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Earnings and Dividends per Share

9 Months Ended

Sep. 30, 2012

Earnings and Dividends per Share [Abstract]

7.	Earnings and Dividends per Share

The computational components of basic and diluted earnings per share for the three month periods ended September 30, 2012 and 2011 and for the nine month periods ended September 30, 2012 and 2011 are below (shares and dollars in thousands, except per share amounts).


	For the three month period ended September 30, 2012
	Numerator (Income)		Denominator (Shares)		Per Share Amount
Basic net income and earnings per share	$	3,268		14,630	$	0.22
Effect of dilutive securities and notes:
Common stock equivalents arising from stock options and employee stock purchase plan		—		371		—
Subordinated convertible promissory notes		82		2,257		(0.03	)

Diluted earnings and earnings per share	$	3,350		17,258	$	0.19


	For the three month period ended September 30, 2011
	Numerator (Income)		Denominator (Shares)		Per Share Amount
Basic net income and earnings per share	$	2,319		14,372	$	0.16
Effect of dilutive securities and notes:
Common stock equivalents arising from stock options and employee stock purchase plan		—		163		—
Subordinated convertible promissory notes		95		2,622		(0.02	)

Diluted earnings and earnings per share	$	2,414		17,157	$	0.14


	For the nine month period ended September 30, 2012
	Numerator (Income)		Denominator (Shares)		Per Share Amount
Basic net income and earnings per share	$	7,798		14,591	$	0.53
Effect of dilutive securities and notes:
Common stock equivalents arising from stock options and employee stock purchase plan		—		290		—
Subordinated convertible promissory notes		250		2,318		(0.06	)

Diluted earnings and earnings per share	$	8,048		17,199	$	0.47


	For the nine month period ended September 30, 2011
	Numerator (Income)		Denominator (Shares)		Per Share Amount
Basic net income and earnings per share	$	5,530		14,340	$	0.39
Effect of dilutive securities and notes:
Common stock equivalents arising from stock options and employee stock purchase plan		—		144		—
Subordinated convertible promissory notes		285		2,647		(0.05	)

Diluted earnings and earnings per share	$	5,815		17,131	$	0.34

We consider outstanding options and warrants in computing diluted net income per share only when they are dilutive. For each of the three and nine month periods ended September 30, 2012, 322,500 outstanding options and warrants were excluded from the computation of diluted weighted average common shares outstanding as their effect would have been anti-dilutive. For the three and nine month periods ended September 30, 2011, 427,500 outstanding options and warrants were excluded from the computation of diluted weighted average common shares outstanding as their effect would have been anti-dilutive.

Holders of restricted stock awards participate in nonforfeitable dividend rights on a one-for-one basis with holders of common stock. Holders of these awards are not obligated to share in losses of the Company. Therefore, these share awards are included in the computation of basic earnings per share during periods of net income using the two-class method, but are excluded from such computation in periods of net loss. When the Company declares a dividend on its common stock, the related dividend on shares of unvested restricted stock that are not expected to vest would be recorded as additional compensation expense and therefore excluded from the two-class method computations; however, there were no non-vested restricted share awards outstanding for the three or nine months ended September 30, 2012 or 2011. Undistributed earnings included in the two-class method computations are allocated equally to each share of common stock outstanding, including all shares of unvested restricted common shares.

Once a restricted stock award vests, it is included in the computation of weighted average shares outstanding for purposes of basic and diluted earnings (loss) per share.

Pursuant to the if-converted method, diluted earnings per share for the third quarter of 2012 includes a $82,000 after tax add back of interest expense to earnings and 2.3 million additional shares, and $95,000 and 2.6 million additional shares for the third quarter of 2011, related to the assumed conversion of the convertible Investor Notes described in Note 6. For the nine month period ended September 30, 2012 diluted earnings per share includes a $250,000 after tax addback of interest expense, and 2.3 million additional shares, and $285,000 and 2.6 million additional shares for the comparable 2011 period, related to the assumed conversion of the convertible Investor Notes.

Dividends

Prior to fiscal year 2011, we had not paid any cash dividends on our common stock. In August 2011, our Board of Directors approved a quarterly cash dividend program, subject to the Board’s continuing determination that the dividend policy and the declaration of dividends are in the best interest of our shareholders. The declaration and payment of dividends is also subject to continued consent by our lender, as our credit agreement contains provisions that prevent us from paying any dividends to our shareholders without such consent. Future dividends and the dividend policy may be changed or cancelled at the Company’s discretion at any time. In fiscal year 2012, our Board has declared the following cash dividends on our common stock:


Dividend Per share	Record Date	Payment Date	Payments (dollars in thousands)
$0.035	March 20, 2012	March 30, 2012	$ 512
$0.035	June 15, 2012	June 29, 2012	$ 512
$0.045	September 14, 2012	September 28, 2012	$ 664

Effective August 13, 2012, the Company implemented a Dividend Reinvestment Plan (the “Plan”), under which the Company may issue up to 750,000 shares of common stock. The Plan provides a way for interested shareholders to increase their holdings in our common stock. Participation in the Plan is strickly voluntary and is open only to existing shareholders.