Stock Options

12 Months Ended

Sep. 30, 2011

Stock Options

Stock Options

(8) Stock Options and Warrants

Stock Options

On November 5, 2007, the Board of Directors granted stock options totaling 75,000 shares. 25,000 of the stock options vested immediately and 25,000 additional options vested on each of the 1^st and 2^nd anniversary of the grant date. These options expired on the fourth anniversary of the grant date, November 5, 2011. On September 23, 2008, the Board of Directors approved performance based stock options totaling 19,000 shares to be vested on the 1^st, 2^nd and 3^rd anniversaries of the grant date. The number of the options granted has been adjusted due to the stock dividend to 28,500 at a price of $11.33 per share and expire on September 23, 2013 (see Note (k) Dividends for additional information). No additional options were granted during 2009 and 2010. On December 14, 2010, the board of directors granted 9,000 compensatory stock options to certain of the Company’s executive officers at an exercise price of $19.25 per share. These options have been adjusted to 13,500 shares at a price of $12.83, are exercisable on or after December 15, 2011 and expire on the fourth anniversary of the grant date. No other options were issued for fiscal 2011. The number of shares and exercise price of each of the option awards are shown in the next two tables.

Management has valued the 2010 options at their date of vesting and 2011 options at their grant date utilizing the Black-Scholes Option Pricing Model. The following weighted average assumptions were utilized in the fair value calculations for options granted:

	2010	2010	2011
	Options @	Options @	Options @
	$10.00	$11.33	$12.83
Expected dividend yield	2.74%	3.16%	3.53%
Expected stock price volatility	32.82%	36.23%	36.31%
Risk-free interest rate	4.00%	4.00%	4.00%
Expected life of options in years	0.00	2.00	4.25

A summary of all stock option activity and information related to all options outstanding follows:

	2010
	Stock Options
			Weighted
	Number of	Weighted	Average
	Shares	Average	Remaining
	Remaining	Exercise	Contractual
	Options	Price	Term
Outstanding at October 1, 2009	126,000	$10.30
Options granted	-
Options exercised during year ended September 30, 2010	36,000	$10.00	1.17years
Options canceled during year ended September 30, 2010	-
Outstanding at September 30, 2010	90,000	$10.42	1.75 years
Exercisable at September 30, 2010	82,500	$10.34	1.63 years
	2011
	Stock Options
			Weighted
	Number of	Weighted	Average
	Shares	Average	Remaining
	Remaining	Exercise	Contractual
	Options	Price	Term
Outstanding at October 1, 2010	90,000	$10.42
Options granted	13,500	$12.83	4.25 years
Options exercised during year ended September 30, 2011	23,500	$10.00	.17 years
Options canceled during year ended September 30, 2011	-
Outstanding at September 30, 2011	80,000	$10.95	1.51 years
Exercisable at September 30, 2011	66,500	$10.57	.95 years

Warrants

During the third quarter of 2007 we conducted a rights offering pursuant to a May 2006 order of the NYPSC that required us to conduct an equity offering and make various capital investments. The rights offering provided holders of our common stock with the right to purchase, at the price of $16.00, one "investment unit" for each share of common stock held. Each investment unit consisted of one share of common stock and one four-year warrant to purchase .7 shares of our common stock at a price of $19.00. The rights offering resulted in warrants being issued for 211,842 shares. On July 1, 2009, we amended the warrant agreement to reduce the exercise price of the warrants to $15.00 a share from July 6, 2009 to August 5, 2009. After August 5, 2009, the exercise price returned to $19.00 a share. During the month in which the exercise price was reduced, warrants to purchase 185,756 shares were exercised, comprising 87.7% of the outstanding warrants. We received $2,786,340 in connection with the warrant exercises in 2009 which was used to support our business plan. No warrants were exercised in 2010. During fiscal 2011, the remaining available warrants were adjusted for the stock dividend (see Note (k) – Dividends for more information) to 55,899. Of that amount, warrants to purchase 34,582 shares were exercised or 88.4% of the remaining warrants. The balance expired on August 17, 2011. We received $438,140 from warrant exercises in 2011 which we used to help fund capital projects.

	2011
	Warrants
			Weighted
		Weighted	Average
	Number of	Average	Remaining
	Remaining	Exercise	Contractual
	Warrants	Price	Term
Outstanding at October 1, 2010	55,899	$12.67
Warrants granted	-
Warrants exercised during year ended September 30, 2011	49,403	$12.67
Warrants canceled during year ended September 30, 2011	6,496	$12.67
Outstanding at September 30, 2011	0
	2010
	Warrants
			Weighted
		Weighted	Average
	Number of	Average	Remaining
	Remaining	Exercise	Contractual
	Warrants	Price	Term
Outstanding at October 1, 2009	55,899	$12.67
Warrants granted	-
Warrants exercised during year ended September 30, 2010	-
Warrants canceled during year ended September 30, 2010	-
Outstanding at September 30, 2010	55,899	$12.67	.92 years