Stock-Based Benefit Plans

The Company has two active stock incentive plans, one for employees (including officers) and one for non-employee directors. The Company’s active stock incentive plans provide for the granting of incentive stock options (solely to employees) and non-qualified stock options with a term of up to ten years at a price not less than the market price of the stock at the date of grant. The Company’s active stock incentive plans also provide for the issuance of stock appreciation rights and restricted and unrestricted stock awards and stock units, which may be performance-based.

The Company grants stock options, restricted stock and various types of restricted stock units to its employees and its non-employee directors under its stock incentive plans. 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. At October 31, 2013, 2012 and 2011, the Company had 4,397,000, 5,489,000 and 6,712,000 shares, respectively, available for grant under its stock incentive plans.

The Company has one additional stock incentive plan for employees, officers and directors that is inactive except for outstanding stock option awards at October 31, 2013. No additional options may be granted under this plan. Stock options granted under this plan were made with a term of up to ten years at a price not less than the market price of the stock at the date of grant and generally vested over a four-year period for employees and a two-year period for non-employee directors.

The following table provides information regarding the amount of total stock-based compensation expense recognized by the Company for fiscal 2013, 2012 and 2011 (amounts in thousands):



	2013		2012		2011
Total stock-based compensation expense recognized	$	19,041	$	15,575	$	12,548
Income tax benefit recognized	$	7,378	$	5,711	$	4,793

At October 31, 2013, 2012 and 2011, the aggregate unamortized value of outstanding stock-based compensation awards was approximately $19.9 million, $14.2 million and $12.7 million, respectively.

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

Stock Options:

Stock options granted to employees generally vest over a four-year period, although certain grants may vest over a longer or shorter period, and stock options granted to non-employee directors generally vest over a two-year period. Shares issued upon the exercise of a stock option are either from shares held in treasury or newly issued shares.

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. 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 following table summarizes the weighted-average assumptions and fair value used for stock option grants in each of the fiscal years ended October 31, 2013, 2012 and 2011.



	2013	2012	2011
Expected volatility	44.04% - 48.13%	44.20% - 50.24%	45.38% - 49.46%
Weighted-average volatility	46.70%	46.99%	47.73%
Risk-free interest rate	0.64% - 1.56%	0.78% - 1.77%	1.64% - 3.09%
Expected life (years)	4.48 - 8.88	4.59 - 9.06	4.29 - 8.75
Dividends	none	none	none
Weighted-average fair value per share of options granted	$13.05	$8.70	$7.94

The fair value of stock option grants is recognized evenly over the vesting period of the options or over the period between the grant date and the time the option becomes non-forfeitable by the employee, whichever is shorter. Information regarding the stock compensation expense, related to stock options, for fiscal 2013, 2012 and 2011 was as follows (amounts in thousands):



	2013		2012		2011
Stock compensation expense recognized - options	$	7,703	$	7,411	$	8,626

At October 31, 2013, total compensation cost related to non-vested stock option awards not yet recognized was approximately $9.8 million and the weighted-average period over which the Company expects to recognize such compensation costs and tax benefit is approximately 2.6 years.

The following table summarizes stock option activity for the Company’s plans during each of the fiscal years ended October 31, 2013, 2012 and 2011 (amounts in thousands, except per share amounts):



	2013				2012				2011
	Number of options		Weighted- average exercise price		Number of options		Weighted- average exercise price		Number of options		Weighted- average exercise price
Balance, beginning	10,669		$	23.23	12,868		$	20.94	14,339		$	19.36
Granted	768		32.22		777		20.50		1,103		19.32
Exercised	(1,454	)	19.21		(2,941	)	12.52		(2,467	)	11.07
Canceled	(59	)	25.09		(35	)	20.67		(107	)	20.12
Balance, ending	9,924		$	24.51	10,669		$	23.23	12,868		$	20.94
Options exercisable, at October 31,	7,996		$	24.49	8,540		$	24.09	10,365		$	21.24

The weighted average remaining contractual life (in years) for options outstanding and exercisable at October 31, 2013 was 4.3 and 3.4, respectively.

The intrinsic value of options outstanding and exercisable is the difference between the fair market value of the Company’s common stock on the applicable date (“Measurement Value”) and the exercise price of those options that had an exercise price that was less than the Measurement Value. The intrinsic value of options exercised is the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price.

