STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

STOCK BASED COMPENSATION

NOTE 6 – STOCK BASED COMPENSATION

At September 30, 2012 we had the following stock option and stock purchase plans:

• the 2011 Incentive Stock Plan, which our stockholders approved in May 2011;

• the 2008 Incentive Stock Plan, which our stockholders approved in May 2008;

• the 2005 Incentive Stock Plan, which our stockholders approved in April 2005;

• the 2000 Nonstatutory Stock Option Plan, which expired in February 2010;

• the 1997 Stock Option Plan, which expired in January 2007;

• the 1996 Directors Stock Option Plan, which expired in May 2006;

• Our Employee Stock Purchase Plan (“ESPP”), which our stockholders approved in May 2001.

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSU”), and the ESPP included in the Condensed Consolidated Statements of Income and Comprehensive Income:

In thousands
	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Cost of revenues – stock option plan	$	34	$	33	$	105	$	89
Selling, general and administrative – stock option plan		3,421		3,336		10,329		10,122
Selling, general and administrative – restricted stock units		389		219		1,077		593
Selling, general and administrative – ESPP		285		257		835		759
Total pre-tax expense	$	4,129	$	3,845	$	12,346	$	11,563

As of September 30, 2012, there was $32.8 million of total unrecognized compensation expense, related to non-vested option awards and RSU, which is expected to be recognized over a weighted-average period of 1.81 years.

The following table sets forth the tax benefits related to stock compensation:

In thousands
	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Tax benefit recognized in income Statement	$	1,631	$	291	$	4,239	$	2,468
Excess tax benefit realized		9,471		2,065		20,994		16,614

The Black-Scholes option-pricing model is used in determining the fair value of each option grant. The expected term of options granted is based on historical experience. Expected volatility is based upon historical volatility. The expected dividend yield is zero. The risk-free interest rate is based upon the U.S. Treasury yield rates for a comparable period. The assumptions that we used in the Black-Scholes model are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Expected term (in years)		6.00			5.75			6.00			5.75
Expected volatility		27.52	%		27.70	%		27.90	%		27.41	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Risk free interest rate		0.79	%		1.38	%		1.06	%		2.23	%

The weighted average grant date fair value of the stock options granted during the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Weighted average fair value at grant date	$	20.68	$	19.94	$	20.09	$	21.09

Stock option activity for the nine months ended September 30, 2012, was as follows:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life			Aggregate Intrinsic Value
							(in years	)
Outstanding at December 31, 2011		6,342,337		$	50.06
Granted		1,072,101			86.17
Exercised		(1,286,860	)		35.88
Cancelled or expired		(86,249	)		63.43
Outstanding at September 30, 2012		6,041,329		$	59.24		6.71		$	188,774,934
Exercisable at September 30, 2012		3,153,374		$	48.18		5.48		$	133,406,484
Vested and expected to vest in the future at September 30, 2012		5,433,451		$	57.38		6.52		$	179,928,576

The total exercise intrinsic value represents the total pre-tax value (the difference between the sales price on that trading day in the quarter and nine months ended September 30, and the exercise price associated with the respective option).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Total exercise intrinsic value of options exercised	$	28,558	$	6,387	$	68,582	$	51,876

Restricted stock units (“RSUs”) activity for the nine months ended September 30, 2012 is summarized below. RSUs vest at the end of three or five years. Our 2008 and 2011 Plans include a share reserve related to RSUs granted at a 2-1 ratio.

	Number of Units			Weighted Average Remaining Contractual Life			Aggregate Intrinsic Value
					(in years	)
Outstanding at December 31, 2011		34,738
Granted		39,237
Forfeited		(1,773	)
Outstanding at September 30, 2012		72,202			2.69		$	6,533,061
Exercisable at September 30, 2012		0			0.00		$	0.00
Vested and expected to vest in the future at September 30, 2012		50,067			2.22		$	4,530,198