Accounting For Stock-Based Compensation

3 Months Ended

Oct. 31, 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.  Most of the options granted in the first quarter of Fiscal 2015 were reload options related to options originally granted prior to 2010 which were exercised during the first quarter.  A reload stock option is granted for the number of shares tendered as payment for the exercise price and minimum 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 granted during the three months ended October 31, 2014: range of less than one year to 7 years expected life; expected volatility range of 18.6 percent to 26.7 percent; risk-free interest rate range of 0.05 percent to 2.12 percent; and annual dividend yield of 1.6 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 are priced at the fair market value of the Company’s stock on the date of grant.  The weighted average fair value for options granted during the three months ended October 31, 2014 and 2013 was $3.05 per share and $10.30 per share, respectively. For the three months ended October 31, 2014 and 2013, the Company recorded pre-tax stock-based compensation expense associated with stock options of $1.3 million and $1.4 million, respectively, and related tax benefit of $0.4 million in each of the periods.

The following table summarizes stock option activity during the three months ended October 31, 2014:

	Options Outstanding	Weighted Average Exercise Price
Outstanding at July 31, 2014	7,197,882	$                        26.84
Granted	8,762	41.91
Exercised	(239,333)	17.45
Canceled	(17,830)	37.66
Outstanding at October 31, 2014	6,949,481	27.16

The total intrinsic value of options exercised during the three months ended October 31, 2014 and 2013 was $5.7 million and $10.7 million, respectively.

The following table summarizes information concerning outstanding and exercisable options as of October 31, 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	801,172	1.11	$         16.06	801,172	$          16.06
$16.70 to $22.69	2,184,715	3.87	19.13	2,184,715	19.13
$22.70 to $28.69	400,114	3.16	22.97	400,114	22.97
$28.70 to $34.69	1,820,717	7.01	31.58	1,241,007	30.59
$34.70 and above	1,742,763	7.84	38.67	620,107	35.59
	6,949,481	5.33	27.16	5,247,115	23.61

At October 31, 2014, the aggregate intrinsic value of options outstanding and exercisable was $100.8 million and $94.3 million, respectively.

   As of October 31, 2014, there was $6.2 million of total unrecognized compensation cost related to non-vested stock options granted under the 2010 Master Stock Incentive Plan.  This unvested cost is expected to be recognized during the remainder of Fiscal 2015, Fiscal 2016, Fiscal 2017, and Fiscal 2018.