Employee Benefit Plans

12 Months Ended

Sep. 30, 2011


NOTE J —	EMPLOYEE BENEFIT PLANS

Deferred Compensation

The Company has a 401(k) plan for all employees who have been with the Company for a period of six months or more. The Company matches portions of employees’ voluntary contributions. Additional employer contributions in the form of profit sharing may also be made at the Company’s discretion. Expenses for the plan were $3.9 million, $4.8 million and $3.9 million in fiscal 2011, 2010 and 2009 respectively.

The Company’s Supplemental Executive Retirement Plan (SERP) is a non-qualified deferred compensation program that provides benefits payable to certain management employees upon retirement, death, or termination of employment. Under the SERP, the Company accrues an unfunded benefit based on a percentage of the eligible employees’ salaries, as well as an interest factor based upon a predetermined formula. The Company’s liabilities related to the SERP were $17.3 million and $15.2 million at September 30, 2011 and 2010, respectively. The Company recorded $2.9 million, $2.7 million and $2.2 million of expense for this plan in fiscal 2011, 2010 and 2009, respectively.

The Company has a deferred compensation plan available to a select group of employees. The participating employees designate investments for their contributions; however, the Company is not required to invest the contributions in the designated investments. The Company’s net liabilities related to the deferred compensation plan were $23.3 million and $24.6 million at September 30, 2011 and 2010, respectively. The Company records as expense the amount that the employee contributions would have earned had the funds been invested in the designated investments. In fiscal 2011 and 2009, the Company recorded a reduction in expense of $0.7 million and $1.1 million, respectively, for this plan, and in fiscal 2010, it recorded expense of $2.1 million.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan provides eligible employees the opportunity to purchase common stock of the Company at a discounted price of 85% of the fair market value of the stock on the designated dates of purchase. The price to eligible employees may be further discounted depending on the average fair market value of the stock during the period and certain other criteria. Under the terms of the plan, the total fair market value of the common stock that an eligible employee may purchase each year is limited to the lesser of 15% of the employee’s annual compensation or $25,000. Under the plan, employees purchased 91,350 shares for $0.9 million in fiscal 2011, 107,952 shares for $1.1 million in fiscal 2010 and 155,254 shares for $1.2 million in fiscal 2009.

Stock Options

The Company’s 2006 Stock Incentive Plan provides for the granting of stock options to certain key employees to purchase shares of common stock. Options are granted at exercise prices which equal the market value of the Company’s common stock at the date of the grant. Generally, the options vest over periods of 3 to 9.75 years and expire 10 years after the dates on which they were granted.

During fiscal 2011 and 2009, stock options were granted to purchase a total of 6.2 million shares and 6.1 million shares, respectively, of common stock at the closing market price on the date of the grant. The Compensation Committee of the Company’s Board of Directors granted stock options to executive officers, other officers and certain employees, and the Company’s Board of Directors granted stock options to its outside directors. No stock options were granted during fiscal 2010. At September 30, 2011, there were 12.1 million shares available for future grants under the Plan.

The Company measures and recognizes compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements. The following table provides additional information related to activity under the Company’s Stock Incentive Plan.


	Year Ended September 30,
	2011					2010					2009
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Options			Price		Options			Price		Options			Price

Stock Options
Outstanding at beginning of year		17,658,872		$	14.87		19,479,417		$	14.31		15,623,148		$	16.19
Granted		6,172,500			9.97		—			—		6,115,000			9.03
Exercised		(303,535	)		8.36		(1,234,396	)		5.36		(665,357	)		4.90
Canceled or expired		(821,874	)		14.92		(586,149	)		16.27		(1,593,374	)		16.34

Outstanding at end of year		22,705,963		$	13.63		17,658,872		$	14.87		19,479,417		$	14.31

Exercisable at end of year		7,540,704		$	16.53		6,143,532		$	16.76		5,410,674		$	15.49

The total intrinsic value of options exercised during fiscal 2011, 2010 and 2009 was $0.9 million, $7.6 million and $4.6 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the option exercise price.

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2011 was $0.1 million and $0, respectively. Exercise prices for options outstanding at September 30, 2011, ranged from $9.03 to $36.92. The weighted average remaining contractual lives of options outstanding and exercisable at September 30, 2011 were 6.5 years and 4.0 years, respectively.

