Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (the “Plan”) as in effect at June 30, 2025, options exercisable for up to 61,845,000 shares of 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 common stock on the date of grant. Options granted under the Plan generally vest as to 25% of the shares one year from the date of grant, and as to the remaining 75% of the shares ratably each month over the following 36 months. The options granted to employees and directors expire at the end of five years and ten years from the date of grant, respectively. All options granted in the three months ended June 30, 2025 and 2024 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

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 based on the assumptions included in the table below. 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. The Company uses historical data, among other factors, to estimate the expected volatility, dividend yield and option life. The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures. The following assumptions were used to estimate the fair value of stock options granted during the three months ended June 30, 2025 and 2024, using the Black-Scholes option-pricing model:


	Three Months Ended
	June 30, 2025	June 30, 2024
Risk-free interest rate	4.07%	4.40%
Expected volatility	31%	32%
Expected dividend yield	0.00%	0.00%
Expected weighted average life of option in years	4.0 years	4.0 years

For the three months ended June 30, 2025 and 2024, the Company recorded stock-based compensation expense of $1,417,000 and $1,070,000, respectively. The table below shows the amounts recognized in the unaudited consolidated financial statements for stock-based compensation expense for all stock options during the three months ended June 30, 2025 and 2024, respectively.


	Three Months Ended
	June 30, 2025			June 30, 2024
Cost of revenues	$	681,000		$	715,000
General and administrative		736,000			355,000
Total cost of stock-based compensation included in income before income tax provision		1,417,000			1,070,000
Amount of income tax benefit recognized		(323,000	)		(246,000	)
Amount charged against net income	$	1,094,000		$	824,000
Effect on basic earnings per share	$	(0.02	)	$	(0.02	)
Effect on diluted earnings per share	$	(0.02	)	$	(0.02	)

The following table provides a summary of information for all stock option activity for the three months ended June 30, 2025 and 2024:


	Three Months Ended
	June 30, 2025					June 30, 2024
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding, beginning		1,185,727		$	51.07		1,469,181		$	43.13
Options granted		45,500			110.03		44,250			90.08
Options exercised		(54,889	)		31.55		(98,835	)		31.79
Options cancelled/forfeited		(1,945	)		73.67		(7,095	)		55.13
Options outstanding, ending		1,174,393		$	54.23		1,407,501		$	45.34

The following table provides summary information for all stock options outstanding and exercisable at June 30, 2025:


Range of Exercise Price	Outstanding Options – Number of Outstanding Options		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
$11.05 to $29.23		298,869		2.11	$	22.51		298,869	$	22.51
$29.24 to $52.00		350,319		2.31		48.98		230,565		47.78
$52.01 to $66.85		323,667		2.99		62.32		177,237		61.76
$66.86 to $110.18		201,538		4.83		97.39		26,123		80.57
Total		1,174,393		2.88	$	54.23		732,794	$	42.02

The following table provides summary information regarding all stock options outstanding at June 30, 2025, and changes during the three months then ended:


	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value as of June 30, 2025
Options outstanding at April 1, 2025		1,185,727		$	51.07
Granted		45,500			110.03
Exercised		(54,889	)		31.55
Cancelled – forfeited		(1,945	)		73.67
Cancelled – expired		—			—
Ending outstanding		1,174,393		$	54.23		2.88	$	57,735,303
Ending vested and expected to vest		1,082,966		$	53.54		2.88	$	53,959,166
Ending exercisable at June 30, 2025		732,794		$	42.02		2.32	$	44,522,423

The weighted-average grant-date fair value of stock options granted during the three months ended June 30, 2025 and 2024, was $33.73 and $26.94, respectively.

The stock option grants and stock-based compensation expense reflected above include time-based stock options, which vest based on the satisfaction of time-based service conditions, and performance-based stock options, which vest based on the Company’s achievement of certain pre-determined earnings per share targets that are assessed on a calendar year basis by the Company’s Board of Directors (the “Board”). Performance-based stock options are generally valued in the same manner as the time-based stock options except the Company only recognizes stock-based compensation expense to the extent that the targets are determined to be probable of being achieved. The Company recognized $427,000 and $80,000 of stock-based compensation expense for the three months ended June 30, 2025 and 2024, respectively, for performance-based stock options.