Stock-Based Compensation

3 Months Ended

Apr. 30, 2011

5. Stock-Based Compensation

Total stock-based compensation related to stock options, nonvested stock awards and restricted stock units (“RSUs”) was $2.9 million and $4.2 million for the thirteen weeks ended April 30, 2011 and May 1, 2010, respectively.

Stock-based compensation expense is classified in the consolidated statements of operations as follows:


	Thirteen Weeks Ended
	April 30,		May 1,
	2011		2010
	(In thousands)
Cost of sales, buying and occupancy	$	273	$	139
Selling, general and administrative		1,736		3,135
Merger-related costs		885		878

Stock-based compensation	$	2,894	$	4,152

Stock Options

The weighted-average fair value of options granted during the thirteen weeks ended April 30, 2011 and May 1, 2010, estimated as of the grant date using the Black-Scholes option pricing model, was $4.32 and $10.40 per option, respectively. Key assumptions used to apply this pricing model were as follows:


	Thirteen Weeks Ended
	April 30,			May 1,
	2011			2010
Risk-free interest rate		2.8	%		3.1	%
Expected life of options	6.9 years			6.8 years
Expected volatility of underlying stock		81.2	%		79.7	%
Expected dividend yield		0.0	%		0.0	%

The following is a summary of stock option activity for the thirteen weeks ended April 30, 2011:


				Weighted		Weighted
				Average		Average Remaining		Aggregate
	Number of			Exercise Price		Contractual Term		Intrinsic
	Shares			per Share		(In Years)		