NOTE D--STOCK-BASED COMPENSATION

The Company has various stock-based compensation plans. During the quarter ended January 31, 2014, the Company did not grant any stock-based compensation awards to employees or non-employee directors. During the nine months ended January 31, 2014, the Board of Directors of the Company approved grants of non-statutory stock options and performance-based restricted stock units (RSUs) to key employees and grants of service-based restricted stock units to key employees and non-employee directors. 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 and non-employee director service-based RSUs totaled 36,400 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, or on the Board, until the units vest. All of the Company’s RSUs granted to employees cliff-vest three years from the grant date. The service-based RSUs granted to non-employee directors vest daily through the end of a two-year vesting period as long as the recipient continuously remains a member of the Board.

For the three- and nine-month periods ended January 31, 2014 and 2013, stock-based compensation expense was allocated as follows:


	Three Months Ended				Nine Months Ended
	January 31,				January 31,
(in thousands)		2014		2013		2014		2013
Cost of sales and distribution	$	131	$	159	$	373	$	467
Selling and marketing expenses		211		224		592		654
General and administrative expenses		446		504		1,553		1,527
Stock-based compensation expense	$	788	$	887	$	2,518	$	2,648

During the nine months ended January 31, 2014, 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. Each performance-based RSTU entitles the recipient to receive a payment in cash equal to the fair market value of a share of our common stock as of the payment date if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSTUs entitle the recipients to receive a payment in cash equal to the fair market value of a share of our common stock as of the payment date if they remain continuously employed with the Company until the units vest. 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 $26 thousand and $67 thousand related to RSTUs for the three- and nine-month periods ended January 31, 2014, respectively.