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Document And Entity Information (USD $)
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12 Months Ended | ||
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Dec. 31, 2011
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Mar. 23, 2012
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Jun. 30, 2011
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| Entity Registrant Name | CHARLES & COLVARD LTD | ||
| Entity Central Index Key | 0001015155 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | No | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Smaller Reporting Company | ||
| Entity Public Float | $ 48,347,355 | ||
| Entity Common Stock, Shares Outstanding | 19,505,129 | ||
| Document Fiscal Year Focus | 2011 | ||
| Document Fiscal Period Focus | FY | ||
| Document Type | 10-K | ||
| Amendment Flag | false | ||
| Document Period End Date | Dec. 31, 2011 |
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- Definition
If the value is true, then the document as an amendment to previously-filed/accepted document. No definition available.
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- Definition
End date of current fiscal year in the format --MM-DD. No definition available.
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- Definition
This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY. No definition available.
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- Definition
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006. No definition available.
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- Definition
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD. No definition available.
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- Definition
The type of document being provided (such as 10-K, 10-Q, N-1A, etc). The document type is limited to the same value as the supporting SEC submission type, minus any "/A" suffix. The acceptable values are as follows: S-1, S-3, S-4, S-11, F-1, F-3, F-4, F-9, F-10, 6-K, 8-K, 10, 10-K, 10-Q, 20-F, 40-F, N-1A, 485BPOS, 497, NCSR, N-CSR, N-CSRS, N-Q, 10-KT, 10-QT, 20-FT, POS AM and Other. No definition available.
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- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Indicate number of shares outstanding of each of registrant's classes of common stock, as of latest practicable date. Where multiple classes exist define each class by adding class of stock items such as Common Class A [Member], Common Class B [Member] onto the Instrument [Domain] of the Entity Listings, Instrument No definition available.
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- Definition
Indicate "Yes" or "No" whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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- Definition
Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, or (4) Smaller Reporting Company. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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- Definition
State aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to price at which the common equity was last sold, or average bid and asked price of such common equity, as of the last business day of registrant's most recently completed second fiscal quarter. The public float should be reported on the cover page of the registrants form 10K. No definition available.
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- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Indicate "Yes" or "No" if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. No definition available.
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| X | ||||||||||
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- Definition
Indicate "Yes" or "No" if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Is used on Form Type: 10-K, 10-Q, 8-K, 20-F, 6-K, 10-K/A, 10-Q/A, 20-F/A, 6-K/A, N-CSR, N-Q, N-1A. No definition available.
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of management's estimate regarding customers' utilization of allowed reimbursement under entity's cooperative advertising program for customers' marketing costs incurred based on customers' purchases from entity. No definition available.
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount as of the balance sheet date of the unpaid sum of the known and estimated amounts payable to satisfy all domestic and foreign income tax obligations due beyond one year or the operating cycle, whichever is longer. Alternate captions include income taxes payable, noncurrent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Value received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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- Definition
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The aggregate sum of gross carrying value of a major finite-lived intangible asset class, less accumulated amortization and any impairment charges. A major class is composed of intangible assets that can be grouped together because they are similar, either by their nature or by their use in the operations of a company. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
This item represents investments in debt securities which are categorized as held-to-maturity and that have scheduled maturities more than one year from the balance sheet date or operating cycle, if longer; such investments are measured at amortized cost (carrying value). The held-to-maturity category is for those securities that the Entity has the positive intent and ability to hold until maturity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount due within one year of the balance sheet date (or one operating cycle, if longer) from tax authorities as of the balance sheet date representing refunds of overpayments or recoveries based on agreed-upon resolutions of disputes. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount as of the balance sheet date of current interest earned but not received. Also called accrued interest or accrued interest receivable. For classified balance sheets, represents the current amount receivable, that is amounts expected to be collected within one year or the normal operating cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Inventories not expected to be converted to cash, sold or exchanged within the normal operating cycle. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all Liabilities and Stockholders' Equity items (or Partners' Capital, as applicable), including the portion of equity attributable to noncontrolling interests, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Aggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The total of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer, and the aggregate carrying amount of current assets, as of the balance sheet date, not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cumulative amount of the reporting entity's undistributed earnings or deficit. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
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Dec. 31, 2011
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Dec. 31, 2010
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|---|---|---|
| Shareholders' equity: | ||
| Common stock, par value (in dollars per share) | $ 0 | $ 0 |
| Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
| Common stock, shares issued (in shares) | 19,454,689 | 19,291,568 |
| Common stock, shares outstanding (in shares) | 19,454,689 | 19,291,568 |
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- Definition
Issuance value per share of no-par value common stock; generally not indicative of the fair market value per share. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The maximum number of common shares permitted to be issued by an entity's charter and bylaws. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
Total costs related to goods produced and sold during the reporting period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total costs of sales and operating expenses for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
This item represents the net total realized and unrealized gain (loss) included in earnings for the period as a result of selling or holding marketable securities categorized as trading, available-for-sale, or held-to-maturity, including the unrealized holding gain (loss) of held-to-maturity securities transferred to the trading security category and the cumulative unrealized gain (loss) which was included in other comprehensive income (a separate component of shareholders' equity) for available-for-sale securities transferred to trading securities during the period. Additionally, this item would include any gains (losses) realized during the period from the sale of investments accounted for under the cost method of accounting and losses recognized for other than temporary impairments (OTTI) of the subject investments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The net gain (loss) resulting from the sale, transfer, termination, or other disposition of assets during the period, excluding transactions involving capital leases, assets-held- or available-for-lease, and other real estate owned which, to the extent appropriate, are included in gains (losses) on the disposition of assets in nonoperating income (expense). No definition available.
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| X | ||||||||||
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- Definition
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of operating profit and nonoperating income or expense before Income or Loss from equity method investments, income taxes, extraordinary items, and noncontrolling interest. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The sum of the current income tax expense or benefit and the deferred income tax expense or benefit pertaining to continuing operations. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cost of borrowed funds accounted for as interest that was charged against earnings during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Income derived from investments in debt securities and on cash and cash equivalents the earnings of which reflect the time value of money or transactions in which the payments are for the use or forbearance of money. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The net result for the period of deducting operating expenses from operating revenues. No definition available.
