XML 77 R23.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 16 - Stock Plans
 12 Months Ended
Oct. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

16. Stock Plans


The fair value of option awards is established at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for October 31, 2013, October 31, 2012 and October 31, 2011: risk free interest rate of  2.14%, 1.65% and 2.99%, respectively; dividend yield of zero; historical volatility factor of the expected market price of our common stock of 0.96 for year ended 2013, 0.97 for the year ended 2012, and 0.94 for the year ended 2011; a weighted-average expected life of the option of 7.30 years for 2013, 7.37 years for 2012 and 7.25 years for 2011; and an estimated forfeiture rate of 18.17% for 2013, 15.99% for fiscal 2012 and 14.93% for fiscal 2011. The benefits of tax deductions in excess of recognized compensation cost are reported as both a financing cash inflow and an operating cash outflow.


For the years ended October 31, 2013, 2012 and 2011, total stock-based compensation expense was $6.8 million (pre and post tax), $6.5 million (pre and post tax) and $6.2 million (pre and post tax), respectively. Included in this total stock-based compensation expense was incremental expense for stock options of $4.0 million, $4.1 million and $4.4 million for the years ended October 31, 2013, October 31, 2012 and October 31, 2011,  respectively. 


We have a stock incentive plan pursuant to which stock options and other equity-based awards may be granted to employees and directors. Options are granted by a committee appointed by the Board of Directors or its delegee in accordance with the stock incentive plan. The exercise price of all stock options must be at least equal to the fair market value of the underlying shares on the date of the grant. Options granted before June 8, 2007 generally vest in four equal installments on the third, fourth, fifth and sixth anniversaries of the date of the grant. Options granted on or after June 8, 2007 generally vest in four equal installments on the second, third, fourth and fifth anniversaries of the date of the grant. All options expire 10 years after the date of the grant. During the year ended October 31, 2013, each of the five non-employee directors of the Company were given the choice to receive stock options or a reduced number of shares of restricted stock units. All five selected to receive restricted stock units. Non-employee directors’ options vest in three equal installments on the first, second and third anniversaries of the date of the grant. Stock option transactions are summarized as follows:


           

Weighted

-Average

           

Weighted-

Average

           

Weighted-

Average

 
   

October 31,

2013

   

Exercise

Price

   

October 31,

2012

   

Exercise

Price

   

October 31,

2011

   

Exercise

Price

 

Options outstanding at beginning of period

    6,019,070       $5.97       5,094,367       $7.05       6,316,860       $8.72  

Granted

    887,500       $6.28       1,334,828       $2.59       674,100       $1.93  

Exercised

    44,812       $2.67       6,250       $2.55                  

Forfeited

    76,500       $3.06       94,808       $4.77       238,499       $7.33  

Cancellations

                                    1,200,000       $11.19  

Expired

    194,204       $16.92       309,067       $9.61       458,094       $11.57  

Options outstanding at end of period

    6,591,054       $5.74       6,019,070       $5.97       5,094,367       $7.05  

Options exercisable at end of period

    3,161,952               2,467,170               1,764,338          

The total intrinsic value of options exercised during fiscal 2013 and 2012 was $167 thousand and $8 thousand, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. There were no options exercised in fiscal 2011.


At October 31, 2013, 1.9 million options outstanding and exercisable had an intrinsic value of $3.6 million. Exercise prices for options outstanding at October 31, 2013 ranged from $1.93 to $60.36.


The weighted-average fair value of grants made in fiscal 2013, 2012, and 2011 was $5.14, $1.74, and $1.57 per share, respectively. Based on the fair value at the time they were granted, the weighted-average fair value of options vested in fiscal 2013, 2012, and 2011 was $2.72, $3.61, and $3.92 per share, respectively.


The following table summarizes the exercise price range and related number of options outstanding at October 31, 2013:


Range of Exercise Prices

 

Number

Outstanding

   

 

Weighted-

Average

Exercise Price

   

Weighted

Average

Remaining

Contractual

Life

 

$1.93

– $5.00     4,405,679       $2.95       7.07  

$5.01

– $10.00     1,701,500       $6.37       7.27  

$10.01

– $20.00     -       $-       -  

$20.01 

– $30.00     241,500       $21.70       3.66  

$30.01

– $40.00     197,375       $32.53       1.77  

$40.01

– $50.00     10,000       $41.45       0.25  

$50.01

– $60.00     30,000       $54.70       1.42  

$60.01

– $70.00     5,000       $60.36       1.67  
          6,591,054       $5.74       6.80  

