XML 37 R33.htm IDEA: XBRL DOCUMENT v2.4.0.8
Share-based compensation expense (Tables)
 12 Months Ended
Jul. 31, 2014
Stock Option and Restricted Stock Awards Transactions

The following table sets forth the stock option and restricted stock transactions for fiscal year 2014:

 

Amounts in thousands, except

share and per share data

   Stock Options Outstanding     Time-Based
Unvested Restricted
Stock		     Performance-Based
Unvested Restricted
Contingent
Restricted Stock		  
    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, 2013

     367,997      $ 58.84        4.81      $ 4,746        198,441      $ 60.10        329,066      $ 60.16   

Granted

     108,139        77.14            32,700        82.46        138,291        65.66   

Exercised

     (86,141 )      60.53            —          —          —          —     

Vesting of restricted stock

     —          —              (73,986 )      50.31        (252,420 )      44.72   

Cancelled (forfeited and expired)

     (8,205 )      75.36            (13,798 )      71.99        (27,007 )      58.01   
 

 

 

          

 

 

      

 

 

    

Outstanding at July 31, 2014

     381,790      $ 63.21        4.75      $ 3,940        143,357      $ 74.25        187,930      $ 85.25   

Options vested or expected to vest at July 31, 2014 (2)

     370,851        62.87        4.71        3,926           

Options exercisable at July 31, 2014

     170,334      $ 55.23        3.63      $ 2,874           

 

(1) The performance-based unvested restricted stock is shown in this table at target, except for the number of shares vested, which reflect the shares earned. As of July 31, 2014, the maximum number of performance-based unvested restricted stock available to be earned is 375,860.
(2) In addition to the vested options, we expect a portion of the unvested options to vest at some point in the future. Stock options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.

 
Share-Based Compensation Expense

The following table presents share-based compensation expense included in our Consolidated Statements of Operations:

 

     Years Ended July 31,  
(in millions)    2014     2013     2012  

Cost of product sales

    $ 0.7      $ 0.8      $ 0.8   

Cost of engineering sales

      0.4        1.2        1.1   

Research and product development

      2.8        2.4        2.7   

Selling and marketing

      1.2        1.1        1.7   

General and administrative

      6.4        6.1        7.1   
                          

Total share-based compensation expense before tax

      11.5        11.6        13.4   

Income tax effect

      (3.5 )      (3.6 )      (4.2 ) 
                          

Share-based compensation expense included in net income

    $ 8.0      $ 8.0      $ 9.2   
                          
Fair Value of Option Grant Assumptions

The fair values of option grants were estimated on the grant date using the following assumptions for fiscal years 2014, 2013, and 2012:

 

     Years Ended July 31,  
     2014     2013     2012  

Expected option term in years (1)

      5.37        5.42        5.32   

Expected volatility (2)

      38.6 %      41.0 %      42.0 % 

Risk-free interest rate (3)

      1.77 %      0.80 %      0.95 % 

Expected annual dividend yield (4)

      0.52 %      0.57 %      0.90 % 

 

(1) The expected option term was estimated using historical data.
(2) The expected volatility for each grant is determined based on the review of the average of historical daily price changes of our common stock over the expected option term.
(3) The risk-free interest rate is determined based on the yield of zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption.
(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 our TSR performance-based awards at the date of grant was estimated using the Monte-Carlo simulation model with the following assumptions:

 

     Years Ended July 31,  
     2014     2013     2012  

Stock Price (1)

    $ 77.14      $ 70.04      $ 57.81   

Expected volatility (2)

      27.6 %      28.0 %      29.0 % 

Risk-free interest rate (3)

      0.82 %      0.32 %      0.33 % 

Expected annual dividend yield (4)

      0.00 %      0.00 %      0.00 % 

 

(1) The stock price is the closing price of our common stock on the date of grant.
(2) The expected volatility for each grant is determined based on the historical volatility for the peer group companies and our common stock 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 is determined based on the yield of zero-coupon U.S. Treasury securities for a period that is commensurate with the performance period.
(4) Dividends are considered reinvested when calculating TSR. The dividend yield is therefore considered to be 0%.