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Stock-based Compensation
 9 Months Ended
Dec. 31, 2011
Stock-based Compensation  
Stock-based Compensation

4.              Stock-based Compensation

 

Stock-based compensation costs for award grants to employees and directors are valued at fair value and recognized on a straight line basis over the service periods of each award.  We estimate forfeiture rates for the year based on historical experience.  Amounts recognized in the condensed financial statements related to stock-based compensation are as follows:

 

 

 

Three months ended
December 31,

 

Nine months ended
December 31,

 

(Dollars in thousands except earnings per share)

 

2011

 

2010

 

2011

 

2010

 

Total cost of stock-based compensation charged against income before income taxes

 

$

112

 

$

125

 

$

339

 

$

287

 

Amount of income tax benefit recognized in earnings

 

41

 

46

 

124

 

109

 

Amount charged against net income

 

$

71

 

$

79

 

$

215

 

$

178

 

Impact on net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

$

0.02

 

$

0.07

 

$

0.06

 

Diluted

 

$

0.02

 

$

0.02

 

$

0.06

 

$

0.05

 

 

Stock-based compensation expense is included in cost of revenues, and general and administrative expense in the condensed statements of income.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model (Black-Scholes). We use historical data to estimate the expected price volatility, the expected option life and expected forfeiture rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The dividend yield is calculated based upon the dividend payments made during the prior four quarters as a percent of the average stock price for that period. The following summarizes the Black-Scholes assumptions:

 

 

 

Nine months ended December 31,

 

 

 

2011

 

2010

 

Volatility

 

33.4-33.7%

 

33.8-36.1%

 

Risk-free interest rate

 

0.9-2.2%

 

1.1-3.9%

 

Expected option life (years)

 

5-10

 

5-10

 

Dividend yield

 

1.8%

 

1.8%

 

 

The following summarizes option activity:

 

 

 

Number of
Shares

 

Weighted-
average
Exercise Price
per Share

 

Weighted-
average
Remaining
Contractual
Term

 

Aggregate
Intrinsic Value
(000)

 

Outstanding at March 31, 2011

 

443,642

 

$

20.10

 

4.0

 

 

 

Options granted

 

103,780

 

29.87

 

4.9

 

 

 

Options forfeited

 

(8,650

)

26.51

 

 

 

 

 

Options expired

 

(1,020

)

14.91

 

 

 

 

 

Options exercised

 

(54,062

)

17.52

 

 

 

 

 

Outstanding at December 31, 2011

 

483,690

 

22.39

 

3.9

 

$

9,216

 

 

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2011

 

187,425

 

19.29

 

3.0

 

$

4,154

 

 

The Company issues new shares of common stock upon exercise of stock options.  The total intrinsic value of options exercised was $738,000 and $624,000 during the nine month periods ended December 31, 2011 and 2010, respectively.

 

A summary of the status of our unvested option shares as of December 31, 2011 is as follows:

 

 

 

Number of
Shares

 

Weighted-
average
Grant-Date
Fair Value

 

Unvested at March 31, 2011

 

291,425

 

$

6.46

 

Options granted

 

103,780

 

8.33

 

Options forfeited

 

(8,255

)

7.36

 

Options vested

 

(90,685

)

6.04

 

Unvested at December 31, 2011

 

296,265

 

7.22

 

 

As of December 31, 2011, there was approximately $1,260,000 of total unrecognized compensation cost related to unvested stock options granted under our plans, which is expected to be recognized over a weighted-average period of 2.3 years.