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Note 10: Incentive Plans: Stock Option Plan Policy (Policies)

3 Months Ended

Dec. 31, 2012

Stock Option Plans. The Corporation established the 2003 Stock Option Plan and the 1996 Stock Option Plan (collectively, the “Stock Option Plans”) for key employees and eligible directors under which options to acquire up to 352,500 shares and 1.15 million shares of common stock, respectively, may be granted. Under the Stock Option Plans, stock options may not be granted at a price less than the fair market value at the date of the grant. Stock options typically vest over a five-year period on a pro-rata basis as long as the employee or director remains in service to the Corporation. The stock options are exercisable after vesting for up to the remaining term of the original grant. The maximum term of the stock options granted is 10 years. As of December 31, 2012 and 2011, the number of stock options available for future grants under the 2003 Stock Option Plan was 14,900 stock options. No stock options remain available for future grant under the 1996 Stock Option Plan, which expired in January 2007.

The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option valuation model with the following assumptions. The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months. The expected dividend yield is based on the most recent quarterly dividend on an annualized basis. The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually. The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date.

For the second quarter of fiscal 2013 and 2012, there was no activity in the Stock Option Plans, except forfeitures of 62,700 shares in the second quarter of fiscal 2012. For the first six months of fiscal 2013 and 2012, there was no activity in the Stock Option Plans, except forfeitures of 7,500 shares and 62,700 shares, respectively. As of December 31, 2012 and 2011, there were 14,900 stock options and 14,900 stock options available for future grants under the Stock Options Plans, respectively.

The following is a summary of the activity in the Stock Option Plans for the quarter ended December 31, 2012.

			Weighted-
		Weighted-	Average	Aggregate
		Average	Remaining	Intrinsic
		Exercise	Contractual	Value
	Shares	Price	Term (Years)	($000)
Options
Outstanding at October 1, 2012	412,700	$24.30	--	--
Granted	--	$-	--	--
Exercised	--	$-	--	--
Forfeited	--	$-	--	--
Outstanding at December 31, 2012	412,700	$24.30	2.01	$--
Vested and expected to vest at December 31, 2012	412,700	$24.30	2.01	$--
Exercisable at December 31, 2012	412,700	$24.30	2.01	$-

			Weighted-
		Weighted-	Average	Aggregate
		Average	Remaining	Intrinsic
		Exercise	Contractual	Value
	Shares	Price	Term (Years)	($000)
Options
Outstanding at July 1, 2012	420,200	$24.11	--	--
Granted	--	$--	--	--
Exercised	--	$--	--	--
Forfeited	(7,500)	$13.67	--	--
Outstanding at December 31, 2012	412,700	$24.30	2.01	$-
Vested and expected to vest at December 31, 2012	412,700	$24.30	2.01	$-
Exercisable at December 31, 2012	412,700	$24.30	2.01	$-

As of December 31, 2012, there was no unrecognized compensation expense. This compares to unrecognized compensation expense of $26,000 at December 31, 2011, related to unvested share-based compensation arrangements under the Stock Option Plans. This expense is expected to be recognized over a weighted-average period of 0.6 years. The forfeiture rate during the first six months of fiscal 2012 was 20 percent, and was calculated by using the historical forfeiture experience of all fully vested stock option grants and is reviewed annually.