Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Sep. 30, 2017	Dec. 04, 2017	Mar. 31, 2017
Document and Entity Information
Entity Registrant Name	LIQUIDITY SERVICES INC
Entity Central Index Key	0001235468
Document Type	10-K
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 202,237,496
Entity Common Stock, Shares Outstanding		31,889,679
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2016
Current assets:
Cash and cash equivalents	$ 94,348	$ 134,513
Accounts receivable, net of allowance for doubtful accounts of $668 and $718 in 2017 and 2016, respectively	11,598	10,355
Inventory	20,736	27,610
Tax refund receivable	357	1,205
Prepaid taxes	2,109	2,166
Prepaid expenses and other current assets	9,774	9,063
Total current assets	138,922	184,912
Property and equipment, net	16,793	14,376
Intangible assets, net	427	2,650
Goodwill	45,388	45,134
Net deferred long-term tax assets	962	1,021
Other assets	12,737	12,016
Total assets	215,229	260,109
Current liabilities:
Accounts payable	13,099	9,732
Accrued expenses and other current liabilities	30,193	45,133
Distributions payable	3,081	1,722
Payables to sellers	24,383	28,901
Total current liabilities	70,756	85,488
Deferred taxes and other long-term liabilities	11,837	12,010
Total liabilities	82,593	97,498
Commitments and contingencies (Notes 7 and 15)	0	0
Stockholders' equity:
Common stock, $0.001 par value; 120,000,000 shares authorized; 31,503,349 shares issued and outstanding at September 30, 2017; 30,742,662 shares issued and outstanding at September 30, 2016	29	29
Additional paid-in capital	227,264	220,192
Accumulated other comprehensive loss	(6,431)	(8,571)
Retained earnings (accumulated deficit)	(88,226)	(49,039)
Total stockholders' equity	132,636	162,611
Total liabilities and stockholders' equity	$ 215,229	$ 260,109

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 668	$ 718
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	31,503,349	30,742,662
Common stock, shares outstanding	31,503,349	30,742,662

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue	$ 188,570	$ 233,828	$ 315,668
Fee revenue	81,445	82,626	81,457
Total revenue from operations	270,015	316,454	397,125
Costs and expenses from operations:
Cost of goods sold	126,227	143,127	166,009
Seller distributions	19,298	11,214	28,093
Technology and operations	82,988	93,405	99,550
Sales and marketing	35,211	37,570	41,465
General and administrative	35,835	39,717	41,338
Depreciation and amortization	5,796	6,502	9,235
Acquisition costs and related fair value adjustments and impairment of goodwill and long-lived assets	1,009	19,037	147,414
Business disposition loss	0	0	7,963
Other operating expenses	3,651	0	273
Total costs and expenses	310,015	350,572	541,340
Loss from operations	(40,000)	(34,118)	(144,215)
Interest (income) expense and other expense, net	(362)	(1,217)	171
Loss before provision for income taxes	(39,638)	(32,901)	(144,386)
(Benefit) provision for income taxes	(451)	27,025	(39,571)
Net loss	$ (39,187)	$ (59,926)	$ (104,815)
Basic and diluted loss per common share (USD per share)	$ (1.25)	$ (1.96)	$ (3.50)

Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (39,187)	$ (59,926)	$ (104,815)
Other comprehensive (loss) income:
Defined benefit pension plan—unrecognized amounts, net of taxes	1,589	(2,547)	1,101
Foreign currency translation	551	(398)	(3,276)
Other comprehensive income (loss), net of taxes	2,140	(2,945)	(2,175)
Comprehensive loss	$ (37,047)	$ (62,871)	$ (106,990)

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Treasury Stock	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Accumulated Loss)
Balance (in shares) at Sep. 30, 2014			29,668,150
Balance at Sep. 30, 2014	$ 316,983		$ 28	$ 204,704	$ (3,451)	$ 115,702
Increase (Decrease) in Stockholders' Equity
Common stock repurchase (in shares)	0	0
Common stock repurchase	$ 0	$ 0	$ 0
Common stock retired (in shares)		0	0
Common stock retired		$ 0		0		0
Exercise of common stock options and restricted stock (in shares)			358,073
Exercise of common stock options and restricted stock	106		$ 1	105
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock	5,903			5,903
Net (loss) income	(104,815)
Defined benefit pension plan- unrecognized amounts, net of taxes	1,101				1,101
Foreign currency translation	(3,276)				(3,276)
Balance (in shares) at Sep. 30, 2015			30,026,223
Balance at Sep. 30, 2015	$ 216,002		$ 29	210,712	(5,626)	10,887
Increase (Decrease) in Stockholders' Equity
Common stock repurchase (in shares)	0
Common stock repurchase	$ 0
Exercise of common stock options and restricted stock (in shares)			716,439
Exercise of common stock options and restricted stock	9		$ 0	9
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock	9,471			9,471
Net (loss) income	(59,926)
Defined benefit pension plan- unrecognized amounts, net of taxes	(2,547)				(2,547)
Foreign currency translation	(398)				(398)
Balance (in shares) at Sep. 30, 2016			30,742,662
Balance at Sep. 30, 2016	$ 162,611		$ 29	220,192	(8,571)	(49,039)
Increase (Decrease) in Stockholders' Equity
Common stock repurchase (in shares)	0
Common stock repurchase	$ 0
Exercise of common stock options and restricted stock (in shares)			760,687
Exercise of common stock options and restricted stock	93			93
Compensation expense and incremental tax benefit from grant of common stock options and issuance of restricted stock	6,979			6,979
Net (loss) income	(39,187)
Defined benefit pension plan- unrecognized amounts, net of taxes	1,589
Foreign currency translation	551
Balance (in shares) at Sep. 30, 2017			31,503,349
Balance at Sep. 30, 2017	$ 132,636		$ 29	$ 227,264	$ (6,431)	$ (88,226)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2015
Operating activities
Net loss	$ (39,187)	$ (59,926)	$ (104,815)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,796	6,502	9,235
Business disposition loss	0	0	7,963
Gain on reversal of earnout liability	(954)	0	0
Stock compensation expense	7,377	12,247	12,405
Provision (benefit) for inventory allowance	10,381	2,676	(575)
Provision for doubtful accounts	357	247	1,109
Deferred tax (benefit) expense	(620)	26,177	(6,282)
Impairment of goodwill and long-lived assets	1,963	18,998	147,414
Change in fair value of financial instruments	(573)	0	0
Incremental tax loss from exercise of common stock options and restricted stock	1,198	229	38
Changes in operating assets and liabilities:
Accounts receivable	(1,611)	(4,408)	12,651
Inventory	(3,507)	(4,776)	43,101
Prepaid and deferred taxes	730	27,057	(38,545)
Prepaid expenses and other assets	(1,024)	(160)	(1,499)
Accounts payable	3,192	232	(4,534)
Accrued expenses and other current liabilities	(14,882)	17,151	(18,895)
Distributions payable	1,359	(790)	(2,228)
Payables to sellers	(4,519)	(901)	(11,742)
Other liabilities	2,871	5,283	(1,310)
Net cash (used) provided by operating activities	(31,653)	45,838	43,491
Investing activities
Cash paid in divestiture	0	0	(2,372)
Increase in intangibles	(119)	(62)	(137)
Purchases of property and equipment, including capitalized software	(7,805)	(6,090)	(7,312)
Net cash used in investing activities	(7,924)	(6,152)	(9,821)
Financing activities
Proceeds from exercise of common stock options (net of tax)	92	9	106
Incremental tax loss from exercise of common stock options and restricted stock	(1,198)	(229)	(38)
Net cash (used in) provided by financing activities	(1,106)	(220)	68
Effect of exchange rate differences on cash and cash equivalents	518	(418)	(871)
Net (decrease) increase in cash and cash equivalents	(40,165)	39,048	32,867
Cash and cash equivalents at beginning of period	134,513	95,465	62,598
Cash and cash equivalents at end of period	94,348	134,513	95,465
Supplemental disclosure of cash flow information
Cash received (paid) for income taxes	$ 793	$ 33,966	$ (5,678)

