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Share-Based Compensation | 6 Months Ended
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Jun. 30, 2011
Share-Based Compensation |
Share-Based Compensation |
14. | Share-Based Compensation
During the six months ended June 30, 2011, the Company granted approximately 0.7 million stock options and 0.2 million unvested shares, respectively. During the six months ended June 30, 2010, the Company granted approximately 0.9 million stock options and 0.3 million unvested shares, respectively. Weighted average option fair values and assumptions for the periods specified are disclosed in the following table:
|  | Three Months Ended June 30, |
|  | 2011 |  |  | 2010 |
Weighted average fair value of grants |  | $ | 12.89 |  |  | $ | 9.22 |
Dividend yield |  |  | 1.35 | % |  |  | 1.85 | %
Volatility |  |  | 31.96 | % |  |  | 32.97 | %
Risk-free forward interest rate |  |  | 0.26% - 5.62 | % |  |  | 0.34% - 5.33 | %
Expected life (in years) |  |  | 5.89 |  |  |  | 5.97 |
|  | Six Months Ended June 30, |
|  | 2011 |  |  | 2010 |
Weighted average fair value of grants |  | $ | 12.31 |  |  | $ | 9.54 |
Dividend yield |  |  | 1.45 | % |  |  | 1.50 | %
Volatility |  |  | 32.73 | % |  |  | 33.45 | %
Risk-free forward interest rate |  |  | 0.28% - 5.62 | % |  |  | 0.32% - 5.69 | %
Expected life (in years) |  |  | 6.13 |  |  |  | 5.98 |
The assumptions are as follows:
| • |  | The Company estimated volatility using its historical share price performance over the contractual term of the option.
| • |  | The Company uses historical data to estimate the expected life of the option. The expected life assumption for the three and six months ended June 30, 2011 and 2010 is an output of the Binomial lattice option-pricing model, which incorporates vesting provisions, rate of voluntary exercise and rate of post-vesting termination over the contractual life of the option to define expected employee behavior.
| • |  | The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option. For the three and six months ended June 30, 2011 and 2010, we present the range of risk-free one-year forward rates, derived from the U.S. treasury yield curve, utilized in the Binomial lattice option-pricing model.
| • |  | The expected dividend yield is based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.
The Company's policy is to recognize compensation cost on a straight-line basis over the requisite service period for the entire award. Additionally, the Company's general policy is to issue authorized and unissued shares of common stock to satisfy stock option exercises or grants of unvested shares. Total compensation cost for the stock options is as follows:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |
Cost of goods sold |  | $ | 208 |  |  | $ | 271 |  |  | $ | 443 |  |  | $ | 529 |
Selling, general and administrative expenses |  |  | 1,930 |  |  |  | 1,906 |  |  |  | 3,983 |  |  |  | 3,863 |
Total expense before income taxes |  |  | 2,138 |  |  |  | 2,177 |  |  |  | 4,426 |  |  |  | 4,392 |
Income tax benefit |  |  | (716 | ) |  |  | (713 | ) |  |  | (1,452 | ) |  |  | (1,413 | )
Total expense after income taxes |  | $ | 1,422 |  |  | $ | 1,464 |  |  | $ | 2,974 |  |  | $ | 2,979 |
Total compensation cost for the unvested shares is as follows:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |
|  | (In thousands) |
Cost of goods sold |  | $ | 150 |  |  | $ | 138 |  |  | $ | 298 |  |  | $ | 265 |
Selling, general and administrative expenses |  |  | 2,945 |  |  |  | 2,267 |  |  |  | 5,358 |  |  |  | 4,673 |
Total expense before income taxes |  |  | 3,095 |  |  |  | 2,405 |  |  |  | 5,656 |  |  |  | 4,938 |
Income tax benefit |  |  | (582 | ) |  |  | (483 | ) |  |  | (1,086 | ) |  |  | (1,050 | )
Total expense after income taxes |  | $ | 2,513 |  |  | $ | 1,922 |  |  | $ | 4,570 |  |  | $ | 3,888 |
Classification of stock compensation cost within the Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees and $0.1 million of compensation cost was capitalized as part of inventory. As of June 30, 2011, there was $13.6 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.5 years, and $12.0 million of total unrecognized compensation cost related to unvested shares that is expected to be recognized over a weighted-average period of 1.2 years.

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- Definition Disclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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