Accounting Policies, by Policy (Policies) | 6 Months Ended |
Dec. 31, 2013 |
Accounting Policies, by Policy (Policies) [Line Items] | ' |
Consolidation, Policy [Policy Text Block] | ' |
Principles of Consolidation |
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The accompanying unaudited interim condensed consolidated financial statements include the accounts of Collectors Universe, Inc. and its operating subsidiaries (the “Company”, “we”, “management”, “us”, “our”). At December 31, 2013, our operating subsidiaries were Certified Asset Exchange, Inc. (“CAE”), Collectors Universe (Hong Kong) Limited, Collectors Universe (Shanghai) Limited and Expos Unlimited, Inc. (“Expos”), all of which are ultimately 100% owned by Collectors Universe, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. |
Basis of Accounting, Policy [Policy Text Block] | ' |
Unaudited Interim Financial Information |
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The accompanying interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, and Condensed Consolidated Statements of Cash Flows for the periods presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Operating results for the three and six months ended December 31, 2013 are not necessarily indicative of the results that may be expected for the year ending June 30, 2014 or for any other interim period during such year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013, as filed with the SEC. Amounts related to disclosure of June 30, 2013 balances within these interim condensed consolidated financial statements were derived from the aforementioned audited consolidated financial statements and notes thereto included in that Annual Report on Form 10-K. |
Reclassification, Policy [Policy Text Block] | ' |
Reclassifications |
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Certain prior period amounts have been reclassified to conform to the current period presentation. |
Revenue Recognition, Policy [Policy Text Block] | ' |
Revenue Recognition Policies |
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We record revenue at the time of shipment of the authenticated and graded collectible to the customer, net of any taxes collected. Due to the insignificant delay between the completion of our grading and authentication services and the shipment of the collectible or high-value asset back to the customer, the time of shipment corresponds to the completion of our authentication and grading services. Many of our authentication and grading customers prepay our authentication and grading fees when they submit their collectibles to us for authentication and grading. We record those prepayments as deferred revenue until the collectibles have been authenticated and graded and shipped back to them. At that time, we record the revenues from the authentication and grading services we have performed for the customer and deduct this amount from deferred revenue. For certain dealers to whom we extend open account privileges, we record revenue at the time of shipment of the authenticated and graded collectible to the dealer. With respect to our Expos trade show business, we recognize revenue from each show in the period in which it takes place. |
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A portion of our net revenues are comprised of subscription fees paid by customers for one year memberships in our Collectors Club. Those membership subscription fees entitle members to access our on-line and printed publications and, in some cases, to receive limited life vouchers for free grading services. We recognize revenue attributable to free grading vouchers on a specific basis and classify those revenues as part of grading and authentication fees. The balance of the membership fee is recognized over the life of the membership. In the third quarter of fiscal 2013, we began to recognize revenue attributable to expired vouchers, and such revenue was immaterial in the three and six months ended December 31, 2013. |
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We recognize product sales when items are shipped to customers. Product revenues consist primarily of collectible coins that we purchase pursuant to our coin authentication and grading warranty program. However, those sales are not considered an integral part of the Company’s ongoing revenue generating activities. |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results from continuing and discontinued operations could differ from results expected on the basis of those estimates, and such differences could be material to our future results of operations and financial condition. |
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Examples of such estimates that could be material include determinations made with respect to the capitalization and recovery of software development costs, the valuation of stock-based compensation awards and the timing of the recognition of related stock-based compensation expense and in particular the timing and recognition of stock-based compensation associated with the Company’s Long-Term Incentive Program, the valuation of coin inventory, the amount of goodwill and the existence or non-existence of goodwill impairment, the amount of warranty reserves, the provision for income taxes and related valuation allowances against deferred tax assets, and adjustments to the fair value of remaining lease obligations for our discontinued jewelry businesses. These estimates are discussed in more detail in these notes to Condensed Consolidated Financial Statements, in the Critical Accounting Policies and Estimates section of Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained elsewhere in this Report and in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | ' |
