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Share-based compensation expense (Tables)
 12 Months Ended
Jul. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Option and RSU Transactions

The following table sets forth the stock option and restricted stock transactions for fiscal year 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance-Based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time-Based Unvested

 

 

Unvested Contingent

 

 

 

Stock Options Outstanding

 

 

Restricted Stock

 

 

Restricted Stock

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Remaining

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Number

 

 

Weighted

 

 

 

Number

 

 

Average

 

 

Contractual

 

 

Aggregate

 

 

Number

 

 

Average

 

 

of

 

 

Average

 

 

 

of

 

 

Exercise

 

 

Term

 

 

Intrinsic

 

 

of Shares/

 

 

Grant Date

 

 

Shares/

 

 

Grant Date

 

(Amounts in thousands, except share and per share data)

 

Shares

 

 

Price

 

 

(years)

 

 

Value

 

 

Units

 

 

Fair Value

 

 

Units (1)

 

 

Fair Value

 

Outstanding at July 31, 2016

 

 

217,905

 

 

$

69.06

 

 

 

4.15

 

 

$

3,265

 

 

 

133,560

 

 

$

78.98

 

 

 

167,114

 

 

$

90.33

 

Granted

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

92,613

 

 

 

88.13

 

 

 

93,260

 

 

 

87.46

 

Exercised

 

 

(119,661

)

 

 

69.52

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Vesting of restricted stock

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

(72,246

)

 

 

75.69

 

 

 

(24,205

)

 

 

115.59

 

Cancelled (forfeited and expired)

 

 

(26,395

)

 

 

72.90

 

 

 

 

 

 

 

 

 

 

 

(56,486

)

 

 

85.88

 

 

 

(40,650

)

 

 

80.55

 

Outstanding at July 31, 2017

 

 

71,849

 

 

$

66.87

 

 

 

3.13

 

 

$

480

 

 

 

97,441

 

 

$

86.11

 

 

 

195,519

 

 

$

87.86

 

Options vested or expected to vest at

   July 31, 2017 (2)

 

 

71,779

 

 

 

66.86

 

 

 

3.13

 

 

$

480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at July 31, 2017

 

 

64,604

 

 

$

66.40

 

 

 

3.02

 

 

$

480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The performance-based unvested RSU’s are shown in this table at target, except for the number of shares vested, which reflect the shares earned. As of July 31, 2017, the maximum number of performance-based unvested RSU’s available to be earned is 343,020.

(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:

 

 

 

For the Year ended

 

 

 

July 31,

 

(in millions)

 

2017

 

 

2016

 

 

2015

 

Cost of product sales

 

$

0.3

 

 

$

0.5

 

 

$

0.7

 

Cost of engineering sales

 

 

0.1

 

 

 

0.1

 

 

 

0.2

 

Research and product development

 

 

1.7

 

 

 

2.3

 

 

 

2.7

 

Selling and marketing

 

 

1.3

 

 

 

1.6

 

 

 

1.4

 

General and administrative

 

 

6.0

 

 

 

4.3

 

 

 

5.9

 

Total share-based compensation expense before tax

 

 

9.4

 

 

 

8.8

 

 

 

10.9

 

Income tax effect

 

 

(2.7

)

 

 

(3.0

)

 

 

(3.2

)

Share-based compensation expense included in net income

 

$

6.7

 

 

$

5.8

 

 

$

7.7

 

 
Fair Value of Awards Grant Assumptions

The fair value of our TSR awards at the date of grant was estimated using the Monte-Carlo simulation model with the following assumptions:

 

 

 

For the Year ended

 

 

 

 

 

 

 

July 31,

 

 

 

 

 

 

 

2017

 

 

2016

 

 

2015

 

Stock price (1)

 

$

89.88

 

 

$

84.06

 

 

$

71.33

 

Expected volatility (2)

 

 

27.00

%

 

 

26.40

%

 

 

29.3

%

Risk-free interest rate (3)

 

 

0.85

%

 

 

1.04

%

 

 

1.00

%

Expected annual dividend yield (4)

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Weighted average grant date fair value of time-based

   restricted stock awards

 

$

88.13

 

 

$

82.63

 

 

$

73.23

 

Weighted average grant date fair value of performance

   based restricted stock awards

 

$

86.88

 

 

$

98.81

 

 

$

78.62

 

 

(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%.