The following table provides information pertaining to the intrinsic value of options outstanding and exercisable at October 31, 2013, 2012 and 2011 (amounts in thousands):



	2013		2012		2011
Intrinsic value of options outstanding	$	84,938	$	106,084	$	16,839
Intrinsic value of options exercisable	$	68,920	$	77,936	$	16,839

Information pertaining to the intrinsic value of options exercised and the fair value of options that became vested or modified in each of the fiscal years ended October 31, 2013, 2012 and 2011 is provided below (amounts in thousands):



	2013		2012		2011
Intrinsic value of options exercised	$	19,632	$	39,730	$	23,573
Fair value of options vested	$	8,334	$	10,079	$	11,027

The Company’s stock incentive plans permit optionees to exercise stock options using a “net exercise” method at the discretion of the Executive Compensation Committee of the Board of Directors (“Executive Compensation Committee”). In a net exercise, the Company withholds from the total number of shares that otherwise would be issued to an optionee upon exercise of the stock option that number of shares having a fair market value at the time of exercise equal to the option exercise price and applicable income tax withholdings and remits the remaining shares to the optionee.

The following table provides information regarding the use of the net exercise method for fiscal 2013, 2012 and 2011.



	2013		2012		2011
Options exercised	531,000		303,412		194,000
Shares withheld	405,838		151,889		98,918
Shares issued	125,162		151,523		95,082
Average market value per share withheld	$	32.22	$	22.68	$	18.94
Aggregate market value of shares withheld (in thousands)	$	13,076	$	3,445	$	1,873

In addition, pursuant to the provisions of the Company’s stock incentive plans, optionees are permitted to use the value of the Company’s common stock that they own to pay for the exercise of options (“stock swap method”).

The following table provides information regarding the use of the stock swap method for fiscal 2013, 2012 and 2011.



	2013		2012		2011
Options exercised	6,534		19,686		28,900
Shares tendered	4,034		8,224		14,807
Shares issued	2,500		11,462		14,093
Average market value per share withheld	$	32.61	$	25.52	$	20.53
Aggregate market value of shares tendered (in thousands)	$	132	$	210	$	304

Performance Based Restricted Stock Units:

In fiscal 2013 and 2012, the Executive Compensation Committee 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 year of grant. 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 New York Stock Exchange ("NYSE") on the date the Performance-Based RSU awards were approved by the Executive Compensation Committee. The Company evaluates the performance-based metrics quarterly and estimates the number of shares underlying the RSUs that are probable of being issued. The following table provides information regarding the issuance, valuation assumptions and amortization of the Company’s Performance-Based RSUs issued in fiscal 2013 and 2012.



	2013		2012
Number of shares underlying Performance-Based RSUs to be issued	302,511		370,176
Closing price of the Company’s common stock on date performance goals were approved	$	37.78	$	20.50
Estimated aggregate fair value of Performance-Based RSUs issued (in thousands)	$	11,429	$	7,589
Aggregate number of Performance-Based RSUs outstanding at October 31	672,687		370,176
Performance-Based RSU expense recognized (in thousands)	$	6,946	$	3,952
Unamortized value of Performance-Based RSUs at October 31 (in thousands)	$	8,120	$	3,636

Stock Price-Based Restricted Stock Units:

In each of December 2010, 2009 and 2008, the Executive Compensation Committee approved awards to certain of its executives of market performance-based restricted stock units (“Stock Price-Based RSUs”) relating to shares of the Company’s common stock. In fiscal 2012, the Company adopted a Performance-Based Restricted Stock Award program to replace the Stock Price-Based RSU program. 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 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.

In fiscal 2012, the Target Price of the Stock Price-Based RSUs issued in December 2010, 2009 and 2008 were met. The Stock Price-Based RSUs issued in December 2008 were paid in fiscal 2012. The recipient of this RSU elected to use a portion of the shares underlying the RSUs to pay the required income withholding taxes on the payout. The gross value of the RSU payout was $5.9 million (200,000 shares), the income tax withholding was $2.4 million (81,200 shares) and the net value of the shares delivered was $3.5 million (118,800 shares).

