Quarterly report pursuant to Section 13 or 15(d)

Share-based compensation

v2.3.0.15
Share-based compensation
 3 Months Ended
Sep. 30, 2011
Share-based compensation

G. Share-based compensation:

Option activity under the Company’s stock option plans during the quarter ended September 30, 2011 was as follows:

 

     Shares
(in
thousands) 		    Weighted
Average
Exercise
Price 		     Weighted
Average
Contractual
Life (Yrs.) 		     Aggregate
Intrinsic
Value 		 

Outstanding at June 30, 2011

      499      $ 64.15         

Granted

      25      $ 76.15         

Exercised

      (1 )    $ 39.93         
  

 

 

          

Outstanding at September 30, 2011

      523      $ 64.78         6.0       $ 2.9 million   
  

 

 

          

Exercisable at September 30, 2011

      314      $ 59.16         5.8       $ 2.8 million   
  

 

 

          

 

The fair value of options granted under the Company’s stock option plans was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

 

     Quarter Ended
September 30,		  
     2011     2010  

Dividend yield

      1.4 %      1.8 % 

Expected annualized volatility

      23 %      23 % 

Risk free interest rate

      1.4 %      1.4 % 

Expected life

      4 years        4 years   

The dividend yield is based on the Company’s historical annual cash dividend divided by the market value of the Company’s Common Stock. The expected annualized volatility is based on the Company’s historical stock price over a period equivalent to the expected life of the option granted. The risk-free interest rate is based on U.S. Treasury constant maturity interest rates with a term consistent with the expected life of the options granted. Separate groups of employees that have similar historical exercise behavior with regard to option exercise timing and forfeiture rates are considered separately in determining option fair value.

The weighted average per share fair value of options granted during the quarters ended September 30, 2011 and 2010 was $13.66 and $9.67, respectively. The total intrinsic value of options exercised during the quarters ended September 30, 2011 and 2010 was $34,000 and $317,000, respectively. The total fair value of options vested during the quarters ended September 30, 2011 and 2010 was $71,000 and $49,000, respectively.

Stock-based compensation cost of $290,000 and $136,000 was included in selling, general and administrative expense for the quarters ended September 30, 2011 and 2010, respectively. Compensation cost is recognized using a straight-line method over the vesting period and is net of estimated forfeitures. As of September 30, 2011, there was $2.5 million of total unrecognized compensation cost related to non-vested stock options, which will be expensed in fiscal 2012 through 2015. The weighted average period over which the compensation cost is expected to be recognized is 1.5 years.