HR Block 2007 Annual Report Download - page 99

The following assumptions were used to value options during the periods:
Year Ended April 30, 2007 2006 2005
Options –management and director:
Expected volatility 21.70% -29.06% 26.40% -27.81% 30.12% -32.41%
Expected term 4-7 years 5 years 5 years
Dividend yield 2.15% -2.62% 1.71% -2.25% 1.74% -1.90%
Risk-free interest rate 4.33% -5.10% 3.65% -4.75% 3.33% -4.07%
Weighted average fair value $5.15 $7.37 $ 6.90
Options –seasonal:
Expected volatility 20.05% 23.28% 27.65%
Expected term 2 years 2 years 2 years
Dividend yield 2.26% 1.71% 1.85%
Risk-free interest rate 5.11% 3.61% 2.60%
Weighted average fair value $3.17 $4.16 $ 3.71
ESPP options:
Expected volatility 19.55% -26.30% 24.52% -25.42% 19.62% -23.22%
Expected term 0.5 years 0.5 years 0.5 years
Dividend yield 2.26% -2.33% 1.71% -2.04% 1.81% -1.84%
Risk-free interest rate 5.08% -5.24% 3.37% -4.36% 1.64% -2.59%
Weighted average fair value $3.90 $4.55 $3.84
A summary of nonvested shares and performance nonvested share The total fair value of shares vesting during fiscal years 2007, 2006
units for the year ended April 30, 2007 is as follows: and 2005 was $24.9 million, $17.5 million and $8.2 million, respectively.
Upon the grant of nonvested shares and performance nonvested share
(shares in 000s)
units, unearned compensation cost is recorded as an offset to additional
Weighted-Average
paid in capital and is amortized as compensation expense over the
Grant Date
vesting period. As of April 30, 2007, we had $40.3 million of total
71 m
Shares Fair Value
unrecognized compensation cost related to these shares. This cost is
Outstanding, beginning of year 2,455 $25.54
expected to be recognized over a weighted-average period of two years.
Granted 1,218 23.40
Released (1,052) 24.93
Forfeited (369) 24.90
Outstanding, end of year 2,252 24.91
NOTE 14: SHAREHOLDER RIGHTS PLAN
On July 25, 1998, the rights under a shareholder rights plan, adopted by amend the plan to lower such 15% threshold to not less than the greater
our Board of Directors on March 25, 1998, became effective. The 1998 of (1) any percentage greater than the largest percentage of beneficial
plan was adopted to deter coercive or unfair takeover tactics and to ownership by any person or group of persons then known by the
prevent a potential acquirer from gaining control of the Company Company, and (2) 10% (in which case the acquisition of such lower
without offering a fair price to all of our stockholders. Under the 1998 percentage of beneficial ownership then constitutes an Unapproved
plan, a dividend of one right (a ‘‘Right’’) per share was declared and paid Stock Acquisition and the Rights become exercisable). When
on each share of our Common Stock outstanding on July 25, 1998. exercisable, the registered holder of each Right may purchase from the
Rights automatically attach to shares issued after such date. Company one four-hundredth of a share of a class of our Participating
Under the 1998 plan, a Right becomes exercisable when a person or Preferred Stock, without par value, at a price of $53.75, subject to
group of persons acquires beneficial ownership of 15% or more of the adjustment. The registered holder of each Right then also has the right
outstanding shares of our Common Stock without the prior written (the ‘‘Subscription Right’’) to purchase for the exercise price of the
approval of our Board of Directors (an ‘‘Unapproved Stock Right, in lieu of shares of Participating Preferred Stock, a number of
Acquisition’’), and at the close of business on the tenth business day shares of our Common Stock having a market value equal to twice the
following the commencement of, or the public announcement of an exercise price of the Right. Following an Unapproved Stock Acquisition,
intent to commence, a tender offer that would result in an Unapproved if we are involved in a merger, or 50% or more of our assets or earning
Stock Acquisition. We may, prior to any Unapproved Stock Acquisition, power are sold, the registered holder of each Right has the right (the
H&R BLOCK 2007 Form 10K