Stock Options and Stock-Based Compensation

6 Months Ended

Jul. 30, 2011

Stock Options and Stock-Based Compensation [Abstract]

Stock Options and Stock-Based Compensation

7. Stock Options and Stock-Based Compensation

The following is a summary of activity in the Company’s stock option plan for the six months ended July 30, 2011:

						Weighted-
				Weighted-		Average
				Average		Remaining
	Number of			Exercise		Contractual
	Shares			Price		Term (Years)
Outstanding at January 29, 2011		6,860,014		$	10.00
Options granted		375,000		$	10.00
Options exercised		—
Options forfeited or expired		(67,406	)	$	10.00
Outstanding at July 30, 2011		7,167,608		$	10.00		4.0
Options vested and expected to vest at July 30, 2011		6,867,260		$	10.00		4.0
Exercisable at July 30, 2011		2,692,445		$	10.00		3.3

The weighted average grant date fair value of options granted during the six months ended July 30, 2011 and July 31, 2010 was $2.86 and $3.00, respectively.

During the three and six months ended July 30, 2011 and July 31, 2010, the Company recorded stock-based compensation expense and additional paid-in capital relating to stock-based compensation of approximately $1.2 million, $2.1 million, $1.3 million and $2.5 million, respectively. Stock-based compensation expense is recorded in “Selling, general and administrative” expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Incentive Plan Modifications

On May 20, 2011, the Compensation Committee of the Company approved amendments to the Company’s Stock Incentive Plan (the “Incentive Plan”), the form of option grant letter and certain outstanding options (the “Outstanding Options”) held by various employees (collectively, the “Plan Amendments”).

The Plan Amendments (which will apply to Outstanding Options and, unless otherwise specified at the time of grant, any future option grants under the Amended Incentive Plan, and, where applicable, any shares held by employees) generally provide for the following:

• Eliminated the holding period after vesting for Performance and Stretch Performance options;

• Changed the definition of “Qualified IPO”;

• Eliminated certain restrictions on transfer of shares in the event of a Qualified IPO;

• Provided each optionee the right to satisfy the exercise price and any withholding tax obligation triggered by such exercise by any combination of cash and/or shares (including both previously owned shares and shares otherwise to be delivered upon exercise of the option); and

• Added two additional vesting events applicable to Performance Options and to certain Stretch Performance Options if they occur prior to or concurrent with the end of the Company’s fiscal 2012 year.

The modifications to the Company’s Incentive Plan resulted in $2.2 million in total incremental compensation cost, of which $0.2 million was recognized in the second fiscal quarter 2011. The remaining unrecognized compensation cost will be amortized over the remaining vesting period. The plan modification affected approximately 155 employees.

Buy-One-Get-One (“BOGO”) Option Offer

On May 20, 2011, the Compensation Committee of the Company also approved an offer pursuant to the amended Incentive Plan to certain employees to purchase a specified number of shares of the common stock of the parent of the Company at a price per share of $10.00 (the “Offer”). For each share purchased, the employee received an option to purchase an additional share at $10.00 (a “BOGO Option”). The Offer was made available to employees who had not previously accepted similar offers from the parent of the Company. The Company granted 179,000 BOGO Options and recognized stock-based compensation expense of approximately $0.1 million in the second fiscal quarter 2011 related to these options.