The Stock Price-Based RSUs issued in December 2009 were paid in fiscal 2013. The recipient of these RSUs elected to use a portion of the shares underlying the RSUs to pay the required income withholding taxes on the payout. The gross value of the payout was $6.5 million (200,000 shares), the income tax withholding was $2.6 million (81,201 shares) and the net value of the shares delivered was $3.8 million (118,799 shares).

In December 2010, the Executive Compensation Committee approved the award of a Stock Price-Based RSUs relating to 306,000 shares of the Company’s common stock to certain senior management of the Company; the closing price of the Company’s common stock on the NYSE on the date of the award was $19.32 and the Target Price was $25.12. Using a lattice based option pricing model and assuming an expected volatility of 48.22%, a risk-free interest rate of 1.99%, and an expected life of 3.0 years, the Company determined the aggregate value of the Stock Price-Based RSUs to be $5.0 million. At October 31, 2013, 306,000 Stock Price-Based RSUs were outstanding and the unamortized value of these RSUs was $0.2 million. In fiscal 2013, the Company recognized $1.8 million of expense related to Stock Price-Based RSUs. The Company expects to distribute these Stock Price-Based RSUs in December 2013.

Non-performance Based Restricted Stock Units:

In December 2013, 2012 and 2011, the Company issued restricted stock units (“RSUs”) to various officers, employees and directors. These RSUs generally vest in annual installments over a two- to 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. The following table provides information regarding these RSUs for fiscal 2013, 2012 and 2011.



	2013		2012		2011
Non-performance-Based RSUs issued:
Number issued	94,080		107,820		15,497
Closing price of the Company’s common stock on date of issuance	$	32.22	$	20.50	$	19.32
Aggregate fair value of RSUs issued (in thousands)	$	3,031	$	2,210	$	299
Non-performance-Based RSU expense recognized (in thousands):	$	2,490	$	156	$	144



	2013		2012		2011
At October 31:
Aggregate Non-performance-Based RSUs outstanding	225,252		137,764		30,994
Cumulative unamortized value of Non-performance-Based RSUs (in thousands)	$	1,706	$	1,326	$	379

Restricted Stock Units in Lieu of Compensation

In December 2008, the Company issued restricted stock units (“RSUs in Lieu”) relating to 62,051 shares of the Company’s common stock to a number of employees in lieu of a portion of the employees’ bonuses and in lieu of a portion of one employee’s 2009 salary. These RSUs in Lieu vested in annual installments over a four-year period. Because the RSUs in Lieu are non-forfeitable, the value of the RSUs in Lieu was determined to be equal to the number of shares of the Company’s common stock to be issued pursuant to the RSUs in Lieu multiplied by $21.70, the closing price of the Company’s common stock on the NYSE on December 19, 2008, the date the RSUs in Lieu were awarded. The amount applicable to employee bonuses was charged to the Company’s accrual for bonuses that it made in fiscal 2008 and the amount applicable to salary deferral ($130,000) was charged to selling, general and administrative expense in the three-month period ended January 31, 2009. The Company’s stock incentive plan permits the Company to withhold from the total number of shares that otherwise would be issued to a RSUs in Lieu recipient upon distribution that number of shares having a fair value at the time of distribution equal to the applicable income tax withholdings due and remit the remaining shares to the RSUs in Lieu participant.

The following table provides information relating to the distribution of shares and the withholding of taxes on the RSUs in Lieu for fiscal 2013, 2012 and 2011.



	2013		2012		2011
Shares withheld	8,509		356		741
Shares issued	29,460		7,982		8,975
Value of shares withheld (in thousands)	$	308	$	10	$	15

At October 31, 2013, 2012 and 2011, 0, 38,000 and 46,000 RSUs in Lieu, respectively, were outstanding.

Employee Stock Purchase Plan

The Company’s employee stock purchase plan enables substantially all employees to purchase the Company’s common stock at 95% of the market price of the stock on specified offering dates without restriction or at 85% of the market price of the stock on specified offering dates subject to restrictions. The plan, which terminates in December 2017, provides that 1.2 million shares be reserved for purchase. At October 31, 2013, 574,000 shares were available for issuance.

The following table provides information regarding the Company’s employee stock purchase plan for fiscal 2013, 2012 and 2011.



	2013		2012		2011
Shares issued	20,362		18,456		23,079
Average price per share	$	28.71	$	22.58	$	15.59
Compensation expense recognized (in thousands)	$	77	$	63	$	54