18. Stock Options and Restricted Stock Awards

In January 1994, the Company adopted the 1994 Stock Option Plan (the “1994 Plan”), under which it was authorized to issue non-qualified stock options and incentive stock options to key employees, directors and consultants. After a number of shareholder-approved increases to this plan, at March 31, 2002 the aggregate number of stock options approved was 960,000 shares of the Company’s common stock. The term and vesting period of options granted is determined by a committee of the Board of Directors with a term not to exceed ten years. At the Company’s Annual Meeting of Shareholders held on November 8, 2002, the 1994 Plan was amended to increase the authorized number of shares issued to 1,155,000. As of March 31, 2014 no options to purchase shares of common stock were outstanding or available for grant under the 1994 Plan. As of March 31, 2013, options to purchase 95,750 shares of common stock were outstanding and no options were available for grant under the 1994 Plan.

At the Company’s Annual Meeting of Shareholders held on December 17, 2003, the shareholders approved the Company’s 2003 Long-Term Incentive Plan (“Incentive Plan”) which had been adopted by the Company’s Board of Directors on October 31, 2003. Under the Incentive Plan, a total of 1,200,000 shares of the Company’s common stock were reserved for grants of Incentive Awards and all of the Company’s employees are eligible to participate. The 2003 Incentive Plan was terminated on October 31, 2013. As of March 31, 2014 and 2013, options to purchase 467,500 and 1,035,534 shares of common stock, respectively, were outstanding under the Incentive Plan. In January 2011, this Incentive Plan was replaced and no options were available for grant under the Incentive Plan.

In November 2004, the Company’s shareholders approved the 2004 Non-Employee Director Stock Option Plan (the “2004 Plan”) which provides for the granting of options to non-employee directors. At the Company’s Annual Meeting of Shareholders held on February 25, 2010, the Company’s shareholders approved an amendment to the 2004 Plan that increased the number of shares of common stock reserved for grant under the 2004 Plan from 175,000 to 275,000. As of March 31, 2014 and 2013, options to purchase 183,000 and 218,000, respectively, shares of common stock for grant under the 2004 Plan. In March 2014, the 2004 Plan was replaced and the Company will not make any further grants of awards under this plan.

In January 2011, the Company’s shareholders approved the 2010 Incentive Award Plan (the “2010 Plan”) which replaced the 2003 Long-term Incentive Plan. At the Company’s Annual Meeting of Shareholders held on March 28, 2013, the Company’s shareholders approved an amendment to the 2010 Plan that increased the number of shares of common stock reserved for grant under the 2010 Plan from 750,000 to 1,750,000. At the Company’s Annual Meeting of Shareholders held on March 31, 2014, the Company’s shareholders approved a second amendment to the 2010 Plan that further increased the number of shares of common stock reserved for grant under the 2010 Plan from 1,750,000 to 2,750,000. Under the 2010 Plan, all of the Company’s employees are eligible to participate. As of March 31, 2014 and 2013, options to purchase 776,468 and 620,800 shares of common stock, respectively, were outstanding and 1,452,983 and 1,078,033, respectively, shares of common stock were available for grant under the 2010 Plan.

At the Company’s Annual Meeting of Shareholders held on March 31, 2014, the shareholders approved the Company’s 2014 Non-Employee Director Incentive Award Plan (the “2014 Plan”) which had been adopted by the Company’s Board of Directors on February 23, 2014 and replaced the 2004 Plan. Under the 2014 Plan, a total of 342,000 shares of the Company’s common stock were reserved for grants to the Company’s non-employee directors. As of March 31, 2014, no options to purchase shares under the 2014 Plan were issued.

The shares of common stock issued upon exercise of a previously granted stock option are considered new issuances from shares reserved for issuance upon adoption of the various plans. The Company requires that the option holders provide a written notice of exercise to the stock plan administrator and payment for the shares prior to issuance of the shares.

A summary of stock option transactions follows:

	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2011		1,591,084		$	8.61
Granted		15,000		$	10.04
Exercised		(95,550	)	$	3.36
Cancelled		(48,250	)	$	3.15
Outstanding at March 31, 2012		1,462,284		$	9.15
Granted		635,800		$	6.47
Exercised		(128,000	)	$	2.28
Cancelled		-		$	-
Outstanding at March 31, 2013		1,970,084		$	8.73
Granted		331,000		$	11.06
Exercised		(721,666	)	$	9.12
Cancelled		(152,450	)	$	7.44
Outstanding at March 31, 2014		1,426,968		$	9.21

Based on the market value of the Company’s common stock at March 31, 2014, 2013 and 2012, the pre-tax intrinsic value of options exercised was $12,593,000, $493,000 and $598,000 respectively.

The followings table summarizes information about the options outstanding at March 31, 2014:

		Options Outstanding								Options Exercisable
Range of Exercise price		Shares		Weighted Average Exercise Price		Weighted Average Remaining Life In Years		Aggregate Intrinsic Value		Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	1.800 to $6.345		81,000	$	5.22		5.02	$	1,729,000		78,000	$	5.20	$	1,667,000
$	6.460 to $7.450		509,468		6.52		8.48		10,215,000		344,766		6.54		6,906,000
$	8.700 to $9.900		279,250		9.33		9.10		4,814,000		12,250		9.48		209,000
$	10.010 to $11.900		214,250		10.24		1.84		3,499,000		214,250		10.24		3,499,000
$	12.000 to $19.94		343,000	$	13.41		3.87		4,514,000		287,000	$	12.23		4,116,000

			1,426,968					$	24,771,000		936,266			$	16,397,000

The aggregate intrinsic values in the above table represent the pre-tax value of all in-the-money options if all such options had been exercised on March 31, 2014 based on the Company’s closing stock price of $26.57 as of that date.

Options to purchase 936,266, 1,549,683 and 1,447,284 shares of common stock were exercisable as of March 31, 2014, 2013 and 2012, respectively. The weighted average exercise price of options exercisable was $9.06, $9.33 and $9.14 as of March 31, 2014, 2013 and 2012, respectively.

A summary of changes in the status of non-vested stock options is presented below.

	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at March 31, 2013		420,401		$	2.93
Granted		331,000		$	5.16
Vested		(147,999	)	$	3.10
Cancelled		(112,700	)	$	2.92
Non-vested at March 31, 2014		490,702		$	4.39

At March 31, 2014, there was $1,916,000 of total unrecognized compensation expense from stock-based compensation granted under the plans, which is related to non-vested shares. The compensation expense is expected to be recognized over a weighted average vesting period of 1.9 years.

Restricted Stock

On September 3, 2013, the Company awarded 138,000 shares of restricted stock to certain executives at the closing market price of $9.32 per share. These awards vest in three equal installments beginning each anniversary from the award date, subject to continued employment. The fair value related to the restricted stock awards of $1,286,000 will be recognized as compensation expense over the vesting period. At March 31, 2014, there was $1,072,000 of total unrecognized compensation expense from these restricted stock awards, which will be recognized over the remaining vesting period.