Goodwill and Other Long-Lived Assets |
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We evaluate the carrying value of goodwill and indefinite-lived intangible assets at least annually, or more frequently if facts and circumstances indicate that impairment may have occurred. Qualitative factors are considered in performing our goodwill impairment assessment, including the significant excess of fair value over carrying value in prior years, and any material changes in the estimated cash flows of the reporting unit. We also evaluate the carrying values of all other tangible and intangible assets for impairment if circumstances arise in which the carrying values of these assets may not be recoverable on the basis of future undiscounted cash flows. Management has determined that no impairment of goodwill or other long-lived assets had occurred as of December 31, 2013. |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | ' |
Foreign Currency |
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The Company has determined that the U.S. Dollar is the functional currency for its French branch office and its Hong Kong and China subsidiaries. Based on this determination, the Company’s foreign operations are re-measured by reflecting the financial results of such operations as if they had taken place within a U.S. dollar-based economic environment. Fixed assets and other non-monetary assets and liabilities are re-measured from foreign currencies to U.S. dollars at historical exchange rates; whereas cash, accounts receivable and other monetary assets and liabilities are re-measured at current exchange rates. Gains and losses resulting from those re-measurements, which are included in income were not material. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock-based compensation expense is measured at the grant date of an equity-incentive award, based on its estimated fair value, and is recognized as expense over the employee or non-employee director’s requisite service period, which is generally the vesting period of the award. However, if the vesting of a stock-based compensation award is subject to satisfaction of a performance requirement or condition, the stock-based compensation expense is recognized if, and when, management determined that the achievement of the performance requirement or condition (and therefore the vesting of the award) has become probable. If stock-based compensation is recognized on the basis that the performance condition has become probable, and management subsequently determines that the performance condition was not met in the original period of expense recognition, but the performance condition may be met in future periods to satisfy the vesting conditions, management will refine the period over which the expense will be recognized. However if, management subsequently determines that the performance condition was not met, then all expense previously recognized with respect to the performance condition would be reversed. |
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Stock Options |
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No stock options were granted during the three and six months ended December 31, 2013 and 2012. The following table presents information relative to the stock options outstanding under all equity incentive plans as of December 31, 2013 and stock option activity during the six months ended December 31, 2013. The closing prices of our common stock as of December 31, 2013 and June 30, 2013 were $17.15 and $13.25, respectively. |
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| | Shares | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term | | | Aggregate | |
Intrinsic |
Value |
| | (In Thousands) | | | | | | | (yrs.) | | | (In Thousands) | |
Options: | | | | | | | | | | | | | | | | |
Outstanding at June 30, 2013 | | | 178 | | | $ | 13.81 | | | | 1.28 | | | $ | 282 | |
Exercised | | | (43 | ) | | $ | 9.67 | | | | - | | | | - | |
Cancelled | | | (14 | ) | | $ | 6.91 | | | | - | | | | - | |
Outstanding at December 31, 2013 | | | 121 | | | $ | 16.13 | | | | 0.84 | | | $ | 177 | |
Exercisable at December 31, 2013 | | | 121 | | | $ | 16.13 | | | | 0.84 | | | $ | 177 | |
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Restricted Stock Awards |
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Fiscal 2013 Long-Term Performance-Based Equity Incentive Program. As previously reported, on December 28, 2012, the Compensation Committee of the Board of Directors adopted a Long-Term Performance-Based Equity Incentive Program (“LTIP”) for the Company’s executive officers (including the Company’s Chief Executive Officer, Mr. Deuster, and the Chief Financial Officer, Mr. Wallace) and certain key management employees (collectively “Participants”). Under that program, in December 2012 299,429 shares of restricted stock (the “restricted shares”) were granted, including 108,880 shares to Mr. Deuster and 40,830 shares to Mr. Wallace, from the Company’s stockholder-approved 2006 Equity Incentive Plan (the “2006 Plan”). The grant date fair value of those restricted shares was approximately $3,000,000. |
