Note 7 - Stock Based Compensation

12 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7. STOCK BASED COMPENSATION

Stock-based compensation expense amounted to $1,129,000, $1,328,000 and $715,000 for the years ended June 30, 2012, 2011 and 2010, respectively.

Stock Based Plans

The Company's 2011 Equity Incentive Plan, approved by the shareholders in December 2011, provides additional compensation incentives to encourage high levels of performance and employee retention.  Key employees of the Company and directors, as well as persons who render services to the Company as consultants, advisors or independent contractors, are eligible to receive grants under this plan.  The number of shares that may be issued under this plan is 2,000,000.  Shares may be issued as either incentive stock options, nonqualified stock options, or restricted common stock.  Options may be granted for a period of up to ten years.  Restricted common stock awards may be subject to vesting restrictions and may be forfeited if certain performance factors are not maintained.  As of June 30, 2012, there were 1,935,671 shares available for issuance under this plan.

The Company's 2003 Equity Incentive Plan, approved by the shareholders in December 2003, provided additional compensation incentives to encourage high levels of performance and employee retention.  Key employees of the Company and directors, as well as persons who rendered services to the Company as consultants, advisors or independent contractors, were eligible to receive grants under this plan.  The number of shares that could be issued under this plan was 2,000,000 but use of the plan for new awards ceased upon the adoption of the 2011 Equity Incentive Plan.  Awards outstanding under the plan were not affected.  Shares were issued as incentive stock options, nonqualified stock options, or restricted common stock.  Options may have a period of up to ten years.  Restricted common stock awards may be subject to vesting restrictions and may be forfeited if certain performance factors are not maintained.  The plan provided that a maximum of 1,700,000 shares could be issued as any combination of restricted stock, options and restricted stock unit awards.  The additional 300,000 shares of common stock could only be granted as option awards.  As of June 30, 2012 no shares were available for issuance under this Plan.

The Company permits net share exercises of certain awards made to employees and directors.  Shares reacquired under net share exercises are included within treasury stock.

Restricted Common Stock Awards

During fiscal 2007, the Company entered into agreements to provide long-term incentive compensation opportunities to key employees.  Under the terms of these agreements, the Company granted the employees 35,000 restricted shares of common stock (the “Time-Based Shares”).  The Time-Based Shares vested over a three-year period based upon the continued employment of the key employee. For the years ended June 30, 2011 and 2010, the Company recorded compensation expense of $3,000 and $10,000, respectively, of compensation expense related to the Time-Based Shares.  These amounts include a benefit related to the forfeiture of certain non-vested Time-Based Shares of $9,000 for the year ended June 30, 2010.  There was no compensation expense related to the Time-Based Shares in the year ending June 30, 2012, and all compensation expense related to the shares has been recognized.

Beginning in fiscal 2007, each member of the Company’s Board of Directors received an annual grant of $10,000 of restricted common stock (the “Director Shares”) as part of their compensation for serving on the Company’s Board of Directors.  The number of shares granted was determined based upon the fair market value of the Company’s stock on January 1 of each fiscal year.  As a result, a total of 5,495, 6,426 and 9,513 Director Shares were granted to the directors in fiscal 2012, 2011 and 2010, respectively.  These shares vested on June 30 each fiscal year based upon the director’s continued service on the Company’s Board of Directors.  The Company recorded compensation expense related to these shares of $70,000 in each of the years ended June 30, 2012, 2011 and 2010.

During fiscal 2008, the Company entered into agreements to provide long-term incentive compensation opportunities to certain employees.  Under the terms of these agreements, the Company granted the employees 220,000 restricted shares of common stock (the “2008 Enhanced Performance Shares”).  The 2008 Enhanced Performance Shares vest partially upon continued employment of the key employees and partially upon the achievement of certain performance goals.  For the years ended June 30, 2011 and 2010, the Company recorded $60,000 and $381,000, respectively, of compensation expense related to the 2008 Enhanced Performance Shares.  There was no compensation expense related to the 2008 Enhanced Performance Shares in the year ending June 30, 2012, and all compensation expense related to the shares has been recognized.

During fiscal 2010, the Company entered into agreements to provide long-term incentive compensation opportunities to certain employees.  Under the terms of these agreements, the Company will grant up to a total of 168,750 restricted shares of common stock (the “2010 Enhanced Performance Shares”) in three tranches.  The 2010 Enhanced Performance Shares vest partially upon continued employment of the key employees and partially upon the achievement of certain performance goals.  The annual grants are deemed to occur upon the annual establishment of the performance criteria.  For the years ended June 30, 2012, 2011 and 2010, the Company granted 56,000, 56,000 and 19,000 2010 Enhanced Performance Shares, respectively and recorded $627,000, $521,000 and $19,000 of compensation expense, respectively.  The Company will continue to assess whether or not the achievement of any performance goals is probable at each reporting period, and will recognize the related expense if and when the performance conditions become probable. At June 30, 2012, all compensation expense related to the first and second tranches of 2010 Enhanced Performance Shares has been recognized. The third tranche of shares awarded under the 2010 Enhanced Performance Shares may result in compensation expense in future periods of up to $637,000 (including $547,000 related to 37,500 shares granted on July 1, 2012), representing the fair value on the date of the grant less the amount of compensation expense already recorded. Also under the terms of these agreements, the Company will grant up to a total of 56,250 restricted shares of common stock (the “Market Condition Shares”).  

