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ESPEY MFG & ELECTRONICS CORP
0000033533
10-Q
2012-03-31
false
--06-30
No
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Smaller Reporting Company
Q3
2012
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<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">Note
1. Basis of Presentation</p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">In
the opinion of management the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the results for such periods. The results
for any interim period are not necessarily indicative of the results to be
expected for the full fiscal year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with United
States generally accepted accounting principles have been condensed or omitted.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of assets and liabilities. On an ongoing basis,
we evaluate our estimates and judgments, including those related to revenue
recognition, inventories, income taxes, and stock-based compensation. Management
bases its estimates on historical experience and on various other factors that
are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. These
financial statements should be read in conjunction with the Company's most
recent audited financial statements included in its report on Form 10-K for the
year ended June 30, 2011. Certain reclassifications may have been made to the
prior year financial statements to conform to the current year presentation.</p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">Note
2. Net Income per Share</p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">Basic
net income per share excludes dilution and is computed by dividing net income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted net income per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the income of the Company. As Unearned ESOP
shares are released or committed-to-be-released the shares become outstanding
for net income-per-share computations.</p>
<p style="margin: 0px; font: 10pt Times New Roman, Times, Serif">Note 4.
Commitments and Contingencies</p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">The
Company at certain times enters into standby letters of credit agreements with
financial institutions primarily relating to the guarantee of future performance
on certain contracts. Contingent liabilities on outstanding standby letters of
credit agreements aggregated to zero at March 31, 2012 and 2011. The Company, as
a U.S. Government contractor, is subject to audits, reviews, and investigations
by the U.S. government related to its negotiation and performance of government
contracts and its accounting for such contracts. Failure to comply with
applicable U.S. Government standards by a contractor may result in suspension
from eligibility for award of any new government contract and a guilty plea or
conviction may result in debarment from eligibility for awards. The government
may, in certain cases, also terminate existing contracts, recover damages, and
impose other sanctions and penalties. As a result of a pending U.S. government
audit the Company has determined a range of possible outcomes none of which the
Company believes would have a materially adverse effect on the Company's
financial position or results of operations.  In accordance with ASC 450
“Contingencies” the Company has accrued the amount within the range that appears
to be its best estimate of a possible outcome.</p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">Note
5. Recently Issued Accounting Standards</p>
<p style="margin: 0px; font: 10pt Arial, Helvetica, Sans-Serif"> </p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">In
May 2011, the FASB issued Accounting Standards Update No. 2011-04, topic 820,
“Fair Value Measurement,” to improve the comparability of fair value
measurements presented and disclosed in financial statements prepared in
accordance with United States GAAP and International Financial Reporting
Standards. Some of the amendments clarify the Board’s intent about the
application of existing fair value measurement requirements. Other amendments
change a particular principle or requirement for measuring fair value or for
disclosing information about fair value measurements. Specifically, the guidance
requires additional disclosures for fair value measurements that are based on
significant unobservable inputs. The updated guidance was to be applied
prospectively and is effective for the Company’s interim and annual periods
beginning January 1, 2012. The adoption of this guidance did not have a material
impact on the Company’s consolidated financial statements.</p>
<p style="margin: 0px; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; margin: 0px; font: 10pt Times New Roman, Times, Serif">FASB
Accounting Standards Update 2011-05, "Presentation of Comprehensive Income," was
issued in June 2011 to be effective for fiscal years beginning after December
15, 2011. Comprehensive income includes certain items that are recognized as
"other comprehensive income" ("OCI") and are excluded from net income. Examples
include unrealized gains/losses on certain investments and gains/losses on
derivative instruments designated as hedges. Under provisions of the update, the
components of OCI must be presented in one of two formats: either (i) together
with net income in a continuous statement of comprehensive income or (ii) in a
second statement of comprehensive income to immediately follow the income
statement. An existing option to present the components of OCI as part of the
statement of changes in shareholders' equity is being eliminated. The Company
expects the update to have minimal effect on its financial statements. The FASB
recently issued Accounting Standards Update (ASU 2011-12) that defers the
effective date of the requirement to present separate line items on the income
statement for reclassification adjustments of items out of accumulated other
comprehensive income into net income. The deferral is temporary until the Board
reconsiders the operational concerns and needs of financial statement users. The
Board has not yet established a timetable for its reconsideration.</p>
<p style="text-align: justify; text-indent: -0.75in; margin: 0px 0px 0px 0.75in; font: 10pt Times New Roman, Times, Serif">Note
6. Employee Stock Ownership Plan</p>
<p style="text-align: justify; text-indent: 0in; margin: 0px; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0in; margin: 0px; font: 10pt Times New Roman, Times, Serif">The
Company sponsors a leveraged employee stock ownership plan (the "ESOP") that
covers all nonunion employees who work 1,000 or more hours per year and are
employed on June 30. The Company makes annual contributions to the ESOP equal to
the ESOP's debt service less dividends on unallocated shares received by the
ESOP. All dividends on unallocated shares received by the ESOP are used to pay
debt service. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings. As the debt is repaid, shares are released and allocated to
active employees, based on the proportion of debt service paid in the year. The
Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly,
the shares purchased by the ESOP are reported as Unearned ESOP Shares in the
statement of financial position. As shares are released or
committed-to-be-released, the Company reports compensation expense equal to the
current average market price of the shares, and the shares become outstanding
for earnings-per-share (EPS) computations. ESOP compensation expense was
$124,896 and $126,533 for the three month periods ended March 31, 2012 and 2011,
respectively. ESOP compensation expense was $376,251 and $361,941 for the nine
month periods ended March 31, 2012 and 2011, respectively. The ESOP shares as of
March 31, 2012 and 2011 were as follows:</p>
<p style="text-align: justify; text-indent: 0in; margin: 0px; font: 10pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0in; margin: 0px; font: 10pt Times New Roman, Times, Serif"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">March 31,</td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">March 31,</td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="text-indent: 0in; padding-left: 5.4pt; width: 76%; font: 10pt Times New Roman, Times, Serif">Allocated Shares</td>
<td nowrap="nowrap" style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; width: 9%; font: 10pt Times New Roman, Times, Serif">433,754</td>
<td nowrap="nowrap" style="text-align: left; width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; width: 9%; font: 10pt Times New Roman, Times, Serif">422,273</td>
<td nowrap="nowrap" style="text-align: left; width: 1%; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Committed-to-be-released shares</td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">15,625</td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">16,250</td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="padding-bottom: 1pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Unreleased shares</td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">141,875</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">162,916</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Total shares held by the ESOP</td>
<td nowrap="nowrap" style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">591,254</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">601,439</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
<td nowrap="nowrap" style="padding-bottom: 2.5pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Fair value of unreleased shares</td>
<td nowrap="nowrap" style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">3,511,406</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td>
<td nowrap="nowrap" style="border-bottom: black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,066,383</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td></tr></table>
<p style="margin: 0px"></p>
2320822
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Note 3. Stock Based Compensation</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 13.5pt"> </p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-weight: normal; font-style: normal">The
Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments
for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based
on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based
payment transactions with employees, except for equity instruments held by employee share ownership plans. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Total stock-based compensation expense recognized
in the Statement of Income for the three month period ended March 31, 2012 and 2011, was $26,074 and $16,735, respectively, before
income taxes. The related total deferred tax benefit was approximately $2,726 and $1,427 for the three month period ended March
31, 2012 and 2011, respectively. Total stock-based compensation expense recognized in the Statement of Income for the nine month
period ended March 31, 2012 and 2011, was $68,499 and $54,374, respectively, before income taxes. The related total deferred tax
benefit was approximately $7,036 and $4,589 for the nine month period ended March 31, 2012 and 2011, respectively. ASC 718 requires
the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options to be classified
and reported as both an operating cash outflow and a financing cash inflow on a prospective basis upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2012, there was approximately
$101,426 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the
next 1.5 years. The total deferred tax benefit related to these awards is approximately $11,228.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has one employee stock option plan
under which options may be granted, the 2007 Stock Option and Restricted Stock Plan (the "2007 Plan"). The Board of Directors
may grant options to acquire shares of common stock to employees of the Company at the fair market value of the common stock on
the date of grant. Generally, options granted have a two-year vesting period based on two years of continuous service and have
a ten-year contractual life. Option grants provide for accelerated vesting if there is a change in control. Shares issued upon
the exercise of options are from those held in Treasury. The 2007 Plan was approved by the Company's shareholders at the Company's
Annual Meeting on November 30, 2007 and supersedes the Company's 2000 Stock Option Plan (the "2000 Plan"). Options covering
400,000 shares were authorized for issuance under the 2007 Plan, of which 128,900 have been granted and 104,250 are outstanding
as of March 31, 2012. While no further grants of options may be made under the 2000 Plan, as of March 31, 2012, 53,200 options
remain outstanding, vested and exercisable from the 2000 Plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.75in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 718 requires the use of a valuation model
to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which
incorporates various assumptions including those for volatility, expected life and interest rates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The table below outlines the weighted average
assumptions that the Company used to calculate the fair value of each option award for the nine months ended:</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="padding-bottom: 1pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">2012</td><td nowrap="nowrap" style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="width: 80%; text-align: justify; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Dividend yield</td><td nowrap="nowrap" style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 9%; text-align: right; font: 10pt Times New Roman, Times, Serif">3.59%</td><td nowrap="nowrap" style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 9%; text-align: right; font: 10pt Times New Roman, Times, Serif">4.69%</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: justify; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Expected stock price volatility</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">33.82%</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">33.13%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: justify; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Risk-free interest rate</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">0.64%</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">1.08%</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: justify; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Expected option life (in years)</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">3.7yrs</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">4.1yrs</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: justify; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Weighted average fair value per share of options granted during the period</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">$4.757</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">$3.335</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company pays dividends quarterly and anticipates
