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Stock-Based Benefit Plans
 12 Months Ended
Oct. 31, 2011
Stock-Based Benefit Plans [Abstract]  
Stock-Based Benefit Plans
9. Stock-Based Benefit Plans
The Company has two active stock incentive plans, one for employees (including officers) and one for non-employee directors. The Company’s active stock incentive plans provide for the granting of incentive stock options (solely to employees) and non-qualified stock options with a term of up to ten years at a price not less than the market price of the stock at the date of grant. The Company’s active stock incentive plans also provide for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance based.
The Company has two additional stock incentive plans for employees, officers and directors that are inactive except for outstanding stock option grants at October 31, 2011. No additional options may be granted under these plans. Stock options granted under these plans were made with a term of up to ten years at a price not less than the market price of the stock at the date of grant and generally vested over a four-year period for employees and a two-year period for non-employee directors.
Stock Options
Stock options granted to employees generally vest over a four-year period, although certain grants may vest over a longer or shorter period, and stock options granted to non-employee directors generally vest over a two-year period. Shares issued upon the exercise of a stock option are either from shares held in treasury or newly issued shares.
The Company used a lattice model for the valuation for all option grants in fiscal 2011, 2010 and 2009. Expected volatilities are based on implied volatilities from traded options on the Company’s stock and the historical volatility of the Company’s stock. The expected life of options granted is derived from the historical exercise patterns and anticipated future patterns and represents the period of time that options granted are expected to be outstanding; the range given above results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
The weighted-average assumptions and fair value used for stock option grants in each of the fiscal years ended October 31, 2011, 2010 and 2009 are set forth below.
                         
    2011     2010     2009  
Expected volatility
  45.38% - 49.46%   46.74% - 51.41%   46.74% - 50.36%
Weighted-average volatility
  47.73%   49.51%   48.06%
Risk-free interest rate
  1.64% - 3.09%   2.15% - 3.47%   1.24% - 1.90%
Expected life (years)
  4.29 - 8.75   4.44 - 8.69   4.29 - 8.52
Dividends
  none   none   none
Weighted-average fair value per share of options granted
  $7.94   $7.63   $8.60
The fair value of stock option grants is recognized evenly over the vesting period of the options or over the period between the grant date and the time the option becomes non-forfeitable by the employee, whichever is shorter. Stock option expense is included in the Company’s selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Information regarding the stock-based compensation for fiscal 2011, 2010 and 2009 is set forth below (amounts in thousands).
                         
    2011     2010     2009  
Stock-based compensation expense recognized
  $ 8,626     $ 9,332     $ 10,925  
 
                 
Income tax benefit recognized
    — (a)   $ 3,266     $ 4,370  
 
                 
(a)   Due to the losses recognized by the Company over the past several years and its inability to forecast future pre-tax profits, the Company has not recognized or estimated a tax benefit on its stock based compensation expense in fiscal 2011.
In fiscal 2010 and 2009, as part of severance plans for certain employees, the Company extended the period in which an option could be exercised on 175,813 options and 46,052 options, respectively. The Company expensed $552,000 and $322,000 of stock option expense related to these extensions in fiscal 2010 and 2009, respectively. These amounts are included in the stock-based compensation in the table above.
At October 31, 2011, total compensation cost related to non-vested awards not yet recognized was approximately $7.4 million and the weighted-average period over which the Company expects to recognize such compensation costs and tax benefit is 2.5 years.
The following table summarizes stock option activity for the Company’s plans during each of the fiscal years ended October 31, 2011, 2010 and 2009 (amounts in thousands, except per share amounts):
                                                 
    2011     2010     2009  
            Weighted-             Weighted-             Weighted-  
    Number     average     Number     average     Number     average  
    of     exercise     of     exercise     of     exercise  
    options     price     options     price     options     price  
Balance, beginning
    14,339     $ 19.36       16,123     $ 17.73       19,854     $ 14.73  
Granted
    1,103       19.32       1,015       18.39       1,092       21.68  
Exercised
    (2,467 )     11.07       (2,498 )     8.72       (4,436 )     5.03  
Cancelled
    (107 )     20.12       (301 )     17.03       (387 )     20.49  
 
                                         
Balance, ending
    12,868     $ 20.94       14,339     $ 19.36       16,123     $ 17.73  
 
                                         
Options exercisable, at October 31,
    10,365     $ 21.24       11,670     $ 19.00       13,171     $ 16.53  
 
                                         
Options available for grant at October 31,
    6,712               8,038               9,168          
 
