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STOCK-BASED COMPENSATION | 6 Months Ended
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Apr. 28, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company issues stock options and restricted shares as part of its stock incentive plans for employees and non-employee directors. During the second quarter and six months ended April 28, 2019, stock-based compensation expense was $5.6 million and $13.5 million, respectively, compared to $4.1 million and $11.4 million for the second quarter and six months ended April 29, 2018, respectively. At April 28, 2019, there was $35.3 million of total unrecognized compensation expense from stock-based compensation arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of approximately 3.0 years. During the second quarter and six months ended April 28, 2019, cash received from stock option exercises was $28.3 million and $44.3 million, respectively, compared to $6.5 million and $30.0 million, for the second quarter and six months ended April 29, 2018, respectively. Shares issued for option exercises and restricted shares may be either authorized but unissued shares or shares of treasury stock acquired in the open market or otherwise. Stock Options: The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant. The Company recognizes stock-based compensation expense ratably over the shorter of the requisite service period or vesting period. The fair value of stock-based compensation granted to retirement-eligible individuals is expensed at the time of grant. During the third quarter of fiscal 2018, the Company made a one-time grant of 200 stock options to each active, full-time employee and 100 stock options to each active, part-time employee of the Company on April 30, 2018. The options vest in five years and expire ten years after the grant date. A reconciliation of the number of options outstanding and exercisable (in thousands) as of April 28, 2019, and changes during the six months then ended, is as follows:
| Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding at October 28, 2018 | 29,536 |  |  | $ | 23.55 |  |  |  |  |
Granted | 1,809 |  |  | 44.37 |  |  |  |  |
Exercised | 3,521 |  |  | 12.58 |  |  |  |  |
Forfeited | 527 |  |  | 36.27 |  |  |  |  |
Outstanding at April 28, 2019 | 27,297 |  |  | 26.10 |  |  | 5.6 |  | $ | 386,180 |
Exercisable at April 28, 2019 | 19,036 |  |  | $ | 21.00 |  |  | 4.2 |  | $ | 360,893 |
The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised (in thousands) during the second quarter and first six months of fiscal years 2019 and 2018, are as follows:
| Three Months Ended |  | Six Months Ended
| April 28, 2019 |  | April 29, 2018 |  | April 28, 2019 |  | April 29, 2018
Weighted-average grant date fair value | $ | 8.21 |  |  | $ | 6.49 |  |  | $ | 9.24 |  |  | $ | 6.86 |
Intrinsic value of exercised options | $ | 75,545 |  |  | $ | 15,512 |  |  | $ | 107,786 |  |  | $ | 71,814 |
The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions:
| Three Months Ended |  | Six Months Ended
| April 28, 2019 |  | April 29, 2018 |  | April 28, 2019 |  | April 29, 2018
Risk-free interest rate | 2.6 | % |  | 2.7 | % |  | 2.8 | % |  | 2.3 | %
Dividend yield | 2.0 | % |  | 2.2 | % |  | 1.9 | % |  | 2.1 | %
Stock price volatility | 19.0 | % |  | 19.0 | % |  | 19.0 | % |  | 19.0 | %
Expected option life | 8 years |  |  | 8 years |  |  | 8 years |  |  | 8 years |
As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using stripped U.S. Treasury yields as of the grant date where the remaining term is approximately the expected life of the option. The dividend yield is set based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is set based primarily on historical volatility. As a reasonableness test, implied volatility from exchange traded options is also examined to validate the volatility range obtained from the historical analysis. The expected life assumption is set based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all employee and non-employee director groups. Restricted Shares: Restricted shares awarded annually on February 1 are subject to a restricted period which expires the date of the Company’s next annual stockholders meeting. Newly elected directors receive a prorated award of restricted shares of the Company's common stock, which expires on the date of the Company's second succeeding annual stockholders meeting. A reconciliation of the restricted shares (in thousands) as of April 28, 2019, and changes during the six months then ended, is as follows:
| Shares |  | Weighted- Average Grant Date Fair Value
Restricted at October 28, 2018 | 52 |  |  | $ | 34.08 |
Granted | 51 |  |  | 42.23 |
Vested | 52 |  |  | 34.08 |
Restricted at April 28, 2019 | 51 |  |  | $ | 42.23 |
The weighted-average grant date fair value of restricted shares granted, the total fair value (in thousands) of restricted shares granted, and the fair value (in thousands) of shares that have vested during the first six months of fiscal years 2019 and 2018, are as follows:
| Six Months Ended
| April 28, 2019 |  | April 29, 2018
Weighted-average grant date fair value | $ | 42.23 |  |  | $ | 34.08 |
Fair value of restricted shares granted | 2,134 |  |  | 1,760 |
Fair value of shares vested | 1,760 |  |  | 2,053 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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