NOTE D--STOCK-BASED COMPENSATION

The Company has various stock-based compensation plans. During the quarter ended October 31, 2013, the Board of Directors of the Company approved grants of a total of 11,200 service-based restricted stock units (RSUs) to non-employee directors. These service-based RSUs vest daily through the end of the two-year vesting period as long as the recipient continuously remains a member of the Board, and entitle the recipient to receive one share of the Company’s common stock per unit granted. During the six months ended October 31, 2013, the Board of Directors of the Company also approved grants of non-statutory stock options and service-based and performance-based 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- and six-month periods ended October 31, 2013 and 2012, stock-based compensation expense was allocated as follows:


	Three Months Ended				Six Months Ended
	October 31,				October 31,
(in thousands)		2013		2012		2013		2012
Cost of sales and distribution	$	102	$	131	$	242	$	308
Selling and marketing expenses		162		189		381		430
General and administrative expenses		605		456		1,107		1,023
Stock-based compensation expense	$	869	$	776	$	1,730	$	1,761

During the six months ended October 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 cash-settled 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 $24 thousand and $41 thousand related to RSTUs for the three- and six-month periods ended October 31, 2013, respectively.