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SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2011
SHAREHOLDERS' EQUITY  
SHAREHOLDERS' EQUITY

NOTE H — SHAREHOLDERS’ EQUITY

 

Income (loss) Per Share

 

The following is a reconciliation of net income (loss) and weighted average common shares outstanding for purposes of calculating basic and diluted net income (loss) per share:

 

 

 

December 31,

 

 

 

2011

 

2010

 

2009

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

Net income (loss)

 

$

10,833,215

 

$

(1,222,682

)

$

1,879,619

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Basic - weighted average common shares outstanding

 

19,243,356

 

19,202,804

 

19,194,334

 

Effect of Dilutive Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

301,679

 

—

 

66,909

 

 

 

19,545,035

 

19,202,804

 

19,261,243

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

0.56

 

$

(0.06

)

$

0.10

 

Diluted net income (loss) per share

 

$

0.55

 

$

(0.06

)

$

0.10

 

 

Outstanding options that were not included in the diluted calculation because their effect would be anti-dilutive total 154,130 and 761,959 for the years ended December 31, 2011 and 2010, respectively.

 

All share and per share amounts have been adjusted to reflect 5% stock dividends paid May 14, 2010 and May 12, 2009, to shareholders of record as of April 30, 2010 and April 28, 2009.

 

Share-Based Compensation Plans

 

The Company’s 1999 stock option plan (the “1999 Plan”) expired in 2009.  However, options covering 84,058 shares remained outstanding at December 31, 2009.  These options expired, unexercised, during the year ended December 31, 2010.  As a result, no options were outstanding under the 1999 Plan at December 31, 2010 or December 31, 2011 and no additional options may be granted under the 1999 Plan.

 

The Company currently has in effect a 2006 stock award plan (the “2006 Plan”).  At the June 11, 2010 Annual Meeting of Shareholders, the shareholders approved an increase of 2,000,000 shares of common stock for issuance under the 2006 Plan.  This increased the total aggregate number of shares of common stock under the 2006 Plan to 3,000,000 shares.  The 2006 Plan provides for the granting of stock options, common stock, and restricted stock.  The 2006 Plan is administered by a committee of the Board of Directors (“the Committee”).  Currently the Committee is comprised of three directors.  Any stock options granted under the 2006 Plan will be exercisable as set forth in the option agreements pursuant to which they are issued, but in no event will stock options be exercisable after the expiration of five (5) years from the date of grant.  Outstanding options, under the 2006 Plan at December 31, 2011, have vesting periods ranging from the date of grant to the third annual anniversary of the grant.

 

During 2011, 99,185 options were granted and 80,334 options were exercised or cancelled under the 2006 Plan.  During 2010, no options were granted and 3,308 options were canceled under the 2006 Plan.  Restricted stock consists of shares that are transferred by the Company to a participant, but are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the participant.  Any restricted stock granted or issued under the 2006 Plan will vest as set forth in the restricted stock agreement pursuant to which it was issued or granted.  The provisions of the restricted stock agreements need not be the same with respect to each participant.  In April of 2006, August of 2007, June of 2008, June of 2009, May of 2010, November of 2011 and December of 2011, the Committee granted 111,711, 20,837, 11,025, 5,250, 5,000, 25,331 and 21,520 shares of restricted stock, respectively.  The shares of restricted stock were issued in the names of the grantees and have restrictive legends prohibiting their sales prior to vesting.  Vesting periods, for restricted stock issued to date, range from at grant date to the third annual anniversary of the grant.  Upon vesting, a new certificate will be issued for the vested portion without the restrictive legend.

 

During the years ended December 31, 2011, 2010, and 2009, the Company recognized compensation expense associated with the restricted stock of $28,603, $86,230, and $182,812, respectively.  During the years ended December 31, 2011 and 2010, no unamortized deferred stock-based compensation was related to any employee that left the Company.  As a result of employees who left the Company during the year ended December 31, 2009, the Company reversed approximately $4,000 of deferred stock-based compensation and approximately $4,000 of additional paid-in capital, which represented the unamortized balance of deferred stock-based compensation relating to the employees who left the Company.  The number of shares of restricted stock issued in August of 2007 has been adjusted to reflect the 5% stock dividends paid in May of 2010, May of 2009 and April of 2008.  The number of shares of restricted stock issued in June of 2008 has been adjusted to reflect the 5% stock dividends paid in May of 2010 and May of 2009.  The number of shares of restricted stock issued in June of 2009 has been adjusted to reflect the 5% stock dividend paid in May of 2010.  No dividends were declared or paid in 2011.

 

During the years ended December 31, 2011, 2010, and 2009, the Company recognized compensation expense associated with unvested options under the 1999 and 2006 Plans of $395,166, $422,024, and $179,918, respectively.

 

The following table summarizes activity under the Plans:

 

 

 

 

 

Weighted

 

 

 

Shares under

 

Average

 

 

 

Option

 

exercise price

 

 

 

 

 

 

 

Balance at December 31, 2008

 

641,787

 

$

3.64

 

Granted

 

241,430

 

$

4.01

 

Exercised

 

(13,892

)

$

.69

 

Canceled

 

(20,000

)

$

3.37

 

Balance at December 31, 2009

 

849,325

 

$

3.80

 

Granted

 

—

 

$

—

 

Exercised

 

—

 

$

—

 

Canceled

 

(87,366

)

$

4.27

 

Balance at December 31, 2010

 

761,959

 

$

3.75

 

Granted

 

99,185

 

$

6.37

 

Exercised

 

(59,334

)

$

3.06

 

Canceled

 

(21,000

)

$

4.10

 

Balance at December 31, 2011

 

780,810

 

$

4.12

 

 

The following information applies to options outstanding and exercisable at December 31, 2010:

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

 

remaining

 

Weighted

 

 

 

Range of

 

Number

 

contractual

 

average

 

 

 

Exercise prices

 

outstanding

 

life (in years)

 

exercise price

 

Outstanding options

 

$3.06 — $8.38

 

780,810

 

2.43

 

$

4.12

 

Exercisable options

 

$3.06 — $8.38

 

729,706

 

2.38

 

$

4.09