XML 45 R22.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Note 15 - Stock Plans | 12 Months Ended
--- | ---
Oct. 31, 2018
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 15. 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 the years ended October 31, 2018, 2017 and 2016: risk free interest rate of 2.8%, 2.05% and 1.38%, respectively; dividend yield of zero; historical volatility factor of the expected market price of our common stock of 0.50, 0.53 and 0.61, respectively; a weighted-average expected life of the option of 8.0 years, 7.64 years and 7.36 years, respectively; and an estimated forfeiture rate of 9.90%, 9.92% and 10.90%, respectively. For the years ended October 31, 2018, 2017 and 2016, total stock-based compensation expense was $3.7 million ( $2.0 million post tax), $0.6 million and $2.9 million ( $2.3 million post tax), respectively. Included in this total stock-based compensation expense was expense from stock options of $0.7 million and $0.5 million for the years ended October 31, 2018 and 2017, respectively, and income for stock options of $1.5 million for the year ended October 31, 2016. The fiscal 2017 expense includes income of $2.0 million from previously recognized expense of certain performance based restricted stock grants for which the performance metrics are no longer expected to be satisfied. This income was offset by the vesting of restricted stock of $2.1 million during the year ended October 31, 2017. The fiscal 2016 expense included income of $2.1 million from previously recognized expense of certain performance based restricted stock grants for which the performance metrics are no longer expected to be satisfied. This income was offset by the vesting of stock options of $0.5 million during the year ended October 31, 2016. We have a stock incentive plan for certain officers and key employees and directors. Options are granted by a committee appointed by the Board of Directors or its delegate 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. Stock options granted to officers and associates 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. At the time of our annual stock grant in the second quarter of fiscal 2018, each of the five of our existing non-employee directors of the Company were given the choice to receive stock options or a reduced number of shares of restricted stock units subject to a two -year post-vesting holding period, or a combination thereof, with restricted stock units based on the fair market value on the date of grant and stock options based on grant date Black-Scholes value. All such directors elected to receive restricted stock units. Additionally, our new non-employee director was granted restricted stock units during fiscal 2018. Non-employee directors’ stock options and restricted stock units 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:
|  | October 31, 2018 |  |  | Weighted-Average Exercise Price |  |  | October 31, 2017 |  |  | Weighted-Average Exercise Price |  |  | October 31, 2016 |  |  | Weighted-Average Exercise Price |
Options outstanding at beginning of period |  |  | 6,860,701 |  |  | $ | 3.40 |  |  |  | 7,373,951 |  |  | $ | 4.03 |  |  |  | 6,393,876 |  |  | $ | 4.78 |
Granted |  |  | 945,625 |  |  | $ | 2.25 |  |  |  | 236,250 |  |  | $ | 2.34 |  |  |  | 1,148,481 |  |  | $ | 1.95 |
Exercised |  |  | 30,250 |  |  | $ | 2.00 |  |  |  | 48,250 |  |  | $ | 2.07 |  |  |  | - |  |  | $ | - |
Forfeited |  |  | 50,000 |  |  | $ | 2.57 |  |  |  | 452,375 |  |  | $ | 5.85 |  |  |  | 51,125 |  |  | $ | 2.73 |
Expired |  |  | 761,750 |  |  | $ | 6.28 |  |  |  | 248,875 |  |  | $ | 16.68 |  |  |  | 117,281 |  |  | $ | 25.05 |
Options outstanding at end of period |  |  | 6,964,326 |  |  | $ | 2.95 |  |  |  | 6,860,701 |  |  | $ | 3.40 |  |  |  | 7,373,951 |  |  | $ | 4.03 |
Options exercisable at end of period |  |  | 4,793,490 |  |  |  |  |  |  |  | 5,259,011 |  |  |  |  |  |  |  | 5,071,181 |  |  |  |  |
The total intrinsic value of options exercised during fiscal 2018 and 2017 was $26 thousand and $12 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. At October 31, 2016, there were no options exercisable which had an intrinsic value. Exercise prices for options outstanding at October 31, 2018 ranged from $1.54 to $6.28. The weighted-average fair value of grants made in fiscal 2018, 2017 and 2016 was $1.08, $1.33 and $1.00 per share, respectively. Based on the fair value at the time they were granted, the weighted-average fair value of options vested in fiscal 2018, 2017 and 2016 was $2.78, $2.60 and $2.55 per share, respectively. The following table summarizes the exercise price range and related number of options outstanding at October 31, 2018:
|  |  |  |  | Number |  |  | Weighted- Average |  |  | Weighted- Average Remaining Contractual |
Range of Exercise Prices |  |  | Outstanding |  |  | Exercise Price |  |  | Life |
$1.54 | – | $2.41 |  |  |  | 2,645,784 |  |  | $ | 2.00 |  |  |  | 6.32 |
$2.42 | – | $4.41 |  |  |  | 3,004,042 |  |  | $ | 2.77 |  |  |  | 3.57 |
$4.42 | – | $6.28 |  |  |  | 1,314,500 |  |  | $ | 5.27 |  |  |  | 2.66 |
|  |  |  |  |  | 6,964,326 |  |  | $ | 2.95 |  |  |  | 4.44 |
The following table summarizes the exercise price range and related number of exercisable options at October 31, 2018:
|  |  |  |  | Number |  |  | Weighted- Average |  |  | Weighted- Average Remaining Contractual |
Range of Exercise Prices |  |  | Exercisable |  |  | Exercise Price |  |  | Life |
$1.54 | – | $2.41 |  |  |  | 1,108,534 |  |  | $ | 1.97 |  |  |  | 3.65 |
$2.42 | – | $4.41 |  |  |  | 2,370,456 |  |  | $ | 2.81 |  |  |  | 2.09 |
$4.42 | – | $6.28 |  |  |  | 1,314,500 |  |  | $ | 5.27 |  |  |  | 2.66 |
|  |  |  |  |  | 4,793,490 |  |  | $ | 3.29 |  |  |  | 2.61 |
Officers and key associates 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 granted to officers and associates generally vest in four equal installments on the second, third, fourth and fifth anniversaries of the grant date. Participants aged 60 years or older, or aged 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, 2018, 2017 and 2016, we granted 507,278 (including 397,590 units to certain of our non-employee directors), 366,513 (including 298,388 units to certain of our non-employee directors) and 456,070 (including 356,382 units to certain of our non-employee directors) restricted stock units, respectively, and also issued 148,424, 101,218 and 176,944 units, relating to awards granted in prior fiscal years, respectively. During the years ended October 31, 2017 and 2016, 452,500 and 33,125 restricted stock units were forfeited, respectively. For the years ended October 31, 2018, 2017 and 2016 total compensation cost recognized in the Consolidated Statement of Operations for the annual restricted stock unit grants, market share unit grants (discussed below), and the stock portion of the long-term incentive plan (also discussed below) was $2.8 million, $21 thousand and $4.3 million, respectively. In addition to nonvested share awards summarized in the following table, there were 540,229, 312,419 and 224,326 vested share awards at October 31, 2018, 2017 and 2016, respectively, which were deferred at the participants' election. A summary of the Company’s nonvested share awards as of and for the year ended October 31, 2018, is as follows:
|  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Nonvested at beginning of period |  |  | 6,174,477 |  |  | $ | 2.36 |
Granted |  |  | 2,129,073 |  |  | $ | 2.55 |
Vested |  |  | 705,144 |  |  | $ | 2.31 |
Forfeited |  |  | 2,423,148 |  |  | $ | 1.98 |
Nonvested at end of period |  |  | 5,175,258 |  |  | $ | 2.62 |
Included in the above table are awards for the share portion of long-term incentive plans (“LTIPs”) for certain officers and associates, which are performance based plans. This includes 0.3 million 2016 LTIP shares which were granted during fiscal 2016 and based on performance outcomes between 2016 and 2018 were reduced from 2.4 million shares during fiscal 2018. This also includes 0.8 million target 2018 LTIP shares which were granted during fiscal year 2018. Also included in the table above are 3.0 million target Market Share Units (“MSUs”) of which 850,000 were granted to certain officers in both fiscal 2018 and fiscal 2017. In addition, 675,000, 400,000 and 200,000 MSUs are included from the fiscal 2016, fiscal 2015 and fiscal 2014 MSU grants, of which the 2015 and 2014 grants were adjusted by 104,377 and 200,000, respectively, in fiscal 2018, as certain performance conditions at the second and third measurement periods were not met and only a portion of the shares were vested, resulting in the reversal of $0.8 million of expense during the