For the years ended June 30, 2012, 2011 and 2010 the Company granted 18,750, 18,750 and 6,250 of the Market Condition Shares, respectively.  The shares awarded as Market Condition Shares vest upon the achievement of certain market condition criteria and the continued employment of the key employees.  The annual market condition grants are deemed to occur upon the annual reset of the market condition criteria.  For the years ended June 30, 2012, 2011 and 2010, the Company recorded $81,000, $83,000 and $6,000, respectively of compensation expense related to the Market Condition Shares.  At June 30, 2012, all compensation expense related to the first and second tranches of Market Condition Shares have been recognized. The third tranche of shares awarded as Market Condition Shares may result in compensation expense in future periods of up to $96,000 (including $83,000 related to 12,500 shares granted on July 1, 2012), representing the fair value on the date of the grant less the amount of compensation expense already recorded.

A summary of the status of the Company’s nonvested restricted common stock as of June 30, 2012, and changes during the year ended June 30, 2012, is presented below (shares amounts in thousands):

	Market Condition Shares			Weighted Average Grant Date Fair Value		2010 Enhanced Performance Shares			Weighted Average Grant Date Fair Value		Directors Shares			Weighted Average Grant Date Fair Value
Nonvested at June 30, 2011		25		$	4.72		75		$	9.84		-		$	-
Granted		19			4.69		56			12.06		6			12.73
Vested		(38	)		4.61		(56	)		9.11		(6	)		12.73
Nonvested at June 30, 2012		6		$	5.98		75		$	12.05		-		$	-

The fair value of the restricted shares is determined based on the average trading price of the Company’s shares on the grant date, except for the fair value of the Market Condition Shares which were valued by an outside party using a Monte Carlo model to take into account the market condition criteria.

Stock Option Awards

The fair value of stock options granted to employees and directors is determined at the date of grant and is charged to compensation expense over the vesting period of the options.  The fair value of options at date of grant was estimated using the Black-Scholes option pricing model utilizing the following assumptions:

	For the Year Ended June 30,
	2012				2011				2010
Risk-free interest rates		0.31%	-	0.61%		1.1%	-	1.7%		1.7%	-	2.4%
Expected option life in years		3.0	-	4.0			4.0			2.0	-	4.0
Expected stock price volatility		34%	-	50%		46%	-	54%		45%	-	66%
Expected dividend yield			0%				0%				0 %

The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.  The Company uses historical data to estimate option exercise and employee and director terminations within the valuation model; separate groups of employees and directors that have similar historical exercise behavior are considered separately for valuation purposes.  The expected term of options granted represents the period of time that options granted are expected to be outstanding; the range given above results from groups of employees and directors exhibiting different behavior.  Expected volatilities are based on historical volatility of the Company’s stock.  The Company has not paid any dividends in the past.

The following table sets forth summarized information concerning the Company's stock options as of June 30, 2012 (option amounts in thousands):

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at June 30, 2011		823		$	8.75
Granted		67			13.51
Exercised		(96	)		7.21
Forfeited or expired		(52	)		8.27
Outstanding at June 30, 2012		742		$	9.41		2.3	$	3,623
Options exercisable at June 30, 2012		483		$	9.15		1.8	$	2,486
Nonvested at June 30, 2012		259		$	9.91		3.3	$	1,137

The exercise price of the options is determined based on the average trading price of the Company’s shares on the grant date.

Cash received from options exercised under all stock-based payment arrangements for the years ended June 30, 2012, 2011 and 2010 was $579,000, $525,000 and $928,000, respectively.  In the year ended June 30, 2012, 17,000 of the shares exercised were cashless exercises.  The excess tax benefit realized for the tax deductions related the share-based payment arrangements totaled $333,000 and $122,000 for the years ended June 30, 2012 and 2011, respectively.  The aggregate intrinsic value of options exercised during the years ended June 30, 2012, 2011 and 2010 was $612,000, $182,000 and $411,000, respectively.  

The weighted average fair value at date of grant for options granted during the years ended June 30, 2012, 2011 and 2010 was $4.34, $4.12 and $2.95 per option, respectively.  The Company recorded $351,000, $591,000 and $229,000 of compensation expense for stock options for the years ended June 30, 2012, 2011 and 2010, respectively.

Estimated future stock-based compensation expense relating to stock options is as follows (in thousands):

Fiscal Years Ending June 30,	Future Stock Option Compensation Expense
2013	$	275
2014		122
2015		32
2016		9
Total estimated future stock-based compensation expense	$	438

A summary of the status of the Company’s nonvested options as of June 30, 2012 and 2011, and changes during the year ended June 30, 2012, is presented below (share amounts in thousands):

Nonvested Options	Shares			Weighted Average Grant Date Fair Value
Nonvested at June 30, 2011		374		$	3.21
Granted		67			4.34
Canceled or expired		(35	)		2.46
Vested		(147	)		2.91
Nonvested at June 30, 2012		259		$	3.78

The total fair value of shares vested during the years ended June 30, 2012, 2011 and 2010 was $973,000, $494,000 and $136,000, respectively.

The following table presents information relating to stock options at June 30, 2012 (share amounts in thousands):

Options Outstanding							Options Exercisable
Range of Exercise Prices $	Shares		Weighted Average Exercise Price		Weighted Average Remaining Life in Years		Shares		Weighted Average Exercise Price
0.00 - 4.49		10	$	3.89		1.3		10	$	3.89
5.00 - 7.49		218	$	6.53		0.8		184	$	6.64
7.50 - 8.99		103	$	8.86		2.8		47	$	8.85
9.00 - 10.49		207	$	9.55		3.0		120	$	9.85
10.50 - 11.99		20	$	11.19		4.0		5	$	11.19
12.00 - 13.49		142	$	12.84		3.0		87	$	12.56
13.50 - 14.99		42	$	13.97		2.5		30	$	13.73
		742						483