Stock-Based Benefit Plans

3 Months Ended

Jan. 31, 2012

Stock-Based Benefit Plans [Abstract]

Stock-Based Benefit Plans

9. Stock-Based Benefit Plans

The Company grants stock options, restricted stock and various types of restricted stock units to its employees and its non-employee directors. Beginning in fiscal 2012, the Company changed the mix of stock-based compensation to its employees by reducing the number of stock options it grants and, in their place, issued non-performance based restricted stock units as a form of compensation. The Company also has an employee stock purchase plan that allows employees to purchase Company stock at a discount. In the three-month period ended January 31, 2012, the Company issued 941,678 shares under its stock-based benefit plans.

Information regarding the amount of total stock-based compensation expense recognized by the Company, for the periods indicated, is as follows (amounts in thousands):

		September 30,		September 30,
	2012		2011
Three months ended January 31:	$	5,626	$	5,373

At January 31, 2012 and October 31, 2011, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $23.3 million and $12.7 million, respectively.

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 a tax benefit on its stock-based compensation expense in the fiscal 2012 and 2011 periods.

Information about the Company’s more significant stock-based compensation programs is outlined below.

Stock Options:

The fair value of each option award is estimated on the date of grant using a lattice-based option valuation model that uses assumptions noted in the following table. The lattice-based option valuation model incorporates ranges of assumptions for inputs, which are disclosed in the table below. Expected volatilities were based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock and other factors. The expected lives of options granted were derived from the historical exercise patterns and anticipated future patterns and represent the period of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behaviors. 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 the fair value used for stock option grants in fiscal 2012 and 2011 were as follows:

	September 30,	September 30,
	2012	2011
Expected volatility	44.20% – 50.24%	45.38% – 49.46%
Weighted-average volatility	46.99%	47.73%
Risk-free interest rate	0.78% – 1.77%	1.64% – 3.09%
Expected life (years)	4.59 – 9.06	4.29 – 8.75
Dividends	none	none
Number of options issued (in thousands)
Weighted-average grant date fair value per share of options granted	$8.70	$7.94

Stock compensation expense, related to stock options, for the periods indicated, was as follows (amounts in thousands):

		September 30,		September 30,
	2012		2011
Three months ended January 31:	$	3,522	$	4,588

Performance-Based Restricted Stock Units:

In December 2011, 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 to certain of its senior management. The use of Performance-Based RSUs replaced the use of stock price-based restricted stock units awarded in prior years. The Performance-Based RSUs are based on the attainment of certain performance metrics of the Company in fiscal 2012. The number of shares underlying the Performance-Based RSUs that will be issued to the recipients may range from 90% to 110% of the base award depending on actual performance metrics as compared to the target performance metrics. The Performance-Based RSUs vest over a four-year period; provided the recipients continue to be employed by the Company or serve on the board of directors of the Company (as applicable) as specified in the award document.

The value of the Performance-Based RSUs was determined to be equal to the estimated number of shares of the Company’s common stock to be issued multiplied by the closing price of the Company’s common stock on the NYSE on the date the Performance-Based RSUs were awarded. The Company evaluates the performance-based metrics quarterly and estimates the number of shares underlying the RSUs that will be issued. Information regarding the issuance, valuation assumptions and amortization of the Company’s Performance-Based RSUs issued in fiscal 2012 is as follows:

		September 30,
	2012
Estimated number to be issued		350,000
Closing price of the Company’s common stock on date of issuance	$	20.50
Estimated aggregate fair value of Performance-Based RSUs issued (in thousands)	$	7,185
Performance-Based RSU expense recognized in the three months ended January 31, 2012 (in thousands):	$	936
Unamortized value of Performance-Based RSUs at January 31, 2012 (in thousands):	$	6,249

Stock Price-Based Restricted Stock Units:

In each of December 2010, 2009 and 2008, the Executive Compensation Committee of the Company’s Board of Directors approved awards of market performance-based restricted stock units (“Stock Price-Based RSUs”) relating to shares of the Company’s common stock. The Stock Price-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 Stock Price-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 specified in the award document. The Company determined the aggregate value of the Stock Price-Based RSUs using a lattice-based option pricing model.

Information regarding the amortization of the Company’s Stock Price-Based RSUs, for the periods indicated, is as follows (amounts in thousands):

		September 30,
Three months ended January 31, 2012	$	848
Three months ended January 31, 2011	$	752

Information regarding the aggregate number of outstanding Stock Price-Based RSUs and aggregate unamortized value of the outstanding Stock Price-Based RSUs, as of the date indicated, is as follows:

		September 30,		September 30,
	January 31, 2012		October 31, 2011
Aggregate outstanding Stock Price-Based RSUs		706,000		706,000
Cumulative unamortized value of Stock Price-Based RSUs (in thousands)	$	4,081	$	4,929

Non-Performance Based Restricted Stock Units:

In December 2011 and 2010, the Company issued restricted stock units (“RSUs”). 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:

		September 30,		September 30,
	2012		2011
Number of RSUs issued		107,820		15,497
Closing price of the Company’s common stock on date of issuance	$	20.50	$	19.32
Aggregate fair value of RSUs issued (in thousands)	$	2,210	$	299

Information regarding the amortization of the Company’s RSUs, for the periods indicated, is as follows (amounts in thousands):

		September 30,		September 30,
	2012		2011
Three months ended January 31:	$	314	$	27

Information regarding the aggregate number of outstanding RSUs and aggregate unamortized value of the outstanding RSUs, as of the date indicated, is as follows:

		September 30,		September 30,
	January 31, 2012		October 31, 2011
Aggregate outstanding RSUs		138,814		30,994
Cumulative unamortized value of RSUs (in thousands)	$	2,275	$	379