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| X | ||||||||||
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- Definition
Reflects the sum of all other revenue and income recognized by the entity in the period not otherwise specified in the income statement. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate revenue during the period from the sale of goods in the normal course of business, after deducting returns, allowances and discounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate total amount of expenses directly related to the marketing or selling of products or services. No definition available.
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| X | ||||||||||
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- Definition
The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
This element represents the amount of recognized equity-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized). Alternate captions include the words "stock-based compensation". Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the economic entity, including both controlling (parent) and noncontrolling interests. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, including any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares issued and outstanding as of the balance sheet date. No definition available.
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| X | ||||||||||
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- Definition
Total of Stockholders' Equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity including portions attributable to both the parent and noncontrolling interests (previously referred to as minority interest), if any. The entity including portions attributable to the parent and noncontrolling interests is sometimes referred to as the economic entity. This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares issued during the period related to Restricted Stock Awards, net of any shares forfeited. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of share options (or share units) exercised during the current period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Value of stock related to Restricted Stock Awards issued during the period, net of the stock value of such awards forfeited. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Value stock issued during the period as a result of the exercise of stock options. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares that have been repurchased during the period and have not been retired and are not held in treasury. Some state laws may govern the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Equity impact of the value of stock that has been repurchased during the period and has not been retired and is not held in treasury. Some state laws may mandate the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The component of interest expense representing the noncash expenses charged against earnings in the period to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate caption: Noncash Interest Expense. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The increase (decrease) during the reporting period in cash and cash equivalents. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate expense recognized in the current period that allocates the cost of tangible assets, intangible assets, or depleting assets to periods that benefit from use of the assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
This item represents the net total realized and unrealized gain (loss) included in earnings for the period as a result of selling or holding marketable securities categorized as trading, available-for-sale, or held-to-maturity, including the unrealized holding gain (loss) of held-to-maturity securities transferred to the trading security category and the cumulative unrealized gain (loss) which was included in other comprehensive income (a separate component of shareholders' equity) for available-for-sale securities transferred to trading securities during the period. Additionally, this item would include any gains (losses) realized during the period from the sale of investments accounted for under the cost method of accounting and losses recognized for other than temporary impairments (OTTI) of the subject investments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The net gain (loss) resulting from the sale, transfer, termination, or other disposition of assets during the period, excluding transactions involving capital leases, assets-held- or available-for-lease, and other real estate owned which, to the extent appropriate, are included in gains (losses) on the disposition of assets in nonoperating income (expense). No definition available.
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- Definition
The increase (decrease) during the reporting period in the aggregate amount of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the period in the amount due for taxes based on the reporting entity's earnings or attributable to the entity's income earning process (business presence) within a given jurisdiction. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in the amount due from borrowers for interest payments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in income taxes receivable, which represents the amount due from tax authorities for refunds of overpayments or recoveries of income taxes paid. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in the aggregate value of all inventory held by the reporting entity, associated with underlying transactions that are classified as operating activities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period of amounts due within one year (or one business cycle) from note holders for outstanding loans. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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- Definition
The increase (decrease) during the reporting period in other expenses incurred but not yet paid. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in other liabilities used in operating activities not separately disclosed in the statement of cash flows. May include changes in other current liabilities, other noncurrent liabilities, or a combination of other current and noncurrent liabilities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The increase (decrease) during the reporting period in the value of prepaid expenses and other assets not separately disclosed in the statement of cash flows, for example, deferred expenses, intangible assets,or income taxes. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The amount of cash paid for interest during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Charge to cost of goods sold that represents the reduction of the carrying amount of inventory, generally attributable to obsolescence or market conditions. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The net cash inflow or outflow from financing activity for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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- Definition
The net cash inflow or outflow from investing activity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Other income (expense) included in net income that results in no cash inflows or outflows in the period. Includes noncash adjustments to reconcile net income (loss) to cash provided by (used in) operating activities that are not separately disclosed. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The cash outflow to reacquire common stock during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The cash outflow to acquire asset without physical form usually arising from contractual or other legal rights, excluding goodwill. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The cash outflow associated with the purchase of all investments (debt, security, other) during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash inflow associated with the sale, maturity and collection of all investments such as debt, security and so forth during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The cash inflow associated with the amount received from holders exercising their stock options. This item inherently excludes any excess tax benefit, which the entity may have realized and reported separately. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Amount of the current period expense charged against operations, the offset which is generally to the allowance for doubtful accounts for the purpose of reducing receivables, including notes receivable, to an amount that approximates their net realizable value (the amount expected to be collected). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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DESCRIPTION OF BUSINESS
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12 Months Ended | ||
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Dec. 31, 2011
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| DESCRIPTION OF BUSINESS [Abstract] | |||
| DESCRIPTION OF BUSINESS |
Charles & Colvard, Ltd. (the “Company”), a North Carolina corporation founded in 1995, manufactures, markets, and distributes Charles & Colvard Created Moissanite® jewels (hereinafter referred to as moissanite or moissanite jewels) and finished jewelry featuring moissanite for sale in the worldwide jewelry market. Moissanite, also known by its chemical name of silicon carbide (“SiC”), is a rare mineral first discovered in a meteor crater. Because naturally occurring SiC crystals are too small for commercial use, larger crystals must be grown in a laboratory. Leveraging its advantage of being the sole source worldwide of created moissanite jewels, the Company's strategy is to establish itself with reputable, high-quality, and sophisticated brands and to position moissanite as an affordable, luxurious alternative to other gemstones, such as diamond. The Company believes this is possible due to moissanite's exceptional brilliance, fire, luster, durability, and rarity like no other jewel available on the market. The Company sells loose moissanite jewels and finished jewelry at wholesale to distributors, manufacturers, and retailers and at retail to end consumers through its wholly owned operating subsidiaries Moissanite.com, LLC and Charles & Colvard Direct, LLC. |
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- Details