Organization	12 Months Ended
Organization	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Liquidity Services (the “Company”) operates a network of leading ecommerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. The Company’s marketplaces provide professional buyers access to a global, organized supply of new, surplus, and scrap assets presented with digital images and other relevant product information. Additionally, the Company enables its corporate and government sellers to enhance their financial return on offered assets by providing a liquid marketplace and value-added services that encompass the consultative management, valuation, and sale of surplus assets. The Company's broad range of services include program management, valuation, asset management, reconciliation, Return to Vendor ("RTV") and Returns Management Authorization ("RMA"), refurbishment and recycling, fulfillment, marketing and sales, warehousing and transportation, buyer support, and compliance and risk mitigation. The Company organizes the products on its marketplaces into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, energy equipment, industrial capital assets, fleet and transportation equipment and specialty equipment. The Company’s marketplaces are www.liquidation.com, www.govliquidation.com, www.govdeals.com, www.networkintl.com, www.secondipity.com, www.go-dove.com, www.unclesamsretailoutlet.com, www.irondirect.com, and www.auctiondeals.com. The Company has over 10,000 sellers, including Fortune 1000 and Global 500 organizations as well as federal, state, and local government agencies. As of September 30, 2017, the Company has three reportable segments, Retail Supply Chain Group (RSCG), Capital Assets Group (CAG), and GovDeals. See Note 16 in the Notes to the Consolidated Financial Statements for Segment Information. The Company's operations are subject to certain risks and uncertainties, many of which are associated with technology-oriented companies, including, but not limited to, the Company's dependence on use of the Internet, the effect of general business and economic trends, the Company's susceptibility to rapid technological change, actual and potential competition by entities with greater financial and other resources, and the potential for the U.S. Government agencies, or the commercial sellers from which the Company derives a significant portion of its inventory to change the way they conduct their disposition of surplus assets or to otherwise not renew their contracts with the Company. The Company has evaluated subsequent events through the date that these financial statements were issued and filed with the Securities and Exchange Commission. See Note 18 in the Notes to the Consolidated Financial Statements for the Subsequent Event disclosure.

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Certain prior period amounts have been reclassified to conform to the current year's presentation. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In addition, in the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included.

Business Combinations

The Company recognizes all of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs incurred in periods subsequent to the acquisition date are expensed when incurred. Subsequent changes to the purchase price (i.e., working capital adjustments) or other fair value adjustments determined during the measurement period are recorded as an adjustment to goodwill, with the exception of contingent consideration, which is recognized in the statement of operations in the period it is modified. All subsequent changes to a valuation allowance or uncertain tax position that relate to the acquired company and existed at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. All other changes in valuation allowances are recognized as a reduction or increase to income tax expense or as a direct adjustment to additional paid-in capital as required.

Cash and Cash Equivalents

The Company considers all highly liquid securities purchased with an initial maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Allowances are based on management’s judgment, which considers historical experience and specific knowledge of accounts where collectability may not be probable. The Company makes provisions based on historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general economic conditions.

Inventory

Inventory consists of property obtained for resale, generally through the online auction process, and is stated at the lower of cost or market. Cost is generally determined using the specific identification method. Charges for unsellable inventory, as well as for inventory written down to expected market price, are included in Cost of goods sold in the period in which they have been determined to occur. During fiscal 2017, the Company recorded a $3.1 million inventory reserve within its IronDirect operating segment, as the carrying value of this inventory was written down to its expected market value. As of September 30, 2017, and 2016, the Company's inventory reserve was approximately $4.6 million and $3.4 million, respectively.

Prepaid expenses and other current assets

Prepaid expenses and other current assets includes prepaid income tax, financial assets, the short-term portion of a promissory note, as well as other miscellaneous prepaid expenses. Financial assets are related to participation agreements for principal transactions in the Company's commercial business. Changes in the fair value of the Company's financial assets are recorded in Other operating expense. See Note 11 in the Notes to the Consolidated Financial Statements for further information.

Other Assets

On September 30, 2015, the Company sold certain assets related to its Jacobs Trading business to Tanager Acquisitions, LLC (the ‘‘Buyer’’). In connection with the disposition, the Buyer assumed certain liabilities related to the Jacobs Trading business. The Buyer issued a $12.3 million 5-year interest bearing promissory note to the Company. Of the $12.3 million, $1.0 million has been repaid as of September 30, 2017, and another $1.5 million was repaid in October 2017. Of the $11.3 million outstanding at September 30, 2017, $8.3 million was recorded in Other assets, and $3.0 million in Prepaid expenses and other current assets as of September 30, 2017.

Property and Equipment

Property and equipment is recorded at cost, and depreciated or amortized on a straight-line basis over the following estimated useful lives:



Computers and purchased software		One to five years
Office equipment		Three to five years
Furniture and fixtures		Five to seven years
Internally developed software for internal-use		Five years
Leasehold improvements		Shorter of lease term or useful life
Buildings		Thirty-nine years
Land		Not depreciated

Intangible Assets

Intangible assets primarily consist of contract acquisition costs, covenants not to compete, customer relationships and other intangible assets associated with acquisitions. Intangible assets are amortized using the straight-line method over their estimated useful lives, ranging from three to ten years.