                                         
The following table summarizes information about stock options outstanding and exercisable at October 31, 2011:
                                                 
    Options outstanding     Options exercisable  
            Weighted-                     Weighted-        
            average                     average        
            remaining     Weighted-             remaining     Weighted-  
Range of   Number     contractual     average     Number     contractual     average  
exercise   outstanding     life     exercise     exercisable     life     exercise  
prices   (in 000s)     (in years)     price     (in 000s)     (in years)     price  
$10.35 - $10.88
    2,484       0.8     $ 10.66       2,484       0.8     $ 10.66  
$18.38 - $20.21
    5,249       5.1     $ 19.36       3,489       3.3     $ 19.57  
$20.76 - $22.18
    2,376       6.5     $ 21.13       1,648       2.3     $ 21.06  
$31.82 - $35.97
    2,759       4.0     $ 33.04       2,744       4.0     $ 33.05  
 
                                           
 
    12,868       4.3     $ 20.94       10,365       3.4     $ 21.24  
 
                                           
The intrinsic value of options outstanding and exercisable is the difference between the fair market value of the Company’s common stock on the applicable date (“Measurement Value”) and the exercise price of those options that had an exercise price that was less than the Measurement Value. The intrinsic value of options exercised is the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price.
Information pertaining to the intrinsic value of options outstanding and exercisable at October 31, 2011, 2010 and 2009 is provided below (amounts in thousands):
                         
    2011     2010     2009  
Intrinsic value of options outstanding
  $ 16,839     $ 35,214     $ 54,646  
Intrinsic value of options exercisable
  $ 16,839     $ 35,214     $ 54,646  
Information pertaining to the intrinsic value of options exercised and the fair value of options which became vested or modified in each of the fiscal years ended October 31, 2011, 2010 and 2009 is provided below (amounts in thousands):
                         
    2011     2010     2009  
Intrinsic value of options exercised
  $ 23,573     $ 25,327     $ 74,659  
Fair value of options vested
  $ 11,027     $ 12,336     $ 15,528  
The Company’s stock incentive plans permit optionees to exercise stock options using a “net exercise” method at the discretion of the Executive Compensation Committee of the Board of Directors (“Executive Compensation Committee”). In a net exercise, the Company withholds from the total number of shares that otherwise would be issued to an optionee upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings and remits the remaining shares to the optionee. Information regarding the use of the net exercise method for fiscal 2011, 2010 and 2009 is set forth below.
                         
    2011     2010     2009  
Options exercised
    194,000       1,201,372       93,000  
Shares withheld
    98,918       798,420       21,070  
 
                 
Shares issued
    95,082       402,952       71,930  
 
                 
Average market value per share withheld
  $ 18.94     $ 17.96     $ 21.29  
 
                 
Aggregate market value of shares withheld (in thousands)
  $ 1,873     $ 14,341     $ 400  
 
                 
In addition, pursuant to the provisions of the Company’s stock incentive plans, optionees are permitted to use the value of the Company’s common stock that they own to pay for the exercise of options (“stock swap method”). Information regarding the use of the stock swap method for fiscal 2011, 2010 and 2009 is set forth below.
                         
    2011     2010     2009  
Options exercised
    28,900       29,512       38,379  
Shares tendered
    14,807       14,459       9,237  
 
                 
Shares issued
    14,093       15,053       29,142  
 
                 
Average market value per share withheld
  $ 20.53     $ 19.71     $ 21.40  
 
                 
Aggregate market value of shares tendered (in thousands)
  $ 304     $ 285     $ 198  
 
                 
Performance Based Restricted Stock Units:
In December 2010, 2009 and 2008, the Executive Compensation Committee of the Company’s Board of Directors approved awards of performance-based restricted stock units (“Performance-Based RSUs”) relating to shares of the Company’s common stock. The Performance-Based RSUs will vest and the recipients will be entitled to receive the underlying shares if the average closing price of the Company’s common stock on the New York Stock Exchange (“NYSE”), measured over any 20 consecutive trading days ending on or prior to five years from date of issuance of the Performance-Based RSUs increases 30% or more over the closing price of the Company’s common stock on the NYSE on the date of issuance (“Target Price”); provided the recipients continue to be employed by the Company or serve on the board of directors of the Company (as applicable) as stipulated in the award document. The Company determined the aggregate value of the Performance-Based RSUs using a lattice-based option pricing model.
The Company used a lattice based option pricing model to determine the fair value of the 2009 and 2008 Performance-Based RSUs. Expenses related to the performance-based RSUs are included in the Company’s selling, general and administrative expenses. Information regarding the issuance, valuation assumptions, amortization and unamortized balances of the Company’s Performance-Based RSUs in and at the relevant periods and dates in fiscal 2011, 2010 and 2009 is as follows:
                         