The weighted average fair value of grants made in fiscal 2011 and 2009 was $3.98 and $3.89 per share, respectively. The fair values of the options granted were estimated on the date of their grant using the Black-Scholes option pricing model based on the following weighted average assumptions:


	Year Ended September 30,
	2011			2010		2009

Risk free interest rate		1.26	%		—		2.50	%
Expected life (in years)		6.46			—		7.74
Expected volatility		46.40	%		—		45.36	%
Expected dividend yield		1.50	%		—		1.66	%

For fiscal 2011, 2010 and 2009, the Company’s compensation expense related to stock option grants was $14.2 million, $13.3 million and $13.7 million, respectively, and at September 30, 2011, there was $57.2 million of total unrecognized compensation expense related to unvested stock option awards. This expense is expected to be recognized over a weighted average period of 5.0 years.

Incentive Bonus Plan

The Company’s Incentive Bonus Plan provides for the Compensation Committee to award short-term performance bonuses to senior management based upon the level of achievement of certain criteria. For fiscal 2011, the Compensation Committee approved an award whereby senior management could earn a quarterly performance bonus based upon a certain percentage of the Company’s quarterly pre-tax income. Subsequent to September 30, 2011, the Compensation Committee exercised its discretion and reduced the total amount awarded under the Incentive Bonus Plan to $0.5 million for fiscal 2011.

Restricted Stock Unit Agreement

In September 2010, the Compensation Committee of the Board of Directors adopted and approved a form of Restricted Stock Unit Agreement (RSU Agreement) for awards to executive officers and other key employees pursuant to the 2006 Stock Incentive Plan. Under the form of RSU Agreement, the Compensation Committee may award performance or service (time) based restricted stock units subject to the terms and conditions of the RSU Agreement and the 2006 Stock Incentive Plan.

In September 2010, the Compensation Committee approved and granted awards of 200,000 performance based restricted stock units (Performance RSUs) that vest at the end of a two-year performance period ending September 30, 2012. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers at the end of the two-year period in achieving certain performance criteria and can range from 0% to 200% of the number of units granted. The performance criteria are total shareholder return, return on investment, SG&A expense containment and gross profit. Each Performance RSU represents the contingent right to receive one share of the Company’s common stock if the vesting conditions are satisfied. The Performance RSUs have no dividend or voting rights during the performance period. The fair value of these awards on the date of grant is $11.53 per unit. Compensation expense related to these grants was $1.2 million in fiscal 2011.

In November 2010, the Compensation Committee approved and granted awards of 300,000 performance based units (Performance Units) that vest at the end of a three-year performance period ending September 30, 2013. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers at the end of the three-year period in achieving certain performance criteria and can range from 0% to 200% of the number of units granted. The performance criteria are total shareholder return, return on investment, SG&A expense containment and gross profit. The earned awards will have a value equal to the number of earned units multiplied by the closing price of the Company’s common stock at the end of the performance period and may be paid in cash, equity or a combination of both. The Compensation Committee has the discretion to reduce the final payout on the Performance Units from the amount earned. The Performance Units have no dividend or voting rights during the performance period. The fair value of these awards on the date of grant was $12.69 per unit. The liability for these awards of $1.0 million at September 30, 2011 was based on the Company’s performance against the peer group, the elapsed portion of the performance period and the Company’s stock price at the end of the period. Compensation expense related to these grants was $1.0 million in fiscal 2011.

Performance Unit Plan

The Company’s Performance Unit Plan provides for the Compensation Committee to award performance units to senior management based upon the level of achievement of certain criteria. Performance units were granted in 2008 and 2009 with 33-month performance periods ending on September 30, 2010 and 2011, respectively. The actual number of performance units earned is based upon the Company’s level of achievement on defined performance metrics as compared to its peer group. The earned award will have a value equal to the number of earned units multiplied by the closing price of the Company’s common stock at the end of the performance period and may be paid in cash, equity or a combination of both. The Compensation Committee has the discretion to reduce the final payout on the performance units from the amount earned.

During the first quarter of fiscal 2011, the Compensation Committee exercised its discretion and reduced the amount earned under the 2008 performance unit grant to 437,500 performance units which had a value of $4.9 million based on the Company’s stock price at September 30, 2010. In November 2010, the Company issued shares of its common stock to satisfy the award.

Subsequent to September 30, 2011, the Compensation Committee exercised its discretion and reduced the amount earned under the 2009 performance unit grant to 551,250 performance units which had a value of $5.0 million based on the Company’s stock price at September 30, 2011. The liability related to this grant was $5.0 million at September 30, 2011. Compensation expense related to this grant was $0.9 million in fiscal 2011.

- Definition

The entire disclosure for compensation costs, including compensated absences accruals, compensated absences liability, deferred compensation arrangements and income statement compensation items. Deferred compensation arrangements may include a description of an arrangement with an individual employee, which is generally an employment contract between the entity and a selected officer or key employee containing a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period, the number of shares (units) issued during the period under such arrangements, and the carrying amount as of the balance sheet date of the related liability.

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