8. Stock Based Compensation

The Company uses the Black-Scholes model for determining stock option valuations. The Black-Scholes model requires subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The expected term of option exercises is derived from historical data regarding employee exercises and post-vesting employment termination behavior. The risk-free rate of return is based on published U.S. Treasury rates in effect for the corresponding expected term. The expected volatility is based on historical volatility of the Company’s stock price. These factors could change in the future, which would affect the stock-based compensation expense in future periods.

The Company recognized operating expense for non-cash stock-based compensation costs in the amount of $269,000, $216,000 and $372,000 for the fiscal years ended June 30, 2013, 2012 and 2011, respectively. As of June 30, 2013, the total remaining unrecognized compensation cost related to non-vested stock based compensation amounted to $519,000. The Company expects to recognize this cost over a weighted average vesting period of 2.8 years.

The Company received $648,000 in cash from option exercises under all share-based payment arrangements for the twelve months ended June 30, 2013. The actual tax benefit realized, that related to tax deductions for non-qualified options exercised and disqualifying dispositions under all share-based payment arrangements, totaled approximately, $148,000 for fiscal 2013.

The Company maintains a 2004 Stock Incentive Plan (“2004 Plan”), a 1992 Stock Option Plan (“1992 Plan”) and a 1998 Global Team Member Stock Option Plan (“1998 Plan”) covering substantially all company employees and certain other key persons and a Directors Stock Option Plan (“Directors Plan”) covering all non-employee directors. The 2004 Plan replaced the 1992 and Directors Plans as to future grants. No further grants are permitted to be made under the terms of the 1998 Plan. Options previously granted under the 1992, Directors and 1998 Plans will continue to be maintained until all options are exercised, cancelled or expire. The 2004, 1992 and Directors Plans are administered by a committee of the Board of Directors, the Management Development, Compensation and Stock Option Committee. The 1998 Plan is administered by the President of the Company.

Awards under the 2004 Stock Incentive Plan may be in the form of stock options, stock appreciation rights, restricted stock or restricted stock units, performance share awards, director stock purchase rights and deferred stock units; or any combination thereof. The terms of the awards will be determined by the Management Development, Compensation and Stock Option Committee, except as otherwise specified in the 2004 Stock Incentive Plan. As of June 30, 2013, the Company has issued awards in the form of stock options and restricted stock. Options outstanding under the 2004 Stock Incentive Plan and the 1992 and 1998 Plans generally become exercisable at 25% per year beginning one year after the date of grant and expire ten years after the date of grant. Restricted stock grants under the 2004 Stock Incentive Plan are based on an individual achieving various levels of performance goals during the previous year and vest at one year after the date of grant, provided the recipient is still employed with the Company. At June 30, 2013, based upon the expected level of achievement of performance goals for fiscal 2013, the Company expects to grant 25,250 shares of restricted stock in the first quarter of fiscal 2014. All options outstanding under the 1992 and Directors Plans are vested and expire ten years from the date of grant. Option prices for options granted under these plans must not be less than fair market value of the Company’s stock on the date of grant.

Activity under these Plans is shown in the following tables:



	Fiscal Year 2013					Fiscal Year 2012
		Weighted		Aggregate			Weighted		Aggregate
		Average		Intrinsic			Average		Intrinsic
		Exercise		Value (1)			Exercise		Value (1)
Shares subject to option	Shares	Price		($000)		Shares	Price		($000)

Outstanding at beginning of period	1,162,996	$	6.81			1,122,919	$	6.60
New Grants (based on fair value
of common stock at dates of grant)	164,000	$	5.76			158,000	$	6.00
Exercised	(171,066)	$	3.79			(56,504)	$	1.54
Expired	(30,705)	$	8.79			(33,119)	$	6.67
Forfeited	(2,550)	$	2.93			(28,300)	$	4.49

Outstanding at end of period	1,122,675	$	7.07	$	1,502	1,162,996	$	6.81	$	678
Exercisable at end of period	846,175	$	7.47	$	940	963,271	$	7.13	$	552

	Fiscal Year 2011
		Weighted		Aggregate
		Average		Intrinsic
		Exercise		Value (1)
Shares subject to option	Shares	Price		($000)

Outstanding at beginning of period	1,240,529	$	6.29
New Grants (based on fair value
of common stock at dates of grant)	9,000	$	6.42
Exercised	(82,985)	$	2.19
Expired	(33,763)	$	7.35
Forfeited	(9,862)	$	3.56

Outstanding at end of period	1,122,919	$	6.60	$	1,252
Exercisable at end of period	922,069	$	6.82	$	845

(1) The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of stock options exercised during the fiscal years ended June 30, 2013, 2012 and 2011, were $466,000, $220,000 and $270,000, respectively. The total fair value of shares vested during the fiscal years ended June 30, 2013, 2012 and 2011, were $148,000, $313,000 and $490,000, respectively.

The estimated fair value as of the date options were granted during the periods presented using the Black-Scholes option-pricing model, was as follows:



	2013		2012		2011
Weighted average estimated fair value per
share of options granted during the period	$	2.27	$	2.46	$	2.77
Assumptions:
Dividend yield		-		-		-
Common stock price volatility		44.86%		46.14%		47.32%
Risk free rate of return		0.62%		0.90%		1.84%
Expected option term (in years)		5		5		5

The following table summarizes information about stock options at June 30, 2013:



					Options Outstanding				Options Exercisable
						Weighted	Weighted			Weighted
						Average	Average			Average
						Remaining	Exercise			Exercise
Range of Exercise Prices					Shares	Contractual Life	Price		Shares	Price

$	2.80	to	$	5.24	150,000	6.02	$	3.41	135,000	$	3.21
	5.26	to		8.00	583,193	5.39	$	6.48	321,693	$	6.95
	8.10	to		12.68	389,482	4.17	$	9.38	389,482	$	9.38
$	2.80	to	$	12.68	1,122,675	5.05	$	7.07	846,175	$	7.47

At June 30, 2013, the 2004 Plan had 264,450 shares available for future grants, including restricted stock to be issued in the first quarter of fiscal 2014.