Stock-Based Compensation

9 Months Ended

Jun. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

8.Stock-Based Compensation

On March 2, 2011, the 2010 Long-Term Incentive Plan (the “2010 Plan”) was approved by our stockholders.  The 2010 Plan, among other things, authorizes the Board of Directors to grant nonqualified stock options, restricted stock awards and stock appreciation rights to selected employees and to non-employee Directors.  Restricted stock may be granted for no consideration other than prior and future services.  The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant.  Stock options expire ten years after the grant date.  There were 455,900 nonqualified stock options and 243,600 shares of restricted stock awards granted in the nine months ended June 30, 2012.  We have the right to satisfy option exercises from treasury shares and from authorized but unissued shares.

A summary of compensation cost for stock-based payment arrangements recognized in general and administrative expense is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Compensation expense
Stock options	$	2,314	$	1,696	$	7,345	$	5,509
Restricted stock	2,228		1,274		5,955		3,605
	$	4,542	$	2,970	$	13,300	$	9,114

STOCK OPTIONS

The following summarizes the weighted-average assumptions utilized in determining the fair value of options granted during the nine months ended June 30, 2012 and 2011:

	2012		2011
Risk-free interest rate	1.0	%	1.9	%
Expected stock volatility	53.3	%	51.6	%
Dividend yield	0.4	%	0.5	%
Expected term (in years)	5.5		5.5

Risk-Free Interest Rate.  The risk-free interest rate is based on U.S. Treasury securities for the expected term of the option.

Expected Volatility Rate.  Expected volatility is based on the daily closing price of our stock based upon historical experience over a period which approximates the expected term of the option.

Dividend Yield.  The expected dividend yield is based on our current dividend yield.

Expected Term.  The expected term of the options granted represents the period of time that they are expected to be outstanding.  We estimate the expected term of options granted based on historical experience with grants and exercises.

A summary of stock option activity under the Plan for the three and nine months ended June 30, 2012 is presented in the following table:

	Three Months Ended June 30, 2012
					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual Term	Value
Options	(in thousands)		Price		(in years)	(in millions)
Outstanding at April 1, 2012	4,739		$	29.58
Granted	3		47.29
Exercised	(22	)	21.26
Forfeited/Expired	(19	)	49.30
Outstanding at June 30, 2012	4,701		$	29.55	5.1	$	74.1
Vested and expected to vest at June 30, 2012	4,661		$	29.53	5.1	$	73.6
Exercisable at June 30, 2012	3,587		$	24.67	4.1	$	68.2

	Nine Months Ended June 30, 2012
			Weighted-
			Average
	Shares		Exercise
Options	(in thousands)		Price
Outstanding at October 1, 2011	4,589		$	25.84
Granted	456		59.68
Exercised	(303	)	16.96
Forfeited/Expired	(41	)	42.04
Outstanding at June 30, 2012	4,701		$	29.55

The weighted-average fair value of options granted in the first quarter of fiscal 2012 was $27.75.  The weighted-average fair value of options granted in the third quarter of fiscal 2012 was $20.69.  No options were granted in the second quarter of fiscal 2012.

The total intrinsic value of options exercised during the three and nine months ended June 30, 2012 was $0.6 million and $11.8 million, respectively.

As of June 30, 2012, the unrecognized compensation cost related to stock options was $14.6 million which is expected to be recognized over a weighted-average period of 2.8 years.

RESTRICTED STOCK

Restricted stock awards consist of our common stock and are time vested over three to six years.  We recognize compensation expense on a straight-line basis over the vesting period.  The fair value of restricted stock awards under the 2010 Plan is determined based on the closing price of our shares on the grant date.  As of June 30, 2012, there was $15.6 million of total unrecognized compensation cost related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 2.8 years.

A summary of the status of our restricted stock awards as of June 30, 2012 and changes in restricted stock outstanding during the nine months then ended is presented below:

	Nine Months Ended
	June 30, 2012
			Weighted-
			Average
	Shares		Grant-Date
Restricted Stock Awards	(in thousands)		Fair Value
Unvested at October 1, 2011	323		$	42.38
Granted	244		59.76
Vested (1)	(119	)	40.21
Forfeited	(18	)	49.47
Unvested at June 30, 2012	430		$	52.53

(1)The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.