Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Nov. 17, 2016 | Mar. 31, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | LIQUIDITY SERVICES INC | ||
Entity Central Index Key | 1,235,468 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 127,314,180 | ||
Entity Common Stock, Shares Outstanding | 31,288,551 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 134,513 | $ 95,465 |
Accounts receivable, net of allowance for doubtful accounts of $718 and $471 in 2016 and 2015, respectively | 10,355 | 6,194 |
Inventory | 27,610 | 25,510 |
Tax refund receivable | 1,205 | 33,491 |
Prepaid and deferred taxes | 2,166 | 19,903 |
Prepaid expenses and other current assets | 9,063 | 7,826 |
Total current assets | 184,912 | 188,389 |
Property and equipment, net | 14,376 | 13,356 |
Intangible assets, net | 2,650 | 4,051 |
Goodwill | 45,134 | 64,073 |
Deferred long-term tax assets | 1,021 | 5,871 |
Other assets | 12,016 | 12,748 |
Total assets | 260,109 | 288,488 |
Current liabilities: | ||
Accounts payable | 9,732 | 9,500 |
Accrued expenses and other current liabilities | 45,133 | 27,350 |
Profit-sharing distributions payable | 1,722 | 2,512 |
Customer payables | 28,901 | 29,802 |
Total current liabilities | 85,488 | 69,164 |
Deferred taxes and other long term liabilities | 12,010 | 3,322 |
Total liabilities | 97,498 | 72,486 |
Commitments and contingencies (Note 9 and 19) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 120,000,000 shares authorized; 30,742,662 shares issued and outstanding at September 30, 2016; 30,026,223 shares issued and outstanding at September 30, 2015 | 29 | 29 |
Additional paid-in capital | 220,192 | 210,712 |
Accumulated other comprehensive loss | (8,571) | (5,626) |
Retained earnings (accumulated deficit) | (49,039) | 10,887 |
Total stockholders' equity | 162,611 | 216,002 |
Total liabilities and stockholders' equity | $ 260,109 | $ 288,488 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 718 | $ 471 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 30,742,662 | 30,026,223 |
Common stock, shares outstanding | 30,742,662 | 30,026,223 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Operations | |||
Revenue | $ 233,828 | $ 315,668 | $ 388,671 |
Fee revenue | 82,626 | 81,457 | 106,990 |
Total revenue from operations | 316,454 | 397,125 | 495,661 |
Costs and expenses from operations: | |||
Cost of goods sold (excluding amortization) | 143,127 | 166,009 | 211,659 |
Profit-sharing distributions | 11,214 | 28,093 | 35,055 |
Technology and operations | 93,405 | 99,743 | 108,940 |
Sales and marketing | 37,570 | 41,465 | 41,951 |
General and administrative | 39,717 | 41,418 | 49,428 |
Depreciation and amortization | 6,502 | 9,235 | 16,595 |
Acquisition costs and related fair value adjustments and impairment of goodwill and long-lived assets | 19,037 | 147,414 | (18,384) |
Business disposition loss | 7,963 | ||
Total costs and expenses | 350,572 | 541,340 | 445,244 |
(Loss) income from operations | (34,118) | (144,215) | 50,417 |
Interest and other income (expense), net | 1,217 | (171) | (370) |
(Loss) income before provision for income taxes | (32,901) | (144,386) | 50,047 |
Provision (benefit) for income taxes | 27,025 | (39,571) | 19,657 |
Net (loss) income | $ (59,926) | $ (104,815) | $ 30,390 |
Basic (loss) earnings per common share | $ (1.96) | $ (3.50) | $ 0.97 |
Diluted (loss) earnings per common share | $ (1.96) | $ (3.50) | $ 0.97 |
Basic weighted average shares outstanding (in shares) | 30,638,163 | 29,987,985 | 31,243,932 |
Diluted weighted average shares outstanding (in shares) | 30,638,163 | 29,987,985 | 31,395,301 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Comprehensive (Loss) Income | |||
Net (loss) income | $ (59,926) | $ (104,815) | $ 30,390 |
Other comprehensive (loss) income: | |||
Defined benefit pension plan- unrecognized amounts, net of taxes | (2,547) | 1,101 | (927) |
Foreign currency translation | (398) | (3,276) | (3,042) |
Other comprehensive (loss), net of taxes | (2,945) | (2,175) | (3,969) |
Comprehensive (loss) income | $ (62,871) | $ (106,990) | $ 26,421 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Loss) | Treasury Stock | Total |
Balance at Sep. 30, 2013 | $ 31,000 | $ 206,861,000 | $ 518,000 | $ 107,469,000 | $ 314,879,000 | |
Balance (in shares) at Sep. 30, 2013 | 31,811,764 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Common stock repurchase | $ (3,000) | $ (44,870,000) | $ (44,873,000) | |||
Common stock repurchase (in shares) | (2,962,978) | (2,962,978) | ||||
Common stock retired | (22,713,000) | (22,157,000) | $ 44,870,000 | |||
Common stock retired (in shares) | (2,962,978) | 2,962,978 | ||||
Exercise of common stock options and restricted stock | 4,146,000 | $ 4,146,000 | ||||
Exercise of common stock options and restricted stock (in shares) | 819,364 | |||||
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock | 16,410,000 | 16,410,000 | ||||
Net (loss) income | 30,390,000 | 30,390,000 | ||||
Defined benefit pension plan- unrecognized amounts, net of taxes | (927,000) | (927,000) | ||||
Foreign currency translation | (3,042,000) | (3,042,000) | ||||
Balance at Sep. 30, 2014 | $ 28,000 | 204,704,000 | (3,451,000) | 115,702,000 | 316,983,000 | |
Balance (in shares) at Sep. 30, 2014 | 29,668,150 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of common stock options and restricted stock | $ 1,000 | 105,000 | 106,000 | |||
Exercise of common stock options and restricted stock (in shares) | 358,073 | |||||
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock | 5,903,000 | 5,903,000 | ||||
Net (loss) income | (104,815,000) | (104,815,000) | ||||
Defined benefit pension plan- unrecognized amounts, net of taxes | 1,101,000 | 1,101,000 | ||||
Foreign currency translation | (3,276,000) | (3,276,000) | ||||
Balance at Sep. 30, 2015 | $ 29,000 | 210,712,000 | (5,626,000) | 10,887,000 | 216,002,000 | |
Balance (in shares) at Sep. 30, 2015 | 30,026,223 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of common stock options and restricted stock | 9,000 | 9,000 | ||||
Exercise of common stock options and restricted stock (in shares) | 716,439 | |||||
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock | 9,471,000 | 9,471,000 | ||||
Net (loss) income | (59,926,000) | (59,926,000) | ||||
Defined benefit pension plan- unrecognized amounts, net of taxes | (2,547,000) | (2,547,000) | ||||
Foreign currency translation | (398,000) | (398,000) | ||||
Balance at Sep. 30, 2016 | $ 29,000 | $ 220,192,000 | $ (8,571,000) | $ (49,039,000) | $ 162,611,000 | |
Balance (in shares) at Sep. 30, 2016 | 30,742,662 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities | |||
Net (loss) income | $ (59,926) | $ (104,815) | $ 30,390 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 6,502 | 9,235 | 16,595 |
Business disposition loss | 7,963 | ||
Change in fair value of earn out liability | (18,390) | ||
Stock compensation expense | 12,247 | 12,405 | 12,605 |
Provision (benefit) for inventory allowance | 2,676 | (575) | 271 |
Provision for doubtful accounts | 247 | 1,109 | 151 |
Deferred tax expense (benefit) | 26,177 | (6,282) | 828 |
Impairment of goodwill and intangible assets | 18,998 | 147,414 | |
Incremental tax loss (benefit) from exercise of common stock options and restricted stock | 229 | 38 | (3,805) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (4,408) | 12,651 | 2,211 |
Inventory | (4,776) | 43,101 | (49,488) |
Prepaid and deferred taxes | 27,057 | (38,545) | (2,829) |
Prepaid expenses and other assets | (160) | (1,499) | 2,735 |
Accounts payable | 232 | (4,534) | (545) |
Accrued expenses and other current liabilities | 17,151 | (18,895) | 9,659 |
Profit-sharing distributions payable | (790) | (2,228) | 425 |
Customer payables | (901) | (11,742) | 12,046 |
Other liabilities | 5,283 | (1,310) | (1,003) |
Net cash provided by operating activities | 45,838 | 43,491 | 11,856 |
Investing activities | |||
Cash paid in divestiture | (2,372) | ||
Cash paid for acquisitions and increase in intangibles | (62) | (137) | (141) |
Purchases of property and equipment, including capitalized software | (6,090) | (7,312) | (7,539) |
Net cash used in investing activities | (6,152) | (9,821) | (7,680) |
Financing activities | |||
Repurchases of common stock | (44,873) | ||
Proceeds from exercise of common stock options (net of tax) | 9 | 106 | 4,146 |
Incremental tax benefit from exercise of common stock options and restricted stock | (229) | (38) | 3,805 |
Net cash (used in) provided by financing activities | (220) | 68 | (36,922) |
Effect of exchange rate differences on cash and cash equivalents | (418) | (871) | 235 |
Net increase (decrease) in cash and cash equivalents | 39,048 | 32,867 | (32,511) |
Cash and cash equivalents at beginning of period | 95,465 | 62,598 | 95,109 |
Cash and cash equivalents at end of period | 134,513 | 95,465 | 62,598 |
Supplemental disclosure of cash flow information | |||
Cash received (paid) for income taxes | $ 33,966 | $ (5,678) | $ (18,108) |
Organization
Organization | 12 Months Ended |
Sep. 30, 2016 | |
Organization | |
Organization | 1. Organization Liquidity Services (the "Company") employs innovative e-commerce marketplace solutions to manage, value, and sell inventory and equipment for business and government clients. The Company operates a network of leading e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. The Company's marketplaces provide professional buyers access to a global, organized supply of new, surplus, and scrap assets presented with digital images and other relevant product information. Additionally, the Company enables its corporate and government sellers to enhance their financial return on offered assets by providing a liquid marketplace and value-added services that encompass the consultative management, valuation, and sale of surplus assets. The Company's broad range of services include program management, valuation, asset management, reconciliation, RTV and RMA ("Return to Vendor" and "Returns Management Authorization"), refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer customer support, and compliance and risk mitigation. The Company organizes the products on its marketplaces into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, energy equipment, industrial capital assets, fleet and transportation equipment and specialty equipment. The Company's marketplaces are www.liquidation.com, www.govliquidation.com, www.govdeals.com, www.networkintl.com, www.truckcenter.com, www.secondipity.com, www.unclesamsretailoutlet.com, www.go-dove.com, and www.irondirect.com. We have over 8,000 clients, including Fortune 1000 and Global 500 organizations as well as government agencies. The Company has one reportable segment consisting of an aggregation of five operating segments that manage e-commerce marketplaces for sellers and buyers of new, surplus, and scrap assets. The Company's operations are subject to certain risks and uncertainties associated with technology-oriented companies including, but not limited to, the Company's dependence on use of the Internet, the effect of general business and economic trends, its susceptibility to rapid technological change, actual and potential competition by entities with greater financial resources, and the potential for the U.S. Government agencies from which the Company has derived a significant portion of its inventory to change the way they conduct their surplus disposition or to otherwise not renew their contracts with the Company. The Company has evaluated subsequent events through the date that these financial statements were issued and filed with the Securities and Exchange Commission. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Certain prior period amounts have been reclassified to conform to the current year's presentation. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In addition, in the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. Business Combinations The Company recognizes all of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs incurred in periods subsequent to the acquisition date are expensed when incurred. Subsequent changes to the purchase price ( i.e. , working capital adjustments) or other fair value adjustments determined during the measurement period are recorded as an adjustment to goodwill, with the exception of contingent consideration, which is recognized in the statement of operations in the period it is modified. All subsequent changes to a valuation allowance or uncertain tax position that relate to the acquired company and existed at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. All other changes in valuation allowances are recognized as a reduction or increase to income tax expense or as a direct adjustment to additional paid-in capital as required. Cash and Cash Equivalents The Company considers all highly liquid securities purchased with an initial maturity of three months or less to be cash equivalents. Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Allowances are based on management's judgment, which considers historical experience and specific knowledge of accounts where collectability may not be probable. The Company makes provisions based on historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general economic conditions. Inventory Inventory consists of property obtained for resale, generally through the online auction process, and is stated at the lower of cost or market. Cost is determined using the specific identification method. Charges for unsellable inventory, as well as for inventory written down to expected market price, are included in cost of goods sold in the period in which they have been determined to occur. As of September 30, 2016 and 2015, the Company's inventory reserve was approximately $3.4 million and $0.8 million, respectively. Property and Equipment Property and equipment is recorded at cost, and depreciated and amortized on a straight-line basis over the following estimated useful lives: Computers and purchased software One to five years Office equipment Three to five years Furniture and fixtures Five to seven years Leasehold improvements Shorter of lease term or useful life Buildings Thirty-nine years Land Not depreciated Intangible Assets Intangible assets primarily consist of contract acquisition costs, covenants not to compete, customer relationships and other intangible assets associated with acquisitions. Intangible assets are amortized using the straight-line method over their estimated useful lives, ranging from three to ten years. Impairment of Long-Lived Assets Long-lived assets, including definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. Goodwill Goodwill is reviewed for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or the loss of a significant customer. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more than likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further testing of goodwill assigned to the reporting unit is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company applies a two-step fair value-based test to assess goodwill for impairment. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step is then performed. The second step compares the carrying amount of the reporting unit's goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount, an impairment loss would be recorded in the statement of operations. During fiscal year 2016, the Company made a voluntary change in the method of applying an accounting principle to change the date of the annual goodwill impairment assessment. The date was changed from September 30 to July 1. As a result, the annual goodwill impairment assessment was performed as of July 1, 2016 for fiscal year 2016. Revenue Recognition The Company recognizes revenue when all of the following criteria are met: • a buyer submits the winning bid in an auction and, as a result, evidence of an arrangement exists and the sale price has been determined; • the buyer has assumed the risks and rewards of ownership; and • collection is reasonably assured. Revenue is also evaluated to determine whether to report the gross proceeds as revenue (when we act as the principal in the arrangement) or report our net commissions and related fees as revenue (when we act as an agent). In arrangements in which the Company is deemed to be the primary obligor, bears physical and general inventory risk, and credit risk, the Company recognizes as revenue the gross proceeds from the sale, including buyer's premiums. The Company has evaluated its revenue recognition policy related to sales under its profit-sharing model and determined it is appropriate to account for these sales on a gross basis. In the Company's evaluation, the Company relied most heavily upon its status as primary obligor in the sales relationship and the fact that the Company has general inventory risk. In arrangements in which the Company acts as an agent or broker on a consignment basis, without taking physical or general inventory risk, revenue is recognized based on the sales commissions that are paid to the Company by the sellers for utilizing the Company's services; in this situation, sales commissions represent a percentage of the gross proceeds from the sale that the seller pays to the Company upon completion of the transaction. Such revenue as well as other fee revenue is presented as Fee Revenue in the Consolidated Statements of Operations. The Company collects and remits sales taxes on merchandise that it purchases and sells, and reports such amounts under the net method in its Consolidated Statements of Operations. Cost of Goods Sold Cost of goods sold includes the costs of purchasing and transporting property for auction as well as credit card transaction fees. The Company purchases the majority of its inventory at a percentage of the supplier's original acquisition cost under the Surplus Contract and certain commercial contracts, at a percentage of the supplier's last retail price under certain commercial contracts, and at a fixed price per pound that varies depending on the type of the inventory purchased under the Scrap Contract. Title for the inventory passes to the Company at the time of purchase and the Company bears the risks and rewards of ownership. The Company does not have title to assets sold on behalf of its commercial or government customers when it receives only sales commission revenue and, as such, recognizes no cost of goods sold associated with those sales. Cost of goods sold also includes shipping and handling costs. Risk Associated with Certain Concentrations The Company does not perform credit evaluations for the majority of its buyers. However, substantially all sales are recorded subsequent to payment authorization being received. As a result, the Company is not subject to significant collection risk, as most goods are not shipped before payment is received. For consignment sales transactions, funds are collected from buyers and are held by the Company on the sellers' behalf. The funds are included in cash and cash equivalents in the consolidated financial statements. The Company releases the funds to the seller, less the Company's commission and other fees due, after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business. The amount of cash held on behalf of the sellers is recorded as customer payables in the accompanying Consolidated Balance Sheets. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents in banks over FDIC limits, and accounts receivable. The Company deposits its cash with financial institutions that the Company considers to be of high credit quality. The Company has two material contracts with the DoD under which it acquires, manages and sells government property. Revenue from the current Surplus Contract accounted for 26.8%, 24.7%, and 31.0% of the Company's consolidated revenue for the fiscal years ended September 30, 2014, 2015, and 2016, respectively. Revenue from the Scrap contract accounted for approximately 14.4%, 15.3% and 10.2% of our total revenue for the fiscal years ended September 30, 2014, 2015 and 2016, respectively. Additionally, the Company has a contract with a commercial client under which it acquires and sells commercial merchandise. Revenue generated from the arrangement represented approximately 9.7% of revenue during fiscal year 2016. Income Taxes The Company accounts for income taxes using an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statement and income tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which the taxes are expected to be paid or recovered. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such determination, we consider all available positive and negative evidence to estimate whether future taxable income will be generated to permit use of the existing deferred tax asset. The resulting net tax asset reflects management's estimate of the amount that will be realized. The Company applies the authoritative guidance related to uncertainty in income taxes. ASC 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. We record unrecognized tax benefits as a reduction to our deferred tax asset for our net operating loss carryforward. We have reduced our net operating loss carryforward by $0.7 million for unrecognized tax benefits related to federal and state exposures. Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant. The fair value of stock options and stock appreciation rights is determined using the Black-Scholes option-pricing model. The fair value of restricted stock awards is based on the closing price of the Company's common stock on the date of grant. The determination of the fair value of the Company's stock option awards and stock appreciation rights is based on a variety of factors including, but not limited to, the Company's common stock price, expected stock price volatility over the expected life of awards, and actual and projected exercise behavior. Additionally, the Company has estimated forfeitures for share-based awards at the dates of grant based on historical experience, adjusted for future expectation. The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates. The Company issues stock options, restricted stock, and stock appreciation rights where restrictions lapse upon either the passage of time (service vesting), achievement of performance targets, or some combination thereof. For those awards with only service vesting conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For awards with both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. For stock options and stock awards that contain performance vesting conditions, the Company excludes these awards from diluted earnings per share computations until the contingency is met as of the end of that reporting period. The Company presents the cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) as a financing activity with a corresponding operating cash outflow in the Consolidated Statements of Cash Flows. Advertising Costs Advertising expenditures are expensed as incurred. Advertising costs charged to expense were $7.2 million, $5.3 million, and $6.0 million for the years ended September 30, 2014, 2015 and 2016, respectively. Fair Value of Financial Instruments Cash and cash equivalents, accounts receivable, accounts payable, profit-sharing distributions payable, and customer payables reported in the Consolidated Balance Sheets approximate their fair values. Foreign Currency Translation The functional currency of the Company's foreign subsidiaries is primarily the local currency. The translation of the subsidiary's financial statements into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive (loss) income, a separate component of stockholders' equity. Realized foreign currency transaction gains and losses for 2014, 2015 and 2016 are included in interest and other income (expense), net in the Consolidated Statements of Operations. Accumulated Other Comprehensive Income (loss) (Net of taxes, amount in dollars) The following table shows the changes in accumulated other comprehensive income (loss), net of taxes (in thousands): Foreign Currency Net Change Pension Accumulated Other Balance at 09/30/13 Current-period other comprehensive (loss) income Balance at 09/30/14 Current-period other comprehensive (loss) income Balance at 09/30/15 Current-period other comprehensive (loss) income Balance at 09/30/16 Earnings per Share The Company calculates net income (loss) per share in accordance with FASB Accounting Standards Codification ("ASC") Topic 260 Earnings Per Share ("ASC 260"). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share ("EPS") reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and unvested restricted stock awards. The dilutive effect of unexercised stock options and unvested restricted stock awards was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded in additional paid-in capital when stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company's common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are antidilutive. The Company has not included the following stock options in the calculation of diluted income per share because the option exercise prices were greater than the average market prices for the applicable periods: (a) for the fiscal year ended September 30, 2016 - 1,284,689 options; (b) for the fiscal year ended September 30, 2015 - 1,256,345 options; and (c) for the fiscal year ended September 30, 2014 - 836,303 options. For the twelve months ended September 30, 2016 and 2015, the basic and diluted weighted average common shares were the same because the inclusion of dilutive securities would have been anti-dilutive. Diluted net income attributable to common stockholders per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. See Note 12 for outstanding stock options and unvested restricted stock, all of which are anti-dilutive as of September 30, 2016. The following summarizes the potential outstanding common stock of the Company as of the dates set forth below: September 30, 2016 2015 2014 (amounts in thousands except Weighted average shares calculation: Basic weighted average shares outstanding Treasury stock effect of options and restricted stock — — Diluted weighted average common shares outstanding Net (loss) income $ $ $ Basic (loss) earnings per common share $ $ $ Diluted (loss) earnings per common share $ $ $ Recent Accounting Pronouncements In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements—Going Concern , which requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern and to provide disclosures in certain circumstances. The new guidance was issued to reduce diversity in the timing and content of footnote disclosures. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2016. The Company expects to adopt this standard in its fiscal year ending September 30, 2018 and does not expect the adoption of this guidance to have a material effect upon its consolidated financial statements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, which supersedes most existing revenue recognition guidance under GAAP. The new standard will change the way the Company recognizes revenue and significantly expand the disclosure requirements for revenue arrangements. In July 2015, the FASB delayed the effective date of the new standard such that the new standard will be effective for the Company beginning on October 1, 2018, and may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new and existing arrangements with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to retained earnings at the effective date for existing arrangements with remaining performance obligations. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company's consolidated financial statements and related disclosures. In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-05, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . ASU 2015-05 provides guidance regarding whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the software license element of the arrangement must be accounted for in a manner consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement must be accounted for as a service contract. ASU 2015-05 does not change the accounting for service contracts. ASU 2015-05 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company will apply the amendments in this Update beginning in fiscal year 2017. In November, 2015, the FASB issued Accounting Standards Update ("ASU") 2015-17, " Income Taxes—Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. For public entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted for all entities as of the beginning of an interim or annual period. The amendments in the Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company has early adopted and chosen to apply the amendments in this Update prospectively effective to the fiscal year 2016. In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases . ASU 2016-02 will change the way the Company recognizes its leased assets. ASU 2016-02 will require organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities representing the rights and obligations created by those leases. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The standard will be effective for the Company beginning on October 1, 2019. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company's consolidated financial statements and related disclosures. |
Significant Contracts
Significant Contracts | 12 Months Ended |
Sep. 30, 2016 | |
Significant Contracts | |
Significant Contracts | 3. Significant Contracts DLA Disposition Services The Company has a Surplus Contract with the DLA Disposition Services (DLA) under which the Company is the remarketer of all Department of Defense (DoD) non-rolling stock surplus turned into the DLA available for sale within the United States, Puerto Rico, and Guam. The Surplus Contract requires the Company to purchase all usable surplus property offered to the Company by the DoD at a fixed percentage of the DoD's original acquisition value (OAV). This fixed percentage is 4.35%; prior to the date the current Surplus Contract became effective, this fixed percentage was 1.8%. The Company retains 100% of the profits from the resale of the property and bears all of the costs for the merchandising and sale of the property. Included in accrued expenses and other current liabilities in the Consolidated Balance Sheet is a liability to the DoD of $16.1 million and $2.0 million for inventory as of September 30, 2016 and 2015, respectively. The Surplus Contract permits either party to terminate the contract for convenience. The initial two-year base period ends in December 2016. There are four one-year options to extend, exercisable by DLA. Revenue from the current Surplus Contract accounted for 26.8%, 24.7%, and 31.0% of the Company's consolidated revenue for the fiscal years ended September 30, 2014, 2015, and 2016, respectively. The Company has a Scrap Contract with the DLA under which the Company is the remarketer of all DoD non electronic scrap turned into the DLA available for sale within the United States, Puerto Rico, and Guam. The DLA initiated an Invitation to Bid for the next Scrap Contract. Bids were solicited in February 2016, and the contract was awarded to the Company in April 2016. The contract is a three-year contract with two one-year options. The Company will pay a revenue-sharing payment to the DLA under this contract equal to 64.5% of the gross resale proceeds of the scrap property, and the Company will bear all of the costs for the sorting, merchandising and sale of the property. The contract contains a provision permitting the DLA to terminate the contract for convenience upon written notice to the Company from the DLA. The Company has commenced operations under this contract in the first fiscal quarter of 2017. Revenue from the Scrap contract accounted for approximately 14.4%, 15.3% and 10.2% of the Company's total revenue for the fiscal years ended September 30, 2014, 2015 and 2016, respectively. |
National Electronic Service Ass
National Electronic Service Association (NESA) Acquisition | 12 Months Ended |
Sep. 30, 2016 | |
National Electronic Service Association (NESA) Acquisition | |
National Electronic Service Association (NESA) Acquisition | 4. National Electronic Service Association (NESA)Acquisition On November 1, 2012, the Company acquired the assets and assumed liabilities of NESA in an all-cash transaction. The acquisition price included an upfront cash payment of approximately $18.3 million and an earn-out payment. The Company's estimate of the fair value of the earn-out as of the date of acquisition was $18.0 million. Based upon revised projections, the Company determined that the fair value of the earn-out as of June 30, 2014 was zero and reversed the liability of $18.6 million with a corresponding reduction (credit) in the acquisition costs and related fair value adjustments and impairment of goodwill and long-lived assets line in the Consolidated Statements of Operations for the year ended September 30, 2014. NESA ceased operations in fiscal 2015. The Company has no further contractual obligations regarding the earn-out payment. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment, including equipment under capital lease obligations, consists of the following: September 30, 2016 2015 (in thousands) Computers and purchased software $ $ Office/Operational equipment Furniture and fixtures Vehicles Leasehold improvements Building Land Construction in progress Total property and equipment Less: Accumulated depreciation and amortization Total property and equipment, net $ $ Depreciation and amortization expense related to property and equipment for the years ended September 30, 2014, 2015 and 2016 was $5.6 million, $6.1 million, and $5.1 million, respectively. |
Goodwill
Goodwill | 12 Months Ended |
Sep. 30, 2016 | |
Goodwill. | |
Goodwill | 6. Goodwill During fiscal year 2016, the Company made a voluntary change in the method of applying an accounting principle to change the date of the annual goodwill impairment assessment. The date was changed from September 30 to July 1. As a result, the annual goodwill impairment assessment was performed as of July 1, 2016 for fiscal year 2016. The goodwill of acquired companies is primarily related to the acquisition of an experienced and knowledgeable workforce. A reporting unit represents a component of an operating segment that (a) constitutes a business, (b) has discrete financial information, and (c) its performance is reviewed by management. At fiscal year-end 2015, the Company had two reporting units—LSI-Retail Supply Chain Group (RSCG) and LSI-Capital Assets Group (CAG). During fiscal year 2016, in light of new business ventures and management restructuring, the Company concluded it now has five reporting units—RSCG, CAG, LSI-GovDeals, LSI-Truckcenter, and LSI-IronDirect. As part of the Company's fiscal year 2016 annual impairment assessment, the Company identified indicators of impairment and as a result performed step one of the goodwill impairment test. The Company performed the step one test using a discounted cash flow method. The Company concluded that the carrying value exceeded fair value for one of the Company's five reporting units that had goodwill. Accordingly, the Company performed the step two test to derive the fair value of the goodwill, and as a result the Company recorded a $19.0 million impairment charge during the fourth quarter of fiscal year 2016. The goodwill impairment was due to updated assumptions used in the fair value calculation. As of December 31, 2014, the Company identified indicators of impairment and as a result performed an impairment test and concluded as part of the step one test that the carrying values of both of the Company's two reporting units exceeded their estimated fair values. The Company performed the step one test using the discounted cash flow method. As a result of the step two test, the Company recorded an impairment charge of $85.1 million during the first quarter of fiscal year 2015. As of September 30, 2015, as part of the Company's annual impairment test, the Company identified indicators of impairment and as a result performed an impairment test and concluded as part of the step one test that the carrying values of both of the Company's two reporting units exceeded their estimated fair values. As a result of the step two test, the Company recorded an impairment charge of $51.2 million during the fourth quarter of fiscal year 2015. Goodwill impairment losses for fiscal 2015 totaled $136.2 million and were the result of the termination of the Wal-Mart Agreement, cessation of operations of NESA, and decline in market capitalization. The following summarizes the goodwill activity for the periods indicated: Goodwill (in thousands) Balance at September 30, 2014 $ Impairment charge Business disposition Translation adjustments Balance at September 30, 2015 Impairment charge Translation adjustments Balance at September 30, 2016 $ No goodwill impairments were recorded prior to September 30, 2014. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Sep. 30, 2016 | |
Intangible Assets | |
Intangible Assets | 7. Intangible Assets As a result of the acquisition of Jacobs Trading Company on October 1, 2011, the Company assumed the rights and obligations of Jacobs Trading Company under the seller's Master Merchandise Salvage Contract with Wal-Mart Stores, Inc. (the "Wal-Mart Agreement") dated May 13, 2011. On December 1, 2014, Wal-Mart provided the Company with written notice terminating the Wal-Mart Agreement effective December 8, 2014. As a result of the termination of the Wal-Mart Agreement, the Company concluded that the intangible asset related to the Wal-Mart Agreement was impaired and reduced the remaining unamortized contract intangible asset of $10.3 million to zero during the fiscal year ended September 30, 2015. This impairment charge is recorded in the Acquisition costs and the related fair value adjustments and impairment of goodwill and long-lived assets line item in the Consolidated Statements of Operations. Intangible assets at September 30, 2016 and September 30, 2015 consisted only of definite-lived intangible assets, and were the following: September 30, 2016 September 30, 2015 Useful Gross Accumulated Net Gross Accumulated Net (dollars in thousands) Contract intangibles $ $ $ $ $ — $ Brand and technology 3 - 5 Covenants not to compete 3 - 5 Patent and trademarks 3 - 10 Total intangible assets, net $ $ $ $ $ $ Future expected amortization of intangible assets at September 30, 2016 is as follows: Years ending September 30, Amortization (in thousands) 2017 $ 2018 2019 2020 2021 and after Total $ Amortization expense related to intangible assets for the years ended September 30, 2016, 2015 and 2014 was $1.4 million, $3.1 million, and $11.0 million, respectively. In prior years the Company presented amortization of contract intangibles on a separate line item within the Consolidated Statements of Operations. During fiscal year 2016, the Company reclassified amortization of contract intangibles to the depreciation and amortization line item. |
Debt
Debt | 12 Months Ended |
Sep. 30, 2016 | |
Debt | |
Debt | 8. Debt Senior Credit Facility In 2010, the Company entered into a senior credit facility (the Agreement) with a bank, which provided for borrowings up to $75.0 million, as amended. On May 1, 2015, the Company amended this credit facility extending the term to May 31, 2018. Borrowings under the Agreement bore interest at an annual rate equal to the 30 day LIBOR rate plus 1.25% (1.451% at September 30, 2015) due monthly. As of September 30, 2015, the Company had no outstanding borrowings under the Agreement, and the Company's borrowing availability was $37.5 million, of which the Company had used $13.9 million for issued letters of credit. Borrowings under the Agreement were secured by substantially all of the assets of the Company. The Agreement contained certain financial and non-financial restrictive covenants including, among others, the requirements to maintain a minimum level of earnings before interest, income taxes, depreciation and amortization (EBITDA) and a minimum debt coverage ratio. Effective March 25, 2016, the Company terminated its $75 million senior credit facility. There were no outstanding borrowings under the Agreement at the time of its termination. |
Commitments
Commitments | 12 Months Ended |
Sep. 30, 2016 | |
Commitments | |
Commitments | 9. Commitments Leases The Company leases certain office space and equipment under non-cancelable operating lease agreements, which expire at various dates through 2021. Certain of the leases contain escalation clauses and provide for the pass-through of increases in operating expenses and real estate taxes. Rent related to leases that have escalation clauses is recognized on a straight-line basis. Resulting deferred rent charges are included in other long-term liabilities and were $1.0 million and $1.2 million, at September 30, 2016 and 2015, respectively. Future minimum payments under the leases as of September 30, 2016 are as follows: Years ending September 30, Operating (in thousands) 2017 $ 2018 2019 2020 2021 2022 Total future minimum lease payments $ Rent expense for the years ended September 30, 2016, 2015 and 2014 was $11.5 million, $12.5 million, and $12.1 million, respectively. |
401(k) Benefit Plan
401(k) Benefit Plan | 12 Months Ended |
Sep. 30, 2016 | |
401(k) Benefit Plan | |
401(k) Benefit Plan | 10. 401(k) Benefit Plan The Company has a retirement plan (the Plan), which is intended to be a qualified plan under Section 401(k) of the Internal Revenue Code. The Plan is a defined contribution plan available to all eligible employees and allows participants to contribute up to the legal maximum of their eligible compensation, not to exceed the maximum tax-deferred amount allowed by the Internal Revenue Service. The Plan also allows the Company to make discretionary matching contributions. For the years ended September 30, 2016, 2015 and 2014, the Company contributed and recorded expense of approximately $1.7 million, $2.4 million, and $2.7 million, respectively, to the Plan. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2016 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The components of the provision for income taxes of continuing operations are as follows: Year ended September 30, 2016 2015 2014 (in thousands) Current tax provision (benefit): U.S. Federal $ — $ ) $ State Foreign Deferred tax (benefit) expense: U.S. Federal State Foreign Total provision $ $ $ Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: September 30, 2016 2015 (in thousands) Deferred tax assets: Net operating losses—Foreign $ $ Net operating losses—U.S. Accrued vacation and bonus Inventory capitalization Inventory reserves Allowance for doubtful accounts Stock compensation expense Amortization of intangibles Amortization of goodwill — Pension liability — Other Total deferred tax assets before valuation allowance Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Amortization of goodwill Depreciation Pension liability — Total deferred tax liabilities $ $ Net deferred taxes $ $ To simplify the presentation of the deferred income taxes, the FASB issued Accounting Standards Update 2015-17. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in our Consolidated Balance Sheets. The Company has early adopted and chosen to apply the new amendments prospectively effective fiscal year 2016. Prior periods have not been retroactively adjusted. The net current deferred tax asset of $10.1 million is recorded in prepaid and deferred taxes on the Consolidated Balance Sheets as of September 30, 2015. The net non-current deferred tax asset of approximately $1.0 million and $5.9 million is recorded in deferred tax assets and other assets on the consolidated balance sheets as of September 30, 2016 and 2015, respectively. The net non-current deferred tax liability of approximately $9.4 million and $2.0 million is recorded in other liabilities in the Consolidated Balance Sheets as of September 30, 2016 and 2015 respectively. The reconciliation of the U.S. federal statutory rate to the effective rate for continuing operations is as follows: Year ended 2016 2015 2014 U.S. statutory rate % % % Permanent items State taxes Net foreign rate differential Unrecognized tax benefits Change in valuation allowance Provision for income taxes % % % At September 30, 2016 and 2015, the Company had federal and state deferred tax assets of $35.8 million and $28.3 million, respectively, related to available federal and state net operating loss (NOL) carryforwards and other U.S. deductible temporary differences. The NOL carryforwards expire beginning in 2035 through 2036. At September 30, 2016 and 2015, the Company had deferred tax assets related to available foreign NOL carryforwards of approximately $9.0 million and $8.6 million respectively. All but approximately $0.3 million of our foreign NOLs maintain an indefinite carry forward life. The NOLs with limited carryforward periods will expire beginning in 2017 through 2036. The Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2016. Such objective evidence limits the ability to consider other evidence such as our projections for future growth. On the basis of this evaluation, the Company recorded a valuation allowance charge of $35.8 million to bring the total valuation allowance to $44.3 million at September 2016. The Company has not recorded a provision for deferred U.S. tax expense on the undistributed earnings of foreign subsidiaries since the Company intends to indefinitely reinvest the earnings of these foreign subsidiaries outside the U.S. The amount of such undistributed foreign earnings was approximately $10.7 million as of September 30, 2016. As of September 30, 2016 and 2015, approximately $21.5 million and $23.6 million, respectively, of cash and cash equivalents was held overseas and not available to fund domestic operations without incurring taxes upon repatriation. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits: Year ended 2016 2015 2014 Beginning balance at October 1 $ — — — Additions based on positions related to the current year — — — Additions for tax positions of prior years — — Reductions for tax positions of prior years — — — Settlements — — — Balance at September 30 $ — — The Company applies the authoritative guidance related to uncertainty in income taxes. ASC 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. We record unrecognized tax benefits as a reduction to our deferred tax asset for our net operating loss carryforward. We have reduced our net operating loss carryforward by $0.7 million for unrecognized tax benefits related to federal and state exposures. Included in the balance of unrecognized tax benefits as of September 30, 2016, 2015, and 2014, are $0.7 million, $0 and $0, respectively, of benefits that, if recognized, would affect the effective tax rate. The Company's policy is to recognize interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the U.K. Currently, the Company is subject to income tax examinations for fiscal years 2012 through 2015. The Company anticipates no material tax liability to arise from these examinations. The statute of limitations for years prior to fiscal 2013 is now closed. However, certain tax attribute carryforwards that were generated prior to fiscal 2013 may be adjusted upon examination by tax authorities if they are utilized. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Sep. 30, 2016 | |
Equity Transactions | |
Equity Transactions | 12. Equity Transactions 2006 Omnibus Long-Term Incentive Plan In conjunction with the Company's initial public offering, the board of directors and the Company's stockholders approved the 2006 Omnibus Long-Term Incentive Plan, or the 2006 Plan, on December 2, 2005. The 2005 Stock Option and Incentive Plan was terminated when the 2006 Plan became effective, immediately after the closing of the initial public offering. A portion of the options and restricted shares granted to employees vest based on certain performance conditions being satisfied by the Company. Performance-based stock options are tied to the Company's annual performance against pre-established internal targets and the actual payout under these awards may vary from zero to 100% of an employee's target payout, based upon the Company's actual performance during the previous twelve months. The performance-based stock options are also subject to vesting requirements and generally vest when the performance condition has been satisfied. The fair value for stock options granted during the period was estimated at the grant date using the Black-Scholes option pricing model, as described in Note 2, and the fair value of restricted shares granted is based on the closing price of the shares on the grant date. Compensation cost is recognized when the performance condition has been satisfied or when it becomes probable that the performance condition will be satisfied. Under the 2006 Plan, as amended, 10,000,000 shares of common stock were available for issuance. At September 30, 2014, there were 772,227 shares remaining reserved for issuance in connection with awards under the 2006 Plan. In February 2015, at the Company's annual meeting of stockholders, the stockholders approved an amendment to the 2006 Plan which increased the shares available for issuance under the 2006 Plan by 3,000,000 shares and established a fungible share pool so that awards other than options or stock appreciation rights granted after January 9, 2015, would be counted as 1.5 shares from the shares reserved for issuance under the 2006 Plan. During the twelve months ended September 30, 2016, the Company canceled 92,499 options and 214,014 restricted shares with performance conditions because the Compensation Committee, which administers the 2006 Plan, determined the performance goals had become unachievable. At September 30, 2016, there were 456,424 shares remaining reserved for issuance in connection with awards under the 2006 Plan. During fiscal year 2015, the Company issued 737,972 cash-settled stock appreciation rights at the price of $9.35, and 59,156 cash-settled stock appreciation rights were forfeited. During the twelve months ended September 30, 2016, the Company issued 1,062,668 cash-settled stock appreciation rights at a price of $4.57 and 153,338 cash-settled stock appreciation rights were forfeited. Stock appreciation rights are recorded as liability awards. The maximum number of shares subject to options or stock appreciation rights that can be awarded under the 2006 Plan to any person is 1,000,000 per year. The maximum number of shares that can be awarded under the 2006 Plan to any person, other than pursuant to an option or stock appreciation right, is 700,000 per year. The Company issues stock appreciation rights where restrictions lapse upon either the passage of time (service vesting), achievement of performance targets, or some combination of these conditions. For those stock appreciation rights with only service conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For awards with both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. The stock appreciation rights that include only service conditions generally vest over a period of one to four years conditioned on continued employment for the incentive period. For the years ended September 30, 2016, 2015 and 2014 the Company recorded stock-based compensation of $12.3 million, $12.4 million, and $12.6 million, respectively. The total costs related to unvested awards, not yet recognized, as of September 30, 2016 was $17.1 million, which will be recognized over the weighted average vesting period of 34.1 months. The 2006 Plan permits the granting of options to purchase shares of common stock intended to qualify as incentive stock options under the Internal Revenue Code and stock options that do not qualify as incentive stock options ("non-qualified stock options"). The exercise price of each stock option may not be less than 100% of the fair market value of the common stock on the date of grant. However, if a grant recipient, who holds at least 10% of the common stock of the Company, receives an incentive stock option, the exercise price of such incentive stock option may not be less than 110% of the fair market value of the common stock on the date of grant. The term of each stock option is fixed by the compensation committee and may not exceed 10 years from the date of grant. The compensation committee may also award under the 2006 Plan: • restricted stock, which are shares of common stock subject to restrictions; • stock units, which are common stock units subject to restrictions; • dividend equivalent rights, which are rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock; • stock appreciation rights, which are rights to receive a number of shares or, in the discretion of the compensation committee and subject to applicable law, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee; • unrestricted stock, which are shares of common stock granted without restrictions as a bonus; and • performance and annual incentive awards, ultimately payable in common stock or cash, as determined by the compensation committee (the compensation committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria set forth in the 2006 Plan). Share Repurchase Program The Company is authorized to repurchase issued and outstanding shares of its common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time, and will be funded using our available cash. The Company's Board of Directors reviews the share repurchase program periodically, the last such review having occurred in May 2016. We did not repurchase shares under this program during the twelve months ended September 30, 2016. As of September 30, 2016, we may repurchase an additional $10.1 million shares under this program. A summary of the Company's share repurchase activity from fiscal year 2009 to the year ended September 30, 2016 is as follows: Fiscal Year Period Total Number Average Price Total Cash Approximate Dollar 2013 — — — 2014 $ 2015 — — — 2016 — — — $ (1) On February 5, 2014, our Board of Directors approved an additional $19.0 million for the share repurchase program. On May 5, 2016, the Company's Board of Directors approved the repurchase of an additional $5.0 million in shares raising the current amount approved for repurchase, that may yet be expended up to $10.1 million. Stock Option Activity A summary of the Company's stock option activity for the years ended September 30, 2016, 2015, and 2014 is as follows: Options Weighted- Options outstanding at September 30, 2013 $ Options granted Options exercised Options canceled Options outstanding at September 30, 2014 Options granted Options exercised Options canceled Options outstanding at September 30, 2015 Options granted Options exercised Options canceled Options outstanding at September 30, 2016 Options exercisable at September 30, 2016 The following table summarizes information about options outstanding at September 30, 2016: Options Outstanding Range of Exercise Price Number Weighted- Weighted- $5.53 - $11.24 $ $11.25 - $46.72 The following table summarizes information about options exercisable at September 30, 2016: Options Exercisable Range of Exercise Price Number Weighted- Weighted- $5.53 - $11.24 $ $11.25 - $46.72 The following table summarizes information about assumptions used in valuing options granted: Year ended September 30 2016 2015 2014 Dividend yield — — — Expected volatility 51.5% - 58.6% 71.9% - 77.9% Risk-free interest rate 0.5% - 1.5% 0.26% - 1.4% 0.1% - 1.2% Expected forfeiture rate 22.2% - 22.8% The intrinsic value of outstanding and exercisable options at September 30, 2016 was approximately $3.2 million and $0.6 million, respectively, based on a stock price of $11.24 on September 30, 2016. The weighted average grant date fair value of options granted during 2016, 2015, and 2014 was $2.07, $4.89, and $7.89, respectively. The intrinsic value of options exercised at September 30, 2016, 2015, and 2014 was approximately $3,128, $4,000, and $1,119,000, respectively. Approximately 0.4 million unvested service-based stock options are expected to vest. Restricted Share Activity A summary of the Company's restricted share activity for the years ended September 30, 2016, 2015, and 2014 is as follows: Restricted Weighted- Unvested restricted shares at September 30, 2013 $ Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2014 Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2015 Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2016 The intrinsic value and weighted average remaining contractual life in years of unvested restricted shares at September 30, 2016 is approximately $29.9 million and 8.68, respectively, based on a stock price of $11.24 on September 30, 2016. Approximately 1.6 million unvested service-based restricted stock shares are expected to vest. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurement | |
Fair Value Measurement | 13. Fair Value Measurement The Company measures and records in the accompanying consolidated financial statements certain liabilities at fair value on a recurring basis. Authoritative guidance issued by the FASB establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Quoted market prices in active markets for identical assets or liabilities; Level 2 Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. As of September 30, 2016 and 2015, the Company had no Level 1, Level 2 or Level 3 assets or liabilities measured at fair value. The Company's financial assets not measured at fair value are cash and cash equivalents (which includes cash and commercial paper with original maturities of less than 90 days). The Company believes the carrying value approximates fair value due to the short term maturity of these instruments. |
Defined Benefit Pension Plan
Defined Benefit Pension Plan | 12 Months Ended |
Sep. 30, 2016 | |
Defined Benefit Pension Plan | |
Defined Benefit Pension Plan | 14. Defined Benefit Pension Plan Certain employees of GoIndustry (UK) Limited ("GoIndustry"), which the Company acquired in July 2012, are covered by the Henry Butcher Pension Fund and Life Assurance Scheme (the "Scheme"), a qualified defined benefit pension plan. The Company recognizes the funded status of its postretirement benefit plans, with a corresponding noncash adjustment to accumulated other comprehensive loss, net of tax, in stockholders' equity. The funded status is measured as the difference between the fair value of the plan's assets and the benefit obligation of the plan. The net periodic benefit cost recognized for the years ended September 30, 2016, 2015 and 2014, included the following components: Qualified Defined Benefit Pension Plan Year ended 2016 2015 2014 (in thousands) Interest cost $ $ $ Expected return on plan assets Total net periodic benefit cost $ $ $ The following table provides a reconciliation of benefit obligations, plan assets, and funded status related to the Company's qualified defined benefit pension plan for the years ended September 30, 2016 and September 30, 2015: Qualified Defined Benefit Pension Plan Year ended 2016 2015 (in thousands) Change in benefit obligation Beginning balance $ $ Interest cost Benefits paid Actuarial loss/(gain) Foreign currency exchange rate changes Ending balance $ $ Qualified Defined Benefit Pension Plan Year ended 2016 2015 (in thousands) Change in plan assets Beginning balance at fair value $ $ Actual return on plan assets Benefits paid Employer's contributions Foreign currency exchange rate changes Ending balance at fair value $ $ (Underfunded) overfunded status of the plan $ $ The accrued pension liability of $0.6 million is recorded in Other long-term liabilities in the Consolidated Balance Sheet. Because the plan is closed to new participants, the accumulated benefit obligation is equal to the projected benefit obligation, and totals $26.3 million and $24.1 million at September 30, 2016 and September 30, 2015, respectively. The amount recognized in other comprehensive loss related to the Company's qualified defined benefit pension plan, net of tax, for the year ended September 30, 2016 and September 30, 2015, is shown in the following table: Qualified Defined Benefit Pension Plan Year ended 2016 2015 (in thousands) Accumulated OCI Accumulated OCI at beginning of year $ $ New actuarial losses/(gains) Accumulated OCI at end of year $ $ Estimated amounts to be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2016 based on September 30, 2016 plan measurements are $0. The plan complies with the funding provisions of the UK Pensions Act 2004 and the Occupational Pension Schemes Regulations Act 2005. In fiscal year 2017, the Company expects to contribute $1.4 million to the plan. In addition, the Company expects to make the following pension plan contributions over the next 10 years: Plan Contributions (in thousands) Year ending September 30, 2017 $ 2018 2019 2020 — 2021 — 2022 through 2026 — Total $ Actuarial Assumptions The actuarial assumptions used to determine the benefit obligations at September 30, 2016 and September 30, 2015, and to determine the net periodic (benefit) cost for the year were as follows: Qualified Defined Benefit Pension Plan 2016 2015 Discount rate % % Expected return on plan assets % % Increases to non-GMP pensions in payment accrued pre 4/6/97 % % Increases to non-GMP pensions in payment accrued post 4/6/97 % % Rate of increases to deferred CPI linked benefits % % Rate of increases to deferred RPI linked benefits % % Mortality—100% for males and 105% for females of S2PxA "light" tables, projected in line with 2014 CMI projection model and 1.5% pa long-term rate of improvement. Estimated Future Benefit Payments The Company's pension plan expects to make the following benefit payments to participants over the next 10 years: Pension Benefits (in thousands) Year ending September 30, 2017 $ 2018 2019 2020 2021 2022 through 2026 Total $ Fair Value Measurements The investment policy and strategy of the plan assets, as established by the Trustees of the plan, strive to maximize the likelihood of achieving primary objectives of the investment policy established for the plan. The primary objectives are: 1) Funding—to ensure that the Plan is fully funded using assumptions that contain a modest margin for prudence. Where an actuarial valuation reveals a deficit, a recovery plan will be put in place which will take into account the financial covenant of the employer; 2) Stability—to have due regard to the likely level and volatility of required contributions when setting the Plan's investment strategy; and 3) Security—to ensure that the solvency position of the Plan is expected to improve. The Trustees will take into account the strength of employer's covenant when determining the expected improvement in the solvency position of the Plan. The assets are allocated among equity investments and fixed income securities. The assets are not rebalanced but the allocation between equities and bonds is reviewed on a periodic basis to ensure that the investments are appropriate to the Scheme's circumstances. The Trustees review the investment policy on an ongoing basis, to determine whether a change in the policy or asset allocation targets is necessary. The assets consisted of the following as of September 30, 2016: Actual Equity securities % Fixed-income securities % Cash equivalents % Total % The class of equity securities consists of one pooled fund whose strategy is to invest in approximately 70% UK company shares (domestic) and 30% international equity securities. The class of fixed-income securities consists of one pooled fund whose strategy is to invest in a limited number of government and corporate bonds. The expected long-term rate of return for the plan's total assets is based on the expected returns of each of the above categories, weighted based on the current target allocation for each class. The Trustees evaluate whether adjustments are needed based on historical returns to more accurately reflect expectations of future returns. The Company is required to present certain fair value disclosures related to its postretirement benefit plan assets, even though those assets are not included on the Company's Consolidated Balance Sheets. The following table presents the fair value of the assets of the Company's qualified defined benefit pension plan by asset category and their level within the fair value hierarchy, which has three levels based on reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant unobservable inputs. Balance as of September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Equity securities $ — $ $ — $ Fixed-income securities — — Cash equivalents — — Total $ $ $ — $ Balance as of September 30, 2016 Level 1 Level 2 Level 3 Total (in thousands) Equity securities $ — $ $ — $ Fixed-income securities — — Cash equivalents — — Total $ $ $ — $ Valuation Techniques The Company relies on pricing inputs from investment fund managers to value investments. The fund manager prices the underlying securities using independent external pricing sources. |
Guarantees
Guarantees | 12 Months Ended |
Sep. 30, 2016 | |
Guarantees | |
Guarantees | 15. Guarantees During the second quarter of 2015, the Company issued a guarantee to GoIndustry (the "Subsidiary") and the Trustees (the "Trustees") of the Scheme. Under the arrangement, the Company irrevocably and unconditionally (a) guarantees to the Trustees punctual performance by the Subsidiary of all its Guaranteed Obligations, defined as all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally in any capacity whatsoever) of the Company to make payments to the Scheme up to a maximum of 10 million British pounds, (b) undertakes with the Trustees that, whenever the Subsidiary does not pay any amount when due in respect of its Guaranteed Obligations, it must immediately on demand by the Trustees pay that amount as if it were the principal obligor; and (c) indemnifies the Trustees as an independent and primary obligation immediately on demand against any cost, charge, expense, loss or liability suffered or incurred by the Trustees if any payment obligation guaranteed by it is or becomes unenforceable, invalid or illegal; the amount of the cost, charge, expense, loss or liability under this indemnity will be equal to the amount the Trustees would otherwise have been entitled to recover on the basis of a guarantee. The guarantee is a continuing guarantee that will extend to the ultimate balance of all sums payable by the Company in respect of its Guaranteed Obligations. |
Business Realignment Expenses
Business Realignment Expenses | 12 Months Ended |
Sep. 30, 2016 | |
Business Realignment Expenses | |
Business Realignment Expenses | 16. Business Realignment Expenses On October 1, 2014, the Company announced that it had realigned its workforce in response to the new terms and scope of its DoD (third) Surplus Contract for non-rolling stock and to adjust for the efficiencies realized in its commercial business through ongoing integration efforts to support the future vision and growth of the Company. The business realignment included employee reductions across the organization. Business realignment expenses during the fiscal year ended September 30, 2014, included costs of $1.8 million in employee severance and benefit costs. In September 2015, the Company evaluated its business realignment effort which resulted in a net increase of $0.3 million in accrued expense primarily due to timing changes in commencement of the third DoD Surplus Contract and the delay in the wind-down of the NESA business. The table below sets forth the significant components and activity in the business realignment initiatives during the fiscal year ended September 30, 2016. (in thousands) Liability Business Cash Liability Employee severance and benefit costs for fiscal 2014 accrual $ $ $ $ — Employee severance and benefit costs for fiscal 2015 accrual ) — Total $ $ $ $ — The business realignment expenses are recorded in costs and expenses from operations in the Consolidated Statement of Operations, and in accrued expenses and other current liabilities on the accompanying Consolidated Balance Sheets as of September 30, 2015 and 2016. |
Termination of the Wal-Mart Agr
Termination of the Wal-Mart Agreement | 12 Months Ended |
Sep. 30, 2016 | |
Termination of the Wal-Mart Agreement | |
Termination of the Wal-Mart Agreement | 17. Termination of the Wal-Mart Agreement As a result of the acquisition of Jacobs Trading Company on October 1, 2011, the Company assumed the rights and obligations of Jacobs Trading Company under Seller's Master Merchandise Salvage Contract (the "Wal-Mart Agreement") dated May 13, 2011. On December 1, 2014, Wal-Mart provided the Company written notice (the "Termination Notice") terminating the Wal-Mart Agreement effective December 8, 2014. As a result of settlement negotiations following the delivery of the Termination Notice, both parties agreed to a settlement including a mutual release of their respective claims, and Wal-Mart agreed to pay $7.5 million in damages to the Company. The payment was received from Wal-Mart in February 2015. |
Business Disposition
Business Disposition | 12 Months Ended |
Sep. 30, 2016 | |
Business Disposition | |
Business Disposition | 18. Business Disposition On September 30, 2015, the Company sold certain assets related to the Jacobs Trading Company to Tanager Acquisitions, LLC (the "Buyer"). In connection with the disposition, the Buyer assumed certain liabilities related to the Jacobs Trading Company. The Buyer issued the Company a five-year interest bearing promissory note in the amount of $12.3 million. Of the $12.3 million, $11.3 million is recorded in Other assets, and $1 million in prepaid expenses and other current assets as of September 30, 2016. As a result of the disposition, during the three months ended September 30, 2015, the Company recorded a loss on the disposition of $8.0 million, determined as follows (in thousands): Carrying value of net assets disposed $ Carrying value of net liabilities disposed Buyer issued note Loss on sale of assets $ |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Sep. 30, 2016 | |
Legal Proceedings | |
Legal Proceedings | 19. Legal Proceedings Howard v. Liquidity Services, Inc., et al., Civ. No. 14-1183 (D. D. C. 2014). On July 14, 2014, Leonard Howard filed a putative class action complaint in the United States District Court for the District of Columbia (the "District Court") against the Company and its chief executive officer, chief financial officer, and chief accounting officer, on behalf of stockholders who purchased the Company's common stock between February 1, 2012, and May 7, 2014. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, misrepresenting the Company's growth initiative, growth potential, and financial and operating conditions, thereby artificially inflating its share price, and seeks unspecified compensatory damages and costs and expenses, including attorneys' and experts' fees. On October 14, 2014, the Court appointed Caisse de Dépôt et Placement du Québec and the Newport News Employees' Retirement Fund as co-lead plaintiffs. The plaintiffs filed an amended complaint on December 15, 2014, which alleges substantially similar claims but which does not name the chief accounting officer as a defendant. On March 2, 2015, the Company moved to dismiss the amended complaint for failure to state a claim or plead fraud with the requisite particularity. On March 31, 2016, the Court granted that motion in part and denied it in part. On May 16, 2016, the Company answered the amended complaint. Pursuant to the scheduling order in this action, document production shall be substantially complete by January 13, 2017, class certification shall be fully briefed by May 2, 2017, all fact discovery shall be completed by August 31, 2017, and expert discovery shall be completed by February 23, 2018. The Company believes the allegations in the amended complaint are without merit and cannot estimate a range of potential liability, if any, at this time. Billard v. Angrick, et al., Civ. No. 16-1612-BAH (D. D. C. 2016) and Slingerland v. Angrick, et al., Civ. No. 16-1725-BAH (D. D. C. 2016). Two of the Company's stockholders filed putative derivative actions on behalf of the Company against certain individuals who served on the Company's Board of Directors or as members of its management between 2012 and 2014. The cases are pending in the District Court. On June 8, 2016, Harold Slingerland filed a putative derivative complaint in the Superior Court for the District of Columbia (the "Superior Court"), purportedly on behalf of the Company against certain individuals who served on the Company's Board of Directors or as members of the Company's management between February 1, 2012, and May 7, 2014. The complaint asserted that, among other things, the defendants breached their fiduciary duties to the Company and its stockholders by supposedly causing or allowing the Company to make the same misstatements that are alleged in the putative class action complaint and exposing the Company to potentially significant costs and expenses in connection with defending that action. The complaint sought monetary damages from the defendants other than the Company, changes to the Company's corporate governance, disgorgement of any profits, benefits, or other compensation obtained by the director defendants, and an award of attorneys' fees, costs, and expenses for plaintiff's counsel. The plaintiff in this putative derivative action never served his complaint and, on August 3, 2016, the action was voluntarily dismissed. On August 8, 2016, Thomas Billard filed a putative derivative complaint in the District Court, which challenges conduct similar to that challenged in the Slingerland complaint filed in the Superior Court, and which asserts claims against the Company's Board and certain former Board members and members of management. The Billard complaint asserts derivative claims for breach of fiduciary, waste, unjust enrichment, and insider trading. On August 24, 2016, the District Court entered a briefing schedule pursuant to which the defendants shall move to dismiss the Billard complaint solely on forum non conveniens grounds based on a Delaware forum selection clause contained in the Company's bylaws, without prejudice to any other grounds for dismissal under Federal Rules of Civil Procedure 12(b) or 23.1. This motion is fully briefed and awaiting decision. On August 25, 2016, the Slingerland plaintiff filed a putative derivative complaint in the District Court that alleges substantially the same claims as raised in the Billard derivative complaint. On October 21, 2016, the Court entered an order staying the defendants' obligation to respond to this complaint to and including January 19, 2017. On September 23, 2016, the plaintiffs and defendants in the Billard and Slingerland actions filed a proposed stipulation and order that would consolidate the two actions into a "Consolidated Action" and that provides that defendants' motion to dismiss the Billard complaint on forum non conveniens grounds is deemed to have been made in the Consolidated Action. The proposed stipulation and order further provides that if defendants' motion to dismiss on forum non conveniens grounds is denied, the parties to the Consolidated Action shall submit a proposed order setting forth a deadline for the filing of a consolidated complaint and subsequent motions and deadline. The Company believes the allegations in both complaints are without merit and cannot estimate a range of potential liability, if any, at this time. |
Quarterly Results (Unaudited)
Quarterly Results (Unaudited) | 12 Months Ended |
Sep. 30, 2016 | |
Quarterly Results (Unaudited) | |
Quarterly Results (Unaudited) | 20. Quarterly Results (Unaudited) The following table sets forth for the eight most recent quarters the selected unaudited quarterly consolidated statement of operations data. The unaudited quarterly consolidated statement of operations data has been prepared on the same basis as the Company's audited consolidated financial statements and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of this data. Three months ended Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, (in thousands, except share and per share data) Revenue from operations $ $ $ $ $ $ $ $ (Loss) income before provision for income taxes from operations $ $ $ $ $ $ $ $ Net (loss) income from operations $ $ $ $ $ $ $ $ Basic (loss) earnings per common share $ $ $ $ $ $ $ $ Diluted (loss) earnings per common share $ $ $ $ $ $ $ $ Basic weighted average shares outstanding Diluted weighted average shares outstanding |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Sep. 30, 2016 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS Balance at Charged Reductions Balance at Deferred tax valuation allowance (deducted from net deferred tax assets) Year ended September 30, 2014 — Year ended September 30, 2015 — Year ended September 30, 2016 — Allowance for doubtful accounts (deducted from accounts receivable) Year ended September 30, 2014 Year ended September 30, 2015 Year ended September 30, 2016 — Inventory allowance (deducted from inventory) Year ended September 30, 2014 — Year ended September 30, 2015 ) Year ended September 30, 2016 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Certain prior period amounts have been reclassified to conform to the current year's presentation. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In addition, in the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. |
Business Combinations | Business Combinations The Company recognizes all of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs incurred in periods subsequent to the acquisition date are expensed when incurred. Subsequent changes to the purchase price ( i.e. , working capital adjustments) or other fair value adjustments determined during the measurement period are recorded as an adjustment to goodwill, with the exception of contingent consideration, which is recognized in the statement of operations in the period it is modified. All subsequent changes to a valuation allowance or uncertain tax position that relate to the acquired company and existed at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. All other changes in valuation allowances are recognized as a reduction or increase to income tax expense or as a direct adjustment to additional paid-in capital as required. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid securities purchased with an initial maturity of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Allowances are based on management's judgment, which considers historical experience and specific knowledge of accounts where collectability may not be probable. The Company makes provisions based on historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general economic conditions. |
Inventory | Inventory Inventory consists of property obtained for resale, generally through the online auction process, and is stated at the lower of cost or market. Cost is determined using the specific identification method. Charges for unsellable inventory, as well as for inventory written down to expected market price, are included in cost of goods sold in the period in which they have been determined to occur. As of September 30, 2016 and 2015, the Company's inventory reserve was approximately $3.4 million and $0.8 million, respectively. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost, and depreciated and amortized on a straight-line basis over the following estimated useful lives: Computers and purchased software One to five years Office equipment Three to five years Furniture and fixtures Five to seven years Leasehold improvements Shorter of lease term or useful life Buildings Thirty-nine years Land Not depreciated |
Intangible Assets | Intangible Assets Intangible assets primarily consist of contract acquisition costs, covenants not to compete, customer relationships and other intangible assets associated with acquisitions. Intangible assets are amortized using the straight-line method over their estimated useful lives, ranging from three to ten years. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, including definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. |
Goodwill | Goodwill Goodwill is reviewed for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or the loss of a significant customer. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more than likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further testing of goodwill assigned to the reporting unit is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company applies a two-step fair value-based test to assess goodwill for impairment. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step is then performed. The second step compares the carrying amount of the reporting unit's goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount, an impairment loss would be recorded in the statement of operations. During fiscal year 2016, the Company made a voluntary change in the method of applying an accounting principle to change the date of the annual goodwill impairment assessment. The date was changed from September 30 to July 1. As a result, the annual goodwill impairment assessment was performed as of July 1, 2016 for fiscal year 2016. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when all of the following criteria are met: • a buyer submits the winning bid in an auction and, as a result, evidence of an arrangement exists and the sale price has been determined; • the buyer has assumed the risks and rewards of ownership; and • collection is reasonably assured. Revenue is also evaluated to determine whether to report the gross proceeds as revenue (when we act as the principal in the arrangement) or report our net commissions and related fees as revenue (when we act as an agent). In arrangements in which the Company is deemed to be the primary obligor, bears physical and general inventory risk, and credit risk, the Company recognizes as revenue the gross proceeds from the sale, including buyer's premiums. The Company has evaluated its revenue recognition policy related to sales under its profit-sharing model and determined it is appropriate to account for these sales on a gross basis. In the Company's evaluation, the Company relied most heavily upon its status as primary obligor in the sales relationship and the fact that the Company has general inventory risk. In arrangements in which the Company acts as an agent or broker on a consignment basis, without taking physical or general inventory risk, revenue is recognized based on the sales commissions that are paid to the Company by the sellers for utilizing the Company's services; in this situation, sales commissions represent a percentage of the gross proceeds from the sale that the seller pays to the Company upon completion of the transaction. Such revenue as well as other fee revenue is presented as Fee Revenue in the Consolidated Statements of Operations. The Company collects and remits sales taxes on merchandise that it purchases and sells, and reports such amounts under the net method in its Consolidated Statements of Operations. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold includes the costs of purchasing and transporting property for auction as well as credit card transaction fees. The Company purchases the majority of its inventory at a percentage of the supplier's original acquisition cost under the Surplus Contract and certain commercial contracts, at a percentage of the supplier's last retail price under certain commercial contracts, and at a fixed price per pound that varies depending on the type of the inventory purchased under the Scrap Contract. Title for the inventory passes to the Company at the time of purchase and the Company bears the risks and rewards of ownership. The Company does not have title to assets sold on behalf of its commercial or government customers when it receives only sales commission revenue and, as such, recognizes no cost of goods sold associated with those sales. Cost of goods sold also includes shipping and handling costs. |
Risk Associated with Certain Concentrations | Risk Associated with Certain Concentrations The Company does not perform credit evaluations for the majority of its buyers. However, substantially all sales are recorded subsequent to payment authorization being received. As a result, the Company is not subject to significant collection risk, as most goods are not shipped before payment is received. For consignment sales transactions, funds are collected from buyers and are held by the Company on the sellers' behalf. The funds are included in cash and cash equivalents in the consolidated financial statements. The Company releases the funds to the seller, less the Company's commission and other fees due, after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business. The amount of cash held on behalf of the sellers is recorded as customer payables in the accompanying Consolidated Balance Sheets. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents in banks over FDIC limits, and accounts receivable. The Company deposits its cash with financial institutions that the Company considers to be of high credit quality. The Company has two material contracts with the DoD under which it acquires, manages and sells government property. Revenue from the current Surplus Contract accounted for 26.8%, 24.7%, and 31.0% of the Company's consolidated revenue for the fiscal years ended September 30, 2014, 2015, and 2016, respectively. Revenue from the Scrap contract accounted for approximately 14.4%, 15.3% and 10.2% of our total revenue for the fiscal years ended September 30, 2014, 2015 and 2016, respectively. Additionally, the Company has a contract with a commercial client under which it acquires and sells commercial merchandise. Revenue generated from the arrangement represented approximately 9.7% of revenue during fiscal year 2016. |
Income Taxes | Income Taxes The Company accounts for income taxes using an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statement and income tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which the taxes are expected to be paid or recovered. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such determination, we consider all available positive and negative evidence to estimate whether future taxable income will be generated to permit use of the existing deferred tax asset. The resulting net tax asset reflects management's estimate of the amount that will be realized. The Company applies the authoritative guidance related to uncertainty in income taxes. ASC 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. We record unrecognized tax benefits as a reduction to our deferred tax asset for our net operating loss carryforward. We have reduced our net operating loss carryforward by $0.7 million for unrecognized tax benefits related to federal and state exposures. |
Stock-Based Compensation | Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant. The fair value of stock options and stock appreciation rights is determined using the Black-Scholes option-pricing model. The fair value of restricted stock awards is based on the closing price of the Company's common stock on the date of grant. The determination of the fair value of the Company's stock option awards and stock appreciation rights is based on a variety of factors including, but not limited to, the Company's common stock price, expected stock price volatility over the expected life of awards, and actual and projected exercise behavior. Additionally, the Company has estimated forfeitures for share-based awards at the dates of grant based on historical experience, adjusted for future expectation. The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates. The Company issues stock options, restricted stock, and stock appreciation rights where restrictions lapse upon either the passage of time (service vesting), achievement of performance targets, or some combination thereof. For those awards with only service vesting conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For awards with both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. For stock options and stock awards that contain performance vesting conditions, the Company excludes these awards from diluted earnings per share computations until the contingency is met as of the end of that reporting period. The Company presents the cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) as a financing activity with a corresponding operating cash outflow in the Consolidated Statements of Cash Flows. |
Advertising Costs | Advertising Costs Advertising expenditures are expensed as incurred. Advertising costs charged to expense were $7.2 million, $5.3 million, and $6.0 million for the years ended September 30, 2014, 2015 and 2016, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Cash and cash equivalents, accounts receivable, accounts payable, profit-sharing distributions payable, and customer payables reported in the Consolidated Balance Sheets approximate their fair values. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company's foreign subsidiaries is primarily the local currency. The translation of the subsidiary's financial statements into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive (loss) income, a separate component of stockholders' equity. Realized foreign currency transaction gains and losses for 2014, 2015 and 2016 are included in interest and other income (expense), net in the Consolidated Statements of Operations. Accumulated Other Comprehensive Income (loss) (Net of taxes, amount in dollars) The following table shows the changes in accumulated other comprehensive income (loss), net of taxes (in thousands): Foreign Currency Net Change Pension Accumulated Other Balance at 09/30/13 Current-period other comprehensive (loss) income Balance at 09/30/14 Current-period other comprehensive (loss) income Balance at 09/30/15 Current-period other comprehensive (loss) income Balance at 09/30/16 |
Earnings per Share | Earnings per Share The Company calculates net income (loss) per share in accordance with FASB Accounting Standards Codification ("ASC") Topic 260 Earnings Per Share ("ASC 260"). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share ("EPS") reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and unvested restricted stock awards. The dilutive effect of unexercised stock options and unvested restricted stock awards was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded in additional paid-in capital when stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company's common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are antidilutive. The Company has not included the following stock options in the calculation of diluted income per share because the option exercise prices were greater than the average market prices for the applicable periods: (a) for the fiscal year ended September 30, 2016 - 1,284,689 options; (b) for the fiscal year ended September 30, 2015 - 1,256,345 options; and (c) for the fiscal year ended September 30, 2014 - 836,303 options. For the twelve months ended September 30, 2016 and 2015, the basic and diluted weighted average common shares were the same because the inclusion of dilutive securities would have been anti-dilutive. Diluted net income attributable to common stockholders per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. See Note 12 for outstanding stock options and unvested restricted stock, all of which are anti-dilutive as of September 30, 2016. The following summarizes the potential outstanding common stock of the Company as of the dates set forth below: September 30, 2016 2015 2014 (amounts in thousands except Weighted average shares calculation: Basic weighted average shares outstanding Treasury stock effect of options and restricted stock — — Diluted weighted average common shares outstanding Net (loss) income $ $ $ Basic (loss) earnings per common share $ ) $ $ Diluted (loss) earnings per common share $ $ $ |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements—Going Concern , which requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern and to provide disclosures in certain circumstances. The new guidance was issued to reduce diversity in the timing and content of footnote disclosures. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2016. The Company expects to adopt this standard in its fiscal year ending September 30, 2018 and does not expect the adoption of this guidance to have a material effect upon its consolidated financial statements. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers , which supersedes most existing revenue recognition guidance under GAAP. The new standard will change the way the Company recognizes revenue and significantly expand the disclosure requirements for revenue arrangements. In July 2015, the FASB delayed the effective date of the new standard such that the new standard will be effective for the Company beginning on October 1, 2018, and may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new and existing arrangements with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to retained earnings at the effective date for existing arrangements with remaining performance obligations. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company's consolidated financial statements and related disclosures. In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-05, " Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . ASU 2015-05 provides guidance regarding whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the software license element of the arrangement must be accounted for in a manner consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement must be accounted for as a service contract. ASU 2015-05 does not change the accounting for service contracts. ASU 2015-05 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company will apply the amendments in this Update beginning in fiscal year 2017. In November, 2015, the FASB issued Accounting Standards Update ("ASU") 2015-17, " Income Taxes—Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. For public entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted for all entities as of the beginning of an interim or annual period. The amendments in the Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company has early adopted and chosen to apply the amendments in this Update prospectively effective to the fiscal year 2016. In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases . ASU 2016-02 will change the way the Company recognizes its leased assets. ASU 2016-02 will require organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities representing the rights and obligations created by those leases. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The standard will be effective for the Company beginning on October 1, 2019. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company's consolidated financial statements and related disclosures. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of property and equipment | Computers and purchased software One to five years Office equipment Three to five years Furniture and fixtures Five to seven years Leasehold improvements Shorter of lease term or useful life Buildings Thirty-nine years Land Not depreciated |
Schedule of changes in accumulated other comprehensive income (loss), net of taxes | The following table shows the changes in accumulated other comprehensive income (loss), net of taxes (in thousands): Foreign Currency Net Change Pension Accumulated Other Balance at 09/30/13 Current-period other comprehensive (loss) income Balance at 09/30/14 Current-period other comprehensive (loss) income Balance at 09/30/15 Current-period other comprehensive (loss) income Balance at 09/30/16 |
Summary of the basic and diluted income per share | September 30, 2016 2015 2014 (amounts in thousands except Weighted average shares calculation: Basic weighted average shares outstanding Treasury stock effect of options and restricted stock — — Diluted weighted average common shares outstanding Net (loss) income $ $ $ Basic (loss) earnings per common share $ $ $ Diluted (loss) earnings per common share $ $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Schedule of property and equipment, including equipment under capital lease obligations | September 30, 2016 2015 (in thousands) Computers and purchased software $ $ Office/Operational equipment Furniture and fixtures Vehicles Leasehold improvements Building Land Construction in progress Total property and equipment Less: Accumulated depreciation and amortization Total property and equipment, net $ $ |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Goodwill. | |
Summary of goodwill activity | Goodwill (in thousands) Balance at September 30, 2014 $ Impairment charge Business disposition Translation adjustments Balance at September 30, 2015 Impairment charge Translation adjustments Balance at September 30, 2016 $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Intangible Assets | |
Schedule of intangible assets | September 30, 2016 September 30, 2015 Useful Gross Accumulated Net Gross Accumulated Net (dollars in thousands) Contract intangibles $ $ $ $ $ — $ Brand and technology 3 - 5 Covenants not to compete 3 - 5 Patent and trademarks 3 - 10 Total intangible assets, net $ $ $ $ $ $ |
Schedule of future expected amortization of intangible assets | Years ending September 30, Amortization (in thousands) 2017 $ 2018 2019 2020 2021 and after Total $ |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Commitments | |
Schedule of future minimum payments under leases | Years ending September 30, Operating (in thousands) 2017 $ 2018 2019 2020 2021 2022 Total future minimum lease payments $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Income Taxes | |
Schedule of components of provision for income taxes of continuing operations | Year ended September 30, 2016 2015 2014 (in thousands) Current tax provision (benefit): U.S. Federal $ — $ $ State Foreign Deferred tax (benefit) expense: U.S. Federal State Foreign Total provision $ $ $ |
Schedule of significant components of deferred tax assets and liabilities | September 30, 2016 2015 (in thousands) Deferred tax assets: Net operating losses—Foreign $ $ Net operating losses—U.S. Accrued vacation and bonus Inventory capitalization Inventory reserves Allowance for doubtful accounts Stock compensation expense Amortization of intangibles Amortization of goodwill — Pension liability — Other Total deferred tax assets before valuation allowance Less: valuation allowance Net deferred tax assets Deferred tax liabilities: Amortization of goodwill Depreciation Pension liability — Total deferred tax liabilities $ $ Net deferred taxes $ $ |
Schedule of reconciliation of U.S. federal statutory rate to effective rate for continuing operations | Year ended 2016 2015 2014 U.S. statutory rate % % % Permanent items State taxes Net foreign rate differential Unrecognized tax benefits Change in valuation allowance ) Provision for income taxes % % % |
Schedule of reconciliation unrecognized tax benefits | Year ended 2016 2015 2014 Beginning balance at October 1 $ — — — Additions based on positions related to the current year — — — Additions for tax positions of prior years — — Reductions for tax positions of prior years — — — Settlements — — — Balance at September 30 $ — — |
Equity Transactions (Tables)
Equity Transactions (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Equity Transactions | |
Summary of share repurchase activity | Fiscal Year Period Total Number Average Price Total Cash Approximate Dollar 2013 — — — 2014 $ 2015 — — — 2016 — — — $ (1) On February 5, 2014, our Board of Directors approved an additional $19.0 million for the share repurchase program. On May 5, 2016, the Company's Board of Directors approved the repurchase of an additional $5.0 million in shares raising the current amount approved for repurchase, that may yet be expended up to $10.1 million. |
Summary of stock option activity | Options Weighted- Options outstanding at September 30, 2013 $ Options granted Options exercised Options canceled Options outstanding at September 30, 2014 Options granted Options exercised Options canceled Options outstanding at September 30, 2015 Options granted Options exercised Options canceled Options outstanding at September 30, 2016 Options exercisable at September 30, 2016 |
Summary of information about options outstanding and exercisable | The following table summarizes information about options outstanding at September 30, 2016: Options Outstanding Range of Exercise Price Number Weighted- Weighted- $5.53 - $11.24 $ $11.25 - $46.72 The following table summarizes information about options exercisable at September 30, 2016: Options Exercisable Range of Exercise Price Number Weighted- Weighted- $5.53 - $11.24 $ $11.25 - $46.72 |
Summary of information about assumptions used in valuing options granted | Year ended September 30 2016 2015 2014 Dividend yield — — — Expected volatility 51.5% - 58.6% 71.9% - 77.9% Risk-free interest rate 0.5% - 1.5% 0.26% - 1.4% 0.1% - 1.2% Expected forfeiture rate 22.2% - 22.8% |
Summary of restricted share activity | Restricted Weighted- Unvested restricted shares at September 30, 2013 $ Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2014 Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2015 Restricted shares granted Restricted shares vested Restricted shares canceled Unvested restricted shares at September 30, 2016 |
Defined Benefit Pension Plan (T
Defined Benefit Pension Plan (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Defined Benefit Pension Plan | |
Schedule of net periodic benefit cost recognized | Year ended 2016 2015 2014 (in thousands) Interest cost $ $ $ Expected return on plan assets Total net periodic benefit cost $ $ $ |
Schedule of reconciliation of benefit obligations, plan assets, and funded status related to qualified defined benefit pension plan | Year ended 2016 2015 (in thousands) Change in benefit obligation Beginning balance $ $ Interest cost Benefits paid Actuarial loss/(gain) Foreign currency exchange rate changes Ending balance $ $ Year ended 2016 2015 (in thousands) Change in plan assets Beginning balance at fair value $ $ Actual return on plan assets Benefits paid Employer's contributions Foreign currency exchange rate changes Ending balance at fair value $ $ (Underfunded) overfunded status of the plan $ $ |
Schedule of amount recognized in other comprehensive loss related to qualified defined benefit pension plan, net of tax | Year ended 2016 2015 (in thousands) Accumulated OCI Accumulated OCI at beginning of year $ $ New actuarial losses/(gains) Accumulated OCI at end of year $ $ |
Schedule of expected pension plan contributions | Plan Contributions (in thousands) Year ending September 30, 2017 $ 2018 2019 2020 — 2021 — 2022 through 2026 — Total $ |
Schedule of actuarial assumptions used to determine (benefit) obligations and net periodic benefit cost | 2016 2015 Discount rate % % Expected return on plan assets % % Increases to non-GMP pensions in payment accrued pre 4/6/97 % % Increases to non-GMP pensions in payment accrued post 4/6/97 % % Rate of increases to deferred CPI linked benefits % % Rate of increases to deferred RPI linked benefits % % |
Schedule of expected benefit payments to participants | Pension Benefits (in thousands) Year ending September 30, 2017 $ 2018 2019 2020 2021 2022 through 2026 Total $ |
Schedule of allocation of plan assets | Actual Equity securities % Fixed-income securities % Cash equivalents % Total % |
Schedule of fair value of assets of qualified defined benefit pension plan by asset category and level within fair value hierarchy | Balance as of September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Equity securities $ — $ $ — $ Fixed-income securities — — Cash equivalents — — Total $ $ $ — $ Balance as of September 30, 2016 Level 1 Level 2 Level 3 Total (in thousands) Equity securities $ — $ $ — $ Fixed-income securities — — Cash equivalents — — Total $ $ $ — $ |
Business Realignment Expenses (
Business Realignment Expenses (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Business Realignment Expenses | |
Schedule of significant components and activity in business realignment initiatives | (in thousands) Liability Business Cash Liability Employee severance and benefit costs for fiscal 2014 accrual $ $ $ $ — Employee severance and benefit costs for fiscal 2015 accrual — Total $ $ $ $ — |
Business Disposition (Tables)
Business Disposition (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Business Disposition | |
Summary of business disposition | As a result of the disposition, during the three months ended September 30, 2015, the Company recorded a loss on the disposition of $8.0 million, determined as follows (in thousands): Carrying value of net assets disposed $ Carrying value of net liabilities disposed Buyer issued note Loss on sale of assets $ |
Quarterly Results (Unaudited) (
Quarterly Results (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Quarterly Results (Unaudited) | |
Schedule of unaudited quarterly consolidated statement of operations data | Three months ended Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, (in thousands, except share and per share data) Revenue from operations $ $ $ $ $ $ $ $ (Loss) income before provision for income taxes from operations $ $ $ $ $ ) $ $ $ Net (loss) income from operations $ $ $ $ $ ) $ $ $ Basic (loss) earnings per common share $ $ $ $ $ ) $ $ $ Diluted (loss) earnings per common share $ $ $ $ $ ) $ $ $ Basic weighted average shares outstanding Diluted weighted average shares outstanding |
