7.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 Human Resources Committee of the Board to grant non-qualified 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 10 years after the grant date. There were 419,585 non-qualified stock options and 275,250 shares of restricted stock awards granted in the three months ended December 31, 2014. Awards outstanding in the 2005 Long-Term Incentive Plan (the “2005 Plan”) and one prior equity plan remain subject to the terms and conditions of those plans.

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

	Three Months Ended
	December 31,
	2014		2013
	(in thousands)

Compensation expense
Stock options	$	3,062	$	3,653
Restricted stock	3,920		3,357
	$	6,982	$	7,010

STOCK OPTIONS

The following summarizes the weighted-average assumptions utilized in determining the fair value of options granted during the three months ended December 31, 2014 and 2013:

	2014		2013

Risk-free interest rate	1.72	%	1.58	%
Expected stock volatility	36.92	%	52.55	%
Dividend yield	3.92	%	3.14	%
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.

Expected 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 all existing long-term incentive plans for the three months ended December 31, 2014 is presented in the following tables:

	Three Months Ended December 31, 2014
					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual Term	Value
Options	(in thousands)		Price		(in years)	(in millions)

Outstanding at October 1, 2014	2,629		$	43.46
Granted	420		68.83
Exercised	(104	)	16.09
Forfeited/Expired	(14	)	67.10
Outstanding at December 31, 2014	2,931		$	47.96	5.9	$	60.7
Vested and expected to vest at December 31, 2014	2,924		$	47.91	5.9	$	60.7

Exercisable at December 31, 2014	2,168		$	41.35	4.8	$	57.8

The weighted-average fair value of options granted in the first quarter of fiscal 2014 was $16.39.

The total intrinsic value of options exercised during the three months ended December 31, 2014 was $6.9 million.

As of December 31, 2014, the unrecognized compensation cost related to stock options was $11.1 million which is expected to be recognized over a weighted-average period of 3.0 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 December 31, 2014, there was $34.2 million of total unrecognized compensation cost related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 2.9 years.

A summary of the status of our restricted stock awards as of December 31, 2014 and changes in restricted stock outstanding during the three months then ended is presented below:

	Three Months Ended
	December 31, 2014
			Weighted-
			Average
	Shares		Grant-Date
Restricted Stock Awards	(in thousands)		Fair Value

Unvested at October 1, 2014	634		$	64.03
Granted	275		68.83
Vested (1)	(214	)	54.18
Forfeited	(6	)	65.95
Unvested at December 31, 2014	689		$	66.93

(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.