Shareholders' Equity and Share-based Compensation

3 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Shareholders' Equity and Share-based Compensation

Share Repurchase

In September 2017, the Board of Directors approved a repurchase program (the “Repurchase Program”) that allowed the Company to repurchase its common shares from the open market pursuant to a pre-established Rule 10b5-1 trading plan or through privately negotiated transactions up to an aggregate of $30.0 million. The amount and timing of any repurchases under the Repurchase Program depend on a number of factors, including but not limited to, the trading price, volume and availability of the Company's common shares. Shares repurchased under this program are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction of shareholders' equity. From time to time, treasury shares may be reissued as part of the Company's share-based compensation programs. Gains on re-issuance of treasury stock are credited to additional paid-in capital; losses are charged to additional paid-in capital to offset the net gains, if any, from previous sales or re-issuance of treasury stock. Any remaining balance of the losses is charged to retained earnings.

During the three months ended September 30, 2020, the Company did not repurchase any shares pursuant to the Repurchase Program. Since the inception of the program, the Company repurchased an aggregate of 6,784,648 shares for a total cost of $67.3 million, at an average price of $9.92 per share, excluding fees and related expenses. No repurchased shares have been retired. Of the 6,784,648 repurchased shares, 146,928 shares with a weighted average repurchase price of $10.30 per share, were reissued at an average price of $5.25 per share pursuant to option exercises and vested restricted share units ("RSU"). As of September 30, 2020, approximately $13.4 million remained available under the Repurchase Program.

Time-based Restricted Stock Units ("TRSU")

The following table summarizes the Company's TRSU activities for the three months ended September 30, 2020:



	Number of Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2020	932,138		$	11.36	1.66	$	10,141,661
Granted	109,425		$	12.91
Vested	(110,495	)	$	13.51
Forfeited	(4,625	)	$	10.86
Nonvested at September 30, 2020	926,443		$	11.29	1.49	$	11,876,999

Market-based Restricted Stock Units ("MSUs")

During the quarter ended September 30, 2018, the Company granted 1.3 million market-based restricted stock units ("MSUs") to certain personnel. The number of shares to be earned at the end of performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period. The MSUs vest in four equal annual installments after the end of each performance period. The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model. On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to extend the performance period through December 31, 2022 and change the commencement date for the four-year time-based service period January 1, 2023. The fair value of these MSUs was recalculated to reflect the change as of August 31, 2020 and the unrecognized compensation amount was adjusted to reflect the increase in fair value. The incremental expenses for the three months ended September 30, 2020 was immaterial. The Company recorded approximately $0.2 million and $0.2 million of expenses for MSUs during the three months ended September 30, 2020 and 2019, respectively.

Performance-based Restricted Stock Units ("PRSUs")

In March each year since year 2017, The Company granted performance-based RSUs (“PRSUs”) to certain personnel. The number of shares to be earned under the PRSUs is determined based on the level of attainment of predetermined financial goals. The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial

goals were met. The Company recorded approximately $0.4 million and $0.2 million of expense for these PRSUs during the three months ended September 30, 2020 and 2019, respectively.

During the three months ended June 30, 2019, the Company announced an incentive program. Under this program, each participant’s award is denominated in stock and subject to achievement of certain objective goals within certain timelines. In June 2020, the Company believed it was most likely that predetermined goal measures would be met. Therefore, started June 2020 quarter the Company recorded $0.6 million of non-cash compensation expense each quarter for these awards. The expense was reported in the other current liabilities line on the condensed consolidated balance sheets as the amount of bonus is to be settled in variable number of RSU’s at the completion of the objective goals. Such non-cash compensation expense was recorded as part of share-based compensation expense in the condensed consolidated statements of operations. In September 2020, the Company granted RSUs total valued at $1.0 million to participants, which were fully vest immediately due to achievement of certain objective measures.

The following table summarizes the Company's PRSUs activities for the three months ended September 30, 2020:



	Number of Performance-based Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2020	342,775		$	12.38	1.60	$	3,729,392
Forfeited	(1,500	)	$	16.67
Nonvested at September 30, 2020	341,275		$	12.36	1.34	$	4,375,146

Stock Options

The Company did not grant any stock options during the three months ended September 30, 2020 and 2019. The following table summarizes the Company's stock option activities for the three months ended September 30, 2020:



				Weighted
		Weighted		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	Per Share		Term (in years)	Intrinsic Value
Outstanding at June 30, 2020	643,978	$	8.79	2.89	$	1,544,664
Outstanding at September 30, 2020	643,978	$	8.79	2.64	$	2,593,702
Options vested and expected to vest	643,978	$	8.79	2.64	$	2,593,702
Exercisable at September 30, 2020	643,978	$	8.79	2.64	$	2,593,702

Employee Share Purchase Plan ("ESPP")

The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:




	Three Months Ended September 30,
	2020
Volatility rate	58.3%
Risk-free interest rate	0.2%
Expected term	1.3 years
Dividend yield	0%

Share-based Compensation Expense

The total share-based compensation expense recognized in the condensed consolidated statements of operations for the periods presented was as follows:



	Three Months Ended September 30,
	2020		2019
	(in thousands)
Cost of goods sold	$	385	$	436
Research and development	1,080		524
Selling, general and administrative	1,411		1,409
	$	2,876	$	2,369

As of September 30, 2020, total unrecognized compensation cost under the Company's equity plans was $13.1 million, which is expected to be recognized over a weighted-average period of 2.5 years.