EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

EARNINGS PER SHARE

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during each period. Diluted earnings per share is calculated based on these same weighted average shares outstanding plus the effect of potential shares issuable upon assumed exercise of stock options based on the treasury stock method. Potential shares issuable upon the exercise of stock options are excluded from the calculation of diluted earnings per share to the extent their effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended
	September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
(in thousands except per share data)
Numerator for basic and diluted earnings per share:
Net income	$	130	$	833	$	1,061	$	2,401
Denominator for basic earnings per share-
weighted-average shares		9,270		9,018		9,159		8,987
Employee stock options and awards		121		130		164		123
Denominator for diluted earnings per share-
adjusted weighted-average shares and  assumed conversions of stock options		9,391		9,148		9,323		9,110
Basic and diluted earnings per share:
Total basic earnings per share	$	0.01	$	0.09	$	0.12	$	0.27
Total diluted earnings per share	$	0.01	$	0.09	$	0.11	$	0.26

The computation for the three and nine months ended September 30, 2011 excludes 471,989 and 311,251 options, respectively, to purchase common stock as their effect is anti-dilutive. The computation for the three and nine months ended September 30, 2010 excludes 346,761 and 250,661 options, respectively, to purchase common stock as their effect is anti-dilutive.