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STOCKHOLDERS' EQUITY
 12 Months Ended
Jan. 31, 2014
Equity [Abstract]  
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 2014. The Company’s credit agreement prohibited 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, 2014, the Company has 682,330 shares available for grant under its stock plan. The plan provides for the grant of equity and cash awards, including restricted stock awards, stock options and other stock unit awards to directors, officers and employees. Restricted stock unit awards vest over a three to five year period. In addition to the time vesting condition, these awards may include market and performance conditions, including a price vesting performance condition and, in certain cases, an earnings after taxes or net income per diluted share performance target. 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

 
    Awards
Outstanding		     Weighted Average
Grant Date Fair Value		  
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  
Granted     315,750     $ 51.96  
Vested     (236,316 )   $ 22.04  
Canceled     (15,988 )   $ 29.01  
Unvested as of January 31, 2014     1,120,177     $ 36.95  

 

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 $9.2 million and $7.0 million in compensation expense for the years ended January 31, 2014 and 2013, respectively, related to restricted stock grants. At January 31, 2014 and 2013, unrecognized costs related to the restricted stock units totaled approximately $26.1 million and $21.4 million, respectively.

 

Stock Options

 

Information regarding all stock options for fiscal 2014, 2013 and 2012 is as follows:

 

    2014     2013     2012  
          Weighted           Weighted           Weighted  
    Shares      Average Exercise     Shares      Average Exercise     Shares      Average Exercise  
Stock options outstanding at beginning of year     382,054     $ 20.79       417,722     $ 16.59       514,190     $ 14.54  
Exercised     (109,766 )   $ 17.36       (120,518 )   $ 11.82       (60,668 )   $ 10.21  
Granted     -     $ -       85,000     $ 28.72       40,000     $ 27.13  
Cancelled or forfeited     (3,800 )   $ 19.39       (150 )   $ 18.40       (75,800 )   $ 13.35  
Stock options outstanding at end of year     268,488     $ 22.21       382,054     $ 20.79       417,722     $ 16.59  
Exercisable     159,238     $ 18.65       224,121     $ 16.89       245,556     $ 14.18  

 

The following table summarizes information about stock options outstanding:

 

    Number
Outstanding as of		     Weighted
Average		     Weighted
Average		     Number
Exercisable as of		     Weighted
Average		  
  January 31,     Remaining     Exercise     January 31,     Exercise  
Range of Exercise Prices      2014     Contractual Life     Price     2014     Price  
$   3.00 - $   8.00     3,000       1.36     $ 5.03       3,000     $ 5.03  
$   8.01 - $ 12.00     12,000       4.46     $ 10.23       9,000     $ 9.94  
$ 12.01 - $ 16.00     56,100       3.92     $ 13.63       56,100     $ 13.63  
$ 16.01 - $ 40.00     197,388       6.41     $ 25.64       91,138     $ 23.06  
      268,488                       159,238          

 

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. No stock options were granted during the year ended January 31, 2014. The following table summarizes the weighted average assumptions used in the Black-Scholes option pricing model for grants in fiscal 2013 and 2012, respectively:

 

    2013     2012  
Expected stock price volatility     58.2% - 68.5%       68.5%  
Expected lives of options                
Directors and officers    

7 years

       7 years  
Employees     6 years       6 years  
Risk-free interest rate     0.3% - 0.6%       1.2%  
Expected dividend yield     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 5.7 years at January 31, 2014. The aggregate intrinsic value at January 31, 2014 was $12.8 million for stock options outstanding and $8.2 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, 2014, the reporting date.

 

Proceeds received from the exercise of stock options were approximately $1.9 million and $1.4 million during the years ended January 31, 2014 and 2013, respectively. The intrinsic value of stock options exercised was $4.0 million and $2.6 million for the years ended January 31, 2014 and 2013, respectively. A portion of this amount is currently deductible for tax purposes.

 

The Company recognized approximately $0.7 million in compensation expense for the years ended January 31, 2014 and 2013, related to equity option award grants. As of January 31, 2014, approximately $1.0 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, 2018.

 

No options were granted during fiscal 2014. The weighted average fair value at date of grant for options granted during fiscal 2013 and 2012 was $12.06 and $12.97 per option, respectively.