Equity Matters

9 Months Ended

Jul. 31, 2011

Equity Matters [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Equity Matters

For the Company, FASB ASC Topic 718 “Compensation – Stock Compensation” affects the stock options that have been granted and requires the Company to expense share-based payment (“SBP”) awards with compensation cost for SBP transactions measured at fair value. The Company has elected to use the simplified method of calculating the expected term of the stock options and historical volatility to compute fair value under the Black-Scholes option-pricing model. The risk-free rate for periods within the contractual life of the option is based on the U.S. zero coupon Treasury yield in effect at the time of grant. Forfeitures have been estimated based upon the Company’s historical experience.

1993 Key Employee Stock Incentive Plan

The Company maintains the Amended and Restated 1993 Key Employee Stock Incentive Program (as amended and restated December 12, 2002 and December 10, 2009) (the “Incentive Plan”), which authorizes grants to officers and other key employees of the Company and its subsidiaries of (i) stock options that are intended to qualify as incentive stock options, (ii) nonqualified stock options and (iii) restricted stock awards. An aggregate of 2,700,000 shares of Common Stock, subject to adjustment upon occurrence of certain events to prevent dilution or expansion of the rights of participants that might otherwise result from the occurrence of such events, has been reserved for issuance pursuant to the Incentive Plan. An individual’s award is limited to 500,000 shares in a five-year period.

Non-qualified stock options and incentive stock options have been granted to date and all options have been granted at market price at the date of grant. Options expire over a period not to exceed ten years from the date of grant and vest ratably over a three year period. In December 2010 options to purchase 154,000 shares were awarded to several officers and employees at an exercise price of $12.04 for stock options that are intended to qualify as incentive stock options and $13.24 for nonqualified stock options. The fair values of these options were estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants awarded during fiscal year 2011:

	2011
Risk-free interest	2.48	%
Dividend yield	0.00	%
Volatility factor—market	89.02	%
Expected life of options—years	5.95

Activity in the Company’s stock option plan for the nine months ended July 31, 2011 and 2010 was as follows:

	Fiscal 2011							Fiscal 2010
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value		Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at November 1	683,692		$	6.13				776,805		$	5.88
Options:
Granted	154,000		12.10					—		—
Exercised	(198,108	)	3.53					(47,931	)	2.20
Canceled	(103,568	)	7.77					(15,000	)	5.82
Options outstanding at July 31	536,016		$	8.55	6.96	$	1,735	713,874		$	6.13	7.86	$	3,181
Exercisable at July 31	122,783		$	13.71	3.68	$	58	196,774		$	11.11	6.56	$	363

At July 31, 2011 and 2010, the exercise price of some of the Company’s stock option grants was higher than the market value of the Company’s stock. These grants are excluded from the computation of aggregate intrinsic value of the Company’s outstanding and exercisable stock options.

For the three and nine months ended July 31, 2011, the Company recorded compensation expense related to stock options currently vesting, effectively reducing income before taxes by $213 and $586, respectively. For the three and nine months ended July 31, 2010, the Company recorded compensation expense related to stock options currently vesting, effectively reducing income before taxes and net income by $128 and $518, respectively. For both the three months ended July 31, 2011 and July 31, 2010, the impact on earnings per share was a reduction of $.01 per share basic and diluted. For both the nine months ended July 31, 2011 and July 31, 2010, the impact on earnings per share was a reduction of $.02 per share basic and diluted. The total compensation cost related to unvested awards not yet recognized is expected to be a combined total of $1,312 over the next three fiscal years.

Earnings per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. In addition, the shares of Common Stock issuable pursuant to stock options outstanding under the Incentive Plan are included in the diluted earnings per share calculation to the extent they are dilutive. For the three and nine month periods ended July 31, 2011, 94,824 and 73,913, respectively, stock options were excluded from the computation of diluted earnings per share because they were anti-dilutive. For the three and nine months ended July 31, 2010, stock options of 147,000 and 483,705 were excluded from the computation of diluted earnings per share because they were anti-dilutive. The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for net income per share:

(Shares in thousands)	Three months ended July 31,				Nine months ended July 31,
	2011		2010		2011		2010
Net income available to common stockholders	$	1,691	$	2,037	$	5,646	$	4,590
Basic weighted average shares	16,753		16,544		16,702		16,524
Effect of dilutive securities:
Stock options	110		210		156		137
Diluted weighted average shares	16,863		16,754		16,858		16,661
Basic income per share	$	0.10	$	0.12	$	0.34	$	0.28
Diluted income per share	$	0.10	$	0.12	$	0.33	$	0.28

Comprehensive Income

Comprehensive income for the three and nine months ended July 31, 2011 was $1,691 and $5,532, respectively and comprehensive income for the three and nine months ended July 31, 2010 was $2,037 and $4,491, respectively. In addition to the reported amounts of net income for the nine months ended July 31, 2011 and 2010, comprehensive income includes the effect of tax adjustments of $(114) and $(99), respectively, to adjust the estimated deferred taxes associated with the pension adjustments included in accumulated other comprehensive income.