Impairment of Long-Lived Assets

Long-lived assets, including definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. During the year ended September 30, 2017, the Company recorded a $1.2 million impairment of a contract intangible associated with its IronDirect business, and a $0.6 million impairment to leasehold improvements, also within its IronDirect business. No impairment was recorded during the fiscal year ended September 30, 2016.

Goodwill

Goodwill is reviewed for impairment annually or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or the loss of a significant buyer. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more than likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further testing of goodwill assigned to the reporting unit is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company applies a two-step fair value-based test to assess goodwill for impairment. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step is then performed. The second step compares the carrying amount of the reporting unit's goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount, an impairment loss would be recorded in the statement of operations.

The annual goodwill impairment assessment was performed as of July 1, 2017, for fiscal year 2017.

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met:


•	a buyer submits the winning bid in an auction and, as a result, evidence of an arrangement exists, and the sale price has been determined;


•	the buyer has assumed the risks and rewards of ownership; and


•	collection is reasonably assured.

Revenue is also evaluated to determine whether the Company should report the gross proceeds as revenue (when the Company acts as the principal in the arrangement) or the Company should report its net commissions and related fees as revenue (when the Company acts as an agent). In arrangements in which the Company is deemed to be the primary obligor, bears physical and general inventory risk, and credit risk, the Company recognizes as revenue the gross proceeds from the sale, including buyer's premiums. The Company has evaluated its revenue recognition policy related to sales under its purchase transaction model and determined it is appropriate to account for these sales on a gross basis. In the Company's evaluation, the Company relied most heavily upon its status as primary obligor in the sales relationship and the fact that the Company has general inventory risk.

In arrangements in which the Company acts as an agent or broker on a consignment basis, without taking physical or general inventory risk, revenue is recognized based on the sales commissions that are paid to the Company by the sellers for utilizing the Company's services; in this situation, sales commissions represent a percentage of the gross proceeds from the sale that the seller pays to the Company upon completion of the transaction. Such revenue as well as other fee revenue is presented as Fee Revenue in the Consolidated Statements of Operations.

The Company collects and remits sales taxes on merchandise that it purchases and sells, and reports such amounts under the net method in its Consolidated Statements of Operations.

Cost of Goods Sold

Cost of goods sold includes the costs of purchasing and transporting property for auction as well as credit card transaction fees. The Company purchases the majority of its inventory at a percentage of the vendor's original acquisition cost under the Surplus Contract and certain commercial contracts, at a percentage of the vendor's last retail price under certain commercial contracts, and at a fixed price per pound that varies depending on the type of the inventory purchased under the Scrap Contract. Title for the inventory passes to the Company at the time of purchase and the Company bears the risks and rewards of ownership. The Company does not have title to assets sold on behalf of its commercial or government sellers when it receives only sales commission revenue and, as such, recognizes no inventory and related cost of goods sold associated with those sales. Cost of goods sold also includes shipping and handling costs.

Risk Associated with Certain Concentrations

The Company does not perform credit evaluations for the majority of its buyers. However, substantially all sales are recorded subsequent to payment authorization being received. As a result, the Company is not subject to significant collection risk, as most goods are not shipped before payment is received.

For consignment sales transactions, funds are typically collected from buyers and are held by the Company on the sellers' behalf. The funds are included in cash and cash equivalents in the consolidated financial statements. The Company releases the funds to the seller, less the Company's commission and other fees due, after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business. The amount of cash held on behalf of the sellers is recorded as Payables to sellers in the accompanying Consolidated Balance Sheets.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents in banks over FDIC limits, and accounts receivable. The Company deposits its cash with financial institutions that the Company considers to be of high credit quality.

The Company has two material vendor contracts with the Department of Defense (DoD) under which it acquires, manages and sells government property. Revenue from the sale of property acquired, as well as provision of services, under the current Surplus Contract accounted for 27.6%, 31.0%, and 24.7%, of the Company's consolidated revenue for the fiscal years ended September 30, 2017, 2016, and 2015, respectively. Revenue from the sale of property acquired under the Scrap contract accounted for approximately 11.1%, 10.2% and 15.3% of the Company's total revenue for the fiscal years ended September 30, 2017, 2016 and 2015, respectively.

Additionally, we have a vendor contract with Amazon.com, Inc. under which we acquire and sell commercial merchandise. The property we purchased under this contract represented approximately 21.8%, 12.1%, and 6.9% of cost of goods sold for the fiscal years ended September 30, 2017, 2016 and 2015, respectively. This contract is included within our RSCG segment.

Income Taxes

The Company accounts for income taxes using an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statement and income tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which the taxes are expected to be paid or recovered. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such determination, we consider all available positive and negative evidence to estimate whether future taxable income will be generated to permit use of the existing deferred tax asset. The resulting net tax asset reflects management's estimate of the amount that will be realized.

The Company applies the authoritative guidance related to uncertainty in income taxes. Accounting Standards Codification (ASC) 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits. The Company records unrecognized tax benefits as a reduction to its deferred tax asset for its net operating loss carryforward. During fiscal year 2016, the Company reduced its net operating loss carryforward by $0.7 million for unrecognized tax benefits related to federal and state tax exposures. During fiscal year 2017, the Company reduced its net operating loss carryforward by $3.0 million for unrecognized tax benefits related to federal and state tax exposures. The Company’s policy is to recognize interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions including, among others, Canada and the U.K.

Stock-Based Compensation

The Company estimates the fair value of share-based awards on the date of grant. The fair value of stock options and stock appreciation rights is determined using the Black-Scholes option-pricing model. The fair value of restricted stock units is based on the closing price of the Company’s common stock on the date of grant. The determination of the fair value of the Company’s stock options and stock appreciation rights is based on a variety of factors including, but not limited to, the Company’s common stock price, expected stock price volatility over the expected life of units, and actual and projected exercise behavior. Additionally, the Company has estimated forfeitures for share-based awards at the dates of grant based on historical experience, adjusted for future expectation. The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates.

The Company issues restricted stock units where restrictions lapse upon either the passage of time (service vesting conditions), achievement of performance targets (performance vesting conditions), or some combination thereof. For those restricted stock units with only service vesting conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For restricted stock units with both performance and service vesting conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met.

The Company excludes stock options and restricted stock units that contain performance vesting conditions from diluted earnings per share computations until the contingency is met as of the end of that reporting period.

The Company presents the cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) as a financing activity with a corresponding operating cash outflow in the Consolidated Statements of Cash Flows when it is considered probable that those tax benefits will be realized.

Advertising Costs

Advertising expenditures are expensed as incurred. Advertising costs charged to expense were $5.2 million, $6.0 million and $5.3 million for the years ended September 30, 2017, 2016 and 2015, respectively.

Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, accounts payable, profit-sharing distributions payable, and payables to sellers reported in the Consolidated Balance Sheets approximate their fair values. The Company holds financial assets that are related to participation agreements for principal transactions in the Company's commercial business. Changes in the fair value of the Company's financial assets are recorded in Other operating expense.

