K – Stock-Based Compensation Plans

The Company has stock-based compensation plans available to grant non-qualified stock options, incentive stock options and restricted stock to employees, directors and certain advisors of the Company. The stock-based compensation plans currently being utilized are the Amended and Restated Stock Option Plan and the Amended and Restated Stock Incentive Plan. The Company recorded total stock-based compensation expense for all plans of $1.5 million ($952,000 after tax effects) and $780,000 ($489,000 after tax effects) for the year ended April 30, 2016 and 2015, respectively. Tax benefits were recognized for these costs at the Company’s overall effective tax rate

Stock Options

The Company has options outstanding under two stock option plans approved by the shareholders, the 1997 Stock Option Plan (“1997 Plan”) and the Amended and Restated Stock Option Plan, formerly the 2007 Stock Option Plan. While previously granted options remain outstanding, no additional option grants may be made under the 1997 Plan. The shareholders of the Company approved the Amended and Restated Stock Option Plan (the “Restated Option Plan”) on August 5, 2015, which extended the term of the Restated Option Plan to June 10, 2025 and increased the number of shares of common stock reserved for issuance under the plan by an additional 300,000 shares to 1,800,000 shares. The Restated Option Plan provides for the grant of options to purchase shares of the Company’s common stock to employees, directors and certain advisors of the Company at a price not less than the fair market value of the stock on the date of grant and for periods not to exceed ten years. Options granted under the Company’s stock option plans expire in the calendar years 2016 through 2026.

	1997 Plan		Restated Option Plan
Minimum exercise price as a percentage of fair market value at date of grant		100%		100%
Last expiration date for outstanding options		July 2, 2017		March 2, 2026
Shares available for grant at April 30, 2016		-		263,250

The fair value of options granted is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below.

	April 30, 2016		April 30, 2015		April 30, 2014
Expected terms (years)		5.5		5.4		5.0
Risk-free interest rate		1.55%		1.64%		0.67%
Volatility		34%		34%		50%
Dividend yield		-		-		-

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of the Company’s common stock. The Company has not historically issued any dividends and does not expect to do so in the foreseeable future.

The following is an aggregate summary of the activity in the Company’s stock option plans from April 30, 2013 to April 30, 2016:

	Number			Exercise			Proceeds			Weighted Average
	of			Price			on			Exercise Price per
	Shares			per Share			Exercise			Share
							(in thousands)
Outstanding at April 30, 2013		1,122,500		$11.90	to	$45.72	$	23,892		$	21.28

Granted		25,000		$44.52	to	$46.44		1,122			44.90
Exercised		(30,500	)	$23.34	to	$23.75		(720	)		23.58

Outstanding at April 30, 2014		1,117,000		$11.90	to	$46.44	$	24,294		$	21.75

Granted		89,000		$36.54	to	$50.25		3,997			44.91
Exercised		(212,250	)	$11.90	to	$45.46		(4,143	)		19.52
Cancelled		(12,000	)	$41.86	to	$45.72		(540	)		45.08

Outstanding at April 30, 2015		981,750		$11.90	to	$53.02	$	23,608		$	24.05

Granted		338,750		$26.37	to	$53.02		16,471			48.62
Exercised		(30,750	)	$11.90	to	$23.34		(400	)		13.00
Cancelled		(11,500	)	$41.86	to	$53.02		(598	)		52.05

Outstanding at April 30, 2016		1,278,250					$	39,081		$	30.57

Stock option compensation expense on a pre-tax basis was $1.4 million ($870,000 after tax effects) and $664,000 ($416,000 after tax effects) and $1.3 million ($791,000 after tax effects) for the years ended April 30, 2016, 2015 and 2014, respectively. As of April 30, 2016, the Company had approximately $3.9 million of total unrecognized compensation cost related to unvested options that are expected to vest. These options have a weighted-average remaining vesting period of 3.79 years.

There were 338,750 options granted during fiscal 2016. The grant-date fair value of all options granted during fiscal 2016, 2015 and 2014 was $5.6 million, $1.4 million and $487,000, respectively. The options were granted at fair market value on date of grant. Generally, options vest after three to five years, except for options issued to directors which are immediately vested at date of grant.

Of the options granted during fiscal 2016, 142,250 were performance based stock options that were granted to key employees that have a five-year performance period ending April 30, 2020. Tiered vesting of these options is based solely on comparing the Company’s net income over the specified performance period to net income at April 30, 2015. As of April 30, 2016, the Company had $1.2 million in unrecognized compensation expense related to 67,750 of these options that are not currently expected to vest.

The aggregate intrinsic value of outstanding options at April 30, 2016 and 2015 was $4.8 million and $26.8 million, respectively.

The Company had the following options exercised for the periods indicated. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows

	Twelve Months Ended April 30,
(Dollars in thousands)	2016		2015		2014
Options Exercised		30,750		212,250		30,500
Cash Received from Options Exercised	$	400	$	4,143	$	720
Intrinsic Value of Options Exercised	$	943	$	5,983	$	563

As of April 30, 2016 there were 904,000 vested and exercisable stock options outstanding with an aggregate intrinsic value of $4.8 million and a weighted average remaining contractual life of 3.43 years and a weighted average exercise price of $23.33.

Stock Incentive Plan

On October 14, 2009, the shareholders of the Company approved an amendment to the Company’s Stock Incentive Plan that increased the number of shares of common stock that may be issued under the Stock Incentive Plan from 150,000 to 300,000. On August 5, 2015, the shareholders of the Company approved the Amended and Restated Stock Incentive Plan, which extended the term of the Stock Incentive Plan to June 10, 2025. For shares issued under the Stock Incentive Plan, the associated compensation expense is generally recognized equally over the vesting periods established at the award date and is subject to the employee’s continued employment by the Company.

The following is a summary of the activity in the Company’s Stock Incentive Plan:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested shares at April 30, 2015		9,500	$	52.10
Shares granted		-
Shares vested		-

Unvested shares at April 30, 2016		9,500	$	52.10

The fair value at vesting for awards under the stock incentive plan was $495,000, $495,000 and $126,000 in fiscal 2016, 2015 and 2014, respectively.

During the fiscal year 2015, 9,500 restricted shares were granted with a fair value of $52.10 per share. There were no restricted shares granted during fiscal years 2016 or 2014. A total of 177,527 shares remain available for award at April 30, 2016.

The Company recorded compensation cost of $99,000 ($62,000 after tax effects), $90,000 ($56,000 after tax effects) and $105,000 ($66,000 after tax effects) related to the Stock Incentive Plan during the years ended April 30, 2016, 2015 and 2014, respectively. As of April 30, 2016 the Company had $396,000 of total unrecognized compensation cost related to unvested awards granted under the Stock Incentive Plan, which the Company expects to recognize over a weighted-average remaining period of four years.