6. Stock Based Compensation

The Company has a shareholder-approved 2006 Stock Incentive Plan (the "2006 Plan"), as well as a 2000 Stock Option Plan for Outside Directors and a 2000 Stock Incentive Plan (collectively, the "2000 Plans") that all have vested awards outstanding. The Company is no longer granting awards under the 2006 Plan and 2000 Plans. On July 28, 2011, the Company's shareholders also approved a 2011 Stock Incentive Plan (see Note 13 to Condensed Consolidated Financial Statements for additional information).

Under the 2006 Plan, the Company may grant non-qualified stock options, incentive stock options, stock-settled stock appreciation rights, time-vested restricted shares, restricted share units, performance-vested restricted shares, and performance shares for up to 3.2 million common shares. The maximum aggregate number of restricted shares, restricted share units, and performance shares that may be granted under the 2006 Plan is 1.6 million. The aggregate number of shares underlying all awards granted under the 2006 Plan in any two consecutive fiscal year period may not exceed 1.6 million shares plus the aggregate number of shares underlying awards previously cancelled, terminated, or forfeited.

For stock option awards, the exercise price must be set at least equal to the closing market price of the Company's common shares on the date of grant. The maximum term of option awards is 10 years from the date of grant. Stock option awards vest over a period established by the Compensation Committee of the Board of Directors. Stock appreciation rights may be granted in conjunction with, or independently from, a stock option granted under the 2006 Plan. Stock appreciation rights, granted in connection with a stock option, are exercisable only to the extent that the stock option to which it relates is exercisable and the stock appreciation rights terminate upon the termination or exercise of the related stock option. The maximum term of stock appreciation rights awards is 10 years.

Restricted shares, restricted share units, and performance shares may be issued at no cost or at a purchase price that may be below their fair market value, but are subject to forfeiture and restrictions on their sale or other transfer. Performance share awards may be granted, where the right to receive shares in the future is conditioned upon the attainment of specified performance objectives and such other conditions, restrictions, and contingencies. Performance shares have the right to receive dividends, if any, subject to the same forfeiture provisions that apply to the underlying awards. As of June 30, 2011, there were no restricted share units awarded from the 2006 Plan.

The Company may distribute authorized but unissued shares or treasury shares to satisfy share option and appreciation right exercises or restricted share and performance share awards.

Stock Options

The following table summarizes the activity during the three months ended June 30, 2011 for stock options awarded by the Company under the 2006 Plan and prior plans:

Number
of
Options

Weighted-Average
Exercise Price

Remaining
Contractual
Term

Aggregate
Intrinsic
Value

(per share)

(in years)

Outstanding at April 1, 2011

1,867,501

11.88

Granted

—

Exercised

—

Forfeited

—

Cancelled/expired

—

Outstanding and exercisable at June 30, 2011

1,867,501

11.88

5.0

2,388

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $8.34 closing price of the Company's common shares on June 30, 2011 over the exercise price of the stock option, multiplied by the number of stock options outstanding and exercisable. Under GAAP, the aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on changes in the fair market value of the Company's common shares.

The following table presents additional information related to stock option activity during the three months ended June 30, 2010:


	Three months ended June 30, 2010
Compensation expense	$	291
Total vest-date fair value of stock options vesting	$	532

Compensation expense for stock options was recorded within "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the three months ended June 30, 2010. The compensation expense recorded in the first quarter of fiscal 2011 included $0.2 million for the accelerated vesting of stock option expense due to a change in control provision contained in the original award agreements that was triggered by MAK Capital and its affiliates reaching a 20% ownership stake in the Company. As of June 30, 2010, there was no remaining unrecognized stock based compensation expense related to non-vested stock options.

Stock-Settled Stock Appreciation Rights

Stock-Settled Appreciation Rights ("SSARs") are rights granted to an employee to receive value equal to the difference in the price of the Company's common shares on the date of the grant and on the date of exercise. This value is settled in common shares of the Company.

The Company uses a Black-Scholes-Merton option pricing model to estimate the fair value of SSARs. The following table summarizes the principal assumptions utilized in valuing SSARs granted in the first quarter of fiscal 2011:


	Three months ended June 30, 2010
Dividend yield		0	%
Risk-free interest rate		1.94	%
Expected life (years)		4.5
Expected volatility		81.92	%

The dividend yield reflects the Company's historical dividend yield on the date of the award. On August 5, 2009, the Company's Board of Directors voted to eliminate the payment of cash dividends on the Company's common shares. For awards granted prior to August 5, 2009, the dividend yield reflects the Company's historical dividend yield on the date of award. Awards granted after August 5, 2009 were valued using a zero percent dividend yield, which is the yield expected during the life of the award. The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury bond whose maturity period approximates the expected life of the SSARs. The Company utilizes the simplified method as permitted under SAB No. 110 to calculate the expected life of the SSARs. Under SAB No. 110, the expected life is based on the midpoint between the vesting date and the end of the contractual term of the SSARs award. The Company believes that SSARs awarded in the first quarter of fiscal 2011 meet the criteria established by the SEC for the use of the simplified method. The expected stock price volatility is based on the volatility of the Company's common shares for the most recent historical period equal to the expected life of the SSARs. The Company's ownership base has been and may continue to be concentrated in a few shareholders, which has increased and could continue to increase the volatility of the Company's common share price over time. The estimated fair value of the SSARs granted, less expected forfeitures, is recognized over the vesting period of the awards utilizing the graded vesting method. Under this method, the compensation cost related to unvested amounts begins to be recognized as of the grant date.