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- Definition
The entire disclosure for the nature of an entity's business, the major products or services it sells or provides and its principal markets, including the locations of those markets. If the entity operates in more than one business, the disclosure also indicates the relative importance of its operations in each business and the basis for the determination (for example, assets, revenues, or earnings). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
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Dec. 31, 2011
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| BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation and Principles of Consolidation - The accompanying consolidated financial statements as of and for the years ended December 31, 2011 and 2010 include the accounts of the Company and its wholly owned subsidiaries Moissanite.com, LLC, formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company's Hong Kong subsidiary that became a dormant entity in the second quarter of 2009 and the operations of which ceased in 2008. All intercompany accounts have been eliminated. Fiscal Year - The Company's fiscal year ends December 31. References to fiscal 2011, for example, refer to the fiscal year ending December 31, 2011. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates impacting the Company's consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, deferred tax assets, uncertain tax positions, stock compensation expense, and cooperative advertising. Actual results could differ materially from those estimates. Reclassifications - Certain amounts in the prior year's consolidated financial statements have been reclassified to conform to the current year presentation. Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents. Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, and trade accounts receivable. The Company maintains cash, cash equivalents, and investments with high-quality financial institutions and invests in low-risk securities, primarily money market funds or long-term United States (“U.S.”) government agency obligations. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits. The Company has never experienced any losses related to these balances. All of the Company's non-interest bearing cash balances were fully insured at December 31, 2011 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning in 2013, insurance coverage will revert to $250,000 per depositor at each financial institution, and the Company's non-interest bearing cash balances may again exceed federally insured limits. Interest-bearing amounts on deposit in excess of FDIC insurable limits at December 31, 2011 approximated $5.12 million. Trade receivables potentially subject the Company to credit risk. The Company's standard customer payment terms on trade receivables are generally between 30 and 90 days, though it may offer extended terms in limited circumstances and on significant orders from time to time. The Company believes its competitors and other vendors in the jewelry industry have also expanded their use of extended payment terms and, in aggregate, the Company believes that by expanding its use of extended payment terms, it has provided a competitive response in its market and that its net sales have been favorably impacted. The Company is unable to estimate the impact of this program on its net sales, but if it ceased providing extended payment terms in select instances, the Company believes it would not be competitive for some customers in the marketplace and that its net sales and profits would likely decrease. The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer's financial condition and credit history, the customer's payment history with the Company, the customer's reputation in the trade, and/or an evaluation of the Company's opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information. The Company has not experienced any significant accounts receivable write-offs related to revenue arrangements with extended payment terms. See Note 12, “Major Customers and Concentration of Credit Risk,” for further discussion of credit risk within trade accounts receivable. Accounts Receivable Reserves - Estimates are used to determine the amount of two reserves against trade accounts receivable. The first reserve is an allowance for sales returns. At the time revenue is recognized, the Company estimates future returns using a historical return rate that is reviewed quarterly with consideration of any contractual return privileges granted to customers, and it reduces sales and trade accounts receivable by this estimated amount. The allowance for sales returns was $156,000 and $117,000 at December 31, 2011 and 2010, respectively. The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company's customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. Based on historical percentages of uncollectible accounts by aging category, changes in payment history, and facts and circumstances regarding specific accounts that become known to management when evaluating the adequacy of the allowance for doubtful accounts, the Company determines a percentage based on the age of the receivable that it deems uncollectible. The allowance is then calculated by applying the appropriate percentage to each of the Company's accounts receivable aging categories, with consideration given to individual customer account activity subsequent to the current period, including cash receipts, in determining the appropriate allowance for doubtful accounts in the current period. Any increases or decreases to this allowance are charged or credited, respectively, as a bad debt expense to general and administrative expenses. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. During its review for 2010, the Company specifically reviewed and recorded an allowance for the balance owed to it by an international customer for which the Company had initiated collection efforts and nearly fully reserved the outstanding accounts receivable balance. During its review for 2011, the Company determined that collection efforts for this international customer had been exhausted and wrote off the associated account receivable. In addition, in 2011 the Company reviewed several of its slower-paying customers and determined that no additional reserves were necessary. Based on these criteria, management determined that allowances for doubtful accounts receivable of $380,000 and $866,000 at December 31, 2011 and 2010, respectively, were required. The following is a reconciliation of the allowance for doubtful accounts:
Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, which would result in increased expense in the period in which such determination is made. Investments - Investments in certain securities may be classified into three categories:
The Company reassesses the appropriateness of the classification of its investments at the end of each reporting period. The Company has determined that its debt securities should be classified as held-to-maturity as of December 31, 2011. This classification was based upon management's determination that it has the positive intention and ability to hold the securities to maturity, as the underlying cash invested in these securities is not required for current operations. Inventories - Inventories are stated at the lower of cost or market on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Any inventory on hand at the measurement date in excess of the Company's current requirements based on historical and anticipated levels of sales is classified as long-term on the Company's consolidated balance sheets. The Company's classification of long-term inventory requires it to estimate the portion of on-hand inventory that can be realized over the next 12 months and does not include precious metal, labor, and other inventory purchases expected to be both purchased and realized over the next 12 months. The Company has historically sold one grade of jewel that is classified as very good (“VG”) and consists of near-colorless jewels that meet certain standards. Previously, only VG jewels were valued in inventory. During the first quarter of 2010, the Company began a project of sorting its jewels into multiple grades and has identified several customers for the sale of lower grades of loose jewels and finished jewelry containing these jewels. As a result, various costs associated with this inventory incurred subsequent to the identification of this market are now being capitalized. All inventories are carefully reviewed for quality standards before they are entered into finished goods. As conditions warrant, the Company's grading standards change. The Company reviews the inventory on an ongoing basis to ensure its inventory meets current quality standards. Obsolescence is not a factor in the Company's loose jewel inventory valuation. The Company's jewels do not degrade over time and inventory generally consists of the shapes and sizes most commonly used in the jewelry industry. In addition, the majority of jewel inventory is not mounted in finished jewelry settings and is therefore not subject to fashion trends. The Company has very small market penetration in the worldwide jewelry market, and the Company has the exclusive right in the U.S. through mid-2015 and in many other countries through mid-2016 to produce and sell created SiC for use in jewelry applications. In view of the foregoing factors, management has concluded that no excess or obsolete loose jewel inventory reserve requirements existed as of December 31, 2011. In 2010, the Company began manufacturing finished jewelry featuring moissanite. Finished jewelry is more fashion oriented and subject to styling trends that could render certain designs obsolete. The majority of the Company's finished jewelry is held in inventory for resale and consists of such basic designs as stud earrings, solitaire and three-stone rings, pendants, and bracelets that tend not to be subject to significant obsolescence risk due to their classic styling. In addition, the Company manufactures small individual quantities of designer-inspired fashion jewelry as part of its sample line that are used in the selling process to its wholesale customers. Typically in the jewelry industry, slow-moving or discontinued lines are sold as closeouts in alternative sales channels. The Company reviews the finished