Shareholder's Equity

9 Months Ended

Nov. 30, 2012

Shareholder's Equity [Abstract]

Shareholder's Equity

Note 11. – Shareholder’s Equity

Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Diluted earnings per share is calculated in a manner consistent with that of basic earnings per share while giving effect to all dilutive potential common shares that were outstanding during the period.

The following table sets forth the computation of basic and diluted earnings per share for the three and nine month periods ended November 30, 2012 and 2011 (in thousands, except per share data):

	Net Income		Weighted Average Common Shares Outstanding		Earnings Per Share
Three months ended November 30, 2012
Basic	$	148		7,566	$	0.02
Effect of dilution:
Options		—		49		—
Diluted	$	148		7,615	$	0.02
Three months ended November 30, 2011
Basic	$	1,258		7,628	$	0.17
Effect of dilution:
Options		—		55		—
Diluted	$	1,258		7,683	$	0.17
Nine months ended November 30, 2012
Basic	$	450		7,571	$	0.06
Effect of dilution:
Options		—		53		—
Diluted	$	450		7,624	$	0.06
Nine months ended November 30, 2011
Basic	$	3,497		7,619	$	0.46
Effect of dilution:
Options		—		236		(0.01	)
Diluted	$	3,497		7,855	$	0.45

Stock-Based Compensation Plans

For the nine-month period ended November 30, 2012 and 2011, the Company recognized general and administrative expenses of $7.7 thousand and $2.0 thousand, respectively, related to share-based compensation. The liability for the share-based compensation recognized is presented in the consolidated balance sheets as part of additional paid in capital. As of November 30, 2012, total unrecognized compensation costs related to stock options granted was $5.6 thousand. The unrecognized stock option compensation cost is expected to be recognized over a period of approximately 1 year.

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the Company to estimate the expected term of the stock option grants and expected future stock price volatility over the term. The term represents the expected period of time the Company believes the options will remain outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock, which represents the standard deviation of the differences in the weekly stock closing price, adjusted for dividends and stock splits.

Three members of the board of directors were each granted 3,000 stock options during the nine-month period ended November 30, 2012.

Stock Repurchase Program

The Company has a stock repurchase program, pursuant to which it was originally authorized to repurchase up to 1,632,500 shares of the Company’s common stock in the open market. On July 8, 2009, the Board of Directors of the Company approved a one time continuation of the stock repurchase program, and authorized the Company to repurchase up to 1,000,000 additional shares of the Company’s common stock, depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program. For the nine months ended November 30, 2012, the Company repurchased 22,031 shares at an average price of $4.10 per share. The Company repurchased 57,087 shares in the nine months ended November 30, 2011. Under the Company’s stock repurchase program, an additional 705,106 shares remain authorized to be repurchased by the Company at November 30, 2012. The Credit Agreement executed by the Company on December 23, 2010 included restrictions on investments that restricted further repurchases of stock under this program. On September 1, 2011, the Agreement was amended to allow the Company to repurchase a limited amount of the Company’s common stock, equal to ten percent of the Company’s net earnings after taxes subject to meeting certain share repurchase conditions.