The following table summarizes the exercise price range and related number of exercisable options at October 31, 2013:


Range of Exercise Prices

 

Number

Exercisable

   

Weighted-

Average

Exercise Price

   

Weighted

Average

Remaining

Contractual

Life

 

$1.93

– $5.00     1,864,077       $3.14       6.18  

$5.01

– $10.00     814,000       $6.46       4.67  

$10.01 

– $20.00     -       $-       -  

$20.01

– $30.00     241,500       $21.70       3.66  

$30.01

– $40.00     197,375       $32.53       1.77  

$40.01

– $50.00     10,000       $41.45       0.25  

$50.01

– $60.00     30,000       $54.70       1.42  

$60.01

– $70.00     5,000       $60.36       4.83  
          3,161,952       $7.95       5.26  

Officers and key employees who are eligible to receive equity grants may elect to receive either a stated number of stock options, or a reduced number of shares of restricted stock units, or a combination thereof. Shares underlying restricted stock units vest 25% each year beginning on the 2nd anniversary of the grant date. Participants age 60 years or older, or age 58 with 15 years of service are eligible to vest in their equity awards on an accelerated basis on their retirement (which in the case of the restricted stock units only applies to a retirement that is at least one year after the date of grant). During the years ended October 31, 2013 and 2012, we granted 104,944 (including 63,694 shares to certain of our non-employee directors) and 133,855 (including 104,167 shares to certain of our non-employee directors) shares of restricted stock, respectively, and also issued 46,393 and 32,112 shares, relating to awards granted in prior fiscal years, respectively. During the years ended October 31, 2013 and 2012, 500 and 9,845 shares of restricted stock were forfeited, respectively.


For certain associates in certain years, a portion of their bonus is paid by issuing a deferred right to receive our common stock. The number of shares is calculated for each bonus year by dividing the portion of the bonus subject to the deferred right award by our average stock price for the year or the stock price at year-end, whichever is lower. Twenty-five percent of the deferred right award will vest and shares will be issued one year after the year end and then 25% a year for the next three years. Participants with 20 years of service or over 58 years of age vest immediately. During the years ended October 31, 2013 and 2012, we issued 68,390 and 258,228 shares relating to awards granted in prior fiscal years. No shares were forfeited during the year ended October 31, 2013, but during the year ended October 31, 2012, 8,701 shares were forfeited. For the years ended October 31, 2013, 2012 and 2011, no rights in lieu of bonus payments were awarded.


For the years ended October 31, 2013, 2012 and 2011 total compensation cost recognized in the Consolidated Statement of Operations for the annual restricted stock grants, and the stock portion of the long term incentive plan was $2.7 million, $2.4 million and $1.7 million, respectively. In addition to nonvested share awards summarized in the following table, there were 534,143 at both October 31, 2013 and 2012 and 692,668 at October 31, 2011 shares of vested restricted stock which were deferred at the associates' election.


A summary of the Company’s nonvested share awards as of and for the year ended October 31, 2013, is as follows:


   

Shares

   

Weighted-Average

Grant Date

 Fair Value

 

Nonvested at beginning of period

    2,128,005       $4.49  

Granted

    1,377,120       $5.63  

Vested

    (979,462 )     $4.58  

Forfeited

    (62,016 )     $4.61  

Nonvested at end of period

    2,463,647       $5.10  

Included in the above table are restricted stock unit awards for a long term incentive plan for certain associates, which is a performance based plan. The awards included above for this plan are based on our current best estimate of the outcome for the performance criteria.  The change in this estimate resulted in an increase of 0.4 million shares, which is reflected in the granted row on the above table. 


As of October 31, 2013, we had 0.3 million shares authorized for future issuance under our equity compensation plans. In addition, as of October 31, 2013, there were $16.5 million of total unrecognized compensation costs related to nonvested share based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2 years.


During fiscal 2011, the Chief Executive Officer and Chief Financial Officer consented to a cancellation of certain of their options (with the full understanding that the Company made no commitment to provide them with any other form of consideration in respect of the cancelled options) in order to reduce a portion of the equity reserve “overhang” under the Company’s equity compensation plans represented by the number of shares of the Company’s common stock remaining available for future issuance under such plans (including shares that may be issued upon the exercise or vesting of outstanding options and other rights). No compensation expense was recorded related to the cancellation of stock options in fiscal 2011, as the options canceled were fully vested and expensed prior to fiscal 2011.