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Stock-Based Compensation
9 Months Ended
Nov. 02, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation
The Company had one stock incentive plan under which shares were available for grant at November 2, 2013: the 2005 Stock Incentive Plan (the “2005 Plan”). The Company previously granted share awards under its 1996 Long-Term Incentive Plan (the “1996 Plan”) and the 2000 Stock Incentive Plan (the “2000 Plan”) that remain unvested and/or unexercised as of November 2, 2013; however, the 1996 Plan expired during fiscal 2006 and the 2000 Plan expired during fiscal 2009, and no further share awards may be granted under the 1996 Plan and 2000 Plan. The 2005 Plan, the 2000 Plan, and the 1996 Plan are collectively referred to as the “Plans.”
The 2005 Plan permits the granting of options, restricted common stock, performance shares awards, restricted and performance stock units, or other equity-based awards to the Company’s employees, officers, directors, and consultants. The Company believes the granting of equity-based awards helps to align the interests of its employees, officers and directors with those of its stockholders. The Company has a practice of issuing new shares to satisfy stock option exercises, as well as for restricted stock, performance share grants and other awards made or settled in the form of Company stock. The 2005 Plan was approved by the Company’s stockholders on January 10, 2005, as amended with stockholder approval on July 20, 2005, for the issuance of incentive awards covering 12,500,000 shares of Class A common stock. Additionally, an amended and restated 2005 Plan was approved by the Company’s stockholders on May 19, 2010, which increased the incentive awards capacity to 17,500,000 shares of Class A common stock. An aggregate of 22,557,528 shares of Class A common stock have been issued or may be issued pursuant to the Plans. As of November 2, 2013, 4,411,479 shares were available for future grants under the 2005 Plan.
Stock Options
The Plans provide that the per-share exercise price of a stock option may not be less than the fair market value of the Company’s Class A common stock on the date the option is granted. Under the Plans, outstanding options vest over periods ranging from three to five years from the grant date and expire from five to ten years after the grant date. Certain stock option and other equity-based awards provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The Company uses historical data, the implied volatility of market-traded options and other factors to estimate the expected price volatility, option lives, and forfeiture rates.
The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and the estimated life of the option. The following weighted-average assumptions were used to estimate the fair value of options granted during the periods indicated using the Black-Scholes option-pricing model:
 
13 Weeks Ended
 
39 Weeks Ended
 
November 2, 2013
 
October 27, 2012
 
November 2, 2013
 
October 27, 2012
Dividend Yield
%
 
%
 
%
 
%
Expected Volatility
40.73
%
 
46.47
%
 
40.89
%
 
48.58
%
Risk-Free Interest Rate
1.00
%
 
0.47
%
 
0.63
%
 
0.48
%
Expected Life of Options (in Years)
3.3

 
3.3

 
3.3

 
3.3


At November 2, 2013, there was $0.4 million of total unrecognized compensation expense related to nonvested stock options under the Company’s share-based payment plans, which will be recognized over an average period of 1.8 years, representing the remaining vesting periods of such options through fiscal 2016.



The following table summarizes the Company’s stock option activities with respect to its Plans for the 39 weeks ended November 2, 2013 (aggregate intrinsic value in thousands):
Options
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual Life
(in years)
 
Aggregate
Intrinsic
Value
Outstanding at February 2, 2013
1,564,167

 
$
4.29

 
 
 
 
Granted
180,000

 
$
3.78

 
 
 
 
Exercised
(210,528
)
 
$
3.55

 
 
 
 
Canceled
(656,171
)
 
$
4.90

 
 
 
 
Outstanding at November 2, 2013
877,468

 
$
3.92

 
3.17
 
$
70

Vested and expected to vest in the future at November 2, 2013
817,397

 
$
3.93

 
3.10
 
$
64

Exercisable at November 2, 2013
540,856

 
$
4.01

 
2.73
 
$
39


Options vested and expected to vest in the future is comprised of all options outstanding at November 2, 2013, net of estimated forfeitures. Additional information regarding stock options outstanding as of November 2, 2013, is as follows:
 
Options Outstanding
 
Options Exercisable
Range of Exercise Prices
Number
Outstanding
as of
November 2, 2013
 
Weighted-
Average
Remaining
Contractual Life
(in years)
 
Weighted-
Average
Exercise
Price Per
Share
 
Number
Exercisable
as of
November 2, 2013
 
Weighted-
Average
Exercise
Price Per
Share
$ 2.66 - $  4.15
618,468

 
3.26
 
$
3.49

 
368,526

 
$
3.51

$ 4.19 -  $ 6.82
256,000

 
2.97
 
$
4.88

 
169,330

 
$
4.98

$ 10.95 -   $ 10.95
3,000

 
0.09
 
$
10.95

 
3,000

 
$
10.95

$ 2.66 - $ 10.95
877,468

 
3.17
 
$
3.92

 
540,856

 
$
4.01


The weighted-average grant-date fair value of options granted during the 13 and 39 weeks ended November 2, 2013, and October 27, 2012, was $1.13, $1.13, $0.94 and $1.08, respectively. The total intrinsic values for options exercised during the 13 and 39 weeks ended November 2, 2013, and October 27, 2012, was less than $0.1 million, $0.2 million, none, and less than $0.1 million, respectively.
Cash received from option exercises under the Plans for the 39 weeks ended November 2, 2013, and October 27, 2012, was $0.7 million and less than $0.1 million, respectively. The Company did not realize tax benefits for the tax deductions from option exercises as it must first utilize its regular NOL prior to realizing the excess tax benefits.
Restricted Common Stock, Restricted Stock Units, Performance Share Awards, and Performance Stock Units
Under the 2005 Plan, the Company grants directors, certain executives and other key employees restricted common stock and restricted stock units with vesting contingent upon completion of specified service periods ranging from one to three years. The Company also grants certain executives and other key employees performance share awards and performance stock units with vesting contingent upon a combination of specified service periods and the Company’s achievement of specified corporate performance objectives. Restricted stock units and performance stock units awarded to employees represent the right to receive one share of the Company's Class A common stock upon vesting.
During the 39 weeks ended November 2, 2013, and October 27, 2012, the Company granted 234,759 and 401,370 shares, respectively, of restricted common stock to certain employees and directors under the Plans. The weighted-average grant-date fair value of the restricted common stock granted during the 39 weeks ended November 2, 2013, and October 27, 2012, was $3.03 and $3.22 per share, respectively. Additionally, the Company granted 249,338 restricted stock units to certain employees during the 39 weeks ended November 2, 2013 with a weighted-average grant-date fair value of $3.67 per share.
During the 39 weeks ended November 2, 2013, the Company granted 261,533 performance share awards under the 2005 Plan, with a grant-date fair value of $2.95 per share. Additionally, the Company granted 183,758 performance stock units to certain employees during the 39 weeks ended November 2, 2013, with a weighted-average grant-date fair value of $3.09 per share, with the opportunity of an additional 32,375 performance stock units to be earned if certain corporate performance objectives are achieved, which are not included in the total outstanding share awards below. During the 13 weeks ended November 2, 2013, the Company reversed the previously recorded performance stock awards and units expense due to declines in corporate performance objectives.
The fair value of nonvested restricted common stock awards, restricted stock units, performance share awards and performance stock units is equal to the specified grant date price of the Company’s Class A common stock on the grant date. The following table summarizes activity with respect to the Company’s restricted common stock, restricted stock units, performance share awards and performance stock units during the 39 weeks ended November 2, 2013:
Restricted Common Stock, Restricted Stock Units, Performance Share Awards, and Performance Stock Units
Number of Shares
 
Weighted-Average Grant-Date Fair Value
Nonvested at February 2, 2013
644,492

 
$
2.89

Granted
929,388

 
$
3.19

Vested
(115,119
)
 
$
3.14

Forfeited
(56,992
)
 
$
3.11

Nonvested at November 2, 2013
1,401,769

 
$
3.06


At November 2, 2013, there was $2.1 million of total unrecognized compensation expense related to nonvested restricted common stock, restricted stock units, performance share awards, and performance stock units under the Company’s share-based payment plans, of which $1.3 million is for restricted common stock and performance stock awards, and $0.8 million is for restricted and performance stock units. That cost is expected to be recognized over a weighted-average period of 2.1 years. These estimates utilize subjective assumptions, which depend upon achievement of a combination of specified service periods and performance objectives. The number of shares to vest, and the related stock-based compensation expense to be incurred, may differ dependent upon actual performance objectives achieved. Therefore, the amount of unrecognized compensation expense noted above does not necessarily represent the expense that will ultimately be recognized by the Company in its condensed consolidated statements of operations.
The following tables summarize stock-based compensation recorded in the condensed consolidated statements of operations (in thousands):
 
13 Weeks Ended
 
39 Weeks Ended
 
November 2, 2013
 
October 27, 2012
 
November 2, 2013
 
October 27, 2012
Stock options
$
89

 
$
175

 
$
211

 
$
1,055

Restricted and performance stock awards and units
278

 
430

 
1,001

 
1,541

Stock-based compensation
$
367

 
$
605

 
$
1,212

 
$
2,596

 
 
13 Weeks Ended
 
39 Weeks Ended
 
November 2, 2013
 
October 27, 2012
 
November 2, 2013
 
October 27, 2012
Cost of sales
$
117

 
$
86

 
$
239

 
$
221

Selling, general, and administrative expenses
250

 
519

 
973

 
2,375

Stock-based compensation
$
367

 
$
605

 
$
1,212

 
$
2,596