ACCOUNTING FOR STOCK-BASED COMPENSATION

6 Months Ended

Sep. 30, 2011

ACCOUNTING FOR STOCK-BASED COMPENSATION

ACCOUNTING FOR STOCK-BASED COMPENSATION

2.   ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based awards made to its employees and Board of Directors in accordance with FASB ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of all compensation costs for stock-based awards made to employees and the Board of Directors based upon fair value over the requisite service period for awards expected to vest.

The Company recognized $597,000 and $1,539,000 of stock-based compensation costs in the consolidated statements of operations for the three months ended September 30, 2011 and September 30, 2010, respectively. The Company recognized $1,204,000 and $2,563,000 of stock-based compensation costs in the consolidated statements of operations for the six months ended September 30, 2011 and September 30, 2010, respectively. The income tax benefit recognized related to this compensation for the three months ended September 30, 2011 and September 30, 2010 was approximately $202,000 and $532,000, respectively.  The income tax benefit recognized related to this compensation for the six months ended September 30, 2011 and September 30, 2010 was approximately $409,000 and $895,000, respectively

The following table summarizes stock-based compensation costs included in the Company’s consolidated statement of operations:

	Three Months Ended				Six Months Ended
(In thousands)	September 30,2011		September 30,2010		September 30,2011		September 30,2010
Cost of revenues	$	117	$	242	$	223	$	395
Selling, general and administrative	480		1,297		981		2,168
Total share-based compensation expense before tax	$	597	$	1,539	$	1,204	$	2,563

The Company deems the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value for the stock-based awards. The Black-Scholes method of valuation requires several assumptions: (1) the expected term of the stock-based award; (2) the expected future stock volatility over the expected term; (3) a risk-free interest rate; and (4) the expected dividend yield. The expected term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock and the risk free interest rate is based on the U.S. Zero-Bond rate. The expected dividend yield was based on the assumption that the Company would continue paying dividends on its common stock at the same rate for the foreseeable future.

There were no options granted in the six month period ended September 30, 2011. There were 56,181 options granted in the six month period ended September 30, 2010.  The fair value of the options at date of grant was estimated with the following assumptions for grants made during the period presented:

	Six Months Ended
	September 30, 2010
Assumptions:
Option life	5 years
Risk-free interest rate	1.5%
Stock volatility	44%
Dividend yield	1.6%

Stock Option and Other Compensation Plans

The Company has various stock option and other compensation plans for non-employee directors, officers, and employees. The Company had the following stock option and other compensation plans outstanding as of September 30, 2011: the 1995 Combination Plan, the 1997 Non-Qualified Option Plan, the 1998 Non-Qualified Option Plan, the 1999 Combination Plan, the 2000 Combination Plan, the 2002 Combination Plan, the 2003 Stock Plan for Non-Employee Directors and the 2005 Equity and Incentive Plan. There are 3,980,000 shares authorized under these plans. As of September 30, 2011, 290,000 shares remain available for future issuance under these plans.  Vesting periods for awards granted under such plans are at the discretion of the Compensation Committee of the Board of Directors, or their designee, and typically range between one and three years. Options under these plans are granted at fair market value and have a term of ten years from the date of grant.

Stock Options

The following tables summarize stock option activity for the six months ended September 30, 2011.

	Number ofShares		Weighted Average Exercise Price ($)		WeightedAverageContractualLife (years)	Aggregate IntrinsicValue
Options outstanding at March 31, 2011	472,446		$	55.77	5.16
Grants	—		—			—
Exercises	(49,804	)	56.96
Cancellations	(20,000	)	65.08
Options outstanding at September 30, 2011	402,642		$	55.16	4.85
Options exercisable at September 30, 2011	396,310		$	55.06		$	3,644,000

Information related to the stock options outstanding as of September 30, 2011 is as follows:

Range of Exercise Prices	Number ofShares	Weighted- AverageRemainingContractualLife (years)	Weighted-AverageExercise Price($)		ExercisableNumber ofShares	ExercisableWeighted-AverageExercise Price($)
$  6.50 - $20.00	23,927	2.12	$	13.13	23,927	$	13.13
$20.01 - $30.00	20,400	2.97	28.50		20,400	28.50
$30.01 - $40.00	20,500	3.18	39.06		20,500	39.06
$40.01 - $50.00	46,600	3.58	45.18		46,600	45.18
$50.01 - $60.00	82,020	3.80	53.25		82,020	53.25
$60.01 - $70.00	153,014	5.20	64.28		146,682	64.41
$70.01 - $75.82	56,181	8.92	74.87		56,181	74.87
$  6.50 - $75.82	402,642	4.85	$	55.16	396,310	$	55.06

As of September 30, 2011, there was approximately $18,000 of unrecognized compensation costs related to options granted. This cost is expected to be recognized over a weighted average period of 1.7 years.   Non-vested common stock options are subject to the risk of forfeiture until the fulfillment of specified conditions.

Restricted Stock and Restricted Stock Units

The Company has instituted long term incentive plans for certain key employees. These plans call for the issuance of restricted stock, restricted stock options, and/or cash bonus which vests or is paid upon the achievement of certain performance-based goals as well as service time incurred.  Restricted stock and restricted stock units may also be granted to other employees with vesting periods that range from one to three years.  In addition, annually the Board of Directors is granted restricted stock. These restricted stock shares vest on a pro-rata basis on service time performed over a one-year period.  The fair values of these restricted stock awards are equal to the market price per share of the Company’s common stock on the date of grant.

Non-vested restricted stock and stock unit awards are subject to the risk of forfeiture until the fulfillment of specified conditions. As of September 30, 2011 there was $1,798,000 of total unrecognized compensation cost related to non-vested restricted stock and stock unit awards granted under the Company’s stock plans. This cost is expected to be recognized over a weighted average period of 1.2 years.

The following table summarizes the status of the Company’s non-vested restricted stock and stock unit awards for the six months ended September 30, 2011:

	Number ofShares		Weighted AverageGrant DateFair Value($)
Outstanding at March 31, 2011	32,882		$	65.03
Granted	20,946		73.41
Vested	(3,062	)	71.68
Forfeited	—		—
Outstanding at September 30, 2011	50,766		$	68.09