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Stock-based compensation and equity transactions | 9 Months Ended
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Jul. 31, 2013
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] |
Stock-based compensation and equity transactions |
Note 6 - Stock-based compensation and equity transactions The Company’s current stock incentive plan provides for the granting of qualified and nonqualified options to the Company’s officers, directors and employees. Incentive stock options granted to the Company’s employees during the nine months ended July 31, 2013 vest and are exercisable equally over three years and expire in five years from date of grant. During the nine months ended July 31, 2013, the Company granted a total of 138,280 incentive stock options to company employees. The Company satisfies the exercise of options by issuing previously unissued common shares. The weighted average fair value of employee and non-employee directors stock options granted by the Company in the nine months ended July 31, 2013 and 2012 was estimated to be $1.12 and $1.23 per share, respectively, using the Black-Scholes option pricing model with the following assumptions:
|  | 2013 |  |  | 2012 |
Risk-free interest rate |  |  | 0.36 | % |  |  | 0.41 | %
Dividend yield |  |  | 4.17 | % |  |  | 4.2 | %
Expected life of the option |  |  | 3.5 years |  |  |  | 3.9 years |
Volatility factor |  |  | 42.85 | % |  |  | 62.79 | %
Expected volatilities are based on historical volatility of the Company’s stock price and other factors. The Company used the historical method to calculate the expected life of the 2013 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield. Issuances of common stock by the Company During the nine months ended July 31, 2013, the Company issued 877,728 shares of common stock and received net proceeds of $2.2 million in connection with the exercise of employee stock options. Company stock option plans Descriptions of the Company’s stock option plans are included in Note 7 of the Company’s Annual Report on Form 10-K for the year ended October 31, 2012. A summary of the status of the options granted under the Company’s stock option plans as of July 31, 2013 and the changes in options outstanding during the nine months then ended is presented in the table that follows:
|  |  |  |  | Weighted |
|  |  |  |  | Average |
|  | Shares |  | Exercise Price |
Outstanding at November 1, 2012 |  |  | 2,004,781 |  | $ | 2.25 |
Options granted |  |  | 176,267 |  | $ | 4.80 |
Options exercised |  |  | (877,728) |  | $ | 2.53 |
Options canceled or expired |  |  | (80,902) |  | $ | 4.07 |
Options outstanding at July 31, 2013 |  |  | 1,222,418 |  | $ | 2.29 |
Options exercisable at July 31, 2013 |  |  | 812,016 |  | $ | 1.81 |
Options vested and expected to vest at July 31, 2013 |  |  | 1,197,118 |  | $ | 2.27 |
Weighted average remaining contractual life of options outstanding as of July 31, 2013: 3.16 years Weighted average remaining contractual life of options exercisable as of July 31, 2013: 2.60 years Weighted average remaining contractual life of options vested and expected to vest as of July 31, 2013: 3.14 years Aggregate intrinsic value of options outstanding at July 31, 2013: $4.6 million Aggregate intrinsic value of options exercisable at July 31, 2013: $3.5 million Aggregate intrinsic value of options vested and expected to vest at July 31, 2013: $3.5 million As of July 31, 2013, $268,000 of expense with respect to nonvested share-based arrangements has yet to be recognized which is expected to be recognized over a weighted average period of 3.06 years. Non-employee directors receive $25,000 annually, which amount is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2013, the Company granted each of its four non-employee directors 8,405 options. The number of stock options granted to each director was determined by dividing $12,500 by the fair value of a stock option grant using the Black Scholes model ($1.49 per share). These options vest ratably over fiscal year 2013. During the quarter ended April 30, 2013, the Company granted a newly appointed non-employee director 4,367 options. The number of stock options granted was determined by dividing $7,292 (a pro rata portion of the $12,500) by the fair value of a stock option grant using the Black Scholes model ($1.67 per share). Stock option expense During the nine months ended July 31, 2013 and 2012, stock-based compensation expense totaled $161,000 and $164,000, respectively. During the three months ended July 31, 2013 and 2012, stock-based compensation expense totaled $54,000 and $43,000, respectively. For the nine months ended July 31, 2013 and 2012, stock-based compensation classified in cost of sales amounted to $38,000 and $42,000, respectively, and stock-based compensation classified in selling and general expense amounted to $123,000 and $122,000, respectively.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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