Restatement

9 Months Ended

Sep. 30, 2012

Note 2. Restatement

We are restating our previously reported financial information for the quarter and year-to-date periods ended September 30, 2011 to change our accounting for interest rate swap agreements under ASC 815, "Derivatives and Hedging."

ASC 815 requires that all derivative instruments be recorded on the balance sheet as either an asset or a liability measured at its fair value, and that changes in the derivatives fair value be recognized in earnings unless specific hedge accounting criteria are met. We applied the method of cash flow hedge accounting under ASC 815 to account for the interest rate swap agreements that allowed us to record changes in the instruments' fair value in other comprehensive income (the "cash flow" method). We recently concluded that the interest rate swap agreements did not qualify for the cash flow method because the documentation was not in place at the inception of the hedge as well as on an ongoing basis. This change reverses the fair value adjustments that were made in other comprehensive income to be recognized in earnings.

Although the swaps do not qualify for the cash flow method under ASC 815, there is no effect on cash flows from operating, investing, or financing activities for these changes. The change in the accounting treatment has not impacted the economics of the interest rate swap agreements.

The following table details the impact of the restatement on the Company's Statement of Operations and Balance Sheets for the periods ended September 30, 2011.

(Dollars in thousands, except share data)	Three Months Ended September 30, 2011									Nine Months Ended September 30, 2011
Statement of Operations Data:	As Reported			Restatement			Restated			As Reported			Restatement			Restated
Operating income	$	6,342		$	-		$	6,342		$	16,010		$	-		$	16,010
Other income and expense:
Interest and other income		26			-			26			50			-			50
Interest expense		(1,487	)		(1,393	)		(2,880	)		(3,570	)		(1,629	)		(5,199	)
Total other (expense)		(1,461	)		(1,393	)		(2,854	)		(3,520	)		(1,629	)		(5,149	)

Income before income taxes		4,881			(1,393	)		3,488			12,490			(1,629	)		10,861
Income tax provision		1,910			(555	)		1,355			4,683			(649	)		4,034
Net income	$	2,971		$	(838	)	$	2,133		$	7,807		$	(980	)	$	6,827
Other comprehensive income, net of taxes	$	(774	)	$	838		$	64		$	(785	)	$	980		$	195
Total comprehensive income	$	2,197		$	-		$	2,197		$	7,022		$	-		$	7,022
Basic earnings per share	$	0.22		$	(0.06	)	$	0.16		$	0.58		$	(0.07	)	$	0.51
Diluted earnings per share	$	0.22		$	(0.06	)	$	0.16		$	0.58		$	(0.07	)	$	0.51

	As of December 31, 2011
Balance Sheet Data:	As Reported			Restatement			Restated
Shareholders' equity:
Common stock	$	1,340		$	-		$	1,340
Additional paid-in capital		15,683			-			15,683
Retained earnings		31,797			(1,488	)		30,309
Accumulated other comprehensive income (loss)		(5,623	)		1,488			(4,135	)
Total shareholders' equity	$	43,197		$	-		$	43,197