Share-Based Payments

12 Months Ended

Feb. 29, 2012

Share-Based Payments [Abstract]

SHARE-BASED PAYMENTS

4. SHARE-BASED PAYMENTS

The amounts recorded as share-based compensation expense primarily relate to restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches of common stock in our 401(k) plans, and annual stock option and restricted stock grants. Nonvested options do not share in dividends.

Stock Option Awards

The Company has granted options to purchase its common stock to employees and directors of the Company under various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding 10 years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company. Generally, these options either vest annually over three years (one-third each year for three years), or cliff vest at the end of three years. The Company issues new shares upon the exercise of stock options.

The amounts recorded as share based compensation expense primarily relate to stock option and restricted stock grants, but may also include restricted common stock issued under employment agreements, common stock issued to employees and directors in lieu of cash payments, and Company matches of common stock in our 401(k) plan.

The fair value of each option awarded is estimated on the date of grant using a Black-Scholes option-pricing model and expensed on a straight-line basis over the vesting period. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The Company includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of awards. The Company uses the simplified method to estimate the expected term for all options granted. Although the Company has granted options for many years, the historical exercise activity of our options was impacted by the way the Company processed the equitable adjustment of our November 2006 special dividend. Consequently, the Company believes that reliable data regarding exercise behavior only exists for the period subsequent to November 2006, which is insufficient experience upon which to estimate the expected term. However, beginning in fiscal 2013, the Company anticipates having sufficient reliable data regarding its employees’ exercise behavior to cease using the simplified method. The risk-free interest rate for periods within the life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following assumptions were used to calculate the fair value of the Company’s options on the date of grant during the years ended February 2010, 2011 and 2012:

	Year Ended February 28 (29),
	2010	2011	2012
Risk-Free Interest Rate:	2.3% - 2.8%	1.9% - 2.9%	1.2% - 2.5%
Expected Dividend Yield:	0%	0%	0%
Expected Life (Years):	6.0 - 6.5	6.0 - 6.5	6.0
Expected Volatility:	72.3% - 100.4%	98.9% - 107.6%	110.2% - 111.3%

The following table presents a summary of the Company’s stock options outstanding at February 29, 2012, and stock option activity during the year ended February 29, 2012 (“Price” reflects the weighted average exercise price per share):

					Weighted Average		Aggregate
					Remaining		Intrinsic
	Options		Price		Contractual Term		Value
Outstanding, beginning of year		8,515,491	$	9.26
Granted		1,058,536		1.02
Exercised (1)		10,000		0.30
Forfeited		78,817		0.50
Expired		1,058,646		17.65
Outstanding, end of year		8,426,564		7.26		5.1	$	688,677
Exercisable, end of year		5,233,393		11.22		3.4	$	136,413	1

The weighted average grant date fair value of options granted during the years ended February 2010, 2011 and 2012 was $0.44, $0.59 and $0.85, respectively. The total intrinsic value of options exercised during the years ended February 2010 and 2012 was less than $0.1 million. No options were exercised during the year ended February 2011.

A summary of the Company’s nonvested options at February 29, 2012, and changes during the year ended February 29, 2012, is presented below:

			Weighted Average
			Grant Date
	Options		Fair Value
Nonvested, beginning of year		2,946,661	$	0.50
Granted		1,058,536		0.85
Vested		733,209		0.64
Forfeited		78,817		0.35
Nonvested, end of year		3,193,171		0.58

There were 3.2 million shares available for future grants under the Company’s various equity plans at February 29, 2012. The vesting dates of outstanding options at February 29, 2012 range from March 2012 to July 2014, and expiration dates range from March 2012 to September 2021.

Restricted Stock Awards

The Company grants restricted stock awards to employees and directors. These awards generally vest at the end of the second or third year after grant and are forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company prior to vesting. Restricted stock award grants prior to fiscal 2011 were granted out of the Company’s 2004 Equity Compensation Plan and restricted stock award grants since March 1, 2010 have been granted out of the Company’s 2010 Equity Compensation Plan. The Company may also award, out of the Company’s 2010 Equity Compensation Plan, stock to settle certain bonuses and other compensation that otherwise would be paid in cash. Any restrictions on these shares are immediately lapsed on the grant date.

¹  The Company did not record an income tax benefit related to option exercises in the years ended February 2009, 2010 and 2011. Cash received from option exercises during the years ended February 2010 and 2012 was less than $0.1 million in both periods. No options were exercised during the year ended February 2011.

The following table presents a summary of the Company’s restricted stock grants outstanding at February 29, 2012, and restricted stock activity during the year ended February 29, 2012 (“Price” reflects the weighted average share price at the date of grant):

	Awards		Price
Grants outstanding, beginning of year		174,956	$	3.37
Granted		537,729		0.72
Vested (restriction lapsed)		686,345		1.39
Forfeited		2,195		1.03
Grants outstanding, end of year		24,145		0.90

The total grant date fair value of shares vested during the years ended February 2010, 2011 and 2012 was $3.3 million, $2.3 million and $1.0 million, respectively.

Recognized Non-Cash Compensation Expense

The following table summarizes stock-based compensation expense and related tax benefits recognized by the Company in the three years ended February 2012:

	Year Ended February 28 (29),
	2010		2011		2012
Station operating expenses excluding depreciation and amortization expense	$	701	$	694	$	207
Corporate expenses		1,740		1,100		946
Stock-based compensation expense included in operating expenses		2,441		1,794		1,153
Tax benefit		—		—		—
Recognized stock-based compensation expense, net of tax	$	2,441	$	1,794	$	1,153

As of February 29, 2012, there was $0.7 million of unrecognized compensation cost, net of estimated forfeitures, related to nonvested share-based compensation arrangements. The cost is expected to be recognized over a weighted average period of approximately 1.5 years.