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The Compensation Committee had intended to grant a total of approximately 550,000 restricted shares to the Participants (including 200,000 restricted shares to Mr. Deuster and 75,000 restricted shares to Mr. Wallace) under the LTIP. However, it was not able to do so, because there were not a sufficient number of authorized shares available for such grants under the 2006 Plan. On December 9, 2013, the Company’s stockholders approved the 2013 Equity Incentive Plan which authorized the issuance of up to 650,000 new shares of common stock for equity incentives to the Company’s executive officers and other key management employees, directors and consultants. As a result, in December 2013, the Compensation Committee approved grants of a total of 223,949, additional restricted shares (net of forfeitures) to the Participants in the LTIP (including 91,120 to Mr. Deuster and 34,170 to Mr. Wallace).The grant date fair values of those shares, net of forfeitures, were approximately $3,700,000. As of December 31, 2013, there were 523,378 shares of restricted stock outstanding under the LTIP, with a total grant date fair value of approximately $6,700,000. |
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The vesting of the restricted shares is conditioned on the Company’s achievement of increasing annual operating income during any fiscal year within a six-year period commencing with fiscal 2013 and continuing through the fiscal year ending June 30, 2018, as indicated in the following table: |
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| | Cumulative Percent of | | | | | | | | | | | | | |
Shares Vested | | | | | | | | | | | | |
If in any fiscal year during the term of the Program: | | | | | | | | | | | | | | | | |
The Threshold Performance Goal is Achieved | | | 10 | % | | | | | | | | | | | | |
Intermediate Performance Goal #1 is Achieved | | | 25 | % | | | | | | | | | | | | |
Intermediate Performance Goal #2 is Achieved | | | 45 | % | | | | | | | | | | | | |
Intermediate Performance Goal #3 is Achieved | | | 70 | % | | | | | | | | | | | | |
The Maximum Performance Goal is Achieved | | | 100 | % | | | | | | | | | | | | |
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Upon the determination that a milestone has been achieved for a fiscal year, 50% of the shares related to achieving that milestone will vest immediately and the remaining 50% will vest on June 30 of the following fiscal year, provided that the Participant is still in the service of the Company. |
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If the Company never achieves the Threshold Performance Goal during the term of the Program, all of the restricted shares will be forfeited effective June 30, 2018. If, instead, the Threshold Performance Goal is achieved or exceeded, but the Maximum Performance Goal is not achieved during the term of the Program, then the unvested shares will be forfeited effective June 30, 2018. |
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As an additional incentive, the Participants may also earn a maximum 25% more shares if the Maximum Performance Goal is achieved in any fiscal year ending on or before June 30, 2015 and such shares would vest 50% upon the determination that the milestone has been achieved and the remaining 50% on June 30 of the following fiscal year. |
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Through June 30, 2013, management estimated that it was probable that the Company would achieve the Threshold Performance Goal by June 30, 2016 (representing the midpoint in the term of the LTIP) and therefore, began recognizing stock-based compensation expense of $300,000, from the service inception date of January 1, 2013, through June 30, 2016. Of that amount, $43,000 of stock-based compensation expense was recognized in fiscal 2013. At September 30, 2013, management reassessed whether any additional compensation expense was required to be recognized based upon the improved results in the first quarter of fiscal 2014, and determined it was probable that the Company would reach the Threshold Performance in fiscal 2014, which resulted in a catch-up accrual of stock-based compensation of approximately $56,000. |
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The service inception date for the additional shares granted in December 2013 was determined to be the grant date such that stock-based compensation for those shares began to be recognized in December, 2013. At December 31, 2013, management again reassessed whether any additional compensation was required to be recognized based upon the continued improved results in the second quarter and concluded that it was probable that the company would also reach the Intermediate Performance Goal #1 in fiscal 2014. This reassessment resulted in a catch-up accrual of stock based compensation expense of approximately $200,000, for those shares with a service inception date of January 1, 2013. Through December 31, 2013, total stock based compensation recognized for the LTIP shares was approximately $450,000 comprising the $43,000 recognized in fiscal 2013 and $407,000 in the six months ended December 31, 2013. Management will continue to reassess at each reporting date whether any additional compensation expense is required to be recognized based on achieving additional milestones under the LTIP, and the period such compensation is required to be recognized. |
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Outstanding Restricted Shares. The following table presents the unvested status of all restricted shares for the six months ended December 31, 2013 and the weighted average grant-date fair values: |
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Unvested Restricted Shares: | | Shares | | | Weighted | | | | | | | | | |
(In Thousands) | Average | | | | | | | | |
| Grant-Date | | | | | | | | |
| Fair Values | | | | | | | | |
Unvested at June 30, 2013 | | | 387 | | | $ | 10.77 | | | | | | | | | |
Granted | | | 267 | | | | 15.73 | | | | | | | | | |
Vested | | | (20 | ) | | | 11.52 | | | | | | | | | |
Cancelled | | | (34 | ) | | | 10.92 | | | | | | | | | |
Unvested at December 31, 2013 | | | 600 | | | $ | 12.94 | | | | | | | | | |
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Stock-based Compensation Expense. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' |
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. |
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Financial Instruments and Cash Balances. At December 31, 2013, we had cash and cash equivalents totaling approximately $16,307,000, of which approximately $12,895,000 was invested in money market accounts, and the balance of $3,412,000 was in non-interest bearing bank accounts for general day-to-day operations. Cash in overseas bank accounts was approximately $991,000. |
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Substantially all of our cash is deposited at two FDIC insured financial institutions. We maintained cash due from banks in excess of the banks’ FDIC insured deposit limits of approximately $14,335,000 at December 31, 2013. |
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Accounts Receivable. A substantial portion of accounts receivable are due from collectibles dealers. One individual customer accounts receivable accounted for 12% of the Company’s total gross accounts receivable balance at December 31, 2013, while one other customer receivable also exceeded 10% of the Company’s total gross accounts receivable balance at June 30, 2013. Management performs an analysis of the expected collectability of accounts receivable based on several factors, including the age and extent of significant past due accounts and economic conditions or trends that may adversely affect the ability of debtors to pay their account receivable balances. Based on that review, management establishes an allowance for doubtful accounts, when deemed necessary. The allowance for doubtful accounts receivable was $31,000 at December 31, 2013 and $27,000 at June 30, 2013. Ultimately, management will write-off account receivable balances when it is determined that there is no possibility of collection. |
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Coin Revenues. The authentication, grading and sales of collectible coins, related services and product sales accounted for approximately 69% and 68% of our net revenues for the three months and six ended December 31, 2013, and 62% of our net revenues for both the three and six months ended December 31, 2012. |
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Customers. Five of our coin authentication and grading customers accounted, in the aggregate, for approximately 12% of our total net revenues in both the six months ended December 31, 2013 and 2012, respectively. |
Inventory, Policy [Policy Text Block] | ' |
Inventories |
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Our inventories consist primarily of (i) our coin collectibles inventories and (ii) consumable supplies that we use in our continuing authentication and grading businesses. Coin collectibles inventories are recorded at the lower of cost or estimated market value using the specific identification method. Consumable supplies are recorded at the lower of cost (using the first-in first-out method) or market. Inventories are periodically reviewed to identify slow-moving items, and an allowance for inventory loss is recognized, as necessary. It is possible that our estimates of market value of collectible coins in inventory could change due to market conditions in the various collectibles markets served by the Company, which could require us to increase that allowance. |
Research, Development, and Computer Software, Policy [Policy Text Block] | ' |
Capitalized Software |
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We capitalize certain costs incurred in the development and upgrading of our software, either from internal or external sources, as part of intangible assets and amortize these costs on a straight-line basis over the estimated useful life of the software of three years. In the three and six months ended December 31, 2013, approximately $27,000 and $52,000, respectively, was recorded as amortization expense for capitalized software. Planning, training, support and maintenance costs incurred either prior to or following the implementation phase are recognized as expense in the period in which they occur. Management evaluates the carrying value of capitalized software to determine if the carrying value is impaired, and, if necessary, an impairment loss is recorded in the period in which any impairment is determined to have occurred. |
Standard Product Warranty, Policy [Policy Text Block] | ' |
Warranty Costs |
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We offer a limited warranty covering the coins and trading cards that we authenticate and grade. Under the warranty, if any collectible that was previously authenticated and graded by us is later submitted to us for re-grading and either (i) receives a lower grade upon that re-submittal or (ii) is determined not to have been authentic, we will offer to purchase the collectible or, in the alternative, at the customer’s option, pay the difference in value of the item at its original grade, as compared with its lower grade. However, this warranty is voided if the collectible, upon re-submittal to us, is not in the same tamper-resistant holder in which it was placed at the time we last graded it. We accrue for estimated warranty costs based on historical trends and related experience. We monitor the adequacy of our warranty reserves on an ongoing basis and significant claims resulting from resubmissions receiving lower grades, or deemed not to be authentic, could result in a material adverse impact on our results of operations |
Stockholders' Equity, Policy [Policy Text Block] | ' |
Dividends |
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In accordance with the Company’s current quarterly dividend policy, we paid quarterly cash dividends of $0.325 per share of common stock in the first and second quarters of fiscal 2014. The declaration of cash dividends in the future is subject to final determination each quarter by the Board of Directors based on a number of factors, including the Company’s financial performance and its available cash resources, its cash requirements and alternative uses of cash that the Board may conclude would represent an opportunity to generate a greater return on investment for the Company. |
New Accounting Pronouncements, Policy [Policy Text Block] | ' |
Recent Accounting Pronouncements |
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In July 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update No. 2013-11 on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or tax credit carryforward exists. Under the guidance, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The updated guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance is not expected to have a material effect on the Company’s Consolidated Financial Statements. |
Employee Stock Option [Member] | ' |
Accounting Policies, by Policy (Policies) [Line Items] | ' |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock Options |
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No stock options were granted during the three and six months ended December 31, 2013 and 2012. The following table presents information relative to the stock options outstanding under all equity incentive plans as of December 31, 2013 and stock option activity during the six months ended December 31, 2013. The closing prices of our common stock as of December 31, 2013 and June 30, 2013 were $17.15 and $13.25, respectively. |
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| | Shares | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term | | | Aggregate | |
Intrinsic |
Value |
| | (In Thousands) | | | | | | | (yrs.) | | | (In Thousands) | |
Options: | | | | | | | | | | | | | | | | |
Outstanding at June 30, 2013 | | | 178 | | | $ | 13.81 | | | | 1.28 | | | $ | 282 | |
Exercised | | | (43 | ) | | $ | 9.67 | | | | - | | | | - | |
Cancelled | | | (14 | ) | | $ | 6.91 | | | | - | | | | - | |
Outstanding at December 31, 2013 | | | 121 | | | $ | 16.13 | | | | 0.84 | | | $ | 177 | |
Exercisable at December 31, 2013 | | | 121 | | | $ | 16.13 | | | | 0.84 | | | $ | 177 | |
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Restricted Stock Awards |
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Fiscal 2013 Long-Term Performance-Based Equity Incentive Program. As previously reported, on December 28, 2012, the Compensation Committee of the Board of Directors adopted a Long-Term Performance-Based Equity Incentive Program (“LTIP”) for the Company’s executive officers (including the Company’s Chief Executive Officer, Mr. Deuster, and the Chief Financial Officer, Mr. Wallace) and certain key management employees (collectively “Participants”). Under that program, in December 2012 299,429 shares of restricted stock (the “restricted shares”) were granted, including 108,880 shares to Mr. Deuster and 40,830 shares to Mr. Wallace, from the Company’s stockholder-approved 2006 Equity Incentive Plan (the “2006 Plan”). The grant date fair value of those restricted shares was approximately $3,000,000. |
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The Compensation Committee had intended to grant a total of approximately 550,000 restricted shares to the Participants (including 200,000 restricted shares to Mr. Deuster and 75,000 restricted shares to Mr. Wallace) under the LTIP. However, it was not able to do so, because there were not a sufficient number of authorized shares available for such grants under the 2006 Plan. On December 9, 2013, the Company’s stockholders approved the 2013 Equity Incentive Plan which authorized the issuance of up to 650,000 new shares of common stock for equity incentives to the Company’s executive officers and other key management employees, directors and consultants. As a result, in December 2013, the Compensation Committee approved grants of a total of 223,949, additional restricted shares (net of forfeitures) to the Participants in the LTIP (including 91,120 to Mr. Deuster and 34,170 to Mr. Wallace).The grant date fair values of those shares, net of forfeitures, were approximately $3,700,000. As of December 31, 2013, there were 523,378 shares of restricted stock outstanding under the LTIP, with a total grant date fair value of approximately $6,700,000. |
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The vesting of the restricted shares is conditioned on the Company’s achievement of increasing annual operating income during any fiscal year within a six-year period commencing with fiscal 2013 and continuing through the fiscal year ending June 30, 2018, as indicated in the following table: |
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| | Cumulative Percent of | | | | | | | | | | | | | |
Shares Vested | | | | | | | | | | | | |
If in any fiscal year during the term of the Program: | | | | | | | | | | | | | | | | |
The Threshold Performance Goal is Achieved | | | 10 | % | | | | | | | | | | | | |
Intermediate Performance Goal #1 is Achieved | | | 25 | % | | | | | | | | | | | | |
Intermediate Performance Goal #2 is Achieved | | | 45 | % | | | | | | | | | | | | |
Intermediate Performance Goal #3 is Achieved | | | 70 | % | | | | | | | | | | | | |
The Maximum Performance Goal is Achieved | | | 100 | % | | | | | | | | | | | | |
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Upon the determination that a milestone has been achieved for a fiscal year, 50% of the shares related to achieving that milestone will vest immediately and the remaining 50% will vest on June 30 of the following fiscal year, provided that the Participant is still in the service of the Company. |
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If the Company never achieves the Threshold Performance Goal during the term of the Program, all of the restricted shares will be forfeited effective June 30, 2018. If, instead, the Threshold Performance Goal is achieved or exceeded, but the Maximum Performance Goal is not achieved during the term of the Program, then the unvested shares will be forfeited effective June 30, 2018. |
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As an additional incentive, the Participants may also earn a maximum 25% more shares if the Maximum Performance Goal is achieved in any fiscal year ending on or before June 30, 2015 and such shares would vest 50% upon the determination that the milestone has been achieved and the remaining 50% on June 30 of the following fiscal year. |
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Through June 30, 2013, management estimated that it was probable that the Company would achieve the Threshold Performance Goal by June 30, 2016 (representing the midpoint in the term of the LTIP) and therefore, began recognizing stock-based compensation expense of $300,000, from the service inception date of January 1, 2013, through June 30, 2016. Of that amount, $43,000 of stock-based compensation expense was recognized in fiscal 2013. At September 30, 2013, management reassessed whether any additional compensation expense was required to be recognized based upon the improved results in the first quarter of fiscal 2014, and determined it was probable that the Company would reach the Threshold Performance in fiscal 2014, which resulted in a catch-up accrual of stock-based compensation of approximately $56,000. |
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The service inception date for the additional shares granted in December 2013 was determined to be the grant date such that stock-based compensation for those shares began to be recognized in December, 2013. At December 31, 2013, management again reassessed whether any additional compensation was required to be recognized based upon the continued improved results in the second quarter and concluded that it was probable that the company would also reach the Intermediate Performance Goal #1 in fiscal 2014. This reassessment resulted in a catch-up accrual of stock based compensation expense of approximately $200,000, for those shares with a service inception date of January 1, 2013. Through December 31, 2013, total stock based compensation recognized for the LTIP shares was approximately $450,000 comprising the $43,000 recognized in fiscal 2013 and $407,000 in the six months ended December 31, 2013. Management will continue to reassess at each reporting date whether any additional compensation expense is required to be recognized based on achieving additional milestones under the LTIP, and the period such compensation is required to be recognized. |
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Outstanding Restricted Shares. The following table presents the unvested status of all restricted shares for the six months ended December 31, 2013 and the weighted average grant-date fair values: |
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Unvested Restricted Shares: | | Shares | | | Weighted | | | | | | | | | |
(In Thousands) | Average | | | | | | | | |
| Grant-Date | | | | | | | | |
| Fair Values | | | | | | | | |
Unvested at June 30, 2013 | | | 387 | | | $ | 10.77 | | | | | | | | | |
Granted | | | 267 | | | | 15.73 | | | | | | | | | |
Vested | | | (20 | ) | | | 11.52 | | | | | | | | | |
Cancelled | | | (34 | ) | | | 10.92 | | | | | | | | | |
Unvested at December 31, 2013 | | | 600 | | | $ | 12.94 | | | | | | | | | |
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Stock-based Compensation Expense. The following table sets forth the stock-based compensation expense we incurred in the three and six months ended December 31, 2013 and 2012 (in thousands): |
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| | Three Months Ended | | | Six Months Ended | |
December 31, | December 31, |
Included In: | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Cost of authentication, grading and related services | | $ | 12 | | | | - | | | $ | 23 | | | | - | |
Sales and marketing expenses | | | - | | | | 5 | | | | - | | | | 5 | |
General and administrative expenses | | | 458 | | | | 142 | | | | 833 | | | | 428 | |
| | $ | 470 | | | $ | 147 | | | $ | 856 | | | $ | 433 | |
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Stock-based compensation for, includes expense of $330,000 and $407,000 in the three and six months ended December 31, 2013, respectively related to the Company’s LTIP and $147,000 of expense for a grant of stock to a former employee of the Company in the six months ended December 31, 2013. There was no comparable expense for the LTIP shares in the three and six months ended December 31, 2012 as the LTIP was only established in December 2012. |
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The following table sets forth total unrecognized compensation expense in the amount of $2,177,000 related to unvested restricted stock awards at December 31, 2013 and represents the expense expected to be recognized through fiscal year 2016, on the assumption that the Participants remain in the Company’s employment throughout the applicable vesting periods, and the Company will achieve the Threshold Performance Goal and the Intermediate Performance Goal #1 under the LTIP in fiscal 2014. The amounts do not include the cost or effect of the possible grant of any additional stock based compensation awards that may become probable of vesting under the LTIP. |
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Fiscal Year Ending June 30, | | Amount | | | | | | | | | | | | | |
(In Thousands) | | | | | | | | | | | | |
2014 (remaining 6 months) | | $ | 1,080 | | | | | | | | | | | | | |
2015 | | | 879 | | | | | | | | | | | | | |
2016 | | | 218 | | | | | | | | | | | | | |
| | $ | 2,177 | | | | | | | | | | | | | |
Restricted Stock [Member] | ' |
Accounting Policies, by Policy (Policies) [Line Items] | ' |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Restricted Stock Awards |
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Fiscal 2013 Long-Term Performance-Based Equity Incentive Program. As previously reported, on December 28, 2012, the Compensation Committee of the Board of Directors adopted a Long-Term Performance-Based Equity Incentive Program (“LTIP”) for the Company’s executive officers (including the Company’s Chief Executive Officer, Mr. Deuster, and the Chief Financial Officer, Mr. Wallace) and certain key management employees (collectively “Participants”). Under that program, in December 2012 299,429 shares of restricted stock (the “restricted shares”) were granted, including 108,880 shares to Mr. Deuster and 40,830 shares to Mr. Wallace, from the Company’s stockholder-approved 2006 Equity Incentive Plan (the “2006 Plan”). The grant date fair value of those restricted shares was approximately $3,000,000. |
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The Compensation Committee had intended to grant a total of approximately 550,000 restricted shares to the Participants (including 200,000 restricted shares to Mr. Deuster and 75,000 restricted shares to Mr. Wallace) under the LTIP. However, it was not able to do so, because there were not a sufficient number of authorized shares available for such grants under the 2006 Plan. On December 9, 2013, the Company’s stockholders approved the 2013 Equity Incentive Plan which authorized the issuance of up to 650,000 new shares of common stock for equity incentives to the Company’s executive officers and other key management employees, directors and consultants. As a result, in December 2013, the Compensation Committee approved grants of a total of 223,949, additional restricted shares (net of forfeitures) to the Participants in the LTIP (including 91,120 to Mr. Deuster and 34,170 to Mr. Wallace).The grant date fair values of those shares, net of forfeitures, were approximately $3,700,000. As of December 31, 2013, there were 523,378 shares of restricted stock outstanding under the LTIP, with a total grant date fair value of approximately $6,700,000. |
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The vesting of the restricted shares is conditioned on the Company’s achievement of increasing annual operating income during any fiscal year within a six-year period commencing with fiscal 2013 and continuing through the fiscal year ending June 30, 2018, as indicated in the following table: |
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| | Cumulative Percent of | | | | | | | | | | | | | |
Shares Vested | | | | | | | | | | | | |
If in any fiscal year during the term of the Program: | | | | | | | | | | | | | | | | |
The Threshold Performance Goal is Achieved | | | 10 | % | | | | | | | | | | | | |
Intermediate Performance Goal #1 is Achieved | | | 25 | % | | | | | | | | | | | | |
Intermediate Performance Goal #2 is Achieved | | | 45 | % | | | | | | | | | | | | |
Intermediate Performance Goal #3 is Achieved | | | 70 | % | | | | | | | | | | | | |
The Maximum Performance Goal is Achieved | | | 100 | % | | | | | | | | | | | | |
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Upon the determination that a milestone has been achieved for a fiscal year, 50% of the shares related to achieving that milestone will vest immediately and the remaining 50% will vest on June 30 of the following fiscal year, provided that the Participant is still in the service of the Company. |
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If the Company never achieves the Threshold Performance Goal during the term of the Program, all of the restricted shares will be forfeited effective June 30, 2018. If, instead, the Threshold Performance Goal is achieved or exceeded, but the Maximum Performance Goal is not achieved during the term of the Program, then the unvested shares will be forfeited effective June 30, 2018. |
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As an additional incentive, the Participants may also earn a maximum 25% more shares if the Maximum Performance Goal is achieved in any fiscal year ending on or before June 30, 2015 and such shares would vest 50% upon the determination that the milestone has been achieved and the remaining 50% on June 30 of the following fiscal year. |
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Through June 30, 2013, management estimated that it was probable that the Company would achieve the Threshold Performance Goal by June 30, 2016 (representing the midpoint in the term of the LTIP) and therefore, began recognizing stock-based compensation expense of $300,000, from the service inception date of January 1, 2013, through June 30, 2016. Of that amount, $43,000 of stock-based compensation expense was recognized in fiscal 2013. At September 30, 2013, management reassessed whether any additional compensation expense was required to be recognized based upon the improved results in the first quarter of fiscal 2014, and determined it was probable that the Company would reach the Threshold Performance in fiscal 2014, which resulted in a catch-up accrual of stock-based compensation of approximately $56,000. |
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The service inception date for the additional shares granted in December 2013 was determined to be the grant date such that stock-based compensation for those shares began to be recognized in December, 2013. At December 31, 2013, management again reassessed whether any additional compensation was required to be recognized based upon the continued improved results in the second quarter and concluded that it was probable that the company would also reach the Intermediate Performance Goal #1 in fiscal 2014. This reassessment resulted in a catch-up accrual of stock based compensation expense of approximately $200,000, for those shares with a service inception date of January 1, 2013. Through December 31, 2013, total stock based compensation recognized for the LTIP shares was approximately $450,000 comprising the $43,000 recognized in fiscal 2013 and $407,000 in the six months ended December 31, 2013. Management will continue to reassess at each reporting date whether any additional compensation expense is required to be recognized based on achieving additional milestones under the LTIP, and the period such compensation is required to be recognized. |
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Outstanding Restricted Shares. The following table presents the unvested status of all restricted shares for the six months ended December 31, 2013 and the weighted average grant-date fair values: |
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Unvested Restricted Shares: | | Shares | | | Weighted | | | | | | | | | |
(In Thousands) | Average | | | | | | | | |
| Grant-Date | | | | | | | | |
| Fair Values | | | | | | | | |
Unvested at June 30, 2013 | | | 387 | | | $ | 10.77 | | | | | | | | | |
Granted | | | 267 | | | | 15.73 | | | | | | | | | |
Vested | | | (20 | ) | | | 11.52 | | | | | | | | | |
Cancelled | | | (34 | ) | | | 10.92 | | | | | | | | | |
Unvested at December 31, 2013 | | | 600 | | | $ | 12.94 | | | | | | | | | |
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Stock-based Compensation Expense. The following table sets forth the stock-based compensation expense we incurred in the three and six months ended December 31, 2013 and 2012 (in thousands): |
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| | Three Months Ended | | | Six Months Ended | |
December 31, | December 31, |
Included In: | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Cost of authentication, grading and related services | | $ | 12 | | | | - | | | $ | 23 | | | | - | |
Sales and marketing expenses | | | - | | | | 5 | | | | - | | | | 5 | |
General and administrative expenses | | | 458 | | | | 142 | | | | 833 | | | | 428 | |
| | $ | 470 | | | $ | 147 | | | $ | 856 | | | $ | 433 | |
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Stock-based compensation for, includes expense of $330,000 and $407,000 in the three and six months ended December 31, 2013, respectively related to the Company’s LTIP and $147,000 of expense for a grant of stock to a former employee of the Company in the six months ended December 31, 2013. There was no comparable expense for the LTIP shares in the three and six months ended December 31, 2012 as the LTIP was only established in December 2012. |
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The following table sets forth total unrecognized compensation expense in the amount of $2,177,000 related to unvested restricted stock awards at December 31, 2013 and represents the expense expected to be recognized through fiscal year 2016, on the assumption that the Participants remain in the Company’s employment throughout the applicable vesting periods, and the Company will achieve the Threshold Performance Goal and the Intermediate Performance Goal #1 under the LTIP in fiscal 2014. The amounts do not include the cost or effect of the possible grant of any additional stock based compensation awards that may become probable of vesting under the LTIP. |
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Fiscal Year Ending June 30, | | Amount | | | | | | | | | | | | | |
(In Thousands) | | | | | | | | | | | | |
2014 (remaining 6 months) | | $ | 1,080 | | | | | | | | | | | | | |
2015 | | | 879 | | | | | | | | | | | | | |
2016 | | | 218 | | | | | | | | | | | | | |
| | $ | 2,177 | | | | | | | | | | | | | |