Accounting For Share-Based Payments

9 Months Ended

Oct. 27, 2012

ACCOUNTING FOR SHARE-BASED PAYMENTS [Abstract]

Accounting for Share-Based Payments

ACCOUNTING FOR SHARE-BASED PAYMENTS

The 2010 Equity Incentive Plan (the “2010 Plan”) provides for equity-based awards to the Company’s employees, directors and consultants. Under the 2010 Plan, the Company initially reserved 1,000,000 shares of common stock for issuance. This number automatically increases on the first trading day of each fiscal year beginning with fiscal 2011, by an amount equal to 1 1/2% of the shares of common stock outstanding as of the last trading day of the immediately preceding fiscal year; accordingly, 1,269,050 shares of common stock were reserved for issuance as of October 27, 2012. The Company previously had two stock option plans which expired on October 31, 2010. No further awards will be granted under these plans, although all options previously granted and outstanding will remain outstanding until they are either exercised or forfeited. As of October 27, 2012, 720,000 stock options have been granted pursuant to the 2010 Plan.

The following is a summary of the stock option activity during the thirty-nine weeks ended October 27, 2012:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Outstanding as of January 28, 2012	216,737		$	9.93
Granted (1)	1,238,505		7.84
Exercised	(39,904	)	3.80
Forfeited	(170,124	)	8.62
Outstanding as of October 27, 2012	1,245,214		$	8.22	6.8	$	439
Vested as of October 27, 2012	1,035,210		$	8.03	6.4	$	439
Exercisable as of October 27, 2012	1,035,210		$	8.03	6.4	$	439

(1) Includes 548,505 stock options issued to holders of options to purchase shares of Parlux Inc. common stock under Parlux Inc.'s equity-based compensation plans as of April 18, 2012, which are not counted against the number of shares reserved for issuance under the 2010 Plan. See further discussion at Note 2.

The following is a summary of stock warrants activity during the thirty-nine weeks ended October 27, 2012:

	Number of Warrants	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Outstanding as of January 28, 2012	1,500,000	$	23.94
Granted (2)	4,805,304	8.00
Exercised	—	—
Forfeited	—	—
Outstanding as of October 27, 2012	6,305,304	$	11.79	5.7	$	12
Vested as of October 27, 2012	6,305,304	$	11.79	5.7	$	12
Exercisable as of October 27, 2012	6,305,304	$	11.79	5.7	$	12

(2) Represents warrants issued in connection with the acquisition of Parlux on April 18, 2012. See further discussion at Note 2.

Share-based compensation expense was ($0.2) million and $4.3 million during the thirteen and thirty-nine weeks ended October 27, 2012, respectively. During the thirteen and thirty-nine weeks ended October 29, 2011, share-based compensation was less than $0.1 million.

The fair value for stock options issued during the thirty-nine weeks ended October 27, 2012 was estimated at the date of grant, using the Black-Scholes option pricing model with the following weighted average assumptions:

	Thirty-nine Weeks Ended October 27, 2012
Expected life (years)	1-5
Expected stock price volatility	100% - 118%
Risk-free interest rates	0.2% - 1.0%
Expected dividend yield	0

The expected life of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected stock price volatility is estimated using the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero coupon issues with a term equal to the option’s expected life. The Company has not paid dividends in the past and does not intend to in the foreseeable future.

The weighted average estimated fair value of options granted during the thirty-nine weeks ended October 27, 2012 was $7.82.