NOTE D--STOCK-BASED COMPENSATION

The Company has various stock-based compensation plans. During the quarter ended July 31, 2013, the Board of Directors of the Company approved grants of non-statutory stock options and service-based and performance-based restricted stock units (RSUs) to key employees. The employee non-statutory stock option grants totaled 60,500 shares of the Company’s common stock with an exercise price of $36.74 per share. The options vest evenly over a three-year period and have a ten-year contractual term. The employee performance-based RSUs totaled 75,600 units and the employee service-based RSUs totaled 25,200 units. The performance-based RSUs entitle the recipients to receive one share of the Company’s common stock per unit granted if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSUs entitle the recipients to receive one share of the Company’s common stock per unit granted if they remain continuously employed with the Company until the units vest. All of the Company’s RSUs granted to employees cliff-vest three years from the grant date.

For the three-month periods ended July 31, 2013 and 2012, stock-based compensation expense was allocated as follows:


	Three Months Ended
	July 31,
(in thousands)		2013		2012
Cost of sales and distribution	$	140	$	177
Selling and marketing expenses		219		241
General and administrative expenses		502		567
Stock-based compensation expense	$	861	$	985

During the quarter ended July 31, 2013, the Board of Directors of the Company also approved grants of 9,486 cash-settled performance-based restricted stock tracking units (RSTUs) and 3,264 service-based RSTUs for more junior level employees who previously received RSU grants under the Company’s shareholder approved plan. The RSTUs cliff-vest three years from the grant date. Since the RSTUs will be settled in cash, the grant date fair value of these awards is recorded as a liability until the date of payment. The fair value of each cash-settled RSTU award is remeasured at the end of each reporting period and the liability is adjusted, and related expense recorded, based on the new fair value. The Company recognized expense of $17 thousand related to RSTUs for the three-month period ended July 31, 2013.