Stock-Based Compensation

9 Months Ended

Jun. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

2. Stock-Based Compensation:

Stock Options

For the three and nine months ended June 30, 2011, stock-based compensation cost recognized in selling, general and administrative expenses amounted to $0.2 million and $0.4 million, respectively. For the three and nine months ended June 30, 2010, stock-based compensation cost recognized in selling, general and administrative expenses amounted to $0.3 million and $0.5 million, respectively. As of June 30, 2011, there was $0.5 million of total unrecognized compensation cost related to share-based compensation awards, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 1.9 years. The compensation cost as generated by the Black-Scholes option-pricing model may not be indicative of the future benefit, if any, that may be received by the option holder. Shares available for future grant under the 2002 Stock Option Plan were 3.0 million shares at June 30, 2011.

Following is a summary of stock option activity during the three and nine months ended June 30, 2011 (in thousands, except per share data):

	Stock		Weighted-Average
Stock Options	Options		Exercise Price ($)
Outstanding at April 1, 2011		3,123		2.35
Outstanding at June 30, 2011		3,123		2.35

						Weighted-
						Average
						Remaining
						Contractual		Aggregate
	Stock			Weighted-Average		Life		Intrinsic
Stock Options	Options			Exercise Price ($)		In Years		Value ($)
Outstanding at October 1, 2010		3,588			2.34
Forfeited		(465	)		2.29
Outstanding at June 30, 2011		3,123			2.35		6.8		897
Exercisable at June 30, 2011		2,041			2.31		6.2		753
Vested and expected to vest at June 30, 2011		2,510			2.34		6.7		804

The total intrinsic value of options exercised during the nine months ended June 30, 2010 was $0.2 million. For options exercised during the nine months ended June 30, 2010, $0.3 million was received in cash to cover the exercise price of the options exercised. There were no options exercised during the nine months ended June 30, 2011.

Following is a summary of the status of the Company’s nonvested stock options as of June 30, 2011 and the activity for the three and nine months ended June 30, 2011 (in thousands, except per share data):

				Weighted-Average
	Stock			Grant-Date
Nonvested Stock Options	Options			Fair Value ($)
Nonvested at April 1, 2011		1,582			1.09
Vested		(500	)		1.07
Nonvested at June 30, 2011		1,082			1.10

				Weighted-Average
	Stock			Grant-Date
Nonvested Stock Options	Options			Fair Value ($)
Nonvested at October 1, 2010		2,031			1.10
Vested		(547	)		1.08
Forfeited		(402	)		1.12
Nonvested at June 30, 2011		1,082			1.10

The total grant date fair value of stock options vested during the three and nine months ended June 30, 2011 was $0.5 million and $0.6 million, respectively. The total grant date fair value of stock options vested during the three and nine months ended June 30, 2010 was $0.5 million and $0.6 million, respectively.

The Company has granted certain options that, in addition to the time vesting requirement, have performance conditions based on one or more of the Company’s growth in sales, earnings per share, earnings before interest and taxes, earnings before interest, taxes and amortization or earnings before interest, taxes, depreciation and amortization. Of the 3.1 million options outstanding at June 30, 2011, 1.0 million options have both time and performance conditions. The following is a summary of the status of the Company’s options that have both the time vesting requirement and performance conditions (in thousands, except per share data):

Time and Performance Based	Stock		Weighted-Average
Stock Options	Options		Exercise Price ($)
Outstanding at April 1, 2011		973		2.20
Outstanding at June 30, 2011		973		2.20

						Weighted-
						Average
						Remaining
						Contractual		Aggregate
Time and Performance Based	Stock			Weighted-Average		Life		Intrinsic
Stock Options	Options			Exercise Price ($)		In Years		Value ($)
Outstanding at October 1, 2010		1,295			2.20
Forfeited		(322	)		2.17
Outstanding at June 30, 2011		973			2.20		6.6		311
Exercisable and vested and expected to vest at June 30, 2011		460			1.98		6.3		235

	Stock			Grant-Date
Time and Performance Based Stock Options	Options			Fair Value ($)
Nonvested at April 1, 2011		663			1.01
Vested		(150	)		1.03
Nonvested at June 30, 2011		513			1.00

	Stock			Grant-Date
Time and Performance Based Stock Options	Options			Fair Value ($)
Nonvested at October 1, 2010		985			1.04
Vested		(150	)		1.03
Forfeited		(322	)		1.12
Nonvested at June 30, 2011		513			1.00

The total grant date fair value of time and performance based stock options that vested during the three and nine months ended June 30, 2011 was $0.2 million and $0.2 million, respectively. The total grant date fair value of time and performance based stock options that vested during the three and nine months ended June 30, 2010 was $0.1 million and $0.2 million, respectively.

Each unvested option (other than those held by the Company’s Chief Executive Officer) will vest immediately prior to the merger, subject to the satisfaction of any applicable performance criteria. See Note 14 for a discussion of the merger.

Stock Appreciation Rights:

In fiscal 2009, the Company’s Board of Directors, upon the recommendation of its Compensation Committee, made a grant of 0.6 million stock appreciation rights (the “SARs”) to Alexander (Sandy) Young, its Chief Executive Officer (the “CEO”). The SARs represent the right to receive a payment, in shares of the Company’s common stock, equal to the product of (a) the number of SARs granted that vest and (b) the excess of (i) the closing sale price of a share of the Company’s common stock on the date that the SARs are settled over (ii) the base price of $1.51 (the closing price of a share of the Company’s common stock on Nasdaq on April 21, 2009, the date that the SARs were granted to Mr. Young). The SARs are subject to both time vesting and performance vesting.

The SARs agreement with Mr. Young provides that the potential maximum value of the SARs (when aggregated with the value of the vested portion of the option to purchase 0.2 million shares of the Company’s common stock held by Mr. Young) is £3.0 million (approximately $4.8 million at the exchange rate at June 30, 2011). If the total value of the SARs and the value of the vested portion of Mr. Young’s options exceeds £3.0 million, then the base price of $1.51 for the SARs will be increased so that the total value is equal to £3.0 million.

At June 30, 2011, the Company estimated that none of the performance measures will be achieved which resulted in zero stock-based compensation cost related to SARs to be recognized as of June 30, 2011. At June 30, 2011, the Company had $0.3 million of total unrecognized compensation cost related to SARs compensation awards. A change in the estimate of the SARs performance measures vesting could result in the Company incurring such cost over a period through September 30, 2011. The compensation cost as generated by the Monte-Carlo pricing model may not be indicative of the future benefit, if any, that may be received by the SARs holder.