Stockholders' Equity

3 Months Ended

Sep. 30, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 12 – Stockholders' Equity

Stock Repurchase Program

From time to time, the Company has made repurchases of its stock, as authorized by the various stock repurchase programs established by the Company's Board of Directors, and through equity incentive plan transactions. On June 16, 2010, the Company announced that its Board of Directors had approved a stock repurchase program allowing the Company to repurchase up to a total of $30 million of its issued and outstanding shares of Common Stock. This program was completed prior to the second quarter ended December 31, 2010, and accordingly, as of September 30, 2011, there were no amounts remaining to repurchase shares of Common Stock under that stock repurchase program.

During the prior comparable fiscal year quarter ended September 30, 2010, the Company repurchased and retired a total of 1,035,769 shares of Common Stock that were settled at a cost of $25,848, or an average price per share of $24.96, using available cash. An additional 34,400 shares were repurchased in June 2010, but settled in July 2010 at a cost of $811, or an average price per share of $23.58.

Share-Based Compensation

The Company accounts for its share-based compensation plans in accordance with FASB ASC Topic 718, "Compensation – Stock Compensation" (ASC 718). Compensation expense related to share-based awards is classified on the Condensed Consolidated Statements of Operations within the same line items as salary or consulting expense with respect to the award recipients, and is recorded over the awards' relevant vesting periods. Compensation expense related to share-based awards granted to the members of the Board of Directors is recorded as a component of Selling, general and administrative expense on the Condensed Consolidated Statements of Operations.

The following table provides additional information related to the Company's share-based compensation:

	Three Months Ended September 30,				Estimated Unrecognized Share-based Compensation as of September 30, 2011		Weighted Average Period Remaining of Share-based Compensation as of September 30, 2011
	2011		2010
Stock options	$	906	$	856	$	3,833		1.68
Non-vested stock awards		121		139		650		1.52
SARs		25		169		3,269		3.00
Total share-based compensation	$	1,052	$	1,164	$	7,752

The income tax benefit recognized in the Condensed Consolidated Statements of Operations for share-based compensation expense for the three months ended September 30, 2011 and 2010 was $368 and $407, respectively.

Stock Options

Stock options have historically been granted to executive officers, other employees and members of the Board of Directors of the Company, as well as non-employee outside consultants (collectively referred to as participants), under the Company's Eighth Amended and Restated Kensey Nash Corporation Employee Incentive Compensation Plan (the Amended Plan) and prior versions of this incentive compensation plan (collectively, the Employee Plan). The Company also has a Non-employee Directors' Stock Option Plan (the Directors' Plan). No shares are available for new awards under the Directors' Plan, and any awards of the type granted previously under the Directors' Plan are now granted under the Employee Plan. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model.

During the three months ended September 30, 2011, no stock options were granted by the Company to any participants under the Employee Plan. See Cash-Settled Stock Appreciation Rights (SARs) below.

During the three months ended September 30, 2010, the Company granted options to executive officers and employees of the Company under the Employee Plan, with exercise prices equal to the fair market values of the Company's Common Stock on the respective grant dates, to purchase a total of 383,625 shares of the Company's Common Stock. These options were valued at a weighted average value of $11.25 per share on the grant date under the Black-Scholes option-pricing model using the fair value assumptions noted in the following table and are being expensed over a three-year vesting period.

	Three Months Ended September 30,
	2011		2010
Dividend yield		—		0%
Expected volatility		—		37% - 39	%
Weighted average volatility		—		37.61	%
Risk-free interest rate		—		1.514% - 2.255	%
Expected term (years)		—		5.25 - 7.75

Options are exercisable over a maximum term of 10 years from the date of grant and typically vest over periods of zero to four years from the grant date. Expected volatilities are based on historical volatility of the Company's Common Stock and other factors. The Company uses historical data to estimate option exercise and employee termination activity within the valuation model; disparate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected terms of granted options are derived from historical exercise behavior and represent the periods of time that granted options are expected to be outstanding.

