NOTE i—EQUITY-BASED COMPENSATION

Grants for the

three

months ended

June 30, 2018

and

2017:

The weighted average estimated fair value of employee restricted stock units (“RSUs”) granted during the

three

months ended

June 30, 2018

and

2017

was

$11.34

and

$11.12

per share, respectively (using the weighted average pre vest cancellation rate of

3.69%

and

4.31%

for the

three

months ended

June 30, 2018

and

2017,

respectively, on an annual basis).

The weighted-average estimated fair value of employee stock options and stock appreciation rights ("SARs") granted during the

three

months ended

June 30, 2018

and

2017

was

$3.49

and

$2.76

per stock option and SARs, respectively, using the binomial model with the following weighted-average assumptions (annualized percentages):

	Three months ended June 3 0 ,
	2018	2017
Volatility	45.08%	34.96%
Risk-free interest rate	2.93%	2.14%
Dividend yield	0%	0%
Pre-vest cancellation rate	3.65%	4.31%
Post-vest cancellation rate	3.21%	3.37%
Suboptimal exercise factor	1.205	1.117

The expected life of employee stock options and SARs is impacted by all of the underlying assumptions used in the Company’s model. The binomial model assumes that employees’ exercise behavior is a function of the remaining contractual life of the stock option or SAR and the extent to which the stock option or SAR is in-the-money (

i.e.

, the average stock price during the period is above the exercise price of the stock option or SAR). The binomial model estimates the probability of exercise as a function of these

two

variables based on the history of exercises and cancellations on past award grants made by the Company. The expected life for stock options and SARs granted during the

three

months ended

June

30,

2018

and

2017

derived from the binomial model was

4.73

and

3.99

years, respectively.

Employee stock benefit plans

As of

June 30, 2018,

the Company had

two

equity incentive plans from which the Company

may

grant future equity awards and

three

expired equity incentive plans from which

future equity awards

may

be granted but had outstanding equity awards granted prior to expiration. The Company also had

one

employee stock purchase plan. As of

June 30, 2018,

approximately

591,000

shares of common stock remain available for grant under the Company’s employee stock purchase plan and

783,000

shares of common stock remain available for grant under the Company’s equity incentive plans.

The table below presents a summary of information relating to the Company’s stock option, RSU and SAR grants pursuant to its equity incentive plans:

	Number of Options/SARs/RSUs			Weighted average exercise price		Weighted average remaining contractual term (years) (3)		Aggregate value (*)
	in thousands							in thousands
Outstanding at March 31, 2018		2,211		$	4.39		4.87	$	16,502
Options granted		6			11.75
SARs Granted		13			12.50
RSUs granted		9			-
Options / SARs / RSUs cancelled/forfeited/expired		(15	)		3.77
Options / SARs exercised and RSUs vested		(117	)	$	2.56
Outstanding at June 30, 2018 (1)		2,107		$	4.55		4.68	$	16,694
Exercisable at June 30, 2018 (2)		801		$	8.78		4.17	$	2,964

(*) Calculation of aggregate intrinsic value is based on the share price of the Company’s common stock on

June 30, 2018 (

$12.45

per share).

(

) Due to the ceiling imposed on the SAR grants, the outstanding amount above can be exercised for a maximum of

2,013

shares of the Company’s common stock as of

June 30, 2018.

SAR grants made on or after

January 1, 2012

are convertible for a maximum number of shares of the Company’s common stock equal to

50%

of the SARs subject to the grant.

(

) Due to the ceiling imposed on the SAR grants, the exercisable amount above can be exercised for a maximum of

774

shares of the Company’s common stock as of

June 30, 2018.

(

) Calculation of weighted average remaining contractual term does

not

include RSUs that were granted, which have indefinite contractual term.

Additional information about stock options, SARs and RSUs outstanding and exercisable at

June 30, 2018

with exercise prices above

$12.45

per share (the closing price of the Company’s common stock on

June 30, 2018)

is as follows:

	Exercisable				Unexercisable				Total
Exercise prices	Number of Options/ SARs / RSUs (in thousands)		Weighted average exercise price		Number of Options/ SARs / RSUs (in thousands)		Weighted average exercise price		Number of Options/ SARs / RSUs (in thousands)		Weighted average exercise price

Less than $12.45		753	$	8.51		1,245	$	1.43		1,998	$	4.10
Above $12.45		48	$	13.05		61	$	12.50		109	$	12.74
Total		801	$	8.78		1,306	$	1.94		2,107	$	4.54

The Company’s aggregate equity-based compensation expense for the

three

months ended

June 30, 2018

and

2017

totaled

$1,660

and

$1,557,

respectively.

As of

June 30, 2018,

there was

$6,883

of total unrecognized equity-based compensation expense related to unvested equity-based compensation awards granted under the Company’s equity incentive plans. This amount is expected to be recognized during the period from

2018

through

2022.