jewelry inventory on an ongoing basis for any lower of cost or market and obsolescence issues and has concluded that no such finished jewelry inventory reserve requirements relating to the Company's new line of finished jewelry products existed as of December 31, 2011. Jewelry inventories consist primarily of finished goods, a portion of which the Company acquired as part of a January 2009 settlement agreement with a former manufacturer customer to reduce the outstanding receivable to the Company. Due to the lack of a plan to market this inventory at that time, a jewelry inventory reserve was established to reduce the majority of the jewelry inventory value to scrap value, or the amount the Company would expect to obtain by melting the gold in the jewelry and returning to loose-jewel finished goods inventory those jewels that meet grading standards. Because the finished jewelry the Company began manufacturing in 2010 after it entered that business was made pursuant to an operational plan to market and sell the inventory, it is not subject to this reserve. The Company also maintains inventory reserves for shrinkage, recuts, and repairs. Shrinkage refers to jewels and finished jewelry on review with customers and vendors that may not be returned to the Company. The recuts reserve is for the projected material loss resulting from the recutting of damaged jewels into smaller loose jewels to remove the damage. The repairs reserve is for finished jewelry in need of repair before it can be returned to finished goods inventory and be available for sale. The need for adjustments to inventory reserves is evaluated on a period-by-period basis. Property and Equipment - Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows:
Intangible Assets - The Company capitalizes costs associated with obtaining or defending patents issued or pending for inventions and license rights related to the manufacture of moissanite jewels. Such costs are amortized over the life of the patent, generally 17 years. The Company also capitalizes licenses it obtains for the use of certain advertising images and external costs incurred for trademarks. Such costs are amortized over the period of the license or estimated useful life of the trademark, respectively. Impairment of Long-Lived Assets - The Company evaluates the recoverability of its long-lived assets by reviewing them for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell. As of December 31, 2011, the Company did not identify any indicators of long-lived asset impairment. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods. In July 2011, the Company identified jewelry-specific manufacturing software that it believes will improve its merchandising, production, and inventory efficiencies and reporting. Because the Company's management decided to purchase and implement this software with a go-live date in January 2012, management reduced the remaining estimated useful life of the Company's existing enterprise resource planning system, which resulted in increased depreciation expense during the year ended December 31, 2011 of $59,000. As of December 31, 2010, no change in useful lives was deemed necessary by management. Revenue Recognition - Revenue is recognized when title transfers at the time of shipment from the Company's facility, excluding consignment shipments as discussed below; evidence of an arrangement exists; pricing is fixed and determinable; and collectability is reasonably assured. At the time revenue is recognized, an allowance for estimated returns is established. Any change in the allowance for returns is charged against net sales. The Company's return policy allows for the return of jewels and finished jewelry for credit generally within 30 days of shipment and must be returned for a valid reason, such as quality problems or an error in shipment. From time to time, some customers may have a contractual right to return a certain percentage of goods for any reason for specified periods of time. In these instances, the Company only recognizes revenue when the contractual right of return is exhausted. Periodically, the Company ships finished goods inventory to customers on consignment terms. Under these terms, the customer assumes the risk of loss and has an absolute right of return for a specified period. The Company's customers are generally required to make payments on consignment shipments within 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (1) the customer informing the Company that it will keep the inventory or (2) the expiration of the right of return period. Cost of Goods Sold - Cost of goods sold is primarily composed of inventory sold during the period; inventory written off during the period due to ongoing quality reviews or through customer returns; salaries and benefits for personnel involved in preparing and shipping product to customers; an allocation of shared expenses such as rent, utilities, communication expenses, and depreciation related to preparing and shipping product to customers; and outbound freight charges. Advertising Costs - Advertising production costs are expensed as incurred. Media placement costs are expensed the first time the advertising appears. The Company also offers a cooperative advertising program to certain of its customers that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers' net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company's products. For the years ended December 31, 2011 and 2010, these amounts were approximately $436,000 and $687,000, respectively, and are included as a component of sales and marketing expenses. Advertising expenses, inclusive of the cooperative advertising program, for the years ended December 31, 2011 and 2010 were approximately $712,000 and $757,000, respectively. Sales and Marketing - Sales and marketing costs are expensed as incurred. These costs include all expenses of promoting and selling the Company's products and include such items as the salaries, payroll-related expenses, and travel of sales and marketing personnel; advertising; trade shows; market research; sales commissions; and an allocation of overhead expenses attributable to these activities. Except for an allocation to general and administrative expenses, these costs also include the operating expenses of the Company's two wholly owned operating subsidiaries Moissanite.com, LLC and Charles & Colvard Direct, LLC. General and Administrative - General and administrative costs are expensed as incurred. These costs include the salaries and payroll-related expenses of executive, finance, information technology, and administrative personnel; legal, investor relations, and professional fees; Board of Directors fees; rent; bad debts; and insurance. Research and Development - Research and development costs are expensed as incurred. These costs primarily comprise salary allocations and consultant fees associated with the study of product enhancement and manufacturing process efficiencies. Stock-Based Compensation - The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The fair value of other stock-based compensation awards is determined by the market price of the Company's common stock on the date of grant. The expense associated with stock-based compensation is recognized on a straight-line basis over the requisite service period of each award. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows:
The assumptions used in calculating the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company's forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested stock options, and the amount of vested stock options as a percentage of total stock options outstanding. If the Company's actual forfeiture rate is materially different from its estimate, or if the Company re-evaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. Income Taxes - Deferred income taxes are recognized for the income tax consequences of “temporary” differences by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized. Net Income per Common Share - Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Fully diluted net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options that are computed using the treasury stock method. The following table reconciles the differences between the basic and fully diluted earnings per share presentations:
For the years ended December 31, 2011 and 2010, stock options to purchase approximately 713,000 and 307,000 shares, respectively, were excluded from the computation of fully diluted net income per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net income per common share. Recently Adopted/Issued Accounting Pronouncements -Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. In May 2011, the Financial Accounting Standards Board (“FASB”) issued new U.S. GAAP guidance to change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and International Financial Reporting Standards (“IFRS”). This guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The new guidance is effective for interim and annual reporting periods ending on or after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Comprehensive Income (Topic 220): Presentation of Comprehensive Income. In June 2011, the FASB issued new U.S. GAAP guidance that changes the requirements for the presentation of other comprehensive income, eliminating the option to present components of other comprehensive income as part of the statement of changes in shareholders' equity, among other things. This guidance requires that all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance is effective for interim periods and annual reporting periods beginning after December 15, 2011 and should be applied retrospectively. In December 2011, the FASB deferred the effective date of provisions included in this guidance that require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements. The revised effective date has not yet been determined. Since the update only requires a change in presentation, the adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. All other new and recently issued, but not yet effective, accounting pronouncements have been deemed to be not relevant to the Company and therefore are not expected to have any impact once adopted. |
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The entire disclosure for the basis of presentation, or accounting, and significant accounting policies. No definition available.
