HR Block 2010 Annual Report Download - page 72

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in effect on the grant date. Both expected volatility and the risk-free interest rate are based on a period that
approximates the expected term.
The following assumptions were used to value options during the periods:
Year Ended April 30, 2010 2009 2008
Options – management and director:
Expected volatility 27.11% - 27.27% 23.41% - 25.20% 21.92% - 25.74%
Expected term 5 years 4 years 4-7 years
Dividend yield 3.24% - 3.55% 2.35% - 3.04% 2.36% - 3.12%
Risk-free interest rate 2.38% - 2.75% 2.54% - 3.26% 2.35% - 5.01%
Weighted-average fair value $ 3.27 $ 3.80 $ 4.44
Options – seasonal:
Expected volatility 33.81% 25.35% 20.75%
Expected term 2 years 2 years 2 years
Dividend yield 3.48% 2.80% 2.44%
Risk-free interest rate 0.85% 2.54% 4.81%
Weighted-average fair value $ 2.70 $ 2.83 $ 3.07
ESPP options:
Expected volatility 23.68% - 43.20% 29.13% - 43.82% 29.96% - 31.10%
Expected term 0.5 years 0.5 years 0.5 years
Dividend yield 2.65% - 3.46% 2.67% - 2.78% 2.46% - 3.06%
Risk-free interest rate 0.20% - 0.33% 0.27% - 2.13% 3.32% - 4.98%
Weighted-average fair value $ 3.66 $ 4.38 $ 3.87
A summary of nonvested shares and performance nonvested share units for the year ended April 30, 2010, is as
follows:
Shares
Weighted-Average
Grant Date
Fair Value
(shares in 000s)
Outstanding, beginning of the year 1,457 $ 22.73
Granted 953 17.04
Released (677) 22.94
Forfeited (114) 20.52
Outstanding, end of the year 1,619 $ 19.55
The total fair value of shares vesting during fiscal years 2010, 2009 and 2008 was $15.5 million, $21.1 million and
$21.4 million, respectively. Upon the grant of nonvested shares and performance nonvested share units, unearned
compensation cost is recorded as an offset to additional paid-in capital and is amortized as compensation expense
over the vesting period. As of April 30, 2010, we had $16.4 million of total unrecognized compensation cost related
to these shares. This cost is expected to be recognized over a weighted-average period of two years.
NOTE 14: INCOME TAXES
The components of income from continuing operations upon which domestic and foreign income taxes have been
provided are as follows:
Year Ended April 30, 2010 2009 2008
(in 000s)
Domestic $ 745,912 $ 815,614 $ 700,162
Foreign 38,223 23,756 34,909
$ 784,135 $ 839,370 $ 735,071
56 H&R BLOCK 2010 Form 10K