period. Additionally, 58,733 from the 2016 MSUs and 96,925 from the 2015 MSUs net shares were issued during fiscal 2018. Fifty percent of the MSUs will vest in four equal annual installments, commencing on the second anniversary of the grant date subject to stock price performance conditions, pursuant to which the actual number of shares issuable with respect to vested MSUs may range from 0% to 200% of the target number of shares covered by the MSU awards, generally depending on the growth in the 60 -day average trading price of the Company’s shares during the period between the grant date and the relevant vesting dates. The remaining fifty percent of the MSUs are also subject to financial performance conditions in addition to the stock price performance conditions applicable to all MSUs. These additional performance-based MSUs vest in four equal installments with the first installment vesting on January 1 st , three years after the MSU grant date (for example, January 1, 2021 for the 2018 MSU grant) and the remaining annual installments commencing on the third anniversary of the grant date, except that no portion of the award will vest unless the Committee determines that the Company achieved ( 1 ) for the 2018 MSU grants, specified community count improvement (as to 25% of the MSU amount) and pre-tax profit (as to 25% of the MSU amount) goals comparing the fiscal year of the grant date and the second fiscal year following the grant date (fiscal 2020 compared to fiscal 2018 ), ( 2 ) for the 2017 and 2016 MSU grants, specified gross margin improvement (as to 25% of the MSU amount) and debt reduction (as to 25% of the MSU amount) goals comparing the fiscal year of the grant date and the second fiscal year following the grant date (fiscal 2019 compared to fiscal 2017 ). The fair value of the MSU grants is determined using the Monte-Carlo simulation model, which simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average closing trading price of the Company’s Class A Common Stock on the New York Stock Exchange over the 60 calendar day period ending on the grant date. This model also incorporates the following ranges of assumptions:
| ● | The expected volatility is based on our stock’s historical volatility commensurate with the life 2 years, 2.6 years, 3 years, 4 years and 5 years.
| ● | The risk-free interest rate is based on the U.S. Treasury rate assumption ranging from 2 - 5 years.
| ● | The expected dividend yield is not applicable since we do not currently pay dividends.
The following assumptions were used for 2018 MSU grants: historical volatility factor of the expected market price of our common stock of 48.41%, 51.92%, 56.11%, 52.59% and 49.57% for the 2 year, 2.6 year, 3 year, 4 year and 5 year vesting tranches, respectively; the concluded risk free rate assumptions of 2.56% and 2.68% equals the continuously compounded 2.56 year and 4 year yield, respectively and dividend yield of zero for all time periods. The following assumptions were used for 2017 MSU grants: historical volatility factor of the expected market price of our common stock of 57.93%, 54.61%, 52.66%, 48.85% and 50.78% for the 2 year, 2.6 year, 3 year, 4 year and 5 year vesting tranches, respectively; risk free interest rates of 1.35%, 1.43%, 1.49%, 1.63% and 1.76% for each vesting tranche, respectively; and dividend yield of zero for all time periods. The following assumptions were used for 2016 MSU Grants: historical volatility factor of the expected market price of our common stock of 56.50%, 52.77%, 50.34%, 52.36% and 61.08% for the 2 year, 2.5 year, 3 year, 4 year and 5 year vesting tranches, respectively; risk free interest rates of 0.73%, 0.81%, 0.87%, 1.02% and 1.17% for each vesting tranche, respectively; and dividend yield of zero for all time periods. Based on the terms of our equity compensation plans, awards that are forfeited become available to us for future grants under the plan. As of October 31, 2018, we had 5.0 million shares authorized and remaining (inclusive of the 2.1 million shares forfeited as of October 31, 2018 ) for future issuance under our equity compensation plans. In addition, as of October 31, 2018, there were $5.1 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 1.5 years.

X
- 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
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration