NOTE I Stock Option Plans

Employee Incentive Plans In November 2010, shareholders approved the 2010 Master Stock Incentive Plan (the Plan). The Plan extends through September 2020 and allows for the granting of nonqualified stock options, incentive stock options, restricted stock, restricted stock units, stock appreciation rights (SAR), dividend equivalents, and other stock-based awards. Options under the Plan are granted to key employees at market price at the date of grant. Options are generally exercisable for up to 10 years from the date of grant. The Plan also allows for the granting of performance awards to a limited number of key executives. As administered by the Human Resources Committee of the Company’s Board of Directors to date, these performance awards are payable in common stock and are based on a formula which measures performance of the Company over a three-year period. Performance award expense under these plans totaled $0.7 million in Fiscal 2014, $0.1 million in Fiscal 2013, and $1.9 million in Fiscal 2012.

Stock options for non-executives are exercisable in equal increments over three years. Stock options issued after Fiscal 2010 become exercisable for executives in equal increments over three years. Stock options issued from Fiscal 2004 to Fiscal 2010 became exercisable for most executives immediately upon the date of grant. For Fiscal 2014, the Company recorded pre-tax compensation expense associated with stock options of $9.9 million and recorded $3.2 million of related tax benefit. For Fiscal 2013 and 2012, the Company recorded pre-tax compensation expense associated with stock options of $8.3 million and $7.8 million, respectively, and $2.7 million and $2.5 million, respectively, of related tax benefit.

Stock-based employee compensation cost is recognized using the fair-value based method. The Company determined the fair value of these awards using the Black-Scholes option pricing model, with the following weighted average assumptions:


	2014	2013	2012
Risk - free interest rate	0.31 - 2.8%	0.02 - 1.7%	0.10 - 1.8%
Expected volatility	18.2 - 28.0%	22.5 - 29.7%	25.8 - 31.9%
Expected dividend yield	1.4 - 1.6%	1.0 - 1.4%	1.0%
Expected life
Director and officer grants	8 years	8 years	8 years
Non - officer original grants	7 years	7 years	7 years
Reload grants	<6 years	<5 years	<8 years

Black-Scholes is a widely accepted stock option pricing model. The weighted average fair value for options granted during Fiscal 2014, 2013, and 2012 was $11.44, $8.18, and $9.37 per share, respectively, using the Black-Scholes pricing model.

Reload grants are grants made to officers or directors who exercised a reloadable option during the fiscal year and made payment of the purchase price using shares of previously owned Company stock. The reload grant is for the number of shares equal to the shares used in payment of the purchase price and/or withheld for minimum tax withholding. Options with a reload provision were no longer issued to officers with more than five years of service and all directors beginning in Fiscal 2006. The Company continued to issue options with a reload provision to officers with less than five years of service until Fiscal 2011 when this was discontinued.

The following table summarizes stock option activity:


		Weighted
	Options	Average Exercise
	Outstanding	Price
Outstanding at July 31, 2011	8,387,994	$	17.72
Granted	1,082,979		34.76
Exercised	(1,379,827)		11.90
Canceled	(34,819)		27.45
Outstanding at July 31, 2012	8,056,327		20.97
Granted	965,050		33.91
Exercised	(1,607,081)		14.79
Canceled	(84,476)		33.94
Outstanding at July 31, 2013	7,329,820		23.88
Granted	900,073		42.17
Exercised	(1,008,848)		18.80
Canceled	(23,163)		34.02
Outstanding at July 31, 2014	7,197,882		26.84

The total intrinsic value of options exercised during Fiscal 2014, 2013, and 2012 was $21.5 million, $33.7 million, and $29.5 million, respectively.

Shares reserved at July 31, 2014 for outstanding options and future grants were 12,599,147. Shares reserved consist of shares available for grant plus all outstanding options.

The following table summarizes information concerning outstanding and exercisable options as of July 31, 2014:


		Weighted
		Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	Life (Years)	Price		Exercisable	Price
$0.00 to $16.69	1,003,381	1.18	$	15.93	1,003,381	$	15.93
$16.70 to $22.69	2,197,543	4.12		19.13	2,197,543		19.13
$22.70 to $28.69	400,114	3.41		22.97	400,114		22.97
$28.70 to $34.69	1,839,809	7.25		31.58	1,254,101		30.59
$34.70 and above	1,757,035	8.10		38.64	622,680		35.52
	7,197,882	5.44		26.84	5,477,819		23.31

At July 31, 2014, the aggregate intrinsic value of shares outstanding and exercisable was $89.0 million and $84.9 million, respectively.

The following table summarizes the status of options which contain vesting provisions:


		Weighted
		Average Grant
		Date Fair
	Options	Value
Non - vested at July 31, 2013	1,805,803	$	9.18
Granted	849,850		11.63
Vested	(915,677)		9.24
Canceled	(19,913)		9.47
Non - vested at July 31, 2014	1,720,063		10.35

The total fair value of shares vested during Fiscal 2014, 2013, and 2012 was $35.5 million, $29.8 million, and $19.5 million, respectively.

As of July 31, 2014, there was $7.7 million of total unrecognized compensation cost related to non-vested stock options granted under the Plan. This unvested cost is expected to be recognized during Fiscal 2015, Fiscal 2016, and Fiscal 2017.