Organization (Details)
Organization (Details) | 12 Months Ended |
Sep. 30, 2016segmentcategoryclient | |
Organization | |
Minimum number of product categories offered (in categories) | category | 500 |
Number of clients | client | 8,000 |
Reportable segments (in segments) | 1 |
Operating segments (in segments) | 5 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Inventory | ||
Inventory reserve | $ 3.4 | $ 0.8 |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - PP&E (Details) | 12 Months Ended |
Sep. 30, 2016 | |
Computers and purchased software | Minimum | |
Property and Equipment | |
Estimated useful life | 1 year |
Computers and purchased software | Maximum | |
Property and Equipment | |
Estimated useful life | 5 years |
Office equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 3 years |
Office equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 5 years |
Furniture and fixtures | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Furniture and fixtures | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Buildings | |
Property and Equipment | |
Estimated useful life | 39 years |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Intangible Assets (Details) | 12 Months Ended |
Sep. 30, 2016 | |
Minimum | |
Intangible Assets | |
Useful life | 3 years |
Maximum | |
Intangible Assets | |
Useful life | 10 years |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Concentration (Details) - contract | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Maximum | |||
Risk Associated with Certain Concentrations | |||
Term for release of funds to the seller | 30 days | ||
Revenue | Contract with commercial client | |||
Risk Associated with Certain Concentrations | |||
Concentration Risk, Percentage | 9.70% | ||
U.S. Department of Defense | |||
Risk Associated with Certain Concentrations | |||
Number of Contracts | 2 | ||
U.S. Department of Defense | Revenue | Surplus Contract | |||
Risk Associated with Certain Concentrations | |||
Concentration Risk, Percentage | 31.00% | 24.70% | 26.80% |
U.S. Department of Defense | Revenue | Scrap Contract | |||
Risk Associated with Certain Concentrations | |||
Concentration Risk, Percentage | 10.20% | 15.30% | 14.40% |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Income Taxes (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Summary of Significant Accounting Policies | |
Unrecognized tax benefits related to federal and state exposures | $ 725 |
Summary of Significant Accoun47
Summary of Significant Accounting Policies - Advertising Costs and AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Advertising Costs | |||
Advertising costs | $ 6,000 | $ 5,300 | $ 7,200 |
Accumulated Other Comprehensive Income (loss) | |||
Balance | 216,002 | 316,983 | 314,879 |
Current-period other comprehensive (loss) income | (2,945) | (2,175) | (3,969) |
Balance | 162,611 | 216,002 | 316,983 |
Foreign Currency Translation Adjustments | |||
Accumulated Other Comprehensive Income (loss) | |||
Balance | (6,947) | (3,671) | (629) |
Current-period other comprehensive (loss) income | (398) | (3,276) | (3,042) |
Balance | (7,345) | (6,947) | (3,671) |
Net Change Pension and Other Post Retirement Benefit Plans | |||
Accumulated Other Comprehensive Income (loss) | |||
Balance | 1,321 | 220 | 1,147 |
Current-period other comprehensive (loss) income | (2,547) | 1,101 | (927) |
Balance | (1,226) | 1,321 | 220 |
Accumulated Other Comprehensive Loss | |||
Accumulated Other Comprehensive Income (loss) | |||
Balance | (5,626) | (3,451) | 518 |
Current-period other comprehensive (loss) income | (2,945) | (2,175) | (3,969) |
Balance | $ (8,571) | $ (5,626) | $ (3,451) |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Earnings Per Share (Details) - shares | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Options | |||
Earnings per Share | |||
Anti-dilutive securities | 1,284,689 | 1,256,345 | 836,303 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies - Weighted Average Shares (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Weighted average shares calculation: | |||||||||||
Basic weighted average shares outstanding | 30,740,977 | 30,726,554 | 30,594,940 | 30,490,670 | 30,026,223 | 30,011,121 | 29,988,324 | 29,926,273 | 30,638,163 | 29,987,985 | 31,243,932 |
Treasury stock effect of options and restricted stock (in shares) | 151,369 | ||||||||||
Diluted weighted average common shares outstanding | 30,740,977 | 30,726,554 | 30,594,940 | 30,490,670 | 30,026,223 | 30,011,121 | 29,988,324 | 29,926,273 | 30,638,163 | 29,987,985 | 31,395,301 |
Net (loss) income | $ (53,755) | $ (124) | $ (850) | $ (5,197) | $ (43,695) | $ 1,615 | $ 1,381 | $ (64,116) | $ (59,926) | $ (104,815) | $ 30,390 |
Basic (loss) earnings per common share | $ (1.75) | $ 0 | $ (0.03) | $ (0.17) | $ (1.46) | $ 0.05 | $ 0.05 | $ (2.14) | $ (1.96) | $ (3.50) | $ 0.97 |
Diluted (loss) earnings per common share | $ (1.75) | $ 0 | $ (0.03) | $ (0.17) | $ (1.46) | $ 0.05 | $ 0.05 | $ (2.14) | $ (1.96) | $ (3.50) | $ 0.97 |
Significant Contracts (Details)
Significant Contracts (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2016Option | Sep. 30, 2016USD ($)Option | Sep. 30, 2015USD ($) | Sep. 30, 2014 | |
Significant Contracts | ||||
Liability for inventory included in accrued expenses and other current liabilities | $ | $ 45,133 | $ 27,350 | ||
Non-rolling stock | ||||
Significant Contracts | ||||
Usable surplus property to be purchased as a fixed percentage of DoD's original acquisition value | 1.80% | |||
Surplus Contract | ||||
Significant Contracts | ||||
Base term of follow-on contract extension | 2 years | |||
Number of renewal options under follow-on contract | Option | 4 | |||
Term of each renewal option under follow-on contract | 1 year | |||
Surplus Contract | Non-rolling stock | ||||
Significant Contracts | ||||
Usable surplus property to be purchased as a fixed percentage of DoD's original acquisition value | 4.35% | |||
Profits from resale of the property (as a percent) | 100.00% | |||
Surplus Contract | U.S. Department of Defense | ||||
Significant Contracts | ||||
Liability for inventory included in accrued expenses and other current liabilities | $ | $ 16,100 | $ 2,000 | ||
Surplus Contract | Revenue | U.S. Department of Defense | ||||
Significant Contracts | ||||
Concentration risk (as a percent) | 31.00% | 24.70% | 26.80% | |
Scrap Contract | ||||
Significant Contracts | ||||
Term of contract | 3 years | |||
Number of renewal options | Option | 2 | |||
Term of renewal options | 1 year | |||
Adjusted percentage of profit sharing distribution | 64.50% | |||
Scrap Contract | Revenue | U.S. Department of Defense | ||||
Significant Contracts | ||||
Concentration risk (as a percent) | 10.20% | 15.30% | 14.40% |
National Electronic Service A51
National Electronic Service Association (NESA) Acquisition (Details) - NESA - USD ($) | Nov. 01, 2012 | Sep. 30, 2014 | Sep. 30, 2016 | Jun. 30, 2014 |
National Electronic Service Association (NESA) Acquisition | ||||
Upfront cash payment | $ 18,300,000 | |||
Estimated fair value of earn-out | $ 18,000,000 | $ 0 | ||
Additional liability accrued (liability reversed) | $ (18,600,000) | |||
Contractual Obligation | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property and Equipment | |||
Total property and equipment | $ 45,697 | $ 41,666 | |
Less: accumulated depreciation and amortization | (31,321) | (28,310) | |
Total property and equipment, net | 14,376 | 13,356 | |
Depreciation and amortization | 5,100 | 6,100 | $ 5,600 |
Computers and purchased software | |||
Property and Equipment | |||
Total property and equipment | 24,584 | 24,140 | |
Office/Operational equipment | |||
Property and Equipment | |||
Total property and equipment | 6,700 | 6,922 | |
Furniture and fixtures | |||
Property and Equipment | |||
Total property and equipment | 1,356 | 1,260 | |
Vehicles | |||
Property and Equipment | |||
Total property and equipment | 981 | 1,015 | |
Leasehold improvements | |||
Property and Equipment | |||
Total property and equipment | 5,139 | 5,301 | |
Buildings | |||
Property and Equipment | |||
Total property and equipment | 2,257 | 1,849 | |
Land | |||
Property and Equipment | |||
Total property and equipment | 754 | 754 | |
Construction in progress | |||
Property and Equipment | |||
Total property and equipment | $ 3,926 | $ 425 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | Jul. 01, 2016item | Dec. 31, 2014item | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($)item |
Goodwill. | |||||||
Number of reporting units exceeding estimated fair values | item | 1 | 2 | 2 | ||||
Number of reporting Units | item | 5 | 5 | 2 | ||||
Goodwill impairment losses | $ 136,200 | $ 136,200 | |||||
Goodwill | |||||||
Balance at the beginning of the period | $ 209,656 | $ 64,073 | 209,656 | ||||
Impairment charge | $ (19,000) | (51,200) | $ (85,100) | (18,998) | (136,248) | ||
Business disposition | (6,733) | ||||||
Translation adjustments | 59 | (2,602) | |||||
Balance at the end of the period | $ 45,134 | $ 64,073 | $ 45,134 | $ 64,073 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Intangible Assets | ||
Gross Carrying Amount | $ 8,769,000 | $ 8,741,000 |
Accumulated Amortization | (6,119,000) | (4,690,000) |
Total | $ 2,650,000 | 4,051,000 |
Minimum | ||
Intangible Assets | ||
Useful life | 3 years | |
Maximum | ||
Intangible Assets | ||
Useful life | 10 years | |
Contract intangibles | ||
Intangible Assets | ||
Useful life | 10 years | |
Gross Carrying Amount | $ 1,500,000 | 1,500,000 |
Accumulated Amortization | (150,000) | |
Total | 1,350,000 | 1,500,000 |
Brand and technology | ||
Intangible Assets | ||
Gross Carrying Amount | 5,749,000 | 5,749,000 |
Accumulated Amortization | (5,018,000) | (3,926,000) |
Total | $ 731,000 | 1,823,000 |
Brand and technology | Minimum | ||
Intangible Assets | ||
Useful life | 3 years | |
Brand and technology | Maximum | ||
Intangible Assets | ||
Useful life | 5 years | |
Covenants not to compete | ||
Intangible Assets | ||
Gross Carrying Amount | $ 700,000 | 700,000 |
Accumulated Amortization | (533,000) | (433,000) |
Total | $ 167,000 | 267,000 |
Covenants not to compete | Minimum | ||
Intangible Assets | ||
Useful life | 3 years | |
Covenants not to compete | Maximum | ||
Intangible Assets | ||
Useful life | 5 years | |
Patent and trademarks | ||
Intangible Assets | ||
Gross Carrying Amount | $ 820,000 | 792,000 |
Accumulated Amortization | (418,000) | (331,000) |
Total | $ 402,000 | 461,000 |
Patent and trademarks | Minimum | ||
Intangible Assets | ||
Useful life | 3 years | |
Patent and trademarks | Maximum | ||
Intangible Assets | ||
Useful life | 10 years | |
Contract Termination | ||
Intangible Assets | ||
Write off of intangible asset | 10,300,000 | |
Total | $ 0 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Future expected amortization of intangible assets | |||
2,017 | $ 1,073 | ||
2,018 | 281 | ||
2,019 | 207 | ||
2,020 | 957 | ||
2021 and after | 132 | ||
Total | 2,650 | $ 4,051 | |
Amortization expense | $ 1,400 | $ 3,100 | $ 11,000 |
Debt (Details)
Debt (Details) - Senior Credit Facility - USD ($) $ in Thousands | May 01, 2015 | Mar. 25, 2016 | Sep. 30, 2015 | Sep. 30, 2010 |
Debt | ||||
Maximum borrowings | $ 75,000 | |||
Amount outstanding | $ 0 | $ 0 | ||
Available borrowing capacity | $ 37,500 | |||
Credit facility terminated | $ 75,000 | |||
LIBOR | ||||
Debt | ||||
Percentage added to reference rate | 1.25% | |||
Interest rate at period end (as a percent) | 1.451% | |||
Issued letters of credit | ||||
Debt | ||||
Amount outstanding | $ 13,900 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments | |||
Deferred rent charges included in other long-term liabilities | $ 1,000 | $ 1,200 | |
Future minimum payments under the leases | |||
2,017 | 9,406 | ||
2,018 | 8,645 | ||
2,019 | 6,607 | ||
2,020 | 3,434 | ||
2,021 | 1,639 | ||
2,022 | 49 | ||
Total future minimum lease payments | 29,780 | ||
Rent expense | $ 11,500 | $ 12,500 | $ 12,100 |
401(k) Benefit Plan (Details)
401(k) Benefit Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
401(k) Benefit Plan | |||
Amount contributed and recorded expense under the 401(k) Benefit Plan | $ 1.7 | $ 2.4 | $ 2.7 |
Income Taxes - Provision (Detai
Income Taxes - Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Current tax provision (benefit): | |||
U.S. Federal | $ (32,116) | $ 14,328 | |
State | $ 672 | (1,375) | 2,613 |
Foreign | 176 | 203 | 1,888 |
Current income tax expense | 848 | (33,288) | 18,829 |
Deferred tax (benefit) expense: | |||
U.S. Federal | 25,338 | 326 | (2,886) |
State | 3,890 | (4,422) | (526) |
Foreign | (3,051) | (2,187) | 4,240 |
Total deferred tax (benefit) expense | 26,177 | (6,283) | 828 |
Total provision | $ 27,025 | $ (39,571) | $ 19,657 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Deferred tax assets: | ||
Net operating losses-Foreign | $ 8,964 | $ 8,586 |
Net operating losses-U.S. | 17,086 | 11,208 |
Accrued vacation and bonus | 1,305 | 4,251 |
Inventory capitalization | 1,906 | 2,817 |
Inventory Reserves | 1,311 | 299 |
Allowance for doubtful accounts | 120 | 83 |
Stock compensation expense | 8,105 | 7,135 |
Amortization of intangibles | 2,286 | 2,808 |
Amortization of goodwill | 1,021 | |
Pension liability | 133 | |
Other | 3,699 | 530 |
Total deferred tax assets before valuation allowance | 45,936 | 37,717 |
Less: valuation allowance | (44,257) | (8,474) |
Net deferred tax assets | 1,679 | 29,243 |
Deferred tax liabilities: | ||
Amortization of goodwill | 9,444 | 14,760 |
Depreciation | 658 | 472 |
Pension liability | 112 | |
Total deferred tax liabilities | 10,102 | 15,344 |
Net deferred taxes | (8,423) | |
Net deferred taxes | 13,899 | |
Other liabilities | ||
Deferred tax liabilities: | ||
Net non-current deferred tax liability | 9,400 | 2,000 |
Prepaid And Deferred Taxes | ||
Deferred tax liabilities: | ||
Net current deferred tax asset | 10,100 | |
Deferred Taxes And Other Assets | ||
Deferred tax liabilities: | ||
Net non-current deferred tax asset | $ 1,000 | $ 5,900 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of the U.S. federal statutory rate to the effective rate for continuing operations | |||
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Permanent items (as a percent) | (4.20%) | (6.30%) | 0.50% |
State taxes (as a percent) | 1.90% | 2.60% | 2.70% |
Net foreign rate differential (as a percent) | (3.80%) | (3.00%) | (2.50%) |
Unrecognized tax benefits | (2.20%) | ||
Changes in valuation allowance (as a percent) | (108.80%) | (0.90%) | 3.60% |
Provision for income taxes (as a percent) | (82.10%) | 27.40% | 39.30% |
Income Taxes - CarryForwards (D
Income Taxes - CarryForwards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net operating loss (NOL) carryforwards | |||
Deferred tax assets related to available federal and state NOL carryforwards | $ 35,800 | $ 28,300 | |
Deferred tax assets related to available foreign NOL carryforwards | 8,964 | 8,586 | |
Valuation allowance | 44,257 | 8,474 | |
Valuation allowance charge | 35,800 | ||
Undistributed foreign earnings | 10,700 | ||
Cash and cash equivalents held overseas on which taxes would be incurred upon repatriation | 21,500 | $ 23,600 | |
Reconciliation of unrecognized tax benefits | |||
Additions for tax positions of prior years | $ 725 | ||
Ending balance | 725 | ||
Uncertain tax positions | |||
Unrecognized tax benefits related to federal and state exposures | $ 725 | 725 | |
Foreign | |||
Net operating loss (NOL) carryforwards | |||
NOLs subject to expiration | $ 300 |
Equity Transactions - 2006 Plan
Equity Transactions - 2006 Plan (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||||
Feb. 28, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Jan. 09, 2015 | Sep. 30, 2009 | Dec. 02, 2005 | |
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Shares available for issuance | 10,000,000 | ||||||
Remaining shares reserved for issuance | 456,424 | 772,227 | |||||
Forfeited (in shares) | 214,014 | ||||||
Increase in shares available for issuance | 3,000,000 | ||||||
Reserve shares counted per share granted from fungible share pool (in shares) | 1,500,000 | ||||||
Options canceled (in shares) | 92,499 | ||||||
Stock-based compensation | $ 12.3 | $ 12.4 | $ 12.6 | ||||
Unvested awards | |||||||
Costs related to unvested awards, not yet recognized | $ 17.1 | ||||||
Weighted average vesting period for recognition of cost related to unvested awards | 34 months 3 days | ||||||
Minimum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Shares and options vesting period | 1 year | ||||||
Maximum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Shares and options vesting period | 4 years | ||||||
Options | Performance-based | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Shares and options vesting period | 12 months | ||||||
Options | Performance-based | Minimum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Actual payout as a percent of employee target payout, based upon the entity's actual performance during the previous twelve months | 0.00% | ||||||
Options | Performance-based | Maximum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Actual payout as a percent of employee target payout, based upon the entity's actual performance during the previous twelve months | 100.00% | ||||||
Incentive Stock Options [Member] | Holder of at least 10% of common stock | Minimum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Exercise price of stock option as a percentage of the fair market value of the common stock on the date of grant | 110.00% | ||||||