    2011     2010     2009  
Performance-Based RSUs issued:
                       
Number issued
    306,000       200,000       200,000  
Closing price of the Company’s common stock on date of issuance
  $ 19.32     $ 18.38     $ 21.70  
Target price
  $ 25.12     $ 23.89     $ 28.21  
Volatility
    48.22 %     49.92 %     48.14 %
Risk-free interest rate
    1.99 %     2.43 %     1.35 %
Expected life
  3.0 years   3.0 years   3.0 years
Aggregate fair value of Performance-Based RSUs issued (in thousands)
  $ 4,994     $ 3,160     $ 3,642  
 
                       
Performance-Based RSU expense recognized (in thousands):
                       
Twelve months ended October 31,
  $ 3,701     $ 2,121     $ 1,045  
 
                       
                         
    2011     2010     2009  
At October 31:
                       
Aggregate outstanding Performance-Based RSUs
    706,000       400,000       200,000  
Cumulative unamortized value of Performance- Based RSUs (in thousands)
  $ 4,929     $ 3,636     $ 2,597  
Non-Performance Based Restricted Stock Units:
In December 2010 and 2009, the Company issued restricted stock units (“RSUs”) relating to shares of the Company’s common stock to several employees. These RSUs generally vest in annual installments over a four-year period. The value of the RSUs was determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the RSUs, multiplied by the closing price of the Company’s common stock on the NYSE on the date the RSUs were awarded. Information regarding these RSUs is as follows:
                 
    2011     2010  
Non-Performance-Based RSUs issued:
               
Number issued
    15,497       19,663  
Closing price of the Company’s common stock on date of issuance
  $ 19.32     $ 18.38  
Aggregate fair value of RSUs issued (in thousands)
  $ 299     $ 361  
 
               
Non-Performance-Based RSU expense recognized (in thousands):
               
Twelve months ended October 31,
  $ 144     $ 138  
 
               
At October 31:
               
Aggregate Non-Performance-Based RSUs outstanding
    30,994       19,663  
Cumulative unamortized value of Non-Performance-Based RSUs (in thousands)
  $ 379     $ 224  
Restricted Stock Units in Lieu of Compensation
In December 2008, the Company issued restricted stock units (“RSUs”) relating to 62,051 shares of the Company’s common stock to a number of employees in lieu of a portion of the employees’ bonuses and in lieu of a portion of one employee’s 2009 salary. These RSUs, although not subject to forfeiture, will vest in annual installments over a four-year period, unless accelerated due to death, disability or termination of employment, as more fully described in the RSU award document. Because the RSUs are non-forfeitable, the value of the RSUs was determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the RSUs, multiplied by $21.70, the closing price of the Company’s common stock on the NYSE on December 19, 2008, the date the RSUs were awarded. The amount applicable to employee bonuses was charged to the Company’s accrual for bonuses that it made in fiscal 2008 and the amount applicable to salary deferral ($130,000) was charged to selling, general and administrative expense in the three-month period ended January 31, 2009. The Company’s stock incentive plan permits the Company to withhold from the total number of shares that otherwise would be issued to a RSU recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the RSU participant. Information relating to the distribution of shares and the withholding of taxes on the RSUs for fiscal 2011, 2010 and 2009 is set forth below.
                         
    2011     2010     2009  
Shares withheld
    741       924       836  
Shares issued
    8,975       2,749       1,509  
Value of shares withheld (in thousands)
  $ 15     $ 17     $ 15  
Employee Stock Purchase Plan
The Company’s employee stock purchase plan enables substantially all employees to purchase the Company’s common stock at 95% of the market price of the stock on specified offering dates without restriction, or at 85% of the market price of the stock on specified offering dates subject to restrictions. The plan, which terminates in December 2017, provides that 1.2 million shares be reserved for purchase. At October 31, 2011, 612,000 shares were available for issuance.
Information regarding the Company’s employee stock purchase plan for fiscal 2011, 2010 and 2009 is set forth below.
                         
    2011     2010     2009  
Shares issued
    23,079       23,587       25,865  
Average price per share
  $ 15.59     $ 16.20     $ 16.49  
Compensation expense recognized (in thousands)
  $ 54     $ 57     $ 64