Coach 2011 Annual Report Download - page 63

TABLE OF CONTENTS
COACH, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars and shares in thousands, except per share data)
4. SHARE-BASED COMPENSATION – (continued)
original option and will remain exercisable for the remaining term of the original option. Replacement stock options generally vest six months
from the grant date. No replacement stock options were granted in fiscal 2012, fiscal 2011 or fiscal 2010.
Stock Options
A summary of option activity under the Coach stock option plans as of June 30, 2012 and changes during the year then ended is as
follows:
Number of
Options
Outstanding
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
Outstanding at July 2, 2011 16,832 $ 31.73
Granted 2,258 62.39
Exercised (5,919) 30.12
Forfeited or expired (371) 41.45
Outstanding at June 30, 2012 12,800 37.61 6.1 $ 276,237
Vested or expected to vest at June
30, 2012
12,599 37.40 6.0 274,191
Exercisable at June 30, 2012 7,061 30.86 4.4 195,081
The fair value of each Coach option grant is estimated on the date of grant using the Black-Scholes option pricing model and the
following weighted-average assumptions:
Fiscal Year Ended
June 30,
2012
July 2,
2011
July 3,
2010
Expected term (years) 3.1 3.3 3.0
Expected volatility 39.4% 44.9% 49.4%
Risk-free interest rate 0.6% 1.0% 1.7%
Dividend yield 1.5% 1.5% 1.0%
The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on
historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from
publicly traded options on Coach’s stock. The risk free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the
grant. Grants subsequent to the Company’s April 2009 Board approval to initiate a quarterly dividend included a dividend yield
assumption based on Coach’s annual expected dividend divided by the grant-date share price.
The weighted-average grant-date fair value of options granted during fiscal 2012, fiscal 2011 and fiscal 2010 was $15.59, $11.41, and
$9.68, respectively. The total intrinsic value of options exercised during fiscal 2012, fiscal 2011 and fiscal 2010 was $197,793,
$226,511, and $127,879, respectively. The total cash received from option exercises was $178,292, $357,344, and $208,919 in fiscal
2012, fiscal 2011 and fiscal 2010, respectively, and the actual tax benefit realized for the tax deductions from these option exercises was
$73,982, $84,993, and $47,795, respectively.
At June 30, 2012, $38,783 of total unrecognized compensation cost related to non-vested stock option awards is expected to be
recognized over a weighted-average period of 1.0 years.
60