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Stockholders' Equity
 12 Months Ended
Jan. 31, 2013
Stockholders' Equity

NOTE H — STOCKHOLDERS’ EQUITY

Share Repurchase Program

In September 2011, the Company’s board of directors authorized a program to repurchase up to two million shares of its common stock. The timing and actual number of shares repurchased will depend upon a number of factors, including market conditions and prevailing stock prices. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws. Pursuant to the share repurchase program, during fiscal 2012, the Company repurchased 125,000 shares of its common stock for an aggregate purchase price of approximately $2.9 million. Repurchased shares are accounted for as treasury stock at cost and will be held in treasury for future use.

 

The Company did not repurchase any shares during fiscal 2013. The Company’s new credit agreement prohibits the repurchase of shares until February 2014, after which repurchases may be made subject to compliance with certain covenants.

Stock Plan

As of January 31, 2013, the Company has 967,057 shares available for grant under its stock plan. The plan provides for the grant of equity and cash awards, including stock options, restricted stock awards and other stock unit awards to directors, officers and employees. It is the Company’s policy to grant stock options at prices not less than the fair market value on the date of the grant. Option terms, vesting and exercise periods vary, except that the term of an option may not exceed ten years. Restricted stock unit awards vest over a three to five year period and may include market and performance conditions, including a price vesting performance condition and, in addition, may also require the satisfaction of an earnings after taxes performance target, in addition to the time vesting condition.

Stock Options

Information regarding all stock options for fiscal 2013, 2012 and 2011 is as follows:

 

    2013     2012     2011  
  Shares     Weighted
Average
Exercise
Price		     Shares     Weighted
Average
Exercise
Price		     Shares     Weighted
Average
Exercise
Price		  
           
           
           

Stock options outstanding at beginning of year

     417,722      $ 16.59        514,190      $ 14.54        817,050      $ 11.23   

Exercised

     (120,518 )    $ 11.82        (60,668 )    $ 10.21        (339,010 )    $ 8.23   

Granted

     85,000      $ 28.72        40,000      $ 27.13        38,000      $ 29.59   

Cancelled or forfeited

     (150 )    $ 18.40        (75,800 )    $ 13.35        (1,850 )    $ 18.40   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Stock options outstanding at end of year

     382,054      $ 20.79        417,722      $ 16.59        514,190      $ 14.54   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Exercisable

     224,121      $ 16.89        245,556      $ 14.18        260,990      $ 12.32   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table summarizes information about stock options outstanding:

 

Range of Exercise Prices

    Number
Outstanding  as of
January 31,
2013		      Weighted
Average
Remaining
Contractual Life		      Weighted
Average
Exercise
Price		      Number
Exercisable  as of
January 31,
2013		      Weighted
Average
Exercise
Price		  
              
              
              

$3.00 - $ 8.00

      22,100         1.09       $ 6.23         22,100       $ 6.23   

$8.01 - $ 12.00

      19,200         5.51       $ 10.28         12,000       $ 9.80   

$12.01 - $ 16.00

      68,900         5.12       $ 13.92         56,300       $ 13.78   

$16.01 - $ 40.00

      271,854         6.77       $ 24.46         133,721       $ 20.60   
  

 

 

           

 

 

     
     382,054               224,121      
  

 

 

           

 

 

     

 

The fair value of stock options was estimated using the Black-Scholes option-pricing model. This model requires the input of subjective assumptions that will usually have a significant impact on the fair value estimate. The following table summarizes the weighted average assumptions used in the Black-Scholes option pricing model for grants in fiscal 2013, 2012 and 2011, respectively:

 

       

2013

     

2012

     

2011

Expected stock price volatility

      58.2% - 68.5%      68.5%      64.1%

Expected lives of options

               

Directors and officers

      7 years      7 years      7 years

Employees

      6 years      6 years      6 years

Risk-free interest rate

      0.3% - 0.6%      1.2%      2.3% - 3.4%

Expected dividend yield

      0%      0%      0%

The weighted average volatility for the current period was developed using historical volatility for periods equal to the expected term of the options.

The risk-free interest rate was developed using the U.S. Treasury yield curve for periods equal to the expected term of the options on the grant date. An increase in the risk-free interest rate will increase stock compensation expense.

The dividend yield is a ratio that estimates the expected dividend payments to shareholders. The Company has not declared a cash dividend and has estimated dividend yield at 0%.

The expected term of stock option grants was developed after considering vesting schedules, life of the option, and historical experience. An increase in the expected holding period will increase stock compensation expense.

The Company is required to recognize stock-based compensation based on the number of awards that are ultimately expected to vest. As a result, for most awards, recognized stock compensation was reduced for estimated forfeitures prior to vesting primarily based on an historical annual forfeiture rate. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.

The weighted average remaining term for stock options outstanding was 6.1 years at January 31, 2013. The aggregate intrinsic value at January 31, 2013 was $5.8 million for stock options outstanding and $4.3 million for stock options exercisable. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common stock as of January 31, 2013, the reporting date.

Proceeds received from the exercise of stock options were approximately $1.4 million and $0.6 million during the years ended January 31, 2013 and 2012, respectively. The intrinsic value of stock options exercised was $2.6 million and $1.4 million for the years ended January 31, 2013 and 2012, respectively. A portion of this amount is currently deductible for tax purposes.

The Company recognized approximately $0.7 million and $0.8 million in compensation expense for the years ended January 31, 2013 and 2012, respectively, related to equity option award grants. As of January 31, 2013, approximately $1.7 million related to unrecognized stock compensation related to unvested option awards (net of estimated forfeitures) is expected to be recognized through the year ending January 31, 2017.

The weighted average fair value at date of grant for options granted during fiscal 2013, 2012 and 2011 was $12.06, $12.97 and $18.01 per option, respectively.

 

Restricted Stock

 

     Awards
Outstanding		     Weighted Average
Grant Date Fair Value		  

Unvested as of January 31, 2011

      658,882      $ 13.86   

Granted

      437,850      $ 30.80   

Vested

      (162,332 )    $ 9.16   

Canceled

      (8,500 )    $ 24.03   
  

 

 

    

Unvested as of January 31, 2012

      925,900      $ 22.60   

Granted

      358,985      $ 35.18   

Vested

      (226,341 )    $ 12.54   

Canceled

      (1,813 )    $ 29.28   
  

 

 

    

Unvested as of January 31, 2013

      1,056,731      $ 29.01   
  

 

 

    

For restricted shares with market conditions, the Company estimates the grant date fair value using a lattice model. This valuation is performed with the assistance of a third party valuation specialist. For restricted shares with no market conditions, shares are valued based on the market price on the date of grant.

The Company recognized $7.0 million and $4.4 million in compensation expense for the years ended January 31, 2013 and 2012, respectively, related to restricted stock grants. At January 31, 2013 and 2012, unrecognized costs related to the restricted stock units totaled approximately $21.4 million and $16.0 million, respectively.

Stock Warrants

In connection with its private placement in July 2006, the Company issued five year warrants to purchase an aggregate of up to 375,000 shares of its Common Stock at an exercise price of $11.00 per share, subject to adjustment upon the occurrence of specified events, including customary weighted average price anti-dilution adjustments. These warrants were exercised on December 30, 2010. As a result, the Company received proceeds of $4.1 million.