Stockholders' Investment

Information as to the Company’s capital stock at July 31, 2018 and 2017 is as follows:



	July 31, 2018				July 31, 2017
	Shares Authorized	Shares Issued	(thousands) Amount		Shares Authorized	Shares Issued	(thousands) Amount
Preferred Stock, $.01 par value	5,000,000				5,000,000
Cumulative Preferred Stock: 6% Cumulative	5,000				5,000
1972 Series	10,000				10,000
1979 Series	30,000				30,000
Common Stock, $.01 par value: Class A Nonvoting	100,000,000	51,261,487	$	513	100,000,000	51,261,487	$	513
Class B Voting	10,000,000	3,538,628	35		10,000,000	3,538,628	35
			$	548			$	548

Before any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled to receive an annual, noncumulative cash dividend of $0.01665 per share. Thereafter, any further dividend in that fiscal year must be paid on each share of Class A Common Stock and Class B Common Stock on an equal basis.

Other than as required by law, holders of the Class A Common Stock are not entitled to any vote on corporate matters, unless, in each of the three preceding fiscal years, the $.01665 preferential dividend described above has not been paid in full. Holders of the Class A Common Stock are entitled to one vote per share for the entire fiscal year immediately following the third consecutive fiscal year in which the preferential dividend is not paid in full. Holders of Class B Common Stock are entitled to one vote per share for the election of directors and for all other purposes.

Upon liquidation, dissolution or winding up of the Company, and after distribution of any amounts due to holders of Preferred Stock, if any, holders of the Class A Common Stock are entitled to receive the sum of $0.835 per share before any payment or distribution to holders of the Class B Common Stock. Thereafter, holders of the Class B Common Stock are entitled to receive a payment or distribution of $0.835 per share. Thereafter, holders of the Class A Common Stock and Class B Common Stock share equally in all payments or distributions upon liquidation, dissolution or winding up of the Company.

The preferences in dividends and liquidation rights of the Class A Common Stock over the Class B Common Stock will terminate at any time that the voting rights of Class A Common Stock and Class B Common Stock become equal.

The following is a summary of other activity in stockholders’ investment for the fiscal years ended July 31, 2018, 2017, and 2016:



	Deferred Compensation			Shares Held in Rabbi Trust, at cost			Total
Balances at July 31, 2015	$	5,684		$	(8,748	)	$	(3,064	)
Shares at July 31, 2015	252,261			362,025
Sale of shares at cost	$	(1,238	)	$	1,278		$	40
Purchase of shares at cost	178			(1,017		)	(839		)
Balances at July 31, 2016	$	4,624		$	(8,487	)	$	(3,863	)
Shares at July 31, 2016	201,418			347,081
Sale of shares at cost	$	(1,247	)	$	1,288		$	41
Purchase of shares at cost	315			(925		)	(610		)
Effect of plan amendment	4,432			—			4,432
Balances at July 31, 2017	$	8,124		$	(8,124	)	$	—
Shares at July 31, 2017	314,082			314,082
Sale of shares at cost	$	(977	)	$	977		$	—
Purchase of shares at cost	1,075			(1,075		)	—
Balances at July 31, 2018	$	8,222		$	(8,222	)	$	—
Shares at July 31, 2018	299,916			299,916

Deferred Compensation Plans

The Company has two deferred compensation plans, the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan that allow for compensation to be deferred into either the Company's Class A Nonvoting Common Stock or in other investment funds. Both the Director Deferred Compensation Plan and the Executive Deferred Compensation Plan disallow transfers from other investment funds into the Company's Class A Nonvoting Common Stock.

At July 31, 2018, the deferred compensation balance in stockholders’ investment represents the investment at the original cost of shares held in the Company’s Class A Nonvoting Common Stock for the deferred compensation plans. The balance of shares held in the Rabbi Trust represents the investment in the Company’s Class A Nonvoting Common Stock at the original cost of all the Company’s Class A Nonvoting Common Stock held in deferred compensation plans.

Incentive Stock Plans

The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock, restricted stock units ("RSUs"), or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. Certain awards may be subject to pre-established performance goals.

As of July 31, 2018, the Company has reserved 2,955,586 shares of Class A Nonvoting Common Stock for outstanding stock options, RSUs and restricted shares and 4,049,563 shares of Class A Nonvoting Common Stock remain for future issuance of stock options, RSUs and restricted and unrestricted shares under the active plans. The Company uses treasury stock or will issue new Class A Nonvoting Common Stock to deliver shares under these plans.

Total stock-based compensation expense recognized by the Company during the years ended July 31, 2018, 2017, and 2016, was $9,980 ($7,485 net of taxes), $9,495 ($5,887 net of taxes), and $8,154 ($5,056 net of taxes), respectively. As of July 31, 2018, total unrecognized compensation cost related to share-based compensation awards that are expected to vest was $10,898 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 1.6 years.