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SEGMENT INFORMATION AND GEOGRAPHIC DATA
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Dec. 31, 2011
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| SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION AND GEOGRAPHIC DATA |
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's operating and reportable segments. The Company manages its business primarily by its product lines. Accordingly, the Company determined its two operating and reporting segments to be loose jewels and finished jewelry. The accounting policies of these segments are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies.” The Company evaluates the performance of its segments based on net sales and segment gross profit, or the excess of product sales over segment cost of goods sold. Segment cost of goods sold is defined as product cost of goods sold excluding non-capitalized expenses from the Company's manufacturing and production control departments, comprising personnel costs, depreciation, rent, utilities, and corporate overhead allocations; freight out; manufacturing and physical inventory variances; inventory valuation allowance adjustments; and costs of quality issues and damaged goods. Accordingly, also excluded from the Company's segment performance measures are operating expenses, comprising sales and marketing, general and administrative, and research and development expenses; interest; and taxes. Summary information by segment is as follows:
A reconciliation of the Company's segment cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows:
The Company's net inventories by segment are as follows:
Supplies inventories of approximately $121,000 and $126,000 at December 31, 2011 and 2010, respectively, included in finished goods inventories in the consolidated financial statements are omitted from inventories by segment because they are used in both product lines and are not maintained separately. The Company recognizes sales by geographic area based on the country in which the customer is based. A portion of the Company's international sales represents products sold internationally that may be re-imported to U.S. retailers. The following presents certain data by geographic area:
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The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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INVESTMENTS
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Dec. 31, 2011
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| INVESTMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENTS |
Investments consist of long-term U.S. government agency securities carried at amortized cost using the effective interest method. The Company classifies its marketable securities as held-to-maturity based upon management's positive intention and ability to hold these securities until their maturity dates. The following table summarizes information about held-to-maturity investments at December 31, 2011:
As of December 31, 2011, the estimated fair value of the investments was greater than the amortized cost. Because management intends to hold the investments until their maturity dates, this unrealized gain was not recorded in the consolidated financial statements. The maturities of held-to-maturity investments at December 31, 2011 were as follows:
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Tabular disclosure of investments in certain debt and equity securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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FAIR VALUE MEASUREMENTS
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Dec. 31, 2011
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| FAIR VALUE MEASUREMENTS |
Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows:
The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, trade accounts receivable, held-to-maturity investments, trade accounts payable, and accrued expenses. All instruments other than held-to-maturity investments are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. The estimated fair value of the Company's held-to-maturity investments as of December 31, 2011 utilized Level 2 inputs of similar investments traded on active securities exchanges. Assets that are measured at fair value on a non-recurring basis include property and equipment and intangible assets, comprising patents, license rights, and trademarks. These items are recognized at fair value when they are considered to be impaired. Level 3 inputs are primarily based on the estimated future cash flows of the asset determined by market inquiries to establish fair market value of used machinery or future revenue expected to be generated with the assistance of patents, license rights, and trademarks. |
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Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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INVENTORIES
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Dec. 31, 2011
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| INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES |
The Company's total inventories, net of reserves, consisted of the following as of December 31, 2011 and 2010:
Periodically, the Company ships finished goods inventory to customers on consignment terms. Under these terms, the customer assumes the risk of loss and has an absolute right of return for a specified period. Finished goods on consignment at December 31, 2011 and 2010 are net of a shrinkage reserve of $11,000 and $15,000, respectively, to allow for certain loose jewels and finished jewelry on consignment with customers that may not be returned or may be returned in a condition that does not meet the Company's current grading standards. Total net loose jewel inventories at December 31, 2011 and 2010, including inventory on consignment net of reserves, were $30.78 million and $34.78 million, respectively. The loose jewel inventories at December 31, 2011 include an inventory reserve for shrinkage, or jewels on review with customers and vendors that may not be returned to the Company, of $14,000. Loose jewel inventories at December 31, 2011 and 2010 also include an inventory reserve for recuts, or the projected material loss resulting from the recutting of damaged jewels into smaller loose jewels to remove the damage, of $30,000 and $36,000, respectively. Total net jewelry inventories at December 31, 2011 and 2010, including inventory on consignment net of reserves and including new jewelry manufactured by the Company since entering the finished jewelry business in 2010, were $4.11 million and $2.48 million, respectively. Jewelry inventories consist primarily of finished goods, a portion of which the Company acquired as part of a January 2009 settlement agreement with a former manufacturer customer to reduce the outstanding receivable to the Company. Due to the lack of a plan to market this inventory at that time, a jewelry inventory reserve was established to reduce the majority of the jewelry inventory value to scrap value, or the amount the Company would expect to obtain by melting the gold in the jewelry and returning to loose-jewel finished goods inventory those jewels that meet grading standards. This scrap reserve has declined as the associated jewelry is sold down, with a balance of $173,000 and $496,000 at December 31, 2011 and 2010, respectively. The finished jewelry inventories at December 31, 2011 also include an inventory reserve for jewelry in need of repair of $45,000. |
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The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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PROPERTY AND EQUIPMENT
