Coach 2012 Annual Report Download - page 63

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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.
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