STOCK OPTION PLANS

6 Months Ended

Aug. 11, 2012

STOCK OPTION PLANS

STOCK OPTION PLANS

2.STOCK OPTION PLANS

The Company recognized total stock-based compensation of $17 and $20 in the second quarters ended August 11, 2012 and August 13, 2011, respectively.  The Company recognized total stock-based compensation of $41 and $44 in the first two quarters of 2012 and 2011, respectively.  These costs were recognized as operating, general and administrative costs in the Company’s Consolidated Statements of Operations.

The Company grants options for common shares (“stock options”) to employees, as well as to its non-employee directors, under various plans at an option price equal to the fair market value of the shares at the date of grant.  In addition to stock options, the Company awards restricted stock to employees and its non-employee directors under various plans.  Equity awards may be made once each quarter on a predetermined date.  It has been the Company’s practice to make a general annual grant to employees, which occurred in the second quarter of 2012.  Special grants may be made in the other three quarters.  Grants to non-employee directors occur on the same date that the general annual grant to employees occurs.

Stock options granted in the first two quarters of 2012 expire 10 years from the date of grant and vest between one year and five years from the date of grant. Restricted stock awards granted in the first two quarters of 2012 have restrictions that lapse between one year and five years from the date of the awards.  All grants and awards become immediately exercisable, in the case of options, and restrictions lapse, in the case of restricted stock, upon certain changes of control of the Company.

Changes in equity awards outstanding under the plans are summarized below.

Stock Options

	Shares subjectto option		Weighted-average  exercise price
Outstanding, January 28, 2012	31.0		$	21.80
Granted	4.0		$	21.98
Exercised	(2.1	)	$	21.16
Canceled or Expired	(1.6	)	$	23.27
Outstanding, August  11, 2012	31.3		$	21.79

Restricted Stock

	Restricted shares outstanding		Weighted-average grant-date fair value
Outstanding, January 28, 2012	4.2		$	23.92
Granted	2.5		$	22.00
Lapsed	(2.3	)	$	24.47
Canceled or Expired	(0.1	)	$	23.73
Outstanding, August  11, 2012	4.3		$	22.54

The weighted-average fair value of stock options granted during the first two quarters ended August 11, 2012 and August 13, 2011, was $4.37 and $6.01, respectively.  The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model, based on the assumptions shown in the table below.  The Black-Scholes model utilizes extensive accounting judgment and financial estimates, including the term employees are expected to retain their stock options before exercising them, the volatility of the Company’s stock price over that expected term, the dividend yield over the term, and the number of awards expected to be forfeited before they vest.  Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations.

The following table reflects the weighted average assumptions used for grants awarded to option holders:

	2012		2011
Risk-free interest rate	0.97	%	2.16	%
Expected dividend yield	2.49	%	1.90	%
Expected volatility	26.48	%	26.31	%
Expected term	6.9 Years		6.9 Years