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Dec. 31, 2011
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| PROPERTY AND EQUIPMENT |
Property and equipment consists of the following:
Depreciation expense for the years ended December 31, 2011 and 2010 was approximately $247,000 and $88,000, respectively. |
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The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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INTANGIBLE ASSETS
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Dec. 31, 2011
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| INTANGIBLE ASSETS |
Intangible assets consist of the following:
Amortization expense for the years ended December 31, 2011 and 2010 was approximately $52,000 and $49,000, respectively. Amortization expense on existing intangible assets is estimated to be $58,000 per year for 2012 through 2014, $49,000 for 2015, $20,000 for 2016, and $6,000 thereafter. |
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The entire disclosure for all or part of the information related to intangible assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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COMMITMENTS AND CONTINGENCIES
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Dec. 31, 2011
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| COMMITMENTS AND CONTINGENCIES |
Lease Commitments In March 2004, the Company entered into a seven-year lease, beginning in August 2004, for approximately 16,500 square feet of mixed-use space from an unaffiliated third party at a base cost with escalations throughout the lease term plus additional common-area expenses based on the Company's proportionate share of the lessor's operating costs. The lease provided for two rent holidays, during which no rent was payable, and a moving allowance. In January 2011, the Company amended the lease effective January 1, 2011 to extend the term through January 2017 in exchange for a reduced rental rate and 50% rent abatement in the first 12 months of the extended term. The amended lease includes 3% annual rent escalations and a one-time option to terminate the lease effective as of July 31, 2014. The Company recognizes rent expense on a straight-line basis, giving consideration to the rent holidays, the moving allowance paid to the Company, and the rent abatement. At the Company's option, the amended lease can be extended for one five-year period. As of December 31, 2011, the Company's future minimum payments under this operating lease were as follows:
Rent expense for the years ended December 31, 2011 and 2010 was approximately $210,000 and $197,000, respectively. Purchase Commitments On June 6, 1997, the Company entered into an amended and restated exclusive supply agreement with Cree, Inc. (“Cree”). The exclusive supply agreement had an initial term of ten years that was extended in January 2005 to July 2015. In connection with the amended and restated exclusive supply agreement, the Company has committed to purchase from Cree a minimum of 50%, by dollar volume, of its raw material SiC crystal requirements. If the Company's orders require Cree to expand beyond specified production levels, the Company must commit to purchase certain minimum quantities. There exist no outstanding purchase commitments under the amended and restated exclusive supply agreement as of December 31, 2011. Legal Proceedings On July 26, 2011, the Company learned that BetterThanDiamond.com requested that the U.S. Patent and Trademark Office (“USPTO”) conduct an ex parte re-examination of the Company's U.S. Patent No. 5,723,391 (the “‘391 Patent”) for manufacturing silicon carbide gemstones based on claims of prior art. On October 5, 2011, the USPTO granted the re-examination request based on its finding that the information provided in the request raises “a substantial new question of patentability.” The Company firmly believes that the ‘391 Patent is valid and enforceable and is committed to vigorously defending the ‘391 Patent. |
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The entire disclosure for commitments and contingencies. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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SHAREHOLDERS' EQUITY AND STOCK BASED COMPENSATION
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Dec. 31, 2011
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| SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHAREHOLDERS' EQUITY AND STOCK- BASED COMPENSATION |
Common Stock The Company is authorized to issue 50,000,000 shares of common stock, no par value. As of December 31, 2011 and 2010, it had 19,454,689 and 19,291,568 shares of common stock outstanding, respectively. Holders of common stock are entitled to one vote for each share held. In November 2009, the Board of Directors authorized a repurchase program for up to 1,000,000 shares of the Company's common stock. The Board authorized an extension of the program in August 2010, and on August 9, 2011, the Board authorized a further extension of the program through August 12, 2012. Repurchases can be made in the open market or in privately negotiated transactions. The Company expects to use available cash to finance these purchases and will determine the timing and amount of stock repurchases based on its evaluation of market conditions, the market price of its common stock, and management's assessment of the Company's liquidity and cash flow needs. During the year ended December 31, 2011, the Company repurchased 149,117 shares. As of March 23, 2012, the Company has repurchased an aggregate of 190,787 shares, and there remained 809,213 shares of the Company's common stock approved for repurchase under the repurchase program. Repurchased shares become authorized but unissued shares of the Company's common stock available for issuance. Preferred Stock The Board of Directors is authorized, without further shareholder approval, to issue up to 10,000,000 shares of preferred stock, no par value. The preferred stock may be issued from time to time in one or more series. No shares of preferred stock had been issued as of December 31, 2011. Shareholder Rights Plan On February 21, 1999, the Company adopted, as a means to guard against abusive takeover tactics, a Shareholder Rights Plan (the “Rights Plan”), as amended by Amendment No. 1 dated as of February 18, 2009, under which all common shareholders of record as of March 8, 1999 received a dividend distribution of one right for each outstanding share of the Company's common stock to purchase shares of a new series of preferred stock. One right would also be distributed for each share of common stock issued after March 8, 1999 until the distribution date, which would occur upon the earlier of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons had acquired beneficial ownership of 20% or more of the outstanding shares of the Company's common stock, or (ii) 10 business days following the commencement of a tender offer or exchange offer that would, if consummated, result in a person or group beneficially owning 20% or more of such outstanding shares of the Company's common stock, subject to certain limitations. The rights would be exercisable only if a person or group acquires or announces a tender offer to acquire 20% or more of the Company's common stock. If a person or group acquires 20% or more of the Company's common stock, all shareholders except the purchaser would be entitled to acquire the Company's common stock at a 50% discount. The rights would trade with the Company's common stock, unless and until they are