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 (the "Incentive Plan"), which authorizes grants to officers and other key employees, including directors, 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, was reserved for issuance pursuant to the Incentive Plan. An individual’s award of stock options is limited to 500,000 shares in a five-year period.

Non-qualified stock options, incentive stock options and restricted stock awards have been granted to date and all options have been granted at the 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. The vesting period of the restricted stock awards range between three months and four years. Incentive stock options were not granted in fiscal 2014 or during the first nine months of fiscal 2015. During fiscal 2014, 89,500 shares of restricted stock were granted to several employees as incentives for future performance. The market value of the Company's stock on the date of awards ranged between $14.97 and $20.64. During the first nine months of fiscal 2015, 23,332 shares of restricted stock with a three month vesting were issued to the members of the Company's Board of Directors as part of their director compensation. The market value of the Company's stock on the date of the awards ranged between $12.90 and $14.22. At July 31, 2015, 85,334 shares of restricted stock were outstanding. During the fiscal quarter ended July 31, 2015, 23,129 shares of restricted stock vested and no shares were forfeited. During the first nine months of fiscal 2015, 94,005 shares of restricted stock vested and 6,750 shares were forfeited.

Activity in the Company’s incentive plan for the nine months ended July 31, 2015 and 2014 was as follows:



	Number of Shares		Weighted Average Exercise Price Per Share	Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at November 1, 2013	236,134		$9.93
Options:
Granted	—		$0.00
Exercised	(88,363	)	$9.83
Canceled	(12,333	)	$7.19
Outstanding at July 31, 2014	135,438		$9.79	5.51	$976
Options exercisable at July, 2014	125,771		$9.93	5.37	$890

Options outstanding at November 1, 2014	123,333		$9.77
Options:
Granted	—		$0.00
Exercised	(19,317	)	$8.19
Canceled	(11,350	)	$11.58
Outstanding at July 31, 2015	92,666		$9.77	4.51	$244
Options exercisable at July 31, 2015	92,666		$9.77	4.51	$244

At both July 31, 2015 and July 31, 2014, the exercise price of some of the Company’s stock option grants was higher than the market value of the Company’s stock. The stock option grants whose exercise price is higher that the market value of the Company's stock are excluded from the computation of aggregate intrinsic value of the Company’s outstanding and exercisable stock options.

All compensation related to stock options was recognized in the first quarter of fiscal year 2015 as all stock options are fully vested and therefore there was no impact on earnings per share basic and diluted related to the stock option compensation expense. For the nine months ended July 31, 2015, compensation expense related to stock options effectively reduced income before taxes by $15. For the three and nine months ended July 31, 2014, the Company recorded compensation expense related to stock options currently vesting, effectively reducing income before taxes by $21 and $127. There was no impact on earnings per share basic and diluted for the three months ended July 31, 2015 and July 31, 2014. For the nine months ended July 31, 2015 there was a $0.01 impact on earnings per share basic and diluted and for the nine months ended July 31, 2014, there was no impact. The total compensation cost related to the restricted stock currently vested was $836 and $303, for the nine months ended July 31, 2015 and July 31, 2014, respectively. The total estimated compensation cost related to the non-vested restricted stock is $1,015, which will be expensed through June of 2018.

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 Amended and Restated 1993 Key Employee Stock Incentive Program are included in the diluted earnings per share calculation to the extent they are dilutive. For the three and nine months ended July 31, 2015, 153,646 and 119,796 stock awards, respectively, were excluded from the computation of diluted earnings per share because they were anti-dilutive. For the and three and nine months ended July 31, 2014, 35,369 and 42,953 stock awards, respectively, 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,
	2015		2014		2015		2014
Net income available to common stockholders	$	1,981	$	8,349	$	10,777	$	21,417
Basic weighted average shares	17,227		17,118		17,220		17,081
Effect of dilutive securities:
Stock options	19		57		27		76
Diluted weighted average shares	17,246		17,175		17,247		17,157
Basic income per share	$	0.11	$	0.49	$	0.63	$	1.25
Diluted income per share	$	0.11	$	0.49	$	0.62	$	1.25