HR Block 2012 Annual Report Download - page 77

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The following assumptions were used to value options during the periods:
Year ended April 30, 2012 2011 2010
Options – management and director:
Expected volatility 31.75% - 32.34% 28.98% - 30.20% 27.11% - 27.27%
Expected term 5 years 5 years 5 years
Dividend yield 3.43% - 4.80% 4.18% - 5.17% 3.24% - 3.55%
Risk–free interest rate 0.79% - 1.95% 1.26% - 1.92% 2.38% - 2.75%
Weighted–average fair value $ 3.31 $ 2.25 $ 3.27
Options – seasonal: (1)
Expected volatility 33.81%
Expected term 2 years
Dividend yield 3.48%
Risk–free interest rate 0.85%
Weighted–average fair value $ 2.70
ESPP options:
Expected volatility 24.27% - 33.07% 22.75% - 23.31% 23.68% - 43.20%
Expected term 0.5 years 0.5 years 0.5 years
Dividend yield 3.68% - 4.93% 3.86% - 4.80% 2.65% - 3.46%
Risk–free interest rate 0.06% - 0.10% 0.19% - 0.23% 0.20% - 0.33%
Weighted–average fair value $ 2.78 $ 2.16 $ 3.66
(1) This plan was terminated in fiscal year 2010, except for outstanding awards thereunder.
A summary of nonvested shares for the year ended April 30, 2012, is as follows:
(shares in 000s)
Shares
Weighted–Average
Grant Date Fair Value
Outstanding, beginning of the year 1,150 $ 15.35
Granted 787 16.28
Released (522) 17.22
Forfeited (180) 15.46
Outstanding, end of the year 1,235 $ 15.12
The total fair value of shares vesting during fiscal years 2012, 2011 and 2010 was $9.0 million, $11.3 million
and $12.4 million, respectively. Upon the grant of nonvested shares, 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, 2012, we had $13.1 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.
A summary of nonvested share units and performance-based nonvested share units for the year ended
April 30, 2012, is as follows:
(shares in 000s)
Shares
Weighted–Average
Grant Date Fair Value
Outstanding, beginning of the year 350 $ 17.30
Granted 228 15.75
Released (162) 16.71
Forfeited (10) 16.89
Outstanding, end of the year 406 $ 16.07
For performance-based units, the number of units to be earned will depend on (1) H&R Block, Inc.’s
achievement of specified earnings before interest, taxes, depreciation and amortization (EBITDA) and revenue
targets and (2) H&R Block, Inc.’s total shareholder return (TSR) ranked against that of other companies that are
included in the Standard & Poor’s 500 Index during the three-year performance period. Compensation expense
for performance-based shares is initially estimated based on target performance and is adjusted as appropriate
through the performance period. Performance shares vest each year over a three year period from date of grant
but are not distributed until the end of the three-year performance period. The TSR is applied at the end of the
three-year performance period.
H&R BLOCK 2012 Form 10K
63