separated upon the occurrence of certain future events. On August 15, 2011, the Company and American Stock Transfer & Trust Company, LLC, as rights agent, entered into Amendment No. 2 to the Rights Plan (the “Amendment”) amending the Company's Rights Plan. The Amendment accelerated the expiration of the preferred share purchase rights issued under the Rights Agreement in connection with the Rights Plan from the close of business on February 22, 2019 to the close of business on August 15, 2011. Accordingly, as of the close of business on August 15, 2011, the rights issued under the Rights Plan expired and are no longer outstanding. The Amendment has the effect of terminating the Rights Plan effective August 15, 2011. Equity Compensation Plans 1996 Stock Option Plan In 1996, the Company adopted the 1996 Stock Option Plan of Charles & Colvard, Ltd. (the “1996 Option Plan”), under which stock options to acquire 1,020,402 common shares, reduced by the number of stock options granted outside the 1996 Option Plan, could be granted to key employees, directors, and independent contractors. Under the 1996 Option Plan, both incentive and non-qualified stock options could be granted under terms and conditions established by the Compensation Committee of the Board of Directors. The exercise price for incentive stock options was the fair market value of the related common stock on the date the stock option was granted. Stock options granted under the 1996 Option Plan generally vested equally over a three-year period and had terms of 10 years. As of December 31, 2011 and 2010, there were no outstanding stock options under the 1996 Option Plan, and the Company currently has no plans to award additional stock options under this plan. 1997 Omnibus Stock Plan In 1997, the Company adopted the 1997 Omnibus Stock Plan of Charles & Colvard, Ltd. (the “1997 Omnibus Plan”). The 1997 Omnibus Plan authorized the Company to grant stock options, stock appreciation rights, and restricted stock awards (collectively, “awards”) to selected employees, independent contractors, and directors of the Company and related corporations in order to promote a closer identification of their interests with those of the Company and its shareholders. All stock options granted under the 1997 Omnibus Plan have an exercise price equal to the market price of the Company's common stock on the date the stock option was granted. Stock options granted to employees under the 1997 Omnibus Plan generally vest over three years and have terms of up to 10 years, with the exception of stock options granted in 2005 under the Executive Compensation Plan (which is governed by and subject to the 1997 Omnibus Plan) that vested immediately and stock options granted in 2006 under the Executive Compensation Plan that vested at the end of three years. Stock options granted to the Board of Directors under the 1997 Omnibus Plan generally vested over one year and have terms of up to 10 years. The terms of stock options granted to independent contractors varied depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vested at the end of one year. The 1997 Omnibus Plan expired (with respect to future grants) on September 30, 2007. As of December 31, 2011 and 2010, there were 70,892 and 95,698 stock options outstanding under the 1997 Omnibus Plan, respectively. 2008 Stock Incentive Plan In May 2008, the shareholders of the Company approved the adoption of the Charles & Colvard, Ltd. 2008 Stock Incentive Plan (the “2008 Plan”), which replaced the 1997 Omnibus Plan. The 2008 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted stock, and other equity awards to selected employees, directors, and independent contractors. The aggregate number of shares of the Company's common stock that may be issued pursuant to awards granted under the 2008 Plan shall not exceed the sum of 3,000,000 plus any shares of common stock subject to an award granted under the 1997 Omnibus Plan or any other stock incentive plan maintained by the Company prior to the 2008 Plan (each, a “Prior Plan”) that is forfeited, cancelled, terminated, expires, or lapses for any reason without the issuance of shares pursuant to the award, or shares subject to an award granted under a Prior Plan which shares are forfeited to, or repurchased or reacquired by, the Company. Stock options granted to employees under the 2008 Plan generally vest over three years and have terms of up to 10 years. The vesting schedules and terms of stock options granted to independent contractors vary depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vest at the end of one year on the date of the Annual Meeting of Shareholders. The vesting schedules of restricted stock awards granted to employees or independent contractors vary depending on the specific grant but are generally three years or less. Only stock options and restricted stock have been granted under the 2008 Plan. As of December 31, 2011 and 2010, there were 1,086,687 and 564,752 stock options outstanding under the 2008 Plan, respectively. Stock-Based Compensation The following table summarizes the components of the Company's stock-based compensation included in net income:
Due to the Company's valuation allowance against deferred tax assets as discussed further in Note 11, “Income Taxes,” some or all of the above income tax benefit was reserved as of December 31, 2011 and 2010. No stock-based compensation was capitalized as a cost of inventory during the years ended December 31, 2011 and 2010. Stock Options The following is a summary of the stock option activity for the years ended December 31, 2011 and 2010:
The weighted average grant date fair value of stock options granted during the years ended December 31, 2011 and 2010 was $1.83 and $1.44, respectively. The total fair value of stock options that vested during the years ended December 31, 2011 and 2010 was approximately $420,000 and $121,000, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the years ended December 31, 2011 and 2010:
The following table summarizes information about stock options outstanding at December 31, 2011:
As of December 31, 2011, the unrecognized stock-based compensation expense related to unvested stock options was approximately $787,000, which is expected to be recognized over a weighted average period of approximately 29 months. The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at December 31, 2011 was approximately $862,000, $564,000, and $830,000, respectively. This amount is before applicable income taxes and represents the closing market price of the Company's common stock at December 31, 2011 less the grant price, multiplied by the number of stock options that had a grant price that is less than the closing market price. This amount represents the amount that would have been received by the optionees had these stock options been exercised on that date. During the years ended December 31, 2011 and 2010, the aggregate intrinsic value of stock options exercised was approximately $48,000 and $205,000, respectively. Restricted Stock The following is a summary of the restricted stock activity for the years ended December 31, 2011 and 2010:
As of December 31, 2011, the unrecognized stock-based compensation expense related to unvested restricted stock was approximately $454,000, which is expected to be recognized over a weighted average period of approximately 31 months. Dividends The Company has not paid any cash dividends during the years ended December 31, 2011 and 2010. |
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- Definition
The entire disclosure for shareholders' equity and compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. No definition available.
