2. ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based awards made to its employees and Board of Directors in accordance with Financial Accounting Standards Board Accounting Standards Codification (“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 $308,000 and $258,000 of stock-based compensation costs for the three months ended June 30, 2013 and June 30, 2012, respectively. The income tax expense recognized related to the compensation costs for the three months ended June 30, 2013 and June 30, 2012 was approximately $99,000 and $88,000, respectively.

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

	Three Months Ended
(In thousands)	June 30, 2013		June 30, 2012
Cost of revenues	$	113	$	58
Selling, general and administrative expenses	195		200
Total stock-based compensation expense before tax	$	308	$	258

Stock Option and Other Compensation Plans

The Company has various stock option and other compensation plans for directors, officers, and employees. The Company had the following stock plans outstanding as of June 30, 2013: 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 3,480,000 shares authorized under these plans. Vesting periods are at the discretion of the Board of Directors and typically range from one to three years. Certain of the options granted vest upon the achievement of certain performance based goals as well as service time incurred. 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 three months ended June 30, 2013:

	Number of Shares		Weighted Average Exercise Price ($)		Weighted Average Contractual Life	Aggregate Intrinsic Value
Options outstanding at March 31, 2013	315,162		$	56.72	4.08
Grants	—		—
Exercises	(35,012	)	41.48			$	676,000
Cancellations	(2,155	)	61.37
Options outstanding at June 30, 2013	277,995		$	58.60	3.96
Options exercisable at June 30, 2013	276,181		$	58.58

Information related to the stock options outstanding as of June 30, 2013 is as follows:

Range of Exercise Prices	Number of Shares	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price ($)		Exercisable Number of Shares	Exercisable Weighted- Average Exercise Price ($)
$11.58 - $20.00	14,075	0.69	$	14.81	14,075	$	14.81
$20.01 - $30.00	13,200	1.22	28.50		13,200	28.50
$30.01 - $40.00	8,629	1.43	39.06		8,629	39.06
$40.01 - $50.00	18,800	2.69	47.26		18,800	47.26
$50.01 - $60.00	41,316	2.50	53.42		41,316	53.42
$60.01 - $70.00	125,794	4.27	64.13		123,980	64.17
$70.01 - $75.82	56,181	6.63	74.87		56,181	74.87
$11.58 - $75.82	277,995	3.96	$	58.60	276,181	$	58.58

The Company deems the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value of 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 that 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 is 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 three month period ended June 30, 2013 or June 30, 2012.

As of June 30, 2013, there was no remaining unrecognized compensation costs related to options granted. 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 incentives which vest or are 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 non-employee directors are granted restricted stock. Restricted stock shares granted to our non-employee directors vest on a pro-rata basis on service time performed over a one-year period. The fair values of 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 June 30, 2013, there was $550,000 of total unrecognized compensation costs related to non-vested restricted stock and stock unit awards granted under the Company’s stock plans. These costs are expected to be recognized over a weighted average period of less than one year.

The following table summarizes the status of the Company’s non-vested restricted stock and stock unit awards for the three months ended June 30, 2013:

	Number of Shares		Weighted Average Grant Date Fair Value ($)
Outstanding at March 31, 2013	28,109		$	66.20
Granted	729		61.99
Vested	(6,601	)	71.85
Forfeited	(2,261	)	61.33
Outstanding at June 30, 2013	19,976		$	64.74