Stock-based Compensation

9 Months Ended

Dec. 31, 2013

Note 5 - Stock-based Compensation

Amounts recognized in the condensed consolidated financial statements related to stock-based compensation are as follows (in thousands, except per share data):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2013		2012		2013		2012
Total cost of stock-based compensation charged against income before income taxes	$	272	$	459	$	629	$	897
Amount of income tax benefit recognized in earnings	98		163		228		314
Amount charged against net income	$	174	$	296	401		583
Impact on net income per common share:
Basic	$	0.05	$	0.09	$	0.12	$	0.17
Diluted	0.05		0.08		0.11		0.17

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

The fair value of each stock 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 stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock 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 is a summary of stock option activity for the nine months ended December 31, 2013:

	Number of Shares		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (000s)
Outstanding at March 31, 2013	416,125		$	29.87	3.7	$	9,529
Stock options granted	128,124		55.33		6.3
Stock options forfeited	(17,680	)	44.21
Stock options expired	—		—
Stock options exercised	(66,140	)	21.85
Outstanding at December 31, 2013	460,429		37.57		4.4	18,884

Exercisable at December 31, 2013	192,570		25.59		3.1	10,204

The total intrinsic value of stock options exercised was $2,889,000 and $1,800,000 for the nine months ended December 31, 2013 and 2012, respectively.

A summary of the status of our unvested stock option shares as of December 31, 2013 is as follows:

	Number of Shares		Weighted- Average Grant-Date Fair Value
Unvested at March 31, 2013	257,805		$	9.55
Stock options granted	128,124		15.90
Stock options forfeited	(17,270	)	10.32
Stock options vested	(100,800	)	8.54
Unvested at December 31, 2013	267,859		13.01

As of December 31, 2013, there was $ 2,407,000 of total unrecognized compensation expense related to unvested stock options. As of December 31, 2013, we have 200,376 shares available for future stock option grants.

Effective November 30, 2012, as part of our Chief Financial Officer transition, 14,400 unvested options were modified to a) extend the expiration date to 10 years following the original grant date, b) allow them to be exercised through their expiration date, and c) accelerate the vesting such that all options would vest by November 30, 2014. This was a modification of the terms of an equity award and, accordingly, we treated this as an exchange of the original award for a new award. We recorded incremental compensation expense of approximately $240,000 for the three and nine months ended December 31, 2012, which is included in general and administrative expense on the accompanying condensed consolidated statements of income.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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