Stockholders' Equity

12 Months Ended

Sep. 30, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

12. STOCKHOLDERS' EQUITY

The 2006 Equity Incentive Plan became effective on May 12, 2006 (as amended, the “2006 Equity Incentive Plan”). The 2006 Equity Incentive Plan provides for grants of stock options as well as grants of stock, including restricted stock. We have approximately 1.0 million shares of common stock authorized for issuance under the 2006 Equity Incentive Plan.

On May 12, 2008, 10,555 shares of outstanding common stock that were reserved for issuance upon exchange of previously issued shares pursuant to our Plan were cancelled.

Treasury Stock

On December 12, 2007, our Board of Directors authorized the repurchase of up to one million shares of our common stock, and the Company has established a Rule 10b5-1 plan to facilitate this repurchase. This share repurchase program was authorized through December 2009.

During the year ended September 30, 2011, we repurchased 20,789 common shares from our employees to satisfy tax withholding requirements upon the vesting of restricted stock issued under the 2006 Equity Incentive Plan, and 130,258 unvested shares were forfeited by former employees and returned to treasury stock. We issued 324,000 shares out of treasury stock under our share-based compensation programs. Finally, 9,616 phantom stock units granted to members of the Board of directors vested, triggering an issuance of 9,616 unrestricted shares from the balance held in treasury shares.

Restricted Stock

Restricted Stock Awards:
Fiscal Year	Shares Granted	Weighted Average Fair Value at Date of Grant	Vested	Forefeitures	Shares Outstanding	Expense recognized through September 30, 2011
2006	384,850	$ 24.78	258,347	126,503	-	$ 6,402
2006	25,000	$ 17.36	25,000	-	-	$ 434
2007	20,000	$ 25.08	20,000	-	-	$ 502
2007	4,000	$ 26.48	4,000	-	-	$ 106
2008	101,650	$ 19.17	85,750	15,900	-	$ 1,779
2009	185,100	$ 8.71	146,400	38,700	-	$ 1,344
2010	225,486	$ 3.64	42,701	68,585	114,200	$ 360
2011	320,000	$ 3.39	7,627	50,373	262,000	$ 174

During the years ended September 30, 2011, 2010 and 2009, we recognized $787, $1,272, and $1,748, respectively, in compensation expense related to these restricted stock awards. At September 30, 2011, the unamortized compensation cost related to outstanding unvested restricted stock was $865. We expect to recognize $480 and $299 of this unamortized compensation expense during the years ended September 30, 2012 and 2013, respectively. A summary of restricted stock awards for the years ended September 30, 2011, 2010 and 2009 is provided in the table below:

		Years Ended September 30,
			2011	2010	2009
Unvested at beginning of year			352,086	230,716	171,926
	Granted		320,000	225,486	185,100
	Vested		(165,628)	(66,116)	(126,190)
	Forfeited		(130,258)	(38,000)	(120)
Unvested at end of year			376,200	352,086	230,716

The fair value of shares vesting during the years ended September 30, 2011, 2010 and 2009 was $520, $423 and $1,202, respectively. Fair value was calculated as the number of shares vested times the market price of shares on the date of vesting. The weighted average grant date fair value of unvested restricted stock at September 30, 2011 was $3.41.

All the restricted shares granted under the 2006 Equity Incentive Plan (vested or unvested) participate in dividends issued to common shareholders, if any.

Phantom Stock Units

We recognized $138 in compensation expense for26,191 shares of performance-based phantom stock units (“PSUs”)are generally granted to the members of the Board of Directors in 2010, and $100 in compensation expense for 24,632PSUs granted in 2011. These PSU's will be paid via unrestricted stock grants to each director upon his departure from the Board of Directors.In accordance with the separation agreement resulting from the departure of one employee in fiscal 2009, 6,100 PSUs vested and expense of $59 was recorded.

Stock Options

We utilized a binomial option pricing model to measure the fair value of stock options granted.Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, the risk-free rate of return, and actual and projected employee stock option exercise behaviors. The expected life of stock options is not considered under the binomial option pricing model that we utilize. The assumptions used in the fair value method calculation for the years ended September 30, 2011, 2010 and 2009 are disclosed in the following table:

		Years Ended September 30,
		2011		2010		2009
Weighted average value per option granted during the period		$	2.05		N/A	$	8.56
Dividends (1)		$	-		N/A	$	-
Stock price volatility (2)			69.9%		N/A		86.4%
Risk-free rate of return			1.9%		N/A		1.3%
Option term			10.0 years		N/A		10.0 years
Expected life			6.0 years		N/A		6.0 years
Forfeiture rate (3)			0.0%		N/A		0.0%
	(1) We do not currently pay dividends on our common stock.
	(2) Based upon the Company's historical volatility.
	(3) The forfeiture rate for these options was assumed on the date of grant to be zero based on the limited number of employees who have been awarded stock options.

Stock-based compensation expense recognized during the period is based on the value of the portion of the share-based payment awards that is ultimately expected to vest during the period. As stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. We estimate our forfeitures at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The following table summarizes activity under our stock option plans.

		Weighted Average
	Shares	Exercise Price
Outstanding, September 30, 2008	161,000	$	26.66
Options granted	7,500		17.09
Exercised	-		-
Forfeited and Cancelled	(10,000)		41.61
Outstanding, September 30, 2009	158,500	$	19.87
Options granted	-		12.31
Exercised	-		-
Forfeited and Cancelled	-		33.35
Outstanding, September 30, 2010	158,500	$	18.66
Options granted	20,000		3.24
Exercised	-		-
Forfeited and Cancelled	(158,500)		18.66
Outstanding, September 30, 2011	20,000	$	3.24

The following table summarizes options outstanding and exercisable at September 30, 2011:

Range of Exercise Prices	Outstanding as of September 30, 2011	Remaining Contractual Life in Years		Weighted-Average Exercise Price	Exercisable as of September 30, 2011		Weighted-Average Exercise Price
$3.24	20,000	9.80	$	3.24	-	$	3.24
	20,000	9.80	$	3.24	-	$	3.24

All of our outstanding options vest over a three-year period at a rate of one-third per year upon the annual anniversary date of the grant and expire ten years from the grant date if they are not exercised. Upon exercise of stock options, it is our policy to first issue shares from treasury stock, then to issue new shares. Unexercised stock options expire between July 2016 and November 2018.

During the years ended September 30, 2011, 2010 and 2009, we recognized $19, $99 and $479, respectively, in compensation expense related to these awards. At September 30, 2011, the unamortized compensation cost related to outstanding unvested stock options was $39. We expect to recognize all of this unamortized compensation expense during the year ended September 30, 2012.

There was no intrinsic value of stock options outstanding and exercisable at September 30, 2011 and 2010, respectively. The intrinsic value is calculated as the difference between the fair value as of the end of the period and the exercise price of the stock options.