Share-based compensation expense (Tables)

12 Months Ended

Jul. 31, 2012

Share-based Compensation Expenses for Continuing Operations

The following table presents share-based compensation expenses for continuing operations included in the Company’s Consolidated Statements of Operations for fiscal years 2012, 2011, and 2010:

	Year Ended July 31,
	2012		2011		2010
Cost of product sales	$	802	$	570	$	445
Cost of engineering sales		1,134		—		—
Research and product development		2,680		3,181		1,558
Selling and marketing		1,686		1,110		657
General and administrative		7,094		4,777		3,131
Share-based compensation expense before tax	$	13,396	$	9,638	$	5,791

Compensation Expense Recognized on Awards

The Company recognized compensation expense on awards with performance-based awards with earnings per share (“EPS”)-related and total shareholder return (“TSR”)-related conditions along with time-based stock option and restricted stock award conditions as follows:

	Year Ended July 31,
	2012		2011		2010
Peformance based EPS-related condition awards	$	7,204	$	3,573	$	896
Performance based TSR-related condition awards		3,648		2,978		976
Total performance award expense		10,852		6,551		1,872
Time based stock options and restricted stock awards		2,544		3,087		3,919
Total share-based compensation expense before tax	$	13,396	$	9,638	$	5,791

Fair Value of Option Grant Assumptions

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions for fiscal years 2012, 2011, and 2010 as follows:

	Year Ended July 31,
	2012			2011			2010
Expected option term (1)		5.32 years			4.74 years			4.84 years
Expected volatility factor (2)		42	%		43	%		43	%
Risk-free interest rate (3)		0.95	%		1.18	%		2.20	%
Expected annual dividend yield (4)		0.9	%		1.0	%		1.0	%

(1) The option life was determined by estimating the expected option life, using historical data.

(2) The stock volatility for each grant is determined based on the review of the experience of the weighted average of historical daily price changes of the Company’s common stock over the most recent five years, which approximates the expected option life of the grant.

(3) The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

(4) The expected annual dividend yield is calculated by dividing the expected annual dividends by the stock price on the date of grant.

Fair Value of Awards Grant Assumptions

The fair value of awards with a TSR-related condition at date of grant was estimated using a Monte-Carlo Simulation model with the following assumptions:

	Year Ended July 31,
	2012			2011			2010
Stock Price (1)	$	57.81		$	41.96		$	40.06
Expected volatility factor (2)		29	%		49	%		51	%
Risk-free interest rate (3)		0.33	%		0.73	%		1.19	%
Expected annual dividend yield (4)		0.0	%		0.0	%		0.0	%

(1) The stock price is the weighted average closing price of the Company’s common stock on the dates of grant.

(2) The stock volatility for each grant is determined based on the historical volatility for the peer group companies over a period equal to the remaining term of the performance period from the date of grant for all awards.

(3) The risk-free interest rate for periods equal to the performance period is based on the U.S. Treasury yield curve in effect at the time of grant.

(4) Dividends are considered reinvested when calculating TSR. For the purpose of the fair value model, the dividend yield is therefore considered to be 0%.

Fair Value of Option Granted under Employee Stock Purchase Plan Assumptions

The fair value of each option granted under the employee stock purchase plan was estimated on the expected grant date using the Black-Scholes option pricing model with the following assumptions:

	Year Ended July 31,
	2012			2011			2010
Expected option term		.5 years			.5 years			.5 years
Expected volatility factor		42	%		42	%		50	%
Risk-free interest rate		0.79	%		0.27	%		2.58	%
Expected annual dividend yield		1.0	%		1.0	%		1.1	%

Stock Option and Restricted Stock Awards Transactions

The following table sets forth the stock option and restricted stock awards transactions for fiscal year 2012:

	Stock Options Outstanding									Time-Based Unvested Restricted Stock Awards					Performance-Based Unvested Restricted Contingent Restricted Stock Awards
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value		Number of Shares/ Units			Weighted Average Grant Date Fair Value		Number of Shares/Units (1)			Weighted Average Grant Date Fair Value
Outstanding at July 31, 2011		274,522		$	55.18		4.34	$	1,466		51,800		$	44.90		447,244		$	46.95
Granted		132,333			47.09						109,338			51.11		76,084			77.54
Exercised		(35,922	)		46.79
Vesting of restricted stock		—			—						(29,811	)		53.59		(9,665	)		45.98
Cancelled (forfeited and expired)		(29,439	)		46.59						(8,256	)		43.66		(62,213	)		45.87
Outstanding at July 31, 2012		341,494			53.67		4.57		3,708		123,071			48.40		451,450			52.29
Options vested or expected to vest at July 31, 2012 (2)		329,147			53.92		4.53		3,576
Options exercisable at July 31, 2012		198,984			58.61		3.36		1,315

(1) The number of performance-based unvested restricted stock awards is shown in this table at target. As of July 31, 2012, the maximum number of performance-based unvested restricted stock awards available to be earned is 902,900.

(2) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.