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, 2014, 2013 and 2012, employees purchased 60,516, 77,094 and 76,526 shares of common stock for approximately $3.5 million, $3.2 million and $2.6 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 17,350,000 shares of common stock, with awards of restricted stock and restricted stock units ("RSUs") reducing the 2010 Plan by 1.75 shares for every share granted. 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.

Restricted stock and RSUs are converted into the right to receive common stock upon vesting. The Company permits the holders to satisfy their tax withholding requirements by net settlement, whereby the Company withholds a portion of the shares to cover the applicable taxes based on the fair market value of the Company's stock at the vesting date. During fiscal years 2014, 2013 and 2012, tax payments made were $5.5 million, $10.1 million and $1.7 million, respectively.

The Company issues new shares for shares delivered under the 1996 Plan, the 2010 Plan and the 2008 ESPP (collectively, the "Plans"). Stock option activity 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, 2013		1,170		$	29.60			$	31,391
Granted		—			—
Exercised		(378	)		31.65
Forfeited or expired		(9	)		38.45


Balance outstanding as of June 30, 2014		783		$	28.51		2.44	$	29,150




Exercisable as of June 30, 2014		666		$	26.86		2.16	$	25,899

Restricted stock and RSU activity 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, 2013		571		$	43.45		82		$	45.65
Granted		291			69.45		80			61.23
Released		(232	)		43.07		(43	)		45.73
Forfeited or expired		(47	)		50.53		—			—


Balance outstanding as of June 30, 2014		583		$	56.22		119		$	56.08

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

	Year Ended June 30,

	2014		2013		2012
	(in 000s, except per share amounts)
Weighted average grant-date fair value per share:
Stock options granted	$	—	$	18.07	$	17.04
Stock options vested	$	17.82	$	15.55	$	16.05
Restricted stock and RSUs vested	$	40.46	$	40.86	$	39.34
Total grant-date fair value of stock options vested	$	3,380	$	4,481	$	6,097
Total grant-date fair value of restricted stock and RSUs vested	$	11,144	$	8,663	$	7,289
Exercises under all share-based payment arrangements:
Total intrinsic value	$	14,542	$	35,324	$	26,973
Cash received	$	12,098	$	32,472	$	23,225
Tax benefit realized	$	5,665	$	20,447	$	6,390

Shares Reserved

The following shares are reserved for issue under the Plans:

		(in 000s)

Shares issued and currently outstanding			902
Shares available for future issuance			3,969


Total			4,871

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,

	2014			2013			2012
	(in 000s)
Selling, general and administrative	$	9,478		$	8,841		$	9,996
Research and development costs		4,471			4,500			3,956
Cost of gaming equipment and systems and product lease, operation and royalty		64			39			220


Share-based compensation expense before tax	$	14,013		$	13,380		$	14,172
Income tax benefit		(4,905	)		(4,683	)		(4,960	)


Net share-based compensation expense	$	9,108		$	8,697		$	9,212

Included in share-based compensation expense in the consolidated statements of operations for the years ended June 30, 2014, 2013 and 2012 is restricted stock amortization of $11.1 million, $9.3 million and $8.9 million, respectively.

As of June 30, 2014, there was $1.2 million of total unrecognized compensation expense related to the unvested portion of stock options which will be recognized over the subsequent 1.2 years. In addition, as of June 30, 2014, there was $32.0 million of total unrecognized compensation expense related to the unvested portion of restricted stock and RSUs which will be recognized over the subsequent 2.0 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,

	2014		2013			2012
Weighted Average:
Expected option term (in years)		—		4.17			4.36
Expected volatility		—		48.30	%		56.90	%
Risk-free interest rate		—		0.63	%		0.89	%
Expected annual dividend yield		—		0	%		0	%

No stock options were granted in fiscal year 2014. The Company uses 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.

The Company has granted restricted stock units which contain performance goals based upon total shareholder return ("TSR") of the Company's common stock.

During fiscal year 2014, 34,444 performance restricted stock units were granted with the payout of shares ranging from 0% to 200% of target and 3,548 performance restricted stock units were granted with the payout of shares ranging from 0% to 150% of target based on EPS. The fair value of the 34,444 restricted stock units were estimated using the Monte Carlo valuation model based on risk-free interest rates ranging from 0.63% to 0.79% and expected volatility ranging from 25.52% to 30.62%. The fair value of the 3,548 performance restricted stock units were estimated based on the fair value of the Company's common stock on the date of grant. The grant date fair value of the restricted stock units totaled $2.5 million, based on a fair value per unit ranging from $59.77 to $70.45.

During fiscal year 2013, a total of 81,953 performance restricted stock units were granted with the payout of shares ranging from 0% to 150% of target. The fair value of each restricted stock unit was estimated using the Monte Carlo valuation model based on risk-free interest rates ranging from 0.34% to 0.35% and expected volatility ranging from 31.75% to 32.38%. The grant date fair value of the restricted stock units totaled $2.1 million, based on a fair value per unit ranging from $24.73 to $27.62.