Share Capital | 9 Months Ended |
Sep. 30, 2014 |
Equity [Abstract] | ' |
Share Capital | ' |
7 | | SHARE CAPITAL | | | | | | | | | | | | | | |
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(a) | Cash Distribution | | | | | | | | | | | | | | | |
On June 27, 2013, we completed a $200.0 million special cash distribution, by way of a reduction of the paid-up capital of the Company’s common shares (the “Cash Distribution”). The Cash Distribution was approved by the Company’s shareholders at QLT’s annual and special shareholder’s meeting on June 14, 2013. All shareholders of record as at June 24, 2013 (the “Record Date”) were eligible to participate in the Cash Distribution and received a payment of approximately $3.92 per share based upon the 51,081,878 common shares issued and outstanding on the Record Date. |
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(b) | Share Repurchase Program | | | | | | | | | | | | | | | |
On October 2, 2012, we commenced a normal course issuer bid to repurchase up to 3,438,683 of our common shares, which represented 10% of our public float as of September 26, 2012. All purchases were affected in the open market through the facilities of the NASDAQ Stock Market in accordance with all applicable regulatory requirements. During the year ended December 31, 2013, we repurchased 1,691,479 (year ended December 31, 2012 – 1,747,204) common shares under the terms of this bid at a cost of $13.5 million, which represents an average price of $7.97 per common share (year ended December 31, 2012 – $13.7 million at an average price of $7.84 per common share). The bid was completed on March 12, 2013. We retired all of these shares as they were acquired. In connection with this retirement, we recorded an increase in additional paid-in capital of $2.0 million in 2013 (year ended December 31, 2012 – $2.4 million). |
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(c) | Stock Options | | | | | | | | | | | | | | | |
On April 25, 2013, the Company’s board of directors amended and restated the QLT 2000 Incentive Stock Plan (the “Plan”) to increase the number of shares of the Company’s common stock, without par value, available for grant under the Plan from 7,800,000 to 11,800,000 and to make certain other amendments to the Plan. The amendment and restatement of the Plan was subject to shareholder approval, which was obtained on June 14, 2013. On July 29, 2013, the Company filed a registration statement to register the issuance of up to 4,000,000 additional common shares that may be issued under the Plan as a result of the amendment to the Plan. |
We use the Black-Scholes option pricing model to estimate the value of the options at each grant date. The Black-Scholes option pricing model was developed for use in estimating the value of traded options that have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility. We project expected volatility and expected life of our stock options based upon historical and other economic data trended into future years. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of our stock options. There were no stock options granted during the three and nine months ended September 30, 2014 and 2013. |
The impact on our results of operations of recording stock-based compensation for the three and nine months ended September 30, 2014 and September 30, 2013 was as follows: |
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| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
(In thousands of U.S. dollars) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
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Research and development | | $ | 98 | | | $ | 77 | | | $ | 682 | | | $ | 171 | |
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Selling, general and administrative | | | 67 | | | | 45 | | | | 425 | | | | 90 | |
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Discontinued operations | | | — | | | | — | | | | — | | | | 3 | |
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Stock-based compensation expense before income taxes | | | 165 | | | | 122 | | | | 1,107 | | | | 264 | |
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Related income tax benefits | | | — | | | | — | | | | — | | | | — | |
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Stock-based compensation, net of income taxes | | $ | 165 | | | $ | 122 | | | $ | 1,107 | | | $ | 264 | |
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As at September 30, 2014, 688,072 stock options were exercisable (December 31, 2013 – 257,332) and 586,816 stock options were unvested (December 31, 2013 – 1,150,197). As at September 30, 2014, the total estimated unrecognized compensation cost related to unvested stock options and the expected weighted average periods over which such costs are expected to be recognized is as follows: |
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| | September 30, | | | | | | | | | | | | | |
2014 | | | | | | | | | | | | |
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Unrecognized estimated compensation costs (in thousands of U.S. dollars) | | $ | 1,256 | | | | | | | | | | | | | |
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Expected weighted average period of recognition of compensation cost (in months) | | | 36 | | | | | | | | | | | | | |
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Expected remaining weighted average period of compensation cost to be recognized (in years) | | | 1.75 | | | | | | | | | | | | | |
We issue new common shares upon exercise of stock options. During the three and nine months ended September 30, 2014, 104,044 stock options were exercised (three months ended September 30, 2013 – nil; nine months ended September 30, 2013 – 1,183,952). The intrinsic values associated with these stock options and the related cash received during the respective periods was as follows: |
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| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
(In thousands of U.S. dollars) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
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Intrinsic value of stock options exercised | | $ | 53 | | | $ | — | | | $ | 53 | | | $ | 2,142 | |
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Cash from exercise of stock options | | | 556 | | | | — | | | | 556 | | | | 7,217 | |
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(d) | Deferred Share Units | | | | | | | | | | | | | | | |
DSUs have only been issued to our directors. DSUs vest in thirty-six (36) successive and equal monthly installments beginning on the first day of the first month after the date of grant. A vested DSU can only be settled by conversion to cash (i.e. no share is issued), and is automatically converted after the director ceases to be member of the Board unless the director is removed from the Board for just cause. |
The impact on our results of operations of recording DSU compensation expense for the three and nine months ended September 30, 2014 and September 30, 2013 was as follows: |
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| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
(In thousands of U.S. dollars) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
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Research and development | | $ | (10 | ) | | $ | 22 | | | $ | 43 | | | $ | 33 | |
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Selling, general and administrative | | | (16 | ) | | | 37 | | | | 102 | | | | 56 | |
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Deferred share unit compensation expense | | $ | (26 | ) | | $ | 59 | | | $ | 145 | | | $ | 89 | |
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No cash payments were made under the DSU Plan during the three and nine months ended September 30, 2014 and September 30, 2013. |
As at September 30, 2014, 85,556 DSUs were vested (December 31, 2013 – 47,056) and 68,444 DSUs were unvested (December 31, 2013 – 106,944). |
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(e) | Restricted Stock Units | | | | | | | | | | | | | | | |
RSUs vest in three (3) successive and equal yearly installments on the date of each of the first three annual general meetings of the Company held after the date of grant. Upon vesting, each RSU represents the right to receive one common share of the Company. |
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The impact on our results of operations of recording RSU compensation expense for the three and nine months ended September 30, 2014 and September 30, 2013 was as follows: |
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| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
(In thousands of U.S. dollars) | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
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Research and development | | $ | 5 | | | $ | 6 | | | $ | 16 | | | $ | 6 | |
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Selling, general and administrative | | | 9 | | | | 9 | | | | 27 | | | | 9 | |
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Restricted stock unit compensation expense | | $ | 14 | | | $ | 15 | | | $ | 43 | | | $ | 15 | |
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As at September 30, 2014, nil RSUs were vested (December 31, 2013 – nil) and 42,000 RSUs were unvested (December 31, 2013 – 42,000). In addition, the total estimated unrecognized compensation cost related to RSUs was $0.1 million (December 31, 2013 – $0.2 million) and the weighted average period over which such costs are expected to be recognized is 1.79 years (December 31, 2013 – 2.54 years). |