I – Stock-Based Compensation

The Company has stock-based compensation plans available to grant non-qualified stock options, incentive stock options and restricted stock to employees, directors and certain advisors of the Company. The stock-based compensation plans being utilized at

January 31, 2020

are the Amended and Restated Stock Option Plan and the Amended and Restated Stock Incentive Plan. The Company recorded total stock-based compensation expense for all plans of approximately

$3.2

million (

$2.4

million after tax effects) and

$2.3

million (

$1.8

million after tax effects) for the

nine

months ended

January 31, 2020

and

2019,

respectively. Tax benefits were recognized for these costs at the Company’s overall effective tax rate, excluding discrete income tax benefits related to excess benefits on share-based compensation.

Stock Option Plan

The Company has options outstanding under a stock option plan approved by the shareholders, the Amended and Restated Stock Option Plan. The shareholders of the Company approved the Amended and Restated Stock Option Plan (the “Restated Option Plan”) on

August 5, 2015,

which extended the term of the Restated Option Plan to

June 10, 2025

and increased the number of shares of common stock reserved for issuance under the plan to

1,800,000

shares. On

August 29, 2018,

the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional

200,000

shares to

2,000,000

shares. The Restated Option Plan provides for the grant of options to purchase shares of the Company’s common stock to employees, directors and certain advisors of the Company at a price

not

less than the fair market value of the stock on the date of grant and for periods

not

to exceed

ten

years. Options granted under the Company’s stock option plans expire in the calendar years

2020

through

2029.

	Restated Option Plan
Minimum exercise price as a percentage of fair market value at date of grant		100	%
Last expiration date for outstanding options		December 30, 2029
Shares available for grant at January 31, 2020		75,000

The fair value of options granted is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below.

	Nine Months Ended January 31,
	2020			2019
Expected term (years)		5.5			5.5
Risk-free interest rate		1.75	%		2.79	%
Volatility		39	%		36	%
Dividend yield		-			-

The expected term of the options is based on evaluations of historical actual and future expected employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of the Company’s common stock. The Company has

not

historically issued any dividends and does

not

expect to do so in the foreseeable future.

There were

225,000

options granted during the

nine

months ended

January 31, 2020

and

145,000

options granted during the

nine

months ended

January 31, 2019.

The grant-date fair value of options granted during the

nine

months ended

January 31, 2020

and

2019

was

$9.3

million and

$3.0

million, respectively. The options were granted at fair market value on the date of grant.

Stock option compensation expense was

$2.3

million (

$1.8

million after tax effects) and

$1.5

million (

$1.2

million after tax effects) for the

nine

months ended

January 31, 2020

and

2019,

respectively. As of

January 31, 2020,

the Company had approximately

$10.0

million of total unrecognized compensation cost related to unvested options that are expected to vest. These unvested outstanding options have a weighted-average remaining vesting period of

1.9

years.

The Company had the following options exercised for the periods indicated. The impact of these cash receipts is included in financing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

	Nine Months Ended January 31,
(Dollars in thousands)	2020		2019

Options exercised		112,250		224,500
Cash received from option exercises	$	2,849	$	4,373
Intrinsic value of options exercised	$	6,861	$	8,506

During the

nine

months ended

January 31, 2020,

there were

50,000

options exercised through net settlements in accordance with plan provisions, wherein the shares issued were reduced by

23,301

shares to satisfy the exercise price and income taxes to acquire

26,699

shares.

The aggregate intrinsic value of outstanding options at

January 31, 2020

and

2019

was

$28.1

million and

$15.2

million, respectively. As of

January 31, 2020,

there were

104,250

vested and exercisable stock options outstanding with an aggregate intrinsic value of

$5.4

million, a weighted average remaining contractual life of

6.1

years, and a weighted average exercise price of

$58.44.

Stock Incentive Plan

August 5, 2015,

the shareholders of the Company approved the Amended and Restated Stock Incentive Plan (the “Restated Incentive Plan”), which extended the term of the Company’s Stock Incentive Plan to

June 10, 2025.

August 29, 2018,

the shareholders of the Company approved an amendment to the Restated Stock Incentive Plan that increased the number of shares of common stock that

may

be issued under the Restated Incentive Plan by

100,000

shares to

450,000.

For shares issued under the Stock Incentive Plan, the associated compensation expense is generally recognized equally over the vesting periods established at the award date and is subject to the employee’s continued employment by the Company.

There were

7,224

restricted shares granted during the

nine

months ended

January 31, 2020

and

3,000

shares granted during the

nine

months ended

January 31, 2019.

A total of

99,303

shares remained available for award at

January 31, 2020.

There were

186,724

unvested restricted shares outstanding as of

January 31, 2020

with a weighted average grant date fair value of

$48.48.

As of

January 31, 2020,

the Company had approximately

$6.6

million of total unrecognized compensation cost related to unvested awards granted under the Stock Incentive Plan, which the Company expects to recognize over a weighted-average remaining period of

6.4

years. The Company recorded compensation cost of approximately

$798,000

(

$611,000

after tax effects) and

$756,000

(

$575,000

after tax effects) related to the Restated Incentive Plan during the

nine

months ended

January 31, 2020

and

2019,

respectively.

There were

modifications to any of the Company’s outstanding share-based payment awards during fiscal

2019

or during the

first

nine

months of fiscal

2020.