that it will be able to continue to pay dividends in the foreseeable future. While the Company has paid a special cash dividend
of $1.00 per share in each of fiscal years 2012 and 2011, there is no assurance that the Board of Directors will declare a comparable
special dividend in fiscal year 2013. Expected stock price volatility is based on the historical volatility of the Company’s
stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating
the expected life of the options. The expected option life (in years) represents the estimated period of time until exercise and
is based on actual historical experience.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes stock option
activity during the nine months ended March 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="14" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif">Employee Stock Options Plan</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Weighted</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Number of</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Weighted</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Average</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Shares</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Average</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Remaining</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Aggregate</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Subject</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Exercise</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Contractual</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif">Intrinsic</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: center; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif">To Option</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif">Price</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="3" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif">Term</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td colspan="2" nowrap="nowrap" style="text-align: center; border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif">Value</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="width: 59%; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Balance at July 1, 2011</td><td nowrap="nowrap" style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 6%; text-align: right; font: 10pt Times New Roman, Times, Serif">132,400</td><td nowrap="nowrap" style="width: 3%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 2%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td nowrap="nowrap" style="width: 5%; text-align: right; font: 10pt Times New Roman, Times, Serif">18.62</td><td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 2%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 6%; text-align: right; font: 10pt Times New Roman, Times, Serif">6.80</td><td nowrap="nowrap" style="width: 3%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 2%; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 5%; text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Granted</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">29,100</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">25.10</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">9.40</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Exercised</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">(3,800</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">17.12</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif">—</td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Forfeited or expired</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(250</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">)</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">25.10</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">—</td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"> </td><td nowrap="nowrap" style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="padding-bottom: 2.5pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Outstanding at March 31, 2012</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">157,450</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">19.84</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">6.65</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">783,081</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Vested or expected to vest at March 31, 2012</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">149,203</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">19.72</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">6.53</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">758,992</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td nowrap="nowrap" style="padding-bottom: 2.5pt; padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif">Exercisable at March 31, 2012</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">98,800</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">18.49</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">5.30</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">613,251</td><td nowrap="nowrap" style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
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<td nowrap="nowrap" style="padding-left: 5.4pt; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="font: 10pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td nowrap="nowrap" style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate intrinsic value in the table
above represents the total pretax intrinsic value (the difference between the closing sale price of the company’s common
stock as reported on the NYSE-Amex on March 31, 2012 and the exercise price, multiplied by the number of in-the-money options)
that would have been received by the option holders if all option holders had exercised their options on March 31, 2012. This amount
changes based on the fair market value of the company’s common stock. The total intrinsic values of the options exercised
during the nine months ended March 31, 2012 and 2011 was $21,089 and $66,929, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>