v2.4.0.6
Stock Options and Stock-Based Compensation
 12 Months Ended
Mar. 31, 2012
Stock Options and Stock-Based Compensation [Abstract]  
Stock Options and Stock-Based Compensation

Note B — Stock Options and Stock-Based Compensation

Under the Company’s Restated Omnibus Incentive Plan (Formerly The Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at March 31, 2012, options for up to 9,682,500 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors and consultants at exercise prices not less than the fair market value of the stock at the date of grant. Options granted under the Plan are non-statutory stock options and generally vest 25% one year from date of grant and the remaining 75% vesting ratably each month for the next 36 months. The options granted to employees and the board of directors expires at the end of five years and ten years from date of grant, respectively.

All options granted in the three fiscal years ended March 31, 2010, 2011, and 2012 were granted at fair value and are non-statutory stock options. Summarized information for all stock options for the past three fiscal year follows:

 

                         
    Fiscal 2010     Fiscal 2011     Fiscal 2012  

Options outstanding — beginning of the year

     1,115,171       1,065,403       813,662  

Options granted

     181,550       207,325       149,075  

Options exercised

     (200,517 )      (371,057 )      (173,064 ) 

Options cancelled/forfeited

     (30,801 )      (88,009 )      (38,650 ) 
   

 

 

    

 

 

    

 

 

  

Options outstanding — end of year

     1,065,403       813,662       751,023  
   

 

 

    

 

 

    

 

 

  

During the year, weighted average exercise price of:

                        

Options granted

   $ 27.98     $ 42.40     $ 50.43  

Options exercised

   $ 15.04     $ 20.16     $ 25.00  

Options forfeited

   $ 21.79     $ 17.53     $ 34.09  

At the end of the year

                        

Price range of outstanding options

   $ 11.00-$47.70     $ 11.00-$47.70     $ 15.50-$52.76  

Weighted average exercise price per share

   $ 22.57     $ 29.26     $ 34.19  

Options available for future grants

     845,726       726,410       616,026  

Exercisable options

     448,257       374,141       388,154  

For the fiscal years ended March 31, 2010, 2011 and 2012, the Company recorded share-based compensation expense of $2,102,000, $2,544,000, and $2,276,000, respectively. The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2010, 2011 and 2012.

 

                         
    Fiscal 2010     Fiscal 2011     Fiscal 2012  

Cost of revenue

   $ 545,000     $ 608,000     $ 484,000  

General and administrative

     1,557,000       1,936,000       1,792,000  
   

 

 

    

 

 

    

 

 

  

Total cost of stock-based compensation included in income before income tax

     2,102,000       2,544,000       2,276,000  

Amount of income tax benefit recognized

     841,000       986,000       897,000  
   

 

 

    

 

 

    

 

 

  

Amount charged to net income

   $ 1,261,000     $ 1,558,000     $ 1,379,000  
   

 

 

    

 

 

    

 

 

  

Effect on basic earnings per share

   $ 0.10     $ 0.13     $ 0.12  
   

 

 

    

 

 

    

 

 

  

Effect on diluted earnings per share

   $ 0.10     $ 0.13     $ 0.12  
   

 

 

    

 

 

    

 

 

  

 

Included in the above-noted stock option grants and stock compensation expense are performance based stock options whereas vesting occurs only upon the Company achieving certain revenue or earnings per shares targets as determined by the Company’s board of directors. The options were valued in the same manner as the time vesting options. However, the Company only recognizes stock compensation to the extent that the targets are determined to be achieved which allow the options to vest. During fiscal years ended March 31, 2010, 2011 and 2012, the Company recognized stock compensation expense in the amount of $553,000, $1,144,000, and $1,002,000, respectively.

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses historical data among other factors to estimate the expected volatility, the expected option life, and the expected forfeiture rate. The risk-free rate is based on the interest rate paid on a U.S. Treasury issue with a term similar to the estimated life of the option. During fiscal 2012, based upon the historical experience of option cancellations, the Company used estimated forfeiture rates ranging from 9.0% to 11.7%. Forfeiture rates will be adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate.

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for fiscal years ended March 31, 2010, 2011 and 2012:

 

             
   

Fiscal 2010

  

Fiscal 2011

  

Fiscal 2012

Expected volatility

   46% to 47%   46% to 47%   46% to 47%

Risk free interest rate

   2.0% to 2.7%   1.5% to 2.2%   0.7% to 1.9%

Dividend yield

   0.0%   0.0%   0.0%

Weighted average option life

   4.8 to 5.0 years   4.8 to 5.0 years   4.6 to 5.0 years

The following table summarizes the status of stock options outstanding and exercisable at March 31, 2012:

 

                                         

Range of Exercise Prices

   Number of
Outstanding
Options		     Weighted
Average
Remaining
Contractual Life		     Outstanding
Options –
Weighted
Average
Exercise Price		     Exercisable
Options –
Number of
Exercisable
Options		     Exercisable
Options –
Weighted
Average
Exercise Price		  

$15.55 to $25.30

     185,478       2.11     $ 20.04       169,118     $ 20.00  

$25.31 to $30.00

     193,873       2.87       28.03       139,165       28.11  

$30.01 to $46.00

     157,447       3.92       37.92       59,624       35.68  

$46.01 to $52.76

     214,225       3.61       49.27       20,247       46.20  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     751,023       3.11     $ 34.19       388,154     $ 26.68  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

A summary of the status for all outstanding options at March 31, 2012, and changes during the fiscal year then ended is presented in the table below:

 

                                 
    Number of
Options		     Weighted
Average
Exercise Price
per Share		     Weighted
Average
Remaining
Contractual
Life (Years)		     Aggregate
Intrinsic Value
as of March 31,
2012		  

Options outstanding, March 31, 2011

     813,662     $ 29.26                  

Granted

     149,075       50.43                  

Exercised

     (173,064 )      25.00                  

Cancelled — forfeited

     (26,314 )      38.75                  

Cancelled — expired

     (12,336 )      24.39                  
   

 

 

    

 

 

                  

Options outstanding, March 31, 2012

     751,023     $ 34.19       3.11     $ 6,451,086  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options vested and expected to vest

     672,434     $ 32.66       3.03     $ 6,366,523  
   

 

 

    

 

 

    

 

 

    

 

 

  

Ending exercisable

     388,154     $ 26.68       2.49     $ 5,270,023  
   

 

 

    

 

 

    

 

 

    

 

 

  

The weighted average fair value of options granted during fiscal 2010, 2011, and 2012 was $12.07, $17.41, and $20.68, respectively. The total intrinsic value of options exercised during fiscal years 2010, 2011, and 2012 were $2,855,000, $9,173,000, and $4,148,000 respectively.

The Company received $2,732,000, $4,728,000, and $2,241,000 of cash receipts from the exercise of stock options during fiscal 2010, 2011, and 2012, respectively. Vested options at March 31, 2012 were 388,154. Unvested options at March 31, 2012 were 362,869. As of March 31, 2012, $2,433,000 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3.2 years.