Note 11. Employee Benefit Plans

A. Stock-based Compensation Plans

Stock-based compensation consists of the following:

•

Stock Options Stock options are granted to employees at exercise prices equal to the fair market value of the Company's common stock on the dates of grant. Stock options are issued under a graded vesting schedule and have a term of 10 years. Options granted prior to July 1, 2008 generally vest ratably over five years and options granted after July 1, 2008 generally vest ratably over four years. Compensation expense is measured based on the fair value of the stock option on the grant date and recognized over the requisite service period for each separately vesting portion of the stock option award. Stock options are forfeited if the employee ceases to be employed by the Company prior to vesting.


•	Restricted Stock


•	Time-Based Restricted Stock and Time-Based Restricted Stock Units Time-based restricted stock and time-based restricted stock units granted prior to fiscal 2013 are subject to vesting periods of up to five years and awards granted in fiscal 2013 and later are subject to a vesting period of two years. Awards are forfeited if the employee ceases to be employed by the Company prior to vesting.

Time-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of time-based restricted stock is measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period. Employees are eligible to receive dividends on shares awarded under the time-based restricted stock program.

Time-based restricted stock units are settled in cash. Compensation expense relating to the issuance of time-based restricted stock units is recorded over the vesting period and is initially based on the fair value of the award on the grant date; and is subsequently remeasured at each reporting date during the vesting period. No dividend equivalents are paid on units awarded under the time-based restricted stock unit program.

•

Performance-Based Restricted Stock and Performance-Based Restricted Stock Units Performance-based restricted stock and performance-based restricted stock units generally vest over a one to three year performance period and a subsequent service period of up to 26 months. Under these programs, the Company communicates "target awards" at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0% to 150% of the "target awards." Awards are forfeited if the employee ceases to be employed by the Company prior to vesting.

Performance-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of performance-based restricted stock is measured based upon the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period, based upon the probability that the performance target will be met. After the performance period, if the performance targets are achieved, employees are eligible to receive dividends on shares awarded under the performance-based restricted stock program.

Performance-based restricted stock units are settled in cash. Compensation expense relating to the issuance of performance-based restricted stock units is recorded over the vesting period and is initially based on the fair value of the award on the grant date; and is subsequently remeasured at each reporting date during the one-year performance period, based upon the probability that the performance target will be met. No dividend equivalents are paid on awards under the performance-based restricted stock unit program.


•	Employee Stock Purchase Plan The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95% of the market value for the Company's common stock on the last day of the offering period. This plan has been deemed non-compensatory, and therefore no compensation expense has been recorded.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase programs. The Company repurchased 1.4 million shares in the three months ended December 31, 2013 as compared to 2.0 million shares repurchased in the three months ended December 31, 2012 and the Company repurchased 5.6 million shares in the six months ended December 31, 2013 as compared to 5.4 million shares repurchased in the six months ended December 31, 2012. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions.

The following table represents stock-based compensation expense and related income tax benefits for the three and six months ended December 31, 2013 and 2012, respectively:



	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2013		2012		2013		2012
Operating expenses	$	7.5	$	6.0	$	12.1	$	9.7
Selling, general and administrative expenses	26.0		18.7		45.3		32.5
System development and programming costs	5.7		4.9		8.9		8.3
Total pretax stock-based compensation expense	$	39.2	$	29.6	$	66.3	$	50.5

Income tax benefit	$	13.9	$	10.6	$	23.5	$	18.0

As of December 31, 2013, the total remaining unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock awards amounted to $6.0 million, $37.2 million, and $147.8 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 1.7 years, 1.5 years, and 1.6 years, respectively.

During the six months ended December 31, 2013, the following activity occurred under the Company’s existing plans:

Stock Options:



	Number of Options (in thousands)		Weighted Average Price (in dollars)
Options outstanding at July 1, 2013	11,110		$	44
Options granted	52		$	74
Options exercised	(2,378	)	$	40
Options canceled	(56	)	$	44
Options outstanding at December 31, 2013	8,728		$	45

Time-Based Restricted Stock and Time-Based Restricted Stock Units:



	Number of Shares (in thousands)		Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2013	1,313		280
Restricted shares/units granted	1,286		308
Restricted shares/units vested	(44	)	—
Restricted shares/units forfeited	(37	)	(11	)
Restricted shares/units outstanding at December 31, 2013	2,518		577

Performance-Based Restricted Stock and Performance-Based Restricted Stock Units:



	Number of Shares (in thousands)		Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2013	521		38
Restricted shares/units granted	844		58
Restricted shares/units vested	—		(6	)
Restricted shares/units forfeited	(20	)	(2	)
Restricted shares/units outstanding at December 31, 2013	1,345		88

The fair value of each stock option issued is estimated on the date of grant using a binomial option pricing model. The binomial model considers a range of assumptions related to volatility, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial model are based on a combination of implied market volatilities, historical volatility of the Company’s stock price, and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock option grant is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding.

The fair value for stock options granted was estimated at the date of grant using the following assumptions:



	Six Months Ended
	December 31,
	2013			2012
Risk-free interest rate	1.5		%	0.8		%
Dividend yield	2.4		%	2.7		%
Weighted average volatility factor	23.6		%	24.4		%
Weighted average expected life (in years)	5.4			5.3
Weighted average fair value (in dollars)	$	12.44		$	8.90

B. Pension Plans

The components of net pension expense were as follows:



	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Service cost – benefits earned during the period	$	16.6		$	16.8		$	33.2		$	33.6
Interest cost on projected benefits	15.7			13.8			31.3			27.5
Expected return on plan assets	(29.9		)	(27.4		)	(59.7		)	(54.8		)
Net amortization and deferral	5.0			7.7			10.0			15.5
Net pension expense	$	7.4		$	10.9		$	14.8		$	21.8

During the six months ended December 31, 2013, the Company contributed $79.9 million to the pension plans and expects to contribute an additional $4.6 million to the pension plans during the remainder of the fiscal year ended June 30, 2014.