Employee and director options | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Options granted (in shares) | 583,228 | 310,177 | 437,755 | ||||
Options granted, exercise prices (in dollars per share) | $ 6.68 | $ 9.92 | $ 22.41 | ||||
Options forfeited (in shares) | 346,133 | 288,572 | 181,094 | ||||
Employee and director options | Minimum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Exercise price of stock option as a percentage of the fair market value of the common stock on the date of grant | 100.00% | ||||||
Employee and director options | Maximum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Term of stock option | 10 years | ||||||
Restricted shares | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Granted (in shares) | 1,504,655 | 1,298,604 | 1,040,748 | ||||
Granted (in dollars per share) | $ 5.54 | $ 10.04 | $ 18.78 | ||||
Forfeited (in shares) | 495,409 | 486,040 | 250,586 | ||||
Options or stock appreciation rights | Maximum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Number of shares awarded per person per year | 1,000,000 | ||||||
Other than options or stock appreciation rights | Maximum | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Number of shares awarded per person per year | 700,000 | ||||||
Cash-settled stock appreciation rights | |||||||
2006 Omnibus Long-Term Incentive Plan (the 2006 Plan) | |||||||
Granted (in shares) | 1,062,668 | 737,972 | |||||
Granted (in dollars per share) | $ 4.57 | $ 9.35 | |||||
Forfeited (in shares) | 153,338 | 59,156 |
Equity Transactions - Repurchas
Equity Transactions - Repurchase Program (Details) - USD ($) | 12 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2016 | May 05, 2016 | Sep. 30, 2015 | Feb. 05, 2014 | Sep. 30, 2013 | |
Equity Transactions | ||||||
Amount yet to be expended under the program | $ 5,127,000 | $ 10,127,000 | $ 10,100,000 | $ 5,127,000 | $ 31,000,000 | |
Total Number of Shares Purchased | 2,962,978 | |||||
Average Price Paid per Share (in dollars per share) | $ 15.90 | |||||
Total Cash Paid for Shares Purchased | $ 44,873,000 | |||||
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | $ 5,127,000 | $ 10,127,000 | 10,100,000 | $ 5,127,000 | $ 31,000,000 | |
Additional amount authorized under share repurchase program | $ 19,000,000 | |||||
Share repurchase program approved amount | $ 5,000,000 |
Equity Transactions - Employee
Equity Transactions - Employee Options (Details) - Employee and director options - $ / shares | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock option activity | |||
Options outstanding at the beginning of the period (in shares) | 1,472,643 | 1,465,907 | 1,592,406 |
Options granted (in shares) | 583,228 | 310,177 | 437,755 |
Options exercised (in shares) | (1,251) | (14,869) | (383,160) |
Options cancelled (in shares) | (346,133) | (288,572) | (181,094) |
Options outstanding at the end of the period (in shares) | 1,708,487 | 1,472,643 | 1,465,907 |
Options exercisable at the end of the period (in shares) | 979,633 | ||
Weighted-Average Exercise Price | |||
Options outstanding at the beginning of the period (in dollars per share) | $ 17.46 | $ 19.50 | $ 16.46 |
Options granted (in dollars per share) | 6.68 | 9.92 | 22.41 |
Options exercised (in dollars per share) | 7.48 | 7.09 | 10.83 |
Options cancelled (in dollars per share) | 16.99 | 20.26 | 18.14 |
Options outstanding at the end of the period (in dollars per share) | 13.91 | $ 17.46 | $ 19.50 |
Options exercisable at the end of the period (in dollars per share) | $ 17.76 |
Equity Transactions - Options (
Equity Transactions - Options (Details) | 12 Months Ended |
Sep. 30, 2016$ / sharesshares | |
$5.53 - $11.24 | |
Summary of information about stock options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | $ 5.53 |
Exercise price, high end of range (in dollars per share) | $ 11.24 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 939,057 |
Weighted-Average Remaining Contractual Life | 7 years 9 months 29 days |
Weighted-Average Exercise Price (in dollars per share) | $ 7.85 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 319,733 |
Weighted-Average Remaining Contractual Life | 5 years 1 month 13 days |
Weighted-Average Exercise Price (in dollars per share) | $ 9.42 |
$11.25 - $46.72 | |
Summary of information about stock options outstanding and exercisable | |
Exercise price, low end of range (in dollars per share) | 11.25 |
Exercise price, high end of range (in dollars per share) | $ 46.72 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 769,430 |
Weighted-Average Remaining Contractual Life | 5 years 7 days |
Weighted-Average Exercise Price (in dollars per share) | $ 21.31 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 659,900 |
Weighted-Average Remaining Contractual Life | 4 years 6 months 26 days |
Weighted-Average Exercise Price (in dollars per share) | $ 21.8 |
Equity Transactions - Fair Valu
Equity Transactions - Fair Value (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Intrinsic value and weighted average remaining contractual life in years of outstanding and exercisable options | |||
Stock price (in dollars per share) | $ 11.24 | ||
Employee and director options | |||
Fair value assumptions | |||
Expected volatility (as a percent) | 71.90% | ||
Expected volatility, minimum (as a percent) | 51.50% | 50.90% | |
Expected volatility, maximum (as a percent) | 58.60% | 77.90% | |
Risk free interest rate, minimum (as a percent) | 0.50% | 0.26% | 0.10% |
Risk free interest rate, maximum (as a percent) | 1.50% | 1.40% | 1.20% |
Expected forfeiture rate (as a percent) | 23.50% | 22.80% | |
Intrinsic value and weighted average remaining contractual life in years of outstanding and exercisable options | |||
Intrinsic value of outstanding shares | $ 3,200,000 | ||
Intrinsic value of exercisable options | $ 600,000 | ||
Weighted average grant date fair value of options granted (in dollars per share) | $ 2.07 | $ 4.89 | $ 7.89 |
Intrinsic value of options exercised | $ 3,128 | $ 4,000 | $ 1,119,000 |
Service based stock options expected to vest | $ 600,000 | ||
Employee and director options | Minimum | |||
Fair value assumptions | |||
Expected forfeiture rate (as a percent) | 22.20% | ||
Employee and director options | Maximum | |||
Fair value assumptions | |||
Expected forfeiture rate (as a percent) | 22.80% |
Equity Transactions - Restricte
Equity Transactions - Restricted Shares (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restricted share activity | |||
Restricted shares cancelled | (214,014) | ||
Unvested awards | |||
Number of service based restricted stock shares expected to vest | 1,600,000 | ||
Stock price (in dollars per share) | $ 11.24 | ||
Restricted shares | |||
Restricted share activity | |||
Unvested restricted shares at the beginning of the period | 2,367,187 | 1,897,827 | 1,543,869 |
Restricted shares granted | 1,504,655 | 1,298,604 | 1,040,748 |
Restricted shares vested | (715,188) | (343,204) | (436,204) |
Restricted shares cancelled | (495,409) | (486,040) | (250,586) |
Unvested restricted shares at the end of the period | 2,661,245 | 2,367,187 | 1,897,827 |
Weighted-Average Fair Value | |||
Unvested restricted shares at the beginning of the period (in dollars per share) | $ 16.08 | $ 24.96 | $ 28.89 |
Granted (in dollars per share) | 5.54 | 10.04 | 18.78 |
Restricted shares vested (in dollars per share) | 16.09 | 27.50 | 24.72 |
Restricted shares cancelled (in dollars per share) | 20.25 | 26.54 | 23.87 |
Unvested restricted shares at the end of the period (in dollars per share) | $ 9.34 | $ 16.08 | $ 24.96 |
Unvested awards | |||
Intrinsic value of unvested restricted shares | $ 29.9 | ||
Weighted average remaining contractual life of unvested restricted shares | 8 years 8 months 5 days | ||
Stock price (in dollars per share) | $ 11.24 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - Recurring basis - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Level 1 | ||
Fair value measurement | ||
Assets, fair value | $ 0 | $ 0 |
Liabilities, fair value | 0 | 0 |
Level 2 | ||
Fair value measurement | ||
Assets, fair value | 0 | 0 |
Liabilities, fair value | 0 | 0 |
Level 3 | ||
Fair value measurement | ||
Assets, fair value | 0 | 0 |
Liabilities, fair value | $ 0 | $ 0 |
Defined Benefit Pension Plan (D
Defined Benefit Pension Plan (Details) | 12 Months Ended | |||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | |
Information about plan assets | ||||
Actual (as a percent) | 100.00% | |||
Equity securities | ||||
Information about plan assets | ||||
Actual (as a percent) | 39.10% | |||
Defined Benefit Plan Number of Pooled Funds | item | 1 | |||
Percentage of UK company shares | 70.00% | |||
Defined Benefit Plan Pooled Funds Strategy Percentage to be Invested in International Securities | 30.00% | |||
Fixed-income securities | ||||
Information about plan assets | ||||
Actual (as a percent) | 58.80% | |||
Defined Benefit Plan Number of Pooled Funds | item | 1 | |||
Cash equivalents | ||||
Information about plan assets | ||||
Actual (as a percent) | 2.10% | |||
Defined benefit pension plan. | ||||
Net periodic benefit cost recognized | ||||
Interest cost | $ 814,000 | $ 964,000 | $ 1,125,000 | |
Expected return on plan assets | (1,066,000) | (1,186,000) | (1,324,000) | |
Total net periodic benefit | (252,000) | (222,000) | (199,000) | |
Change in benefit obligation | ||||
Beginning balance | 24,069,000 | 27,527,000 | ||
Interest cost | 814,000 | 964,000 | 1,125,000 | |
Benefits paid | (1,246,000) | (1,674,000) | ||
Actuarial loss/(gain) | 5,999,000 | (905,000) | ||
Foreign currency exchange rate changes | (3,315,000) | (1,843,000) | ||
Ending balance | 26,321,000 | 24,069,000 | 27,527,000 | |
Change in plan assets | ||||
Beginning balance at fair value | 24,537,000 | 24,946,000 | ||
Actual return on plan assets | 4,831,000 | 1,382,000 | ||
Benefits paid | (1,246,000) | (1,674,000) | ||
Employer's contributions | 1,482,000 | 1,613,000 | ||
Foreign currency exchange rate changes | (3,837,000) | (1,730,000) | ||
Ending balance at fair value | 25,767,000 | 24,537,000 | 24,946,000 | |
(Underfunded) overfunded status of the plan | (554,000) | 468,000 | ||
Amount recorded in the consolidated balance sheet | ||||
Accrued pension asset recorded in Accrued expenses and other current liabilities and Deferred taxes and other long-term assets | $ 600,000 | |||
Accumulated benefit obligation | 26,300,000 | 24,100,000 | ||
Accumulated OCI | ||||
Accumulated OCI at beginning of year | (1,321,000) | (220,000) | ||
New actuarial losses/(gains) | 2,547,000 | (1,101,000) | ||
Accumulated OCI at end of year | 1,226,000 | $ (1,321,000) | $ (220,000) | |
Estimated amounts to be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost | ||||
Estimated amounts to be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during next fiscal year | 0 | |||
Expected pension plan contributions over the next 10 years | ||||
2,017 | 1,358,000 | |||
2,018 | 1,358,000 | |||
2,019 | 340,000 | |||
Total | $ 3,056,000 | |||
Actuarial assumptions used to determine the benefit obligations and the net periodic benefit cost | ||||
Discount rate, net periodic benefit cost (as a percent) | 2.30% | 3.70% | ||
Expected return on plan assets, net periodic benefit cost (as a percent) | 3.20% | 4.60% | ||
Increases to non-GMP pensions in payment accrued pre 4/6/97 (as a percent) | 0.00% | 0.00% | ||
Increases to non-GMP pensions in payment accrued post 4/6/97 (as a percent) | 2.00% | 1.90% | ||
Rate of increases to deferred CPI linked benefits (as a percent) | 2.00% | 1.90% | ||
Rate of increases to deferred RPI linked benefits (as a percent) | 3.10% | 3.00% | ||
Defined Benefit Plan Mortality Rate | 100.00% | |||
Defined Benefit Plan Long Term Rate of Improvement | 1.50% | |||
Expected benefit payments over the next 10 years | ||||
2,017 | $ 859,000 | |||
2,018 | 704,000 | |||
2,019 | 722,000 | |||
2,020 | 748,000 | |||
2,021 | 651,000 | |||
2022 through 2026 | 4,119,000 | |||
Total | $ 7,803,000 |
Defined Benefit Pension Plan -
Defined Benefit Pension Plan - Fair Value Estimates (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 30, 2015 |
Total | ||
Defined benefit pension plan | ||
Fair values | $ 25,767 | $ 24,537 |
Level 1 | ||
Defined benefit pension plan | ||
Fair values | 531 | 368 |
Level 2 | ||
Defined benefit pension plan | ||
Fair values | 25,236 | 24,169 |
Equity securities | Total | ||
Defined benefit pension plan | ||
Fair values | 10,087 | 9,692 |
Equity securities | Level 2 | ||
Defined benefit pension plan | ||
Fair values | 10,087 | 9,692 |
Fixed-income securities | Total | ||
Defined benefit pension plan | ||
Fair values | 15,149 | 14,477 |
Fixed-income securities | Level 2 | ||
Defined benefit pension plan | ||
Fair values | 15,149 | 14,477 |
Cash equivalents | Total | ||
Defined benefit pension plan | ||
Fair values | 531 | 368 |
Cash equivalents | Level 1 | ||
Defined benefit pension plan | ||
Fair values | $ 531 | $ 368 |
Guarantees (Details)
Guarantees (Details) £ in Millions | Sep. 30, 2016GBP (£) |
Guarantees | |
Guarantee Obligation Value, maximum | £ 10 |
Business Realignment Expenses73
Business Realignment Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business realignment expenses rollforward | |||
Employee severance and benefit costs | $ 1,800 | ||
Net increase | $ 300 | ||
Business Realignment October 2014 | |||
Business realignment expenses rollforward | |||
Liability Balance, beginning | $ 845 | ||
Business Realignment Expenses | (101) | ||
Cash Payments | (744) | ||
Liability Balance, ending | 845 | ||
Employee severance for fiscal year 2014 | Business Realignment October 2014 | |||
Business realignment expenses rollforward | |||
Liability Balance, beginning | 356 | ||
Business Realignment Expenses | (21) | ||
Cash Payments | (335) | ||
Liability Balance, ending | 356 | ||
Employee severance for fiscal year 2015 | Business Realignment October 2014 | |||
Business realignment expenses rollforward | |||
Liability Balance, beginning | 489 | ||
Business Realignment Expenses | (80) | ||
Cash Payments | $ (409) | ||
Liability Balance, ending | $ 489 |
Termination of Wal Mart Agreeme
Termination of Wal Mart Agreement (Details) $ in Millions | Jan. 22, 2015USD ($) |
Walmart | |
Settlement agreement | $ 7.5 |
Business Disposition (Details)
Business Disposition (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Business Disposition | ||
Loss on sale of assets | $ (7,963) | |
Other assets | $ 12,016 | 12,748 |
Prepaid expenses and other current assets | 9,063 | 7,826 |
Jacobs Trading Company | ||
Business Disposition | ||
Other assets | 11,300 | |
Prepaid expenses and other current assets | $ 1,000 | |
Jacobs Trading Company | Disposed of by sale | ||
Business Disposition | ||
Promissory note term | 5 years | |
Carrying value of net assets disposed | 22,920 | |
Carrying value of net liabilities disposed | (2,707) | |
Net Assets And Liabilities Of Disposal Group Including Discontinued Operation | 20,213 | |
Buyer issued note | (12,250) | |
Loss on sale of assets | $ 7,963 |
Legal Proceedings (Details)
Legal Proceedings (Details) | Sep. 30, 2016stockholder | Sep. 23, 2016action |
Legal Proceedings | ||
Number of stockholders | stockholder | 2 | |
Number of actions consolidated into one | action | 2 |
Quarterly Results (Unaudited)77
Quarterly Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Unaudited quarterly consolidated statement of operations | |||||||||||
Revenue from operations | $ 78,513 | $ 85,188 | $ 86,878 | $ 65,875 | $ 79,293 | $ 89,746 | $ 102,943 | $ 125,143 | $ 316,454 | $ 397,125 | $ 495,661 |
(Loss) income before provision for income taxes | (24,291) | (141) | (1,117) | (7,351) | (63,024) | (6) | 3,811 | (84,996) | (32,901) | (144,386) | 50,047 |
Net (loss) income from operations | $ (53,755) | $ (124) | $ (850) | $ (5,197) | $ (43,695) | $ 1,615 | $ 1,381 | $ (64,116) | $ (59,926) | $ (104,815) | $ 30,390 |
Unaudited quarterly consolidated statement of operations | |||||||||||
Basic (loss) earnings per common share | $ (1.75) | $ 0 | $ (0.03) | $ (0.17) | $ (1.46) | $ 0.05 | $ 0.05 | $ (2.14) | $ (1.96) | $ (3.50) | $ 0.97 |
Diluted (loss) earnings per common share | $ (1.75) | $ 0 | $ (0.03) | $ (0.17) | $ (1.46) | $ 0.05 | $ 0.05 | $ (2.14) | $ (1.96) | $ (3.50) | $ 0.97 |
Basic weighted average shares outstanding (in shares) | 30,740,977 | 30,726,554 | 30,594,940 | 30,490,670 | 30,026,223 | 30,011,121 | 29,988,324 | 29,926,273 | 30,638,163 | 29,987,985 | 31,243,932 |
Diluted weighted average shares outstanding (in shares) | 30,740,977 | 30,726,554 | 30,594,940 | 30,490,670 | 30,026,223 | 30,011,121 | 29,988,324 | 29,926,273 | 30,638,163 | 29,987,985 | 31,395,301 |
SCHEDULE II - VALUATION AND Q78
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Deferred tax valuation allowance (deducted from net deferred tax assets) | |||
Activity in valuation and qualifying accounts | |||
Balance at beginning of period | $ 8,474 | $ 7,216 | $ 5,424 |
Charged (credited) to expense | 35,783 | 1,258 | 1,792 |
Balance at end of period | 44,257 | 8,474 | 7,216 |
Allowance for doubtful accounts (deducted from accounts receivable) | |||
Activity in valuation and qualifying accounts | |||
Balance at beginning of period | 471 | 1,042 | 891 |
Charged (credited) to expense | 247 | 1,243 | 240 |
Reductions | 1,814 | 89 | |
Balance at end of period | 718 | 471 | 1,042 |
Inventory allowance (deducted from inventory) | |||
Activity in valuation and qualifying accounts | |||
Balance at beginning of period | 770 | 1,723 | 1,452 |
Charged (credited) to expense | 2,709 | (575) | 271 |
Reductions | 33 | 378 | |
Balance at end of period | $ 3,446 | $ 770 | $ 1,723 |