The following table summarizes the activity during the three months ended June 30, 2011 for SSARs awarded by the Company under the 2006 Plan:

Number
of
Rights

Weighted-Average
Exercise Price

Remaining
Contractual
Term

Aggregate
Intrinsic
Value

(per right)

(in years)

Outstanding at April 1, 2011

1,317,684

6.50

Granted

—

Exercised

(31,000

)

5.82

Forfeited

—

Cancelled/expired

(3,333

)

6.83

Outstanding at June 30, 2011

1,283,351

6.51

5.5

2,380

Exercisable at June 30, 2011

1,269,351

6.48

5.5

2,380

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $8.34 closing price of the Company's common shares on June 30, 2011 over the exercise price of the SSARs, multiplied by the number of SSARs outstanding or outstanding and exercisable. Under GAAP, the aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on changes in the fair market value of the Company's common shares.

The following table presents additional information related to SSARs activity during the three months ended June 30, 2011 and 2010:


	Three months ended June 30
	2011		2010
Compensation expense	$	1,728	$	236
Income tax benefit related to SSARs exercised:
Classified in operating activities in the Consolidated Statements of Cash Flows	$	—	$	—
Classified in financing activities in the Consolidated Statements of Cash Flows	$	—	$	—
Total intrinsic value of SSARs exercised	$	72	$	189
Total vest-date fair value of SSARs vesting	$	2,807	$	—

Compensation expense for SSARs was recorded within "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the three months ended June 30, 2011 and 2010. The compensation expense recorded in the first quarter of fiscal 2012 included $1.4 million for the accelerated vesting of SSARs expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. As of June 30, 2011, total unrecognized stock based compensation expense related to non-vested SSARs was $66,000, which is expected to be recognized over a weighted-average vesting period of 5.8 years.

A total of 8,852 shares were issued from treasury shares to settle SSARs exercised during the first quarter of fiscal 2012. A total of 4,935 shares, net of 2,463 shares withheld to cover the employee's minimum applicable income taxes, were issued from treasury shares to settle SSARs exercised during the first quarter of fiscal 2011.

As discussed in Note 7 to Condensed Consolidated Financial Statements, in fiscal 2012 and fiscal 2011 the Company was in a net operating loss position for U.S. federal income taxes. Therefore, the Company did not recognize and will not recognize an income tax benefit related to SSARs until that tax benefit can be realized.

Restricted Shares

The Company granted shares to certain of its Directors and executives under the 2006 Plan, the vesting of which is service-based. The following table summarizes the activity during the three months ended June 30, 2011 for restricted shares awarded by the Company:


	Number of shares			Weighted-Average Grant-Date Fair Value
				(per share)
Outstanding at April 1, 2011		35,000		$	8.18
Granted		—			—
Vested		(25,000	)		7.71
Forfeited		—			—

Outstanding at June 30, 2011		10,000		$	9.35

The weighted-average grant date fair value of the restricted shares is determined based upon the closing price of the Company's common shares on the grant date.

The following table presents additional information related to restricted stock activity during the three months ended June 30, 2011 and 2010:


	Three months ended June 30
	2011		2010
Compensation expense	$	146	$	72
Total vest-date fair value of restricted stock vesting	$	170	$	—

Compensation expense related to restricted stock awards is recognized ratably over the restriction period based upon the closing market price of the Company's common shares on the grant date. Compensation expense for restricted stock was recorded within "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the three months ended June 30, 2011 and 2010. The fiscal 2012 compensation expense included $0.1 million for the accelerated vesting of restricted stock expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. As of June 30, 2011, total unrecognized stock based compensation expense related to non-vested restricted stock was $72,000, which is expected to be recognized over a weighted-average vesting period of 5.8 years. The Company will not include restricted stock in the calculation of earnings per share until the shares are vested.

Performance Shares

The Company granted shares to certain of its executives under the 2006 Plan, the vesting of which is contingent upon meeting various Company-wide performance goals as of March 31, 2010. The earned performance shares vest over three years. The weighted-average grant date fair value of the performance share grants was determined based on the closing market price of the Company's common shares on the grant date and assumed that performance goals would be met at target.

The following table summarizes the activity during the three months ended June 30, 2011 for performance shares awarded by the Company under the 2006 Plan:


	Number of shares			Weighted -Average Grant-Date Fair Value
				(per share)
Outstanding at April 1, 2011		49,438		$	6.83
Granted		—			—
Vested		(49,438	)		6.83
Forfeited		—			—

Outstanding at June 30, 2011		—		$	—

The following table presents additional information related to performance share activity during the three months ended June 30, 2011 and 2010:


	Three months ended June 30
	2011		2010
Compensation expense	$	168	$	80
Total vest-date fair value of performance shares vesting	$	337	$	539

Once attainment of the performance goals becomes probable, compensation expense related to performance share awards is recognized ratably over the vesting period based upon the closing market price of the Company's common shares on the grant date. The compensation expense for performance shares was recorded within "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the three months ended June 30, 2011 and 2010. The fiscal 2012 compensation expense included $0.2 million for the accelerated vesting of performance share expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. At June 30, 2011, there was no remaining unrecognized stock based compensation expense related to non-vested performance shares.