Accounting For Stock-Based Compensation

9 Months Ended

Apr. 30, 2014

Accounting For Stock-Based Compensation [Abstract]

Accounting For Stock-Based Compensation

Note C – Accounting for Stock-Based Compensation

Stock-based compensation expense is recognized using the fair-value method for all awards.  In addition to granting stock options, the Company also granted reload options during the nine months ended April 30, 2014.  A reload stock option is granted for the number of shares tendered as payment for the exercise price and tax withholding obligation upon the exercise of a stock option with a reload provision.  The option price of the reload option is equal to the market price of the stock on the date of exercise of the original option and will expire on the same date as the original option which was exercised.  The Company determined the fair value of its option awards using the Black-Scholes option pricing model.  The following assumptions were used to value the options, including reload options which generally have a shorter contractual life, granted during the nine months ended April 30, 2014: range of 4 years to 8 years expected life; expected volatility range of 21.0 percent to 28.0 percent; risk-free interest rate range of 1.21 percent to 2.83 percent; and annual dividend yield of 1.4 percent.  The expected life for options granted during the period represents the period of time that the options are expected to be outstanding based on the contractual life and historical data of option holder exercise and termination behavior.  Expected volatilities are based upon historical volatility of the Company’s stock over a period at least equal to the expected life of each option grant.  Option grants have exercise prices equal to the fair market value of the Company’s stock on the date of grant.  The weighted average fair value of options granted during the nine months ended April 30, 2014 and 2013 was $11.51 per share and $8.37 per share, respectively. For the three and nine months ended April 30, 2014, the Company recorded pre-tax stock-based compensation expense associated with stock options of $2.2 million and $8.3 million, respectively, and recorded $0.7 million and $2.7 million, respectively of related tax benefit.  For the three and nine months ended April 30, 2013, the Company recorded pre-tax stock-based compensation expense associated with stock options of $1.4 million and $6.9 million, respectively, and recorded $0.4 million and $2.2 million, respectively, of related tax benefit.

The following table summarizes stock option activity during the nine months ended April 30, 2014:

	Options Outstanding	Weighted Average Exercise Price
Outstanding at July 31, 2013	7,329,820	$                        23.88
Granted	891,737	42.18
Exercised	(930,225)	18.63
Canceled	(14,914)	35.59
Outstanding at April 30, 2014	7,276,418	26.76

The total intrinsic value of options exercised during the nine months ended April 30, 2014 and 2013 was $19.8 million and $27.5 million, respectively.

The following table summarizes information concerning outstanding and exercisable options as of April 30, 2014:

Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
$  0.00 to $16.69	1,050,081	1.41	$         15.92	1,050,081	$          15.92
$16.70 to $22.69	2,207,951	4.37	19.13	2,207,951	19.13
$22.70 to $28.69	405,114	3.67	23.01	405,114	23.01
$28.70 to $34.69	1,854,574	7.50	31.58	1,266,367	30.59
$34.70 and above	1,758,698	8.38	38.62	621,343	35.43
	7,276,418	5.67	26.76	5,550,856	23.25

At April 30, 2014, the aggregate intrinsic value of options outstanding and exercisable was $111.7 million and $104.6 million, respectively.

   As of April 30, 2014, there was $9.3 million of total unrecognized compensation expense related to non-vested stock options granted under the 2010 Master Stock Incentive Plan.  This unvested expense is expected to be recognized during the remainder of Fiscal Years 2014, 2015, 2016, and 2017.