Foreign Currency Translation

The functional currency of the Company's foreign subsidiaries is primarily the local currency. The translation of the subsidiary's financial statements into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in accumulated other comprehensive (loss) income, a separate component of stockholders' equity. Realized foreign currency transaction gains and losses for 2017, 2016 and 2015 are included in interest and other income (expense), net in the Consolidated Statements of Operations.

Accumulated Other Comprehensive Income (loss)

The following table shows the changes in accumulated other comprehensive income (loss), net of taxes (in thousands):



	Foreign Currency Translation Adjustments		Net Change Pension and Other Postretirement Benefit Plans		Accumulated Other Comprehensive Income (Loss)
Balance at September 30, 2014	(3,671	)	220		(3,451	)
Current-period other comprehensive (loss) income	(3,276	)	1,101		(2,175	)
Balance at September 30, 2015	(6,947	)	1,321		(5,626	)
Current-period other comprehensive loss	(398	)	(2,547	)	(2,945	)
Balance at September 30, 2016	(7,345	)	(1,226	)	(8,571	)
Current-period other comprehensive income	551		1,589		2,140
Balance at September 30, 2017	(6,794	)	363		(6,431	)

Earnings per Share

The Company calculates net income (loss) per share in accordance with Financial Accounting Standards Board (FASB) Topic 260 Earnings Per Share (“ASC 260”). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock units. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and unvested restricted stock units. The dilutive effect of unexercised stock options and unvested restricted stock units was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded in additional paid-in capital when stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. Stock options and restricted stock units are not included in the computation of diluted net income (loss) per share when they are antidilutive.

The Company has not included the following stock options in the calculation of diluted income per share because the option exercise prices were greater than the average market prices for the applicable periods:

(a) for the fiscal year ended September 30, 2017 1,023,072 options;

(b) for the fiscal year ended September 30, 2016 1,284,689 options; and

For the fiscal years ended September 30, 2017, 2016 and 2015, the basic and diluted weighted average common shares were the same because the inclusion of dilutive securities would have been anti-dilutive. Diluted net income attributable to common stockholders per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. See Note 10 in the Notes to the Consolidated Financial Statements for outstanding stock options and unvested restricted stock, all of which are anti-dilutive as of September 30, 2017.

The following summarizes the potential outstanding common stock of the Company as of the dates set forth below:



	September 30,
	2017			2016			2015
	(amounts in thousands except per share and share data)
Weighted average shares calculation:
Basic weighted average shares outstanding	31,402,921			30,638,163			29,987,985
Treasury stock effect of options and restricted stock	—			—			—
Diluted weighted average common shares outstanding	31,402,921			30,638,163			29,987,985
Net loss	$	(39,187	)	$	(59,926	)	$	(104,815	)
Basic and diluted loss per common share	$	(1.25	)	$	(1.96	)	$	(3.50	)

Recent Accounting Pronouncements

In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements—Going Concern, which requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern and to provide disclosures in certain circumstances. The new guidance was issued to reduce diversity in the timing and content of footnote disclosures. This guidance is effective for fiscal years, and interim reporting periods ending after December 15, 2016. The Company's adoption of this new standard for the year ended September 30, 2017, had no impact on the Company’s consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). The new standard will change certain aspects of accounting for share-based payments to employees. Under the new standard, the Company will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, the Company will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement when the awards vest or are settled. The APIC pools will be eliminated. For interim reporting purposes, the Company will account for excess tax benefits and tax deficiencies as discrete items in the period in which they occur. The new standard will also allow the Company to repurchase more of an employee’s shares than it can today for income tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The new guidance will require the Company to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. This guidance will become effective for the Company beginning on October 1, 2017. The Company does not expect the adoption of this standard to have a material effect upon its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805). ASU 2017-01 clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. This guidance will become effective for the Company beginning on October 1, 2018. The amendments in this update should be applied prospectively on or after the effective date. No disclosures are required at transition. The Company does not expect the adoption of this standard to have a material effect upon its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes most existing revenue recognition guidance under GAAP. The new standard will change the way the Company recognizes revenue and significantly expand the disclosure requirements for revenue arrangements. The guidance may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new and existing arrangements with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to retained earnings at the effective date for existing arrangements with remaining performance obligations. During fiscal year ended September 30, 2017, the Company initiated a formal project to assess the new standard, which is being completed in phases: the assessment phase followed by the implementation phase. The Company has substantially completed the assessment phase of its project. The assessment phase consisted of reviewing a representative sample of contracts, discussions with key stakeholders, and cataloging potential impacts on the Company’s accounting policies, financial statements, and systems and processes. The implementation team has apprised both management and the audit committee of project status on a recurring basis. The Company is continuing to evaluate the accounting impacts, and have identified some areas of the accounting guidance which will require more detailed analysis, including the principal-agent guidance, the transfer of control guidance, and the guidance on when certain services that we provide would be considered separate performance obligations. Because this assessment is preliminary and the accounting for revenue recognition is subject to significant judgment, this could change as the Company finalizes the implementation of the new standard. The Company does not yet know and cannot reasonably estimate the quantitative impact on the consolidated financial statements. This guidance will become effective for the Company beginning October 1, 2018, which is when the Company intends to adopt. The Company intends to adopt the new standard on a modified retrospective basis. This determination is subject to change based on finalization of our implementation work.

In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-5, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. ASU 2015-5 provides guidance regarding whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the software license element of the arrangement must be accounted for in a manner consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement must be accounted for as a service contract. ASU 2015-5 does not change the accounting for service contracts. ASU 2015-5 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted this standard beginning in fiscal year 2017, and it had no impact on the financial statements.

In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-2, Leases. ASU 2016-2 will change the way the Company recognizes its leased assets. ASU 2016-2 will require organizations that lease assets—referred to as "lessees"—to recognize on the balance sheet the assets and liabilities representing the rights and obligations created by those leases. ASU 2016-2 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The standard will be effective for the Company beginning on October 1, 2019. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company's consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350). Under ASU 2017-04 the entity should perform its annual or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance will become effective for the Company beginning on October 1, 2020. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company’s consolidated financial statements and related disclosures.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the cost of the benefits in the income statement. Under this standard, employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. This guidance will become effective for the Company beginning on October 1, 2018. The Company is currently evaluating the methods of adoption allowed by the new standard and the effect that adoption of the standard is expected to have on the Company’s consolidated financial statements and related disclosures.

