I – Stock-Based Compensation

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 being utilized at

October 31, 2017

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 approximately

$988,000

(

$619,000

after tax effects) and

$783,000

(

$491,000

after tax effects) for the

six

months ended

October 31, 2017

and

2016,

respectively. Tax benefits were recognized for these costs at the Company’s overall effective tax rate.

Stock Options

The Company has options outstanding under a stock option plan approved by the shareholders, the Amended and Restated Stock Option 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 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

2018

through

2027.

	Restated Option Plan

Minimum exercise price as a percentage of fair market value at date of grant		100%
Last expiration date for outstanding options		May 1, 2027
Shares available for grant at October 31, 2017		284,000

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.

	Six Months Ended October 31,
	2017			2016
Expected term (years)		5.5			5.5
Risk-free interest rate		1.81	%		1.28	%
Volatility		36	%		36	%
Dividend yield		-			-

The expected term of the options is based on evaluations of historical actual and future expected 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.

There were

25,000

options granted during the

six

months ended

October 31, 2017

and

35,000

options granted during the

six

months ended

October 31, 2016.

The grant-date fair value of options granted during the

six

months ended

October 31, 2017

and

2016

was

$336,000

and

$338,000,

respectively. The options were granted at fair market value on the date of grant.

Stock option compensation expense was

$810,000

(

$508,000

after tax effects) and

$723,000

(

$453,000

after tax effects) for the

six

months ended

October 31, 2017

and

2016,

respectively. As of

October 31, 2017,

the Company had approximately

$2.2

million of total unrecognized compensation cost related to unvested options that are expected to vest. These unvested outstanding options have a weighted-average remaining vesting period of

2.4

years.

May 2015,

key employees of the Company were granted

91,125

performance based stock options with a

five

-year performance period ending

April 30, 2020.

An additional

40,000

such options were granted to key employees of the Company in

August 2015.

Tiered vesting of these units is based solely on comparing the Company’s net income over the specified performance period to net income at

April 30, 2015.

As of

October 31, 2017,

the Company had

$1.1

million in unrecognized compensation expense related to

62,750

of these options that are

not

currently expected to vest.

The aggregate intrinsic value of outstanding options at

October 31, 2017

and

2016

was

$9.4

million and

$12.2

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 Condensed Consolidated Statements of Cash Flows.

	Six Months Ended October 31,
(Dollars in thousands)	2017		2016
Options exercised		113,000		57,500
Cash received from option exercises	$	822	$	860
Intrinsic value of options exercised	$	2,998	$	1,335

As of

October 31, 2017,

there were

566,500

vested and exercisable stock options outstanding with an aggregate intrinsic value of

$8.7

million, a weighted average remaining contractual life of

3.13

years, and a weighted average exercise price of

$28.60.

Stock Incentive Plan

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 to

350,000.

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.

There were

34,500

restricted shares granted during the

six

months ended

October 31, 2017

and

10,000

restricted shares granted during the

six

months ended

October 31, 2016.

A total of

137,027

shares remained available for award at

October 31, 2017.

There were

50,000

unvested restricted shares outstanding as of

October 31, 2017

with a weighted average grant date fair value of

$38.27.

The Company recorded compensation cost of approximately

$168,000

(

$105,000

after tax effects) and

$47,000

(

$29,000

after tax effects) related to the Stock Incentive Plan during the

six

months ended

October 31, 2017

and

2016,

respectively. As of

October 31, 2017,

the Company had approximately

$1.5

million 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

4.1

years.

There were

modifications to any of the Company’s outstanding share-based payment awards during fiscal

2017

or during the

first

six

months of fiscal

2018.