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SHARE-BASED COMPENSATION
12 Months Ended
Jun. 30, 2012
SHARE-BASED COMPENSATION  
SHARE-BASED COMPENSATION

10.   SHARE-BASED COMPENSATION

Employee Stock Purchase Plan

The 2008 Employee Stock Purchase Plan (the "2008 ESPP") provides that eligible employees are able to contribute up to 10% of their eligible earnings towards the quarterly purchase of the Company's common stock. The employee's purchase price is equal to 85% of the fair market value. During the years ended June 30, 2012, 2011 and 2010, employees purchased 76,526, 67,730 and 53,716 shares of common stock for approximately $2.6 million, $2.1 million and $1.9 million, respectively.

Share-Based Award Plans

The Company's 2010 Long-Term Incentive Plan, which was an amendment and restatement of the Company's 2001 Long-Term Incentive Plan, as amended, (the "2010 Plan") provides for the issuance of up to 15,050,000 shares of common stock to Company employees, directors and designated paid consultants. At the Company's 2010 Annual Meeting, the 2010 Plan was amended to increase the number of shares issuable pursuant to awards of restricted stock, restricted stock units ("RSUs") or incentive bonuses granted after the 2010 Annual Meeting shall count against the overall share limit as 1.75 shares for every share granted. Prior to the 2010 Annual Meeting, the number of shares issuable pursuant to awards of restricted stock or RSUs was capped at 1,400,000 shares. Generally, options are granted at the fair value of the Company's common stock at the date of grant and are exercisable for up to ten years.

The Company's 1996 Long-Term Incentive Plan (the "1996 Plan") provided for the issuance of up to 3,428,000 shares of common stock to Company employees, directors and designated paid consultants. Generally, options were granted at the fair value of the Company's common stock at the date of grant and are exercisable for up to ten years. No shares of common stock remain available under the 1996 Plan for the grant of new awards.

The Company issues new shares for shares delivered under the 1996 Plan and the 2010 Plan (collectively, the "Plans").

Stock option activity as of and for the year ended June 30, 2012 is summarized below:

 
   
  Weighted Average    
 
 
  Shares   Exercise Price   Remaining Contractual Term   Aggregate Intrinsic Value  
 
  (in 000s)
  (per share)
  (years)
  (in 000s)
 

Balance outstanding as of June 30, 2011

    3,682   $ 24.45         $ 60,558  

Granted

    79     37.20              

Exercised

    (1,148 )   20.33              

Forfeited or expired

    (68 )   35.87              
                         

Balance outstanding as of June 30, 2012

    2,545   $ 26.40     3.06   $ 51,655  
                   

Exercisable as of June 30, 2012

    1,976   $ 23.83     2.50   $ 45,191  
                   

Restricted stock and RSU activity as of and for the year ended June 30, 2012 is summarized below:

 
  Restricted
Stock
  Weighted
Average
Grant Date
Fair Value
  RSUs   Weighted
Average
Grant Date
Fair Value
 
 
  (in 000s)
  (per share)
  (in 000s)
  (per share)
 

Balance outstanding as of June 30, 2011

    337   $ 38.42     600   $ 18.92  

Granted

    391     42.80          

Released

    (152 )   38.90     (30 )   42.01  

Forfeited or expired

    (8 )   38.07          
                       

Balance outstanding as of June 30, 2012

    568   $ 41.31     570     17.69  
                   

Vested as of June 30, 2012

                534   $ 16.04  
                       

The following is additional information about stock options, restricted stock and RSUs exercised, granted and vested during the periods:

 
  Year Ended June 30,  
 
  2012   2011   2010  
 
  (in 000s, except per share amounts)
 

Weighted average grant-date fair value per share:

                   

Stock options granted

  $ 17.04   $ 16.86   $ 19.56  

Stock options vested

  $ 16.05   $ 11.47   $ 10.71  

Restricted stock and RSUs vested

  $ 39.34   $ 33.31   $ 29.99  

Total grant-date fair value of stock options vested

  $ 6,097   $ 6,458   $ 7,123  

Total grant-date fair value of restricted stock and RSUs vested

  $ 7,289   $ 8,962   $ 4,384  

Exercises under all share-based payment arrangements:

                   

Total intrinsic value

  $ 26,973   $ 37,915   $ 59,583  

Cash received

  $ 23,225   $ 26,314   $ 30,074  

Tax benefit realized

  $ 6,390   $ 8,718   $ 16,730  

Shares Reserved

The following shares are reserved for stock options and RSUs issued and available for issue under the Plans and the 2008 ESPP:

 
  (in 000s)  

Stock options and RSUs issued and currently outstanding

    3,115  

Shares available for future issuance

    2,484  
       

Total

    5,599  
       

Share-Based Compensation

The following table presents share-based compensation expense and related effect of the income tax benefit included in the Company's consolidated statements of operations:

 
  Year Ended June 30,  
 
  2012   2011   2010  
 
  (in 000s)
 

Selling, general and administrative

  $ 9,996   $ 9,624   $ 10,382  

Research and development

    3,956     3,104     3,231  

Cost of gaming equipment and systems and operations

    220     179     180  
               

Share-based compensation expense before tax

  $ 14,172   $ 12,907   $ 13,793  

Income tax benefit

    (4,960 )   (4,517 )   (4,828 )
               

Net share-based compensation expense

  $ 9,212   $ 8,390   $ 8,965  
               

Share-based compensation expense from discontinued operations before income tax was $137,000 for the year ended June 30, 2010.

Included in share-based compensation expense in the consolidated statements of operations for the years ended June 30, 2012, 2011 and 2010 is restricted stock amortization of $8.9 million, $7.0 million and $6.4 million, respectively.

As of June 30, 2012, there was $6.8 million of total unrecognized compensation expense related to the unvested portion of stock options which will be recognized over the subsequent 1.64 years. In addition, as of June 30, 2012, there was $19.5 million of total unrecognized compensation expense related to the unvested portion of restricted stock which will be recognized over the subsequent 2.09 years.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the option, the expected option term, the expected volatility of the Company's common stock over the option's expected term, the risk-free interest rate over the option's expected term and the Company's expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company's stock options granted. Estimates of fair value are not intended to predict actual future events, or the value ultimately realized by the recipients of equity awards.

The fair value of each option granted during the periods referenced below was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

 
  Year Ended June 30,  
 
  2012   2011   2010  

Weighted Average:

                   

Expected option term (in years)

    4.36     4.61     4.66  

Expected volatility

    56.90 %   54.91 %   56.04 %

Risk-free interest rate

    0.89 %   1.76 %   2.23 %

Expected annual dividend yield

    0 %   0 %   0 %

For the year ended June 30, 2010, the expected option term was determined using the simplified method for share based payments as the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. During fiscal year 2011, the Company ceased using the simplified method and began using its historical exercise activity to estimated expected term. Expected volatility is based on historical market factors related to the Company's common stock. Risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term.