A summary of the stock option activity under the Employee Plan for the three months ended September 30, 2011 is as follows:

	Employee Plan							Directors' Plan
	Shares			Weighted  Avg Exercise Price		Aggregate Intrinsic  Value		Shares			Weighted  Avg Exercise Price		Aggregate Intrinsic  Value
Balance at June 30, 2011		1,665,937		$	28.09	$	1,873		141,000		$	23.86	$	437
Granted		—		$	—				—		$	—
Cancelled		(9,866	)	$	29.36				—		$	—
Exercised		(14,500	)	$	14.58				(18,000	)	$	22.23
Balance at September 30, 2011		1,641,571		$	28.20	$	1,571		123,000		$	24.10	$	319
Shares vested + expected to vest		1,627,375		$	28.20	$	1,567		123,000		$	24.10	$	319
Exercisable portion		1,278,322		$	28.16	$	1,456		123,000		$	24.10	$	319
Available for future grant at September 30, 2011		534,210							—

Nonvested Stock Awards

Nonvested stock awards have historically been granted to the non-employee members of the Board of Directors, executive officers, certain other management of the Company and a non-employee outside consultant, pursuant to the Employee Plan, and generally vest in three equal annual installments based solely on continued employment or service, as applicable, with the Company. Nonvested stock awards are commonly referred to as restricted stock, but ASC 718 reserves that term for fully vested and outstanding shares, the sale of which is contractually or governmentally prohibited for a specified period of time. Fair value is based upon the closing price of the Company's Common Stock on the date of grant. The following table outlines the nonvested stock awards activity for the three months ended September 30, 2011.

	Nonvested Stock Awarded Under the Employee Plan
	Shares		Weighted Average Price Per Share
Balance at June 30, 2011		48,729	$	22.89
Granted:
Non-employee Directors		1,270		25.64
Balance at September 30, 2011		49,999	$	22.96

Cash-Settled Stock Appreciation Rights (SARs)

Cash-settled SARs awards are granted to executive officers and other eligible employees, providing each participant with the right to receive payment in cash, upon exercise, for the appreciation in market value of a specified number of shares of the Company's Common Stock over the award's exercise price. The per-share exercise price of a cash-settled SAR is equal to the closing market price of a share of the Company's Common Stock on the date of grant.

On September 20, 2011, the Company granted cash-settled SARs awards to executive officers and other eligible employees. The Company granted a total of 484,900 cash-settled SARs, which are to vest over a period of three years, with a maximum term of seven years. The number of cash-settled SARs awarded refers to the number of shares underlying the awards.

As of September 30, 2011, the average fair market value of the cash-settled SARs from the September 20, 2011 grant was $7.00 and the related liability for these cash-settled SARs was $30. These cash-settled SARs will continue to be remeasured at each reporting period until all awards are settled. The Company cannot predict the market value of its Common Stock at the time of exercise for these grants, nor the magnitude of exercises at any particular time over the terms of these grants. Cash- settled SARs are classified as liability awards as a component of Other non-current liabilities on the Condensed Consolidated Balance Sheets, with fluctuations in the fair market value recorded as increases or decreases in compensation cost.

During the fiscal year ended June 30, 2007, the Company granted cash-settled SARs to eligible employees and executive officers. These awards expired in October 2011. As of September 30, 2011, there were 94,000 remaining cash-settled SAR awards, which had no remaining liability, with an average fair market value of $0, as of September 30, 2011.

The following table outlines the cash-settled SAR activity for the three months ended September 30, 2011.

	Shares			Weighted Average Price Per Share
Balance at June 30, 2011		94,700		$	31.35
Granted:
Executive officers		180,430			25.64
Eligible employees		304,470			25.64
Expired:
Eligible employees		(700	)		29.88
Balance at September 30, 2011		578,900		$	26.57

The fair value of each cash-settled SAR award is remeasured at each reporting period using the Black-Scholes option-pricing model with the assumptions noted in the following table for the three months ended September 30, 2011 and 2010.

	Three Months Ended September 30,
	2011	2010
Dividend yield	0%	0%
Expected volatility	35%	35%
Risk-free interest rate	0.763%	0.269% - 0.333%
Expected term (years)	4.50	1.04 - 1.13

Cash-settled SARs are exercisable over a maximum term of seven years from the date of grant and vest over a period of three years from the grant date. Expected volatilities are based on historical volatility of the Company's Common Stock and other factors. The Company uses historical data to estimate employee termination behavior within the valuation model; disparate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. As the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected life, it uses the "simplified method" as permitted by ASC 718-10. The "simplified method" calculates the expected life of an equity award equal to the time from grant to the midpoint between the vesting date and contractual term, taking into account all vesting tranches. The risk-free rate for periods within the contractual life of the cash-settled SAR is based on U.S. treasuries with constant maturities in effect at the time of grant.