EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE

3.         EARNINGS PER SHARE

The following table shows the shares (in thousands) used in computing diluted earnings per share (“EPS”) in accordance with ASC topic No. 260 – Earnings per Share:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Diluted earnings per share:
Weighted average shares outstanding		13,245		13,058		13,199		13,033
Employee and director stock options		22		-		16		-
Weighted average shares assuming dilution		13,267		13,058		13,215		13,033

Options outstanding to purchase 286,000 shares of the Company’s common stock for the three and nine months ended September 30, 2013 and 351,000 shares for the three and nine months ended September 30, 2012 were not included in the computation of diluted EPS because their effect was anti-dilutive.

On January 1, 2009 the Company adopted an update to ASC topic No. 260, which requires the inclusion of all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted EPS calculations.

As a result, 910,637 of restricted shares are included in our calculation of basic and diluted EPS for the three and nine months ended September 30, 2013 and 820,637 for the three and nine months ended September 30, 2012.    These restricted shares were issued under the Innotrac Corporation 2000 Stock Option and Incentive Award Plan and the Innotrac Corporation 2010 Stock Award Plan.  Both plans provide for immediate voting rights, forfeiture of unvested shares if a grantee’s employment or service with the Company ends for any reason (other than a change in control, as defined in the plan), and vesting of shares upon the earlier of a change in control or on specific vesting dates.  The vesting period for all restricted shares issued prior to June 2011 is 25% on each of the 7th, 8th, 9th and 10th anniversary of the issuance date, or earlier upon a change in control.  Vesting for restricted shares issued to employees beginning in June 2011 follow the same schedule of 25% on each of the 7th, 8th, 9th and 10th anniversary of the issuance date, or earlier upon a change in control.  The vesting period for restricted shares issued to non-employee Directors of the Company beginning in June 2011 follows the same schedule of 25% vesting on each of the 7th, 8th, 9th, and 10th anniversary (or earlier upon a change in control), unless the Director’s service with the Company terminates other than for cause prior to all shares vesting, in which case shares vest one third on the date of issuance and one third on each of the 1st and 2nd anniversary of the issuance date.