Stock Options

The stock options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years. Options issued under the plan, referred to herein as “time-based” options, generally expire 10 years from the date of grant.

The Company has estimated the fair value of its time-based stock option awards granted during the years ended July 31, 2018, 2017, and 2016, using the Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the following table:



Black-Scholes Option Valuation Assumptions	2018			2017			2016
Expected term (in years)	6.07			6.11			6.11
Expected volatility	28.19		%	29.55		%	29.95		%
Expected dividend yield	2.72		%	2.70		%	2.59		%
Risk-free interest rate	1.96		%	1.26		%	1.64		%
Weighted-average market value of underlying stock at grant date	$	36.85		$	35.14		$	20.02
Weighted-average exercise price	$	36.85		$	35.14		$	20.02
Weighted-average fair value of options granted during the period	$	7.96		$	7.56		$	4.58

The following is a summary of stock option activity for the fiscal year ended July 31, 2018:



	Option Price				Options Outstanding		Weighted Average Exercise Price
Balance as of July 31, 2017	$	19.96	—	$38.83	2,879,801		$	27.40
Options granted	36.85		—	36.85	364,046		36.85
Options exercised	19.96		—	38.31	(622,916	)	28.84
Options cancelled	19.96		—	38.31	(116,298	)	31.42
Balance as of July 31, 2018	$	19.96	—	$38.83	2,504,633		$	28.23

The total fair value of options vested during the fiscal years ended July 31, 2018, 2017, and 2016, was $3,006, $2,911, and $3,203, respectively. The total intrinsic value of options exercised during the fiscal years ended July 31, 2018, 2017, and 2016, was $6,208, $7,901, and $811, respectively.

There were 1,722,229, 1,859,959, and 2,488,527 options exercisable with a weighted average exercise price of $26.82, $28.20, and $30.18 at July 31, 2018, 2017, and 2016, respectively. The cash received from the exercise of stock options during the fiscal years ended July 31, 2018, 2017, and 2016, was $12,099, $19,728, and $5,246, respectively. The tax benefit on options exercised during the fiscal years ended July 31, 2018, 2017, and 2016, was $1,893, $3,002, and $308, respectively.

The following table summarizes information about stock options outstanding at July 31, 2018:



	Options Outstanding				Options Outstanding and Exercisable
Range of Exercise Prices	Number of Shares Outstanding at July 31, 2018	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares Exercisable at July 31, 2018	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$19.96 - $26.99	846,353	6.7	$	20.84	611,735	6.5	$	21.16
$27.00 - $32.99	978,233	3.3	29.24		977,506	3.3	29.24
$33.00 - $38.83	680,047	8.4	35.97		132,988	7.2	35.13
Total	2,504,633	5.8	$	28.23	1,722,229	4.7	$	26.82

As of July 31, 2018, the aggregate intrinsic value (defined as the amount by which the fair value of the underlying stock exceeds the exercise price of an option) of options outstanding and the options exercisable was $24,033 and $18,945, respectively.

Restricted Shares and RSUs

Restricted and unrestricted shares and RSUs issued under the plan have a grant date fair value equal to the fair market value of the underlying stock at the date of grant. Shares issued under the plan are referred to herein as either "time-based" or "performance-based" restricted shares and RSUs. The time-based RSUs issued under the plan generally vest ratably over a three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years. The performance-based RSUs granted under the plan vest at the end of a three-year service period provided specified Company financial performance metrics are met.

The following tables summarize the RSU and restricted share activity for the fiscal year ended July 31, 2018:



Time-Based RSUs and Restricted Shares	Shares		Weighted Average Grant Date Fair Value
Balance as of July 31, 2017	517,108		$	25.61
New grants	94,457		36.80
Vested	(219,389	)	24.76
Forfeited	(49,320	)	26.94
Balance as of July 31, 2018	342,856		$	29.05

The time-based RSUs granted during the fiscal year ended July 31, 2017, had a weighted-average grant-date fair value of $35.15. The total fair value of time-based RSU's vested during the years ended July 31, 2018 and 2017, was $8,237 and $6,512, respectively.



Performance-Based RSUs	Shares		Weighted Average Grant Date Fair Value
Balance as of July 31, 2017	58,206		$	32.03
New grants	56,290		33.12
Vested	—		—
Forfeited	(6,399	)	32.57
Balance as of July 31, 2018	108,097		$	32.57

The performance-based RSUs granted during the year ended July 31, 2017, had a weighted-average grant-date fair value of $32.03. The aggregate intrinsic value of unvested time-based and performance-based RSU's outstanding at July 31, 2018 and 2017, and expected to vest, was $17,249 and $19,100, respectively.