Significant Contracts	12 Months Ended
Significant Contracts	Sep. 30, 2017
Contractors [Abstract]
Significant Contracts	Significant Contracts DLA Disposition Services The Company has two material vendor contracts with the DoD, the Surplus Contract and the Scrap Contract. Under the Surplus Contract the Company is the remarketer of all DoD non-rolling stock surplus turned into the DLA available for sale within the United States, Puerto Rico, and Guam. The Surplus Contract requires the Company to purchase all usable surplus property offered to the Company by the DoD at a fixed percentage of the DoD's OAV. This fixed percentage is 4.35%; prior to the date the current Surplus Contract became effective, this fixed percentage was 1.8%. The Company retains 100% of the profits from the resale of the property and bears all of the costs for the merchandising and sale of the property. Included in accrued expenses and other current liabilities in the Consolidated Balance Sheet is a liability to the DoD for the inventory that has not been paid for in the amount of $6.2 million and $16.1 million as of September 30, 2017 and 2016, respectively. The Surplus Contract permits either party to terminate the contract for convenience. The initial two-year base period ended in December 2016. On December 6, 2016, the DLA notified the Company that it was exercising the first 1-year extension option. The Surplus contract now extends through December 14, 2017. There are three remaining one-year options to extend the Surplus contract, exercisable by the DLA. See note 18 (Subsequent Event) in the Notes to the Consolidated Financial Statements for information about the bidding on the DLA’s Request for Technical Proposal, which was issued subsequent to September 30, 2017. The Company currently earns fees for services provided under the Surplus contract. Service fees may vary month-to-month based on services rendered, agreed pricing and volume of goods. Pricing declines negatively affected revenue under the Surplus contract beginning in the quarter ended June 30, 2017, and the Company anticipates service fee revenue will continue to decline over several quarters due to anticipated additional pricing declines. Revenue under the Surplus contract was negatively affected for the twelve months ended September 30, 2017, as a result of an approximate $2.0 million decrease in service revenue due to lower pricing compared to the pricing in effect through the quarter ended March 31, 2017. Revenue from the current Surplus Contract accounted for 27.6%, 31.0% and 24.7% of the Company's consolidated revenue for the fiscal years ended September 30, 2017, 2016, and 2015, respectively. This contract is included within the CAG segment. Under the Scrap Contract, the Company is the remarketer of all DoD non-electronic scrap turned into the DLA available for sale within the United States, Puerto Rico, and Guam. The Scrap contract was awarded to the Company in April 2016. The Scrap contract has a 36-month base term, and commenced in the first quarter of fiscal year 2017, with two 12-month extension options exercisable by the DLA. The base period of the Scrap Contract will expire on September 30, 2019. The Company pays a revenue-sharing payment to the DLA under this contract equal to 64.5% of the gross resale proceeds of the scrap property, and the Company bears all of the costs for the sorting, merchandising and sale of the property. The contract contains a provision permitting the DLA to terminate the contract for convenience upon written notice to the Company. The original Scrap contract was structured as a profit-sharing arrangement, whereby the profit sharing percentage to the DLA was 65.0%. As a result of moving from a profit-sharing arrangement to a revenue-sharing arrangement, the Company re-named the balance sheet line item from Profit-sharing distributions payable to Distributions payable during the first quarter of fiscal year 2017. Revenue from the Scrap contract accounted for approximately 11.1%, 10.2% and 15.3% of the Company's consolidated revenue for the fiscal years ended September 30, 2017, 2016 and 2015, respectively. This contract is included within the CAG segment.

Property and Equipment

12 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment, including equipment under capital lease obligations, consists of the following:



	September 30,
	2017			2016
	(in thousands)
Computers and purchased software	$	23,724		$	24,584
Internally developed software for internal-use	7,100			—
Office/Operational equipment	6,845			6,700
Leasehold improvements	4,167			5,139
Building	2,558			2,257
Furniture and fixtures	1,247			1,356
Vehicles	1,048			981
Land	754			754
Construction in progress	944			3,926
Total property and equipment	48,387			45,697
Less: Accumulated depreciation and amortization	(31,594		)	(31,321		)
Total property and equipment, net	$	16,793		$	14,376

Depreciation and amortization expense related to property and equipment for the years ended September 30, 2017, 2016 and 2015, was $4.8 million, $5.1 million and $6.1 million, respectively. During the year ended September 30, 2017, the Company transferred $3.9 million from Construction in progress to internally developed software for internal-use, and capitalized an additional $3.2 million in cost associated with internally developed software for internal-use. Amortization of internally developed software for internal-use was $0.4 million for the year ended September 30, 2017.

During the year ended September 30, 2017, the Company recorded $0.6 million in fixed asset impairment charges associated with leasehold improvements in its IronDirect business. The Company did not record fixed asset impairment charges in fiscal 2016. These impairment charges are recorded in the Acquisition costs and related fair value adjustments and impairment of goodwill and long-lived assets line item in the Consolidated Statements of Operations and reported under the Corporate & other segment.

Goodwill

12 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The annual goodwill impairment assessment was performed as of July 1, 2017, for fiscal year 2017.

The goodwill of acquired companies is primarily related to the acquisition of an experienced and knowledgeable workforce.

A reporting unit represents a component of an operating segment that (a) constitutes a business, (b) has discrete financial information, and (c) its performance is reviewed by management. At fiscal year-end 2015, the Company had two reporting units—LSI-Retail Supply Chain Group (RSCG) and LSI-Capital Assets Group (CAG). During fiscal year 2016, in light of new business ventures and management restructuring, the Company concluded that it had five reporting units—RSCG, CAG, GovDeals, Truckcenter, and IronDirect. During fiscal year 2017, the Company decided to exit certain Truckcenter operations in order to focus its time and resources on its ecommerce marketplace strategy. As a result, as of September 30, 2017, the Company had four reporting units-RSCG, CAG, GovDeals and IronDirect.

As of December 31, 2014, the Company identified indicators of impairment and as a result performed an impairment test and concluded as part of the step one test that the carrying values of both of the Company’s two reporting units exceeded their estimated fair values. The Company performed the step one test using the discounted cash flow method. As a result of the step two test, the Company recorded an impairment charge of $85.1 million during the first quarter of fiscal year 2015. As of September 30, 2015, as part of the Company’s annual impairment test, the Company identified indicators of impairment and as a result performed an impairment test and concluded as part of the step one test that the carrying values of both of the Company’s two reporting units exceeded their estimated fair values. As a result of the step two test, the Company recorded an impairment charge of $51.2 million during the fourth quarter of fiscal year 2015. Goodwill impairment losses for fiscal 2015 totaled $136.2 million and were the result of the termination of the Wal-Mart Agreement, cessation of operations of NESA, and decline in market capitalization.