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INCOME TAXES
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Dec. 31, 2011
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| INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES |
The Company accounts for income taxes under the liability method. Under the liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. Income tax net benefit comprises the following:
Significant components of the Company's deferred income tax assets are as follows:
A reconciliation between expected income taxes, computed at the statutory federal income tax rate of 34% applied to pretax accounting income, and the income tax expense included in the consolidated statements of operations for each of the years ended December 31, 2011 and 2010 is as follows:
For the years ended December 31, 2011 and 2010, the Company did not recognize an income tax benefit for net operating loss carryforwards due to the uncertainty of sufficient future taxable income to utilize its deferred tax assets. The valuation allowance decreased in 2011 and increased in 2010 to fully offset all deferred tax assets generated during those years. The decrease in the valuation allowance as of December 31, 2011 was partially offset by a $138,000 expense associated with stock-based compensation timing differences and a $60,000 expense related to a statutory tax rate decrease on losses associated with a controlled company in China that ceased operations in 2008. The increase in the valuation allowance as of December 31, 2010 was partially offset by a $113,000 benefit associated with the carryback of net operating losses to the 2004 and 2005 tax years and a $810,000 benefit associated with an inventory valuation adjustment resulting from the Company's change in its method of accounting for inventories from the FIFO method to the average cost method effective as of January 1, 2010. As of December 31, 2011, the Company had approximately $1.01 million of remaining federal income tax credits, $666,000 of which expire between 2012 and 2021 and the balance without an expiration, which can be carried forward to offset future income taxes. As of December 31, 2011, the Company also had a federal tax net operating loss carryforward under U.S. GAAP of approximately $6.21 million expiring between 2020 and 2030, which can be used to offset against future federal taxable income, a North Carolina tax net operating loss carryforward of approximately $11.90 million expiring between 2015 and 2025, and various other state tax net operating loss carryforwards expiring between 2024 and 2030, which can be used to offset against future state taxable income. As of December 31, 2011, there was approximately $6.03 million in net operating loss carryforwards in Hong Kong. In accordance with the Hong Kong tax code, these amounts can be carried forward indefinitely to offset future taxable income in Hong Kong. Uncertain Tax Positions The gross liability for income taxes associated with uncertain tax positions at December 31, 2011 was $865,000. This amount is shown net of approximately $123,000 recorded as a direct reduction to the associated deferred tax asset. The gross liability, if recognized, would favorably affect the Company's effective tax rate. A federal income tax benefit for state income taxes and timing differences of approximately $223,000 resulting from the uncertain tax positions was fully reserved by a valuation allowance consistent with the full valuation allowance on the Company's other deferred tax assets. The total 2011 income tax benefit attributable to uncertain tax positions was approximately $196,000. During the year ended December 30, 2011, the Company entered into a voluntary disclosure agreement with a taxing authority for which the Company had previously recorded a liability for an uncertain tax position. As a result of the agreement, the Company reduced its total recorded liabilities relating to uncertain tax positions by approximately $252,000 and recognized a corresponding income tax benefit. This benefit was offset by approximately $57,000 of income tax expense for estimated tax, penalties, and interest accrued under U.S. GAAP for other uncertain tax positions, including $4,000 for new uncertain tax positions during 2011. The gross liability for income taxes associated with uncertain tax positions at December 31, 2010 was $1.06 million. This amount is shown net of approximately $123,000 recorded as a direct reduction to the associated deferred tax asset. The gross liability, if recognized, would favorably affect the Company's effective tax rate. A federal income tax benefit for state income taxes and timing differences of approximately $290,000 resulting from the uncertain tax positions was fully reserved by a valuation allowance consistent with the full valuation allowance on the Company's other deferred tax assets. The total 2010 income tax benefit attributable to uncertain tax positions was approximately $121,000. There was no additional liability for new uncertain tax positions during 2010. The Company recognized approximately $143,000 of additional income tax benefit, consisting of a $102,000 reduction of a deferred tax asset valuation allowance to offset liabilities associated with an uncertain tax position and approximately $41,000 of income tax benefits due to the reduction of the penalties and interest associated with the same uncertain tax position. These benefits were offset by approximately $43,000 of income tax expense for estimated tax, penalties, and interest accrued under U.S. GAAP for other uncertain tax positions. The Company's policy for recording interest and penalties associated with tax audits is to record such items as a component of the provision for income taxes. During 2011 and 2010, the Company accrued interest and penalties associated with uncertain tax positions of approximately $57,000 and $43,000, respectively. Including the interest and penalties recorded for uncertain tax positions, there is a total of approximately $263,000 and $298,000 of interest and penalties included in the accrued income tax liability for uncertain tax positions at December 31, 2011 and 2010, respectively. To the extent interest and penalties are not ultimately incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. In all of the significant federal and state jurisdictions where it is required to file income tax returns, the Company has analyzed filing positions for all tax years in which the statute of limitations is open. The only periods subject to examination by the major tax jurisdictions where the Company does business are the 2008 through 2010 tax years. The Company expects in the first quarter of 2012 to enter into a voluntary disclosure agreement with a taxing authority for which the Company had previously recorded a liability for an uncertain tax position. The liability associated with the uncertain tax position has been accrued in excess of the agreed upon net liability, and the reversal of this accrued liability is expected to result in a material tax benefit during the three months ended March 31, 2012. The Company does not believe that the outcome of any examination will have a material impact on its consolidated financial statements and does not expect settlement on any uncertain tax positions within the next 12 months. The following summarizes the activity related to the Company's gross liability for uncertain tax positions from January 1, 2010 through December 31, 2011:
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The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
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Dec. 31, 2011
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| Major Customers And Concentration Of Credit Risk [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK |
As of December 31, 2011, three customers accounted for 29%, 12%, and 10% of trade accounts receivable, respectively. As of December 31, 2010, five customers accounted for 30%, 24%, 13%, 13%, and 12% of trade accounts receivable, respectively. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total gross sales:
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The entire disclosure for the extent of the entity's reliance on its major customers. If revenues from transactions with a single external customer amount to 10 percent or more of entity revenues, the disclosure of that fact, the total amount of revenues from each such customer, and the identity of the reportable segment or segments reporting the revenues. The entity need not disclose the identity of a major customer or the amount of revenues that each segment reports from that customer. No definition available.
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EMPLOYEE BENEFIT PLAN
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Dec. 31, 2011
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| EMPLOYEE BENEFIT PLAN [Abstract] | |||
| EMPLOYEE BENEFIT PLAN |
All full-time employees who meet certain age and length of service requirements are eligible to participate in the Company's 401(k) Plan. The plan provides for matching contributions by the Company in such amounts as the Board of Directors may annually determine, as well as a 401(k) option under which eligible participants may defer a portion of their salaries. The Company contributed a total of $41,000 and $21,000 to the plan during the years ended December 31, 2011 and 2010, respectively. |
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The entire disclosure for pension and other postretirement benefits. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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