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Share-Based Compensation | 12 Months Ended
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Jun. 30, 2011
Share-Based Compensation |
Share-Based Compensation |
(10) | Share-Based Compensation
Share-Based Compensation Plans The Company has awards outstanding from four share-based compensation plans (the 1993 Incentive Stock Option Plan, the 1997 Stock Incentive Plan, the 2002 Long-Term Incentive Plan, and the 2003 Director Plan), two of which (the 2002 Long-Term Incentive Plan and the 2003 Director Plan) are available for future grants. As of June 30, 2011, there were 2,073,794 and 100,100 shares available for future grant under the 2002 Long-Term Incentive Plan and the 2003 Director Plan, respectively. All of the Company's share-based compensation plans are shareholder approved, and it is the Company's belief that such awards better align the interests of its employees and directors with those of its shareholders. Under the plans, the Company is authorized to award officers, employees, and non-employee members of the Board of Directors various share-based payment awards, including options to purchase common stock and restricted stock. Restricted stock can be in the form of a restricted stock award ("RSA") or a restricted stock unit ("RSU"). An RSA is common stock that is subject to risk of forfeiture or other restrictions that lapse upon satisfaction of specified conditions. RSUs represent the right to receive shares of common stock in the future with the right to future delivery of the shares subject to risk of forfeiture or other restrictions that lapse upon satisfaction of specified conditions. The Company accounts for its share-based compensation awards in accordance with ASC 718 – Stock Compensation. This standard requires all share-based compensation to be recognized in the income statement based on fair value and applies to all awards granted, modified, cancelled, or repurchased after the effective date. Total share-based compensation included as a component of selling, general, and administrative expense in our Consolidated Income Statements was as follows:
|  | Fiscal Year Ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (in thousands) |
Share-based compensation related to: |  |  |  |  |  |  |  |  |  |  |  |
Equity classified stock options |  | $ | 1,771 |  |  | $ | 4,698 |  |  | $ | 4,168 |
Equity classified restricted stock |  |  | 3,106 |  |  |  | 1,367 |  |  |  | 570 |
Total share-based compensation |  | $ | 4,877 |  |  | $ | 6,065 |  |  | $ | 4,738 |
Stock Options During the fiscal year ended June 30, 2011, the Company granted 165,000 stock options to certain employees. These options vest annually over 3 years and have a 10-year contractual life. In accordance with the requirements of the Company's Equity Award Grant Policy, the options issued during the fiscal year were granted with an exercise price that is no less than 100% of the fair market value of those shares on the date of the grant. The fair value of each option (for purposes of calculation of share-based compensation) was estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses assumptions determined at the date of grant. Use of this option pricing model requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of our common stock price over the expected term ("expected volatility") and the number of options that will ultimately not complete their vesting requirements ("forfeitures"). Changes in the subjective assumptions can materially affect the estimate of the fair value of share-based compensation and, consequently, the related amount recognized in the Consolidated Income Statements. The Company used the following weighted average assumptions for the options granted during the following fiscal years:
|  | Fiscal Year Ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Expected term |  |  | 6.88 years |  |  |  | 6.82 years |  |  |  | 5.12 years |
Expected volatility |  |  | 42.92% |  |  |  | 46.27% |  |  |  | 45.73% |
Risk-free interest rate |  |  | 2.56% |  |  |  | 2.89% |  |  |  | 1.67% |
Dividend yield |  |  | 0.00% |  |  |  | 0.00% |  |  |  | 0.00% |
Weighted average fair value per option |  | $ | 17.21 |  |  | $ | 12.43 |  |  | $ | 7.49 |
The weighted average expected term of the options represents the period of time the options are expected to be outstanding based on historical trends and behaviors of certain groups and individuals receiving these awards. The expected volatility is predominately based on the historical volatility of our common stock for a period approximating the expected life. The risk-free interest rate reflects the interest rate at grant date on zero-coupon U.S. governmental bonds that have a remaining life similar to the expected option term. The dividend yield assumption was based on our dividend payment history and expectations of future dividend payments. A summary of our stock option plans is presented below:
|  |  | $14,731,784 |  |  |  | $14,731,784 |  |  |  | $14,731,784 |  |  |  | $14,731,784 |
|  | Fiscal Year Ended June 30, 2011 |
|  | Options |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life |  |  | Aggregate Intrinsic Value |
Outstanding, beginning of year |  |  | 2,198,900 |  |  | $ | 25.58 |  |  |  |  |  |  |  |  |
Granted during the period |  |  | 165,000 |  |  |  | 36.11 |  |  |  |  |  |  |  |  |
Exercised during the period |  |  | (362,805 | ) |  |  | 19.36 |  |  |  |  |  |  |  |  |
Cancelled, forfeited, or expired during the period |  |  | (31,618 | ) |  |  | 32.89 |  |  |  |  |  |  |  |  |
Outstanding, end of year |  |  | 1,969,477 |  |  |  | 27.47 |  |  |  | 6.10 |  |  | $ | 19,712,906 |
Vested and expected to vest at June 30, 2011 |  |  | 1,968,468 |  |  |  | 27.47 |  |  |  | 6.10 |  |  | $ | 19,701,875 |
Exercisable, end of year |  |  | 1,524,467 |  |  | $ | 27.82 |  |  |  | 5.38 |  |  | $ | 14,731,784 |
The aggregate intrinsic value was calculated using the market price of our stock on June 30, 2011 and the exercise price for only those options that have an exercise price that is less than the market price of our stock. This amount will change as the market price per share changes. The aggregate intrinsic value of options exercised during the fiscal years ended June 30, 2011, 2010, and 2009 was $5.2 million, $1.6 million, and $2.4 million. A summary of the status of the Company's unvested shares is presented below:
|  | Fiscal Year Ended June 30, 2011 |
|  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Grant Date Fair- Value |
Unvested, beginning of year |  |  | 622,307 |  |  | $ | 22.98 |  |  | $ | 9.79 |
Granted |  |  | 165,000 |  |  |  | 36.11 |  |  |  | 17.21 |
Vested |  |  | (339,262 | ) |  |  | 25.06 |  |  |  | 10.20 |
Cancelled or forfeited |  |  | (3,035 | ) |  |  | 19.96 |  |  |  | 6.28 |
Unvested, end of year |  |  | 445,010 |  |  | $ | 26.29 |  |  | $ | 12.25 |
As of June 30, 2011 there were approximately $4.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a weighted-average period of 1 year. The total fair value of shares vested during the fiscal years ended June 30, 2011, 2010, and 2009 is $3.5 million, $4.3 million and $3.6 million, respectively. The following table summarizes information about stock options outstanding and exercisable as of June 30, 2011:
|  | Options Outstanding |  |  | Options Exercisable |
Range of Exercise Prices |  | Shares Outstanding |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Exercise Price |
$ 0.00 - $ 3.67 |  |  | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |
$ 3.67 - $ 7.34 |  |  | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | - |
$ 7.34 - $11.01 |  |  | 18,752 |  |  |  | 0.43 |  |  | $ | 10.62 |  |  |  | 18,752 |  |  | $ | 10.62 |
$11.01 - $14.68 |  |  | 97,026 |  |  |  | 1.27 |  |  | $ | 12.86 |  |  |  | 97,026 |  |  | $ | 12.86 |
$14.68 - $18.35 |  |  | 481,871 |  |  |  | 7.04 |  |  | $ | 18.03 |  |  |  | 305,481 |  |  | $ | 17.97 |
$18.35 - $22.01 |  |  | 18,800 |  |  |  | 2.43 |  |  | $ | 21.58 |  |  |  | 18,800 |  |  | $ | 21.58 |
$22.01 - $25.68 |  |  | 200,850 |  |  |  | 7.14 |  |  | $ | 24.52 |  |  |  | 97,230 |  |  | $ | 24.53 |
$25.68 - $29.35 |  |  | 83,000 |  |  |  | 4.52 |  |  | $ | 27.48 |  |  |  | 83,000 |  |  | $ | 27.48 |
$29.35 - $33.02 |  |  | 449,908 |  |  |  | 5.52 |  |  | $ | 31.35 |  |  |  | 449,908 |  |  | $ | 31.35 |
$33.02 - $36.69 |  |  | 619,270 |  |  |  | 6.71 |  |  | $ | 35.93 |  |  |  | 454,270 |  |  | $ | 35.86 |
|  |  | 1,969,477 |  |  |  | 6.10 |  |  | $ | 27.47 |  |  |  | 1,524,467 |  |  | $ | 27.82 |
The Company issues shares to satisfy the exercise of options. Restricted Stock Grants of Restricted Shares During the fiscal year ended June 30, 2011, the Company elected to grant 144,968 shares of restricted stock to employees and non-employee directors, of which 6,000 of these shares were issued in the form of RSU's:
|  | Fiscal Year Ended June 30, 2011
|  | Shares granted |  | Date granted |  | Grant date fair value |  |  | Vesting period
Employees |  |  |  |  |  |  |  |  |  |
Certain employees based on promotions |  | 2,200 |  | August 24, 2010 |  | $ | 24.77 |  |  | Annually over 3 years
Certain employees |  | 89,760 |  | December 3, 2010 |  | $ | 31.13 |  |  | Annually over 3 years
Certain employees |  | 30,040 |  | May 4, 2011 |  | $ | 36.17 |  |  | Annually over 3 years
Executive officers, vesting based on certain service and performance conditions |  | 12,268 |  | June 6, 2011 |  | $ | 35.05 |  |  | Annually over 3 years
Non-Employee Directors (1) |  | 10,700 |  | May 4, 2011 |  | $ | 36.17 |  |  | 6 months
(1) | Per the Amended and Restated Director's Equity Compensation Plan, non-employee directors will receive annual awards of restricted stock, as opposed to stock options. The number of shares of restricted stock to be granted will be established from time to time by the Board of Directors. Currently, the number of shares of restricted stock awarded to each non-employee director will be determined by dividing $80,000 by the fair market value of the common stock on the date of grant. These awards will generally vest in full on the day that is six months after the date of grant or upon the earlier occurrence of (i) the director's termination of service as a director by reason of death, disability or retirement, or (ii) a change in control by the Company. The compensation expense associated with these awards will be recognized on a pro-rata basis over this period.
A summary of the status of the Company's outstanding restricted stock is presented below:
|  | Fiscal Year Ended June 30, 2011 |
|  | Shares |  |  | Weighted Average Grant Date Fair- Value |
Outstanding, beginning of year |  |  | 172,288 |  |  | $ | 23.33 |
Granted during the period |  |  | 144,968 |  |  |  | 32.78 |
Vested during the period |  |  | (69,452 | ) |  |  | 23.02 |
Cancelled, forfeited, or expired during the period |  |  | (6,719 | ) |  |  | 26.06 |
Outstanding, end of year |  |  | 241,085 |  |  | $ | 23.13 |
As of June 30, 2011, there was approximately $5.6 million of unrecognized compensation cost related to unvested restricted stock awards granted, which is expected to be recognized over a weighted average period of 2.04 years.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-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 Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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