As part of the Company's fiscal year 2016 annual impairment assessment, the Company identified indicators of impairment and as a result performed step one of the goodwill impairment test. The Company performed the step one test using a discounted cash flow method. The Company concluded that the carrying value exceeded fair value for one of the Company's reporting units that had goodwill. Accordingly, the Company performed the step two test to derive the fair value of the goodwill, and as a result the Company recorded a $19.0 million impairment charge to its RSCG reporting unit during the fourth quarter of fiscal year 2016. The goodwill impairment was due to updated assumptions used in the fair value calculation.

As part of the Company's fiscal year 2017 annual impairment assessment, the Company believed that certain events triggered moving to a step one evaluation of goodwill to identify potential impairment. After performing the step one test, the Company concluded the remaining reporting units with goodwill had fair values as of July 1, 2017, that substantially exceeded their respective book values.

The following summarizes the goodwill activity for the Company's reportable segments that have goodwill during the periods indicated:



Goodwill (in thousands)	RSCG			CAG			GovDeals		Total
Balance at September 30, 2014	$	78,458		$	131,198		$	—	$	209,656
Impairment charge	(52,716		)	(83,532		)	—		(136,248		)
Business disposition	(6,733		)	—					(6,733		)
Translation adjustments	(405		)	(2,197		)	—		(2,602		)
Balance at September 30, 2015	$	18,604		$	45,469		$	—	$	64,073
Reallocation of goodwill	—			(23,731		)	23,731		—
Impairment charge	(18,998		)	—			—		(18,998		)
Translation adjustments	394			(335		)	—		59
Balance at September 30, 2016	—			21,403			23,731		45,134
Impairment charge	—			—			—		—
Translation adjustments	—			254			—		254
Balance at September 30, 2017	$	—		$	21,657		$	23,731	$	45,388

Accumulated goodwill impairment losses as of September 30, 2014 were $13.4 million.

Intangible Assets

12 Months Ended

Sep. 30, 2017

Finite-Lived Intangible Assets, Net [Abstract]

Intangible Assets



		Balance as of September 30, 2017							Balance as of September 30, 2016
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Contract intangibles	10	$	—	$	—		$	—	$	1,500	$	(150	)	$	1,350
Brand and technology	3 - 5	—		—			—		5,749		(5,018		)	731
Covenants not to compete	3 - 5	—		—			—		700		(533		)	167
Patent and trademarks	3 - 10	943		(516		)	427		820		(418		)	402
Total intangible assets, net		$	943	$	(516	)	$	427	$	8,769	$	(6,119	)	$	2,650

Future expected amortization of intangible assets at September 30, 2017, is as follows:



Year Ending September 30,	Amortization
	(in thousands)
2018	$	76
2019	69
2020	70
2021	58
2022 and after	154
Total	$	427

Amortization expense related to intangible assets for the years ended September 30, 2017, 2016 and 2015 was $1.0 million, $1.4 million, and $3.1 million, respectively.

During fiscal year 2017, the Company recorded a $1.2 million impairment of a contract intangible associated with customer relationships in its IronDirect business, and reduced the remaining unamortized value of this intangible asset to zero during the fiscal year ended September 30, 2017. The Company also concluded that the covenant not to compete intangible asset received in connection with the acquisition of the TruckCenter business, was impaired due to the exit of the TruckCenter land-based, live auction and retail business. The Company recorded a $0.1 million charge, and reduced the remaining unamortized value of this intangible asset to zero during the fiscal year ended September 30, 2017. These impairment charges are recorded in the Acquisition costs and related fair value adjustments and impairment of goodwill and long-lived assets line item in the Consolidated Statements of Operations and reported under the Corporate & other segment.

Commitments

12 Months Ended

Sep. 30, 2017

Leases, Operating [Abstract]

Commitments

Leases

The Company leases certain office space and equipment under non-cancelable operating lease agreements, which expire at various dates through 2022. Certain of the leases contain escalation clauses and provide for the pass-through of increases in operating expenses and real estate taxes. Rent related to leases that have escalation clauses is recognized on a straight-line basis. Resulting deferred rent charges are included in other long-term liabilities and were $0.6 million and $1.0 million, at September 30, 2017 and 2016, respectively. Future minimum payments under the leases as of September 30, 2017, are as follows:



Year Ending September 30,	Operating Lease Payments
	(in thousands)
2018	$	9,432
2019	8,696
2020	4,903
2021	2,806
2022	1,001
2023	305
Total future minimum lease payments	$	27,143

On June 16, 2017 the Company entered into a sub-lease agreement for 18,412 square feet of office space at 6931 Arlington Road, Bethesda, Maryland. The sub-lease commenced September 29, 2017, and will expire April 30, 2023. On the sub-lease commencement date, the Company relocated its headquarters previously located at 1920 L Street NW, Washington DC, to the new Bethesda location. The Company ceased using the L Street location as of September 30, 2017, and recognized a $2.0 million cease-use charge in its consolidated statements of operations at September 30, 2017, within the Other operating expenses line item.

Rent expense for the years ended September 30, 2017, 2016 and 2015, was $10.8 million, $11.5 million, and $12.5 million, respectively. The fiscal 2017 rent expense amount does not include the $2.0 million cease-use charge pertaining to the L Street location.

Income Taxes

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

The components of the provision for income taxes of continuing operations are as follows:



	Year Ended September 30,
	2017			2016			2015
Current tax provision (benefit):
U.S. Federal	$	(234	)	$	—		$	(32,116	)
State	613			672			(1,375		)
Foreign	(210		)	176			203
	169			848			(33,288		)
Deferred tax (benefit) expense:
U.S. Federal	(592		)	25,338			326
State	(86		)	3,890			(4,422		)
Foreign	58			(3,051		)	(2,187		)
	(620		)	26,177			(6,283		)
Total (benefit) provision	$	(451	)	$	27,025		$	(39,571	)

Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:



	September 30,
	2017			2016
Deferred tax assets:
Net operating losses—Foreign	$	9,171		$	8,964
Net operating losses—U.S.	31,133			17,086
Accrued vacation and bonus	859			1,305
Inventory capitalization	1,315			1,906
Inventory reserves	1,903			1,311
Allowance for doubtful accounts	98			120
Stock compensation expense	6,689			8,105
Amortization of intangibles	2,753			2,286
Amortization of goodwill	—			1,021
Pension liability	—			133
Restructuring costs	913			—
Other	3,134			3,699
Total deferred tax assets before valuation allowance	57,968			45,936
Less: valuation allowance	(54,379		)	(44,257		)
Net deferred tax assets	3,589			1,679
Deferred tax liabilities:
Amortization of goodwill	9,000			9,444
Depreciation	185			658
Capitalized costs	3,032			—
Pension liability	372			—
Total deferred tax liabilities	$	12,589		$	10,102
Net deferred taxes	$	(9,000	)	$	(8,423	)

The reconciliation of the U.S. federal statutory rate to the effective rate for continuing operations is as follows:



	Year Ended September 30,
	2017		2016		2015
U.S. statutory rate	35.0	%	35.0	%	35.0	%
Permanent items	(0.9	)%	(4.2	)%	(6.3	)%
State taxes	1.2	%	1.9	%	2.6	%
Net foreign rate differential	(2.8	)%	(3.8	)%	(3.0	)%
Unrecognized tax benefits	3.5	%	(2.2	)%	—	%
Change in valuation allowance	(34.8	)%	(108.8	)%	(0.9	)%
Other	(0.06	)%	—	%	—	%
Provision for income taxes	1.1	%	(82.1	)%	27.4	%

At September 30, 2017 and 2016, the Company had federal and state deferred tax assets of $45.4 million and $35.8 million, respectively, related to available federal and state net operating loss (NOL) carryforwards and other U.S. deductible temporary differences. The NOL carryforwards expire beginning in 2035 through 2037. At September 30, 2017 and 2016, the Company had deferred tax assets related to available foreign NOL carryforwards of approximately $9.2 million and $9.0 million respectively. All but approximately $0.5 million of our foreign NOLs maintain an indefinite carry forward life. The NOLs with limited carryforward periods will expire beginning in 2018 through 2037.

The Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2017. Such objective evidence limits the ability to consider other evidence such as our projections for future growth. On the basis of this evaluation, the Company recorded a valuation change of $10.1 million to bring the total valuation allowance to $54.4 million at September 30, 2017.

The Company has not recorded a provision for deferred U.S. tax expense on the undistributed earnings of foreign subsidiaries since the Company intends to indefinitely reinvest the earnings of these foreign subsidiaries outside the U.S. The amount of such undistributed foreign earnings was approximately $8.0 million as of September 30, 2017. As of September 30, 2017, and 2016, approximately $14.9 million and $21.5 million, respectively, of cash and cash equivalents was held overseas and not available to fund domestic operations without incurring taxes upon repatriation.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:



	Year Ended September 30, (In thousands)
	2017			2016	2015
Beginning balance at October 1	$	725		—	—
Additions based on positions related to the current year	—			—	—
Additions for tax positions of prior years	1,426			725	—
Reductions for tax positions of prior years	(229		)	—	—
Settlements	(1,922		)	—	—
Balance at September 30	$	—		725	—

The Company applies the authoritative guidance related to uncertainty in income taxes. ASC 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. During fiscal year 2017, we reduced our deferred tax asset and valuation allowance for our net operating loss carryforward by $1.2 million for unrecognized tax benefits related to federal and state exposures. We recorded a net tax benefit of $1.4 million comprised of a $1.2 million recovery of tax deductions related to equity compensation previously recorded to equity and a $0.2 million recovery of prior year taxes. The Company has agreed to settle all previously unrecognized tax benefits with the IRS and anticipates no additional adjustments for fiscal years 2013 through 2015.

The Company's policy is to recognize interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the U.K. Currently, the Company is subject to income tax examinations for fiscal years 2012 through 2015. The Company anticipates no material tax liability to arise from these examinations. The statute of limitations for years prior to fiscal year 2013 is now closed. However, certain tax attribute carryforwards that were generated prior to fiscal year 2013 may be adjusted upon examination by tax authorities if they are utilized.

Equity Transactions

12 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Equity Transactions

2006 Omnibus Long-Term Incentive Plan

In conjunction with the Company's initial public offering, the board of directors and the Company's stockholders approved the 2006 Omnibus Long-Term Incentive Plan, or the 2006 Plan, on December 2, 2005. The 2005 Stock Option and Incentive Plan was terminated when the 2006 Plan became effective, immediately after the closing of the initial public offering.

A portion of the options and restricted shares granted to employees vest based on certain performance conditions being satisfied by the Company. Performance-based stock options are tied to the Company's annual performance against pre-established internal targets and the actual payout under these awards may vary from zero to 100% of an employee's target payout, based upon the Company's actual performance during the previous twelve months. The performance-based stock options are also subject to vesting requirements and generally vest when the performance condition has been satisfied. The fair value for stock options granted during the period was estimated at the grant date using the Black-Scholes option pricing model, as described in Note 2, and the fair value of restricted shares granted is based on the closing price of the shares on the grant date. Compensation cost is recognized when the performance condition has been satisfied or when it becomes probable that the performance condition will be satisfied.

Under the 2006 Plan, as amended, 10,000,000 shares of common stock were available for issuance. At September 30, 2014, there were 772,227 shares remaining reserved for issuance in connection with awards under the 2006 Plan. In February 2015, at the Company's annual meeting of stockholders, the stockholders approved an amendment to the 2006 Plan which increased the shares available for issuance under the 2006 Plan by 3,000,000 shares and established a fungible share pool so that awards other than options or stock appreciation rights granted after January 9, 2015, would be counted as 1.5 shares from the shares reserved for issuance under the 2006 Plan. On February 23, 2017, at the Company's annual meeting of stockholders, the stockholders approved amendments to the 2006 Plan to increase the number of shares available for issuance under the 2006 Plan by 3,300,000, bringing the total number of shares issuable under the 2006 Plan since it was adopted to 16,300,000 shares. At September 30, 2017, there were 3,269,071 shares remaining reserved for issuance in connection with awards under the 2006 Plan.

During fiscal year 2016, the Company issued 1,062,668 cash-settled stock appreciation rights at a price of $4.57, and 153,338 cash-settled stock appreciation rights were forfeited. During fiscal year 2017, the Company issued 218,550 cash-settled stock appreciation rights at a price of $10.30, and 234,313 cash-settled stock appreciation rights were forfeited. Stock appreciation rights are recorded as liability awards. The maximum number of shares subject to options or stock appreciation rights that can be awarded under the 2006 Plan to any person is 1,000,000 per year. The maximum number of shares that can be awarded under the 2006 Plan to any person, other than pursuant to an option or stock appreciation right, is 700,000 per year. The Company issues stock appreciation rights where restrictions lapse upon either the passage of time (service vesting), achievement of performance targets, or some combination of these conditions. For those stock appreciation rights with only service conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For awards with both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. The stock appreciation rights that include only service conditions generally vest over a period of one to four years conditioned on continued employment for the incentive period.

For the years ended September 30, 2017, 2016 and 2015, the Company recorded stock-based compensation of $7.4 million, $12.3 million and $12.4 million, respectively. The total costs related to unvested awards with service vesting conditions, not yet recognized, as of September 30, 2017 was $8.8 million, which will be recognized over the weighted average vesting period of 56.00 months. The total costs related to unvested awards with performance vesting conditions, not yet recognized, as of September 30, 2017 was $4.8 million.

The 2006 Plan permits the granting of options to purchase shares of common stock intended to qualify as incentive stock options under the Internal Revenue Code and stock options that do not qualify as incentive stock options ("non-qualified stock options"). The exercise price of each stock option may not be less than 100% of the fair market value of the common stock on the date of grant. However, if a grant recipient, who holds at least 10% of the common stock of the Company, receives an incentive stock option, the exercise price of such incentive stock option may not be less than 110% of the fair market value of the common stock on the date of grant. The term of each stock option is fixed by the compensation committee and may not exceed 10 years from the date of grant.

The compensation committee may also award under the 2006 Plan:


•	restricted stock, which are shares of common stock subject to restrictions;


•	restricted stock units, which are common stock units subject to restrictions;


•	dividend equivalent rights, which are rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock;


•	stock appreciation rights, which are rights to receive a number of shares or, in the discretion of the compensation committee and subject to applicable law, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee;


•	unrestricted stock, which are shares of common stock granted without restrictions as a bonus; and


•	performance and annual incentive awards, ultimately payable in common stock or cash, as determined by the compensation committee (the compensation committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria set forth in the 2006 Plan).

Share Repurchase Program

The Company is authorized to repurchase issued and outstanding shares of its common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time, and will be funded using the Company's available cash. The Company's Board of Directors reviews the share repurchase program periodically, the last such review having occurred in May 2016. The Company did not repurchase shares under this program during the twelve months ended September 30, 2017. As of September 30, 2017, the Company may repurchase an additional $10.1 million shares under this program. A summary of the Company's share repurchase activity from fiscal year 2014 to the year ended September 30, 2017 is as follows:



Fiscal Year Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Cash Paid for Shares Purchased	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
2014	2,962,978	16	44,873,000	5,127,000
2015	—	—	—	5,127,000
2016	—	—	—	10,127,000
2017	—	—	—	$	10,127,000

_______________________________________________________________________________


(1)	On February 5, 2014, the Company's Board of Directors approved an additional $19.0 million for the share repurchase program. On May 5, 2016, the Company's Board of Directors approved the repurchase of an additional $5.0 million in shares raising the current amount approved for repurchase, that may yet be expended up to $10.1 million.

Stock Option Activity

A summary of the Company's stock option activity for the years ended September 30, 2017, 2016, and 2015 is as follows:



	Options		Weighted- Average Exercise Price
Options outstanding at September 30, 2014	1,465,907		$	19.50
Options granted	310,177		9.92
Options exercised	(14,869	)	7.09
Options canceled	(288,572	)	20.26
Options outstanding at September 30, 2015	1,472,643		17.46
Options granted	583,228		6.68
Options exercised	(1,251	)	7.48
Options canceled	(346,133	)	16.99
Options outstanding at September 30, 2016	1,708,487		13.91
Options granted	232,845		9.18
Options exercised	(12,421	)	7.41
Options canceled	(223,938	)	13.00
Options outstanding at September 30, 2017	1,704,973		13.43
Options exercisable at September 30, 2017	1,270,781		14.99

The following table summarizes information about options outstanding at September 30, 2017:



	Options Outstanding
Range of Exercise Price	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price
$5.53 - $6.96	366,151	8.30	$	6.42
$6.97 - $9.09	289,049	6.19	7.83
$9.10 - $10.82	359,597	6.92	9.78
$10.83 - $19.27	330,321	1.85	13.04
$19.28 - $46.72	359,855	5.55	29.06

The following table summarizes information about options exercisable at September 30, 2017:



	Options Exercisable
Range of Exercise Price	Number Exercisable	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price
$5.53 - $6.96	282,064	8.30	$	6.36
$6.97 - $9.09	138,533	3.43	7.81
$9.10 - $10.82	182,613	6.30	9.99
$10.83 - $19.27	322,201	1.70	13.08
$19.28 - $46.72	345,370	5.52	29.35

The following table summarizes information about assumptions used in valuing options granted:



	Year ended September 30
	2017		2016		2015
Dividend yield	—		—		—
Expected volatility	54.22% - 54.93%		51.5% - 58.6%		71.9% - 77.9%
Risk-free interest rate	1.65% - 2.17%		0.5% - 1.5%		0.26% - 1.4%
Expected forfeiture rate	21.4	%	23.5	%	22.2% - 22.8%

The intrinsic value of outstanding and exercisable options at September 30, 2017 was approximately $494 and $494, respectively, based on a stock price of $5.90 on September 30, 2017.

The weighted average grant date fair value of options granted during 2017, 2016, and 2015 was $3.58, $2.07, and $4.89, respectively.

The intrinsic value of options exercised at September 30, 2017, 2016, and 2015 was approximately $24,032, $3,128 and $4,000, respectively. Approximately 0.2 million unvested service-based stock options are expected to vest.

Restricted Share Activity

A summary of the Company's restricted share activity for the years ended September 30, 2017, 2016, and 2015 is as follows:



	Restricted Shares		Weighted- Average Fair Value
Unvested restricted shares at September 30, 2014	1,897,827		$	24.96
Restricted shares granted	1,298,604		10.04
Restricted shares vested	(343,204	)	27.50
Restricted shares canceled	(486,040	)	26.54
Unvested restricted shares at September 30, 2015	2,367,187		16.08
Restricted shares granted	1,504,655		5.54
Restricted shares vested	(715,188	)	16.09
Restricted shares canceled	(495,409	)	20.25
Unvested restricted shares at September 30, 2016	2,661,245		9.34
Restricted shares granted	849,352		8.78
Restricted shares vested	(748,266	)	11.04
Restricted shares canceled	(571,900	)	9.81
Unvested restricted shares at September 30, 2017	2,190,431		8.42

The intrinsic value and weighted average remaining contractual life in years of unvested restricted shares at September 30, 2017, is approximately $12.9 million and 8.37, respectively, based on a stock price of $5.90 on September 30, 2017. Approximately 1.2 million unvested service-based restricted stock shares are expected to vest.

401(k) Benefit Plan	12 Months Ended
401(k) Benefit Plan	Sep. 30, 2017
Defined Contribution Plan [Abstract]
401(k) Benefit Plan	401(k) Benefit Plan The Company has a retirement plan (the Plan), which is intended to be a qualified plan under Section 401(k) of the Internal Revenue Code. The Plan is a defined contribution plan available to all eligible employees and allows participants to contribute up to the legal maximum of their eligible compensation, not to exceed the maximum tax-deferred amount allowed by the Internal Revenue Service. The Plan also allows the Company to make discretionary matching contributions. For the years ended September 30, 2017, 2016 and 2015, the Company contributed and recorded expense of approximately $2.1 million, $1.7 million and $2.4 million, respectively, to the Plan.