Note 4 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 4. Stock-Based Compensation. The Company had two stock-based compensation plans at June 30, 2011.  The shares outstanding are for grants under the Company’s 1997 Stock Option Plan (the “1997 Plan”) and the 2008 Equity Incentive Plan (the “2008 Plan”). The 1997 Plan matured on April 8, 2008 and no additional options may be granted under the 1997 Plan. At June 30, 2011, the 1997 Plan had 109,941 granted unexercised shares, and the 2008 Plan includes 91,000 granted unexercised shares and 867,000 shares available to be granted.  No restricted shares were granted under the 2008 Plan during the three and six months ended June 30, 2011.

Stock options expire ten years from the date of grant and vest over service periods ranging from one year to five years. Options granted under the 2008 Plan are granted at the closing sales price of the Company’s common stock on the NASDAQ Stock Market on the date of grant. The Company settles stock option exercises with treasury shares.

A summary of option activity under the Plans as of June 30, 2011 and 2010, and changes during the three and six month periods ended June 30, 2011 and 2010 is presented below:

	Options Outstanding			Price		Aggregate Intrinsic Value
Quarter Ended June 30, 2011:
Outstanding at December 31, 2010		181,441		$	15.60
Granted		21,000		$	5.40
Forfeited		(1,500	)	$	26.97
Exercised		-		$	-
Outstanding at March 31, 2011		200,941		$	14.45	$	(1,900,166	)
Granted		3,000		$	5.05
Forfeited		(3,000	)	$	17.41
Exercised		-		$	-
Outstanding at June 30, 2011		200,941		$	14.26	$	(2,009,778	)
Vested and Exercisable at June 30, 2011		137,876		$	16.22	$	(1,649,652	)
Quarter Ended June 30, 2010:
Outstanding at December 31, 2009		171,770		$	16.04
Granted		27,000		$	11.11
Forfeited		(3,500	)	$	18.02
Exercised		(1,675	)	$	5.50
Outstanding at March 31, 2010		193,595		$	15.41	$	(562,874	)
Granted		7,000		$	12.29
Forfeited		(3,854	)	$	16.03
Exercised		-		$	-
Outstanding at June 30, 2010		196,741		$	15.28	$	(919,650	)
Vested and Exercisable at June 30, 2010		122,958		$	16.24	$	(692,240	)

The average fair value per share of options granted in the three and six months ended June 30, 2011 was $2.09 and $2.21, compared to $4.58 and $4.25 in the three and six months ended June 30, 2010. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The following weighted-average assumptions were used for grants awarded in the three and six months ended June 30, 2011 and 2010:

	Three Months Ended 6/30/11			Three Months Ended  6/30/10			Six Months Ended  6/30/11			Six Months Ended  6/30/10
Dividend growth rate		0.0	%		5.3	%		0.0	%		5.3	%
Expected volatility		37.79	%		36.5	%		37.84	%		36.6	%
Average risk-free interest rate		2.9	%		2.8	%		2.8	%		3.1	%
Expected lives - years		6			6			6			6

There were no income tax benefits realized from the exercise of stock options for the three and six months ended June 30, 2011 or 2010.  There was no intrinsic value for options exercised during the three and six months ended June 30, 2011, as no options were exercised, compared to $11,357 of intrinsic value for options exercised during the three and six months ended June 30, 2010.

The following table summarizes additional information about the Company’s outstanding options and exercisable options as of June 30, 2011, including weighted-average remaining contractual term expressed in years ("Life") and weighted average exercise price (“Price”):

	Outstanding						Exercisable
Range of Exercise Price	Shares		Life		Price		Shares		Price
$5.05 – 13.82		107,108		6.54	$	9.34		49,109	$	9.74
$14.97 – 16.49		33,958		1.52	$	16.07		33,958	$	16.07
$16.77 – 25.22		48,625		5.60	$	20.51		43,959	$	20.57
$26.17 – 33.27		11,250		5.49	$	28.62		10,850	$	28.46
		200,941		5.41	$	14.26		137,876	$	16.22

A summary of nonvested option shares as of June 30, 2011 and 2010, and changes during the three and six months ended June 30, 2011 and 2010, is presented below:

	Shares			Price
Period Ended June 30, 2011:
Nonvested at December 31, 2010		63,116		$	13.04
Granted		21,000		$	5.40
Forfeited		-		$	-
Vested		(19,501	)	$	12.37
Nonvested at March 31, 2011		64,615		$	10.76
Granted		3,000		$	5.05
Forfeited		(1,500	)	$	9.60
Vested		(3,050	)	$	21.95
Nonvested at June 30, 2011		63,065		$	9.97
Period Ended June 30, 2010:
Nonvested at December 31, 2009		58,158		$	16.16
Granted		27,000		$	11.11
Forfeited		(3,500	)	$	18.02
Vested		(8,950	)	$	16.05
Nonvested at March 31, 2010		72,708		$	14.21
Granted		7,000		$	12.29
Forfeited		(2,500	)	$	12.95
Vested		(3,425	)	$	22.31
Nonvested at June 30, 2010		73,783		$	13.69

The net compensation cost charged against income for the Plans was $20,555 and $49,172 for the three and six months ended June 30, 2011, and $20,782 and $43,481 for the three and six months ended June 30, 2010. Total recapture credits against compensation expense due to forfeited options was $7,505 for both the three and six months ended June 30, 2011, compared to $9,269 and $10,952 for the three and six months ended June 30, 2010. As of June 30, 2011, total unrecognized compensation cost on granted unexercised shares was $154,801, and is expected to be recognized during the next three years.

The fair value compensation cost recognition provisions for share-based payments are different from the recognition provisions of the intrinsic value method for recording compensation cost. The following table reflects the impact of fair value compensation cost recognition on income before income taxes, net income, basic earnings per share and diluted earnings per share for the three and six month periods ended June 30, 2011 and 2010:

	Three Months Ended  6/30/11		Three Months Ended  6/30/10		Six Months Ended  6/30/11			Six Months Ended  6/30/10
Reduce net income before income taxes	$	20,555	$	20,782	$	49,172		$	43,481
Reduce net income	$	20,140	$	20,030	$	48,342		$	42,424
Reduce basic earnings per share	$	0.00	$	0.00	$	(0.01	)	$	0.00
Reduce diluted earnings per share	$	0.00	$	0.00	$	(0.01	)	$	0.00