STOCK BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
STOCK BASED COMPENSATION | ' |
STOCK BASED COMPENSATION |
At September 30, 2014, we had the following stock option and stock purchase plans: |
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• | the 2014 Incentive Stock Plan, which our stockholders approved in May 2014; | | | | | | | | | | | | | | | |
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• | the 2011 Incentive Stock Plan, which our stockholders approved in May 2011; | | | | | | | | | | | | | | | |
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• | the 2008 Incentive Stock Plan, which our stockholders approved in May 2008; | | | | | | | | | | | | | | | |
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• | the 2005 Incentive Stock Plan, which our stockholders approved in April 2005; | | | | | | | | | | | | | | | |
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• | the 2000 Nonstatutory Stock Option Plan, which expired in February 2010; | | | | | | | | | | | | | | | |
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• | the 1997 Stock Option Plan, which expired in January 2007; | | | | | | | | | | | | | | | |
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• | the 1996 Directors Stock Option Plan, which expired in May 2006; and | | | | | | | | | | | | | | | |
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• | the Employee Stock Purchase Plan (“ESPP”), which our stockholders approved in May 2001. | | | | | | | | | | | | | | | |
Stock-Based Compensation Expense: |
The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), and the ESPP included in the Condensed Consolidated Statements of Income: |
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In thousands |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Cost of revenues – stock option plan | | $ | 14 | | | $ | 32 | | | $ | 42 | | | $ | 102 | |
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Selling, general and administrative – stock option plan | | 3,600 | | | 3,561 | | | 11,459 | | | 10,265 | |
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Selling, general and administrative – RSUs | | 319 | | | 389 | | | 948 | | | 967 | |
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Selling, general and administrative – ESPP | | 308 | | | 163 | | | 916 | | | 754 | |
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Total pre-tax expense | | $ | 4,241 | | | $ | 4,145 | | | $ | 13,365 | | | $ | 12,088 | |
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The following table sets forth the tax benefits related to stock compensation: |
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In thousands |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Tax benefit recognized in Statement of Income | | $ | 1,319 | | | $ | 1,109 | | | $ | 3,248 | | | $ | 3,493 | |
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Excess tax benefit realized | | 3,667 | | | 3,981 | | | 10,747 | | | 12,354 | |
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Stock Options: |
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Stock option activity for the nine months ended September 30, 2014, is summarized as follows: |
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| | Number of | | Weighted | | Weighted Average Remaining Contractual Life | | Total Aggregate Intrinsic Value | | | |
Options | Average | | | |
| Exercise | | | |
| Price per | | | |
| Share | | | |
| | | | | | (in years) | | (in thousands) | | | |
Outstanding at beginning of year | | 5,540,482 | | | $ | 70.29 | | | | | | | | |
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Granted | | 975,038 | | | 115.31 | | | | | | | | |
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Exercised | | (646,434 | ) | | 53.91 | | | | | | | | |
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Forfeited | | (101,361 | ) | | 93.91 | | | | | | | | |
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Canceled or expired | | (1,657 | ) | | 80.96 | | | | | | | | |
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Outstanding at September 30, 2014 | | 5,766,068 | | | $ | 79.32 | | | 6.25 | | $ | 214,733 | | | | |
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Exercisable at September 30, 2014 | | 3,030,962 | | | $ | 63.97 | | | 5.18 | | $ | 159,403 | | | | |
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Vested and expected to vest at September 30, 2014 | | 5,527,430 | | | $ | 78.34 | | | | | | | | |
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As of September 30, 2014, there was $49.0 million of total unrecognized compensation expense related to non-vested option awards, which is expected to be recognized over a weighted average period of 3.05 years. |
The total exercise intrinsic value represents the total pre-tax value (the difference between the sales price on that trading day in the quarter ended September 30, and the exercise price associated with the respective option). |
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In thousands |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Total intrinsic value of options exercised | | $ | 14,375 | | | $ | 12,809 | | | $ | 40,893 | | | $ | 40,537 | |
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The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes model option pricing model was as follows: |
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| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Stock options granted (shares) | | 11,555 | | | 4,950 | | | 975,038 | | | 1,050,080 | |
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Weighted average fair value at grant date | | $ | 21.32 | | | $ | 26.51 | | | $ | 21.3 | | | $ | 21.99 | |
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Assumptions: | | | | | | | | |
Expected term (in years) | | 4.78 | | | 5.75 | | | 4.75 | | | 5.83 | |
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Expected volatility | | 16.98 | % | | 26.2 | % | | 17.39 | % | | 27.05 | % |
Expected dividend yield | | — | % | | — | % | | — | % | | — | % |
Risk free interest rate | | 1.59 | % | | 1.67 | % | | 1.52 | % | | 1 | % |
Restricted Stock Units: |
Restricted stock units ("RSUs") vest at the end of three or five years. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2-1 ratio. |
A summary of the status of our non-vested RSUs and changes during the nine months ended September 30, 2014, are as follows: |
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| | Number of | | Weighted Average Grant Date Fair Value | | Total Aggregate Intrinsic Value | | | | | |
Units | | | | | |
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Non-vested at beginning of year | | 70,457 | | | $ | 88.32 | | | | | | | | |
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Granted | | 16,334 | | | 115.67 | | | | | | | | |
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Vested and released | | (17,288 | ) | | 85 | | | | | | | | |
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Forfeited | | (5,610 | ) | | 89.21 | | | | | | | | |
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Non-vested at September 30, 2014 | | 63,893 | | | $ | 96.13 | | | $ | 7,447 | | | | | | |
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As of September 30, 2014, there was $4.4 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 3.12 years. |