Share-Based Awards

Employee Stock Option Plans

In September 1998, the Company's shareholders approved a stock option plan (the “1998 Plan”) under which 8,000,000 shares of common stock were reserved for the issuance of options. The 1998 Plan provides that employees, directors and consultants of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted options to purchase shares of common stock. The exercise price of each option granted was determined by the Board of Directors at the date of grant, and options under the 1998 Plan expire no later than ten years from the grant date. Options granted will generally become exercisable in accordance with the terms of the agreement pursuant to which they were granted. Certain option grants to directors became exercisable three months from the date of grant. Upon an acquisition of the Company by merger or asset sale, each outstanding option may be subject to accelerated vesting under certain circumstances. The 1998 Plan terminated on December 31, 2007. As of March 31, 2013, there were 40,000 outstanding options related to the 1998 Plan.

In October 2005, the Company's shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 shares of common stock were reserved for the issuance of awards, including stock options, incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that employees, directors and consultants of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted awards to acquire shares of common stock. The exercise price of each option award shall be determined by the Board of Directors at the date of grant in accordance with the terms of the 2005 Plan, and under the 2005 Plan awards expire no later than ten years from the grant date. Options granted will generally become exercisable in accordance with the terms of the agreement pursuant to which they were granted. Upon an acquisition of the Company by merger or asset sale, each outstanding option may be subject to accelerated vesting under certain circumstances. The 2005 Plan terminates on May 25, 2015, unless terminated earlier by the Board of Directors. As of March 31, 2013, there were 1,119,183 outstanding options and 3,012,491 shares available for future grant related to the 2005 Plan.

A summary of stock option transactions during the years ended March 31, 2013, 2012 and 2011 is as follows:



	Number of Shares		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding, March 31, 2010	1,743,926		$	21.58
Granted	110,000		29.15
Exercised	(307,428	)	18.60			$	7,093
Forfeited/Canceled	(148,942	)	27.50
Outstanding, March 31, 2011	1,397,556		$	22.20
Granted	459,400		43.04
Exercised	(697,157	)	18.34			$	17,698
Forfeited/Canceled	(171,462	)	36.66
Outstanding, March 31, 2012	988,337		$	32.09	5.4
Granted	556,500		27.78		7.2
Exercised	(56,366	)	16.81		0.3	$	82
Forfeited/Canceled	(329,288	)	31.42		5.8
Outstanding, March 31, 2013	1,159,183		$	30.54	5.5	$	31
Vested and expected to vest, March 31, 2013	1,096,365		$	30.98	5.5	$	31
Exercisable, March 31, 2013	354,843		$	27.72	3.3	$	29

The Company utilizes the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions:



	Year Ended	Year Ended	Year Ended
	March 31, 2013	March 31, 2012	March 31, 2011
Expected life	5.0 years	4.3 years	4.2 years
Expected volatility	41.3% - 45.1%	41.2%	42.6% - 44.7%
Expected dividends	2.4% - 4.0%	1.6%	1.9% - 2.2%
Risk-free rate	0.7% - 0.8%	1.8%	1.5% - 2.1%

The weighted-average grant date fair value of stock options granted during the years ended March 31, 2013, 2012 and 2011 was $8.22, $13.32 and $9.24 per share, respectively.

The Company issues new shares to satisfy option exercises. Based on historical experience of option cancellations, the Company has estimated an annualized forfeiture rate of 8.0%, 4.1% and 3.6% for employee options for the years ended March 31, 2013, 2012 and 2011 and 0.0% for director options for the years ended March 31, 2013, 2012 and 2011. Forfeiture rates will be adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate.

During the years ended March 31, 2013, 2012 and 2011, a total of 556,500, 459,400 and 110,000 options, respectively, were granted under the 2005 Plan at an exercise price equal to the market price of the Company’s common stock on the date of grant. A summary of stock options granted under the 2005 Plan during the years ended March 31, 2013, 2012 and 2011 is as follows:



Option Grant Date	Number of Shares	Exercise Price		Vesting Terms (1)	Expires
January 23, 2013	40,000	$	19.00	Five years	January 23, 2021
November 5, 2012	5,000	$	17.68	Five years	November 5, 2020
September 25, 2012	20,000	$	18.42	Five years	September 25, 2020
May 24, 2012	346,000	$	29.17	Five years	May 24, 2020
May 24, 2012	30,000	$	29.17	Four years	May 24, 2020
May 23, 2012	115,500	$	29.45	Five years	May 23, 2020
Fiscal year 2013 option grants	556,500

May 31, 2011	459,400	$	43.04	Five years	May 31, 2019
Fiscal year 2012 option grants	459,400

November 29, 2010	20,000	$	32.16	Five years	November 29, 2018
August 3, 2010	10,000	$	27.62	Five years	August 3, 2018
June 4, 2010	50,000	$	28.15	Five years	June 4, 2018
June 2, 2010	30,000	$	29.31	Five years	June 2, 2018
Fiscal year 2011 option grants	110,000

____________________


(1)	Options vest in equal annual installments on each grant anniversary date beginning one year after the grant date.

Performance-Based Awards

On May 24, 2012, the Board of Directors approved its fiscal year 2013 equity incentive program for certain employees to be awarded options to purchase the Company’s common stock. The maximum number of options available under the equity incentive program plan is 600,000, of which 220,000 are reserved for the Company’s named executive officers and 380,000 for non-executive employees of the Company. Under the program, executives are eligible to receive cash bonuses and options based on meeting certain target increases in EPS performance and revenue and operating income growth during fiscal year 2013. Under the program, the non-executive employees are eligible to receive options based on satisfying certain management established criteria and recommendations of senior management. The options shall be issued pursuant to one of the Company’s shareholder approved option plans, have an exercise price equal to the closing price of the Company’s shares on the date of grant, a term of eight years and vesting in five equal annual installments commencing one year following the date of grant.

Compensation expense associated with the performance based awards under the Company’s equity incentive plans are initially based on the number of options expected to vest after assessing the probability that certain performance criteria will be met. Cumulative adjustments are recorded quarterly to reflect subsequent changes in the estimated outcome of performance-related conditions. The Company utilized the Black-Scholes option valuation model with the assumptions below and recorded stock compensation expense related to the performance based awards of $616 and $788 for the years ended March 31, 2012 and 2011, respectively. Stock compensation expense related to the performance based awards was not significant for the year ended March 31, 2013.



	Year Ended March 31, 2013	Year Ended March 31, 2012	Year Ended March 31, 2011
Expected life	5.0 years	4.3 years	4.3 years
Expected volatility	41.7% - 45.0%	41.2% - 42.2%	41.6%
Expected dividends	2.5% - 4.0%	1.4% - 1.9%	1.5%
Risk-free rate	0.6% - 0.7%	0.8 % - 1.8%	2.2%

Non-vested stock option award activity, including employee stock options and performance-based awards, during the years ended March 31, 2013, 2012 and 2011 is summarized as follows:



	Non-Vested Number of Shares		Weighted- Average Grant-Date Fair Value per Share
Outstanding, March 31, 2010	1,221,672		$	7.63
Granted	110,000		9.24
Vested	(379,694	)	6.43
Forfeited/Canceled	(148,942	)	9.41
Outstanding, March 31, 2011	803,036		$	8.08
Granted	459,400		13.32
Vested	(312,655	)	7.22
Forfeited/Canceled	(171,462	)	11.55
Outstanding, March 31, 2012	778,319		$	10.76
Granted	556,500		8.22
Vested	(201,191	)	8.43
Forfeited/Canceled	(329,288	)	9.92
Outstanding, March 31, 2013	804,340		$	9.89

As of March 31, 2013, $5,575 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of 3.6 years. This amount does not include the cost of new options that may be granted in future periods or any changes in the Company’s forfeiture percentage. The total fair value of options vested during the years ended March 31, 2013, 2012 and 2011 was $1,696, $2,256 and $2,442, respectively.

Restricted Stock

On May 24, 2012, the Board of Directors approved its 2013 Director Compensation Program, whereby each non-employee director is to be awarded shares of restricted stock upon election or re-election to the Board of Directors. The shares of restricted stock are awarded under the 2005 Plan. Such shares of restricted stock vest in two equal, annual installments on the first and second anniversaries of the grant date and are nontransferable for one year following vesting. The weighted-average grant date fair value for the restricted stock was estimated using the market price of the common stock on the date of grant. The fair value of the restricted stock is amortized on a straight-line basis over the vesting period.

The Company recorded compensation expense related to restricted stock of approximately $566, $540 and $427 for the years ended March 31, 2013, 2012 and 2011, respectively. Restricted stock activity for the years ended March 31, 2013, 2012 and 2011 is summarized as follows:



	Number of Shares		Weighted- Average Grant-Date Fair Value per Share
Outstanding, March 31, 2010	16,000		$	26.93
Granted	18,292		27.31
Vested	(11,396	)	27.22
Outstanding, March 31, 2011	22,896		$	27.09
Granted	22,668		39.75
Vested	(15,563	)	27.51
Outstanding, March 31, 2012	30,001		$	36.32
Granted	18,939		19.32
Vested	(18,555	)	32.14
Outstanding, March 31, 2013	30,385		$	27.09

As of March 31, 2013, $529 of total unrecognized compensation costs related to restricted stock is expected to be recognized over a weighted-average period of 1.7 years. This amount does not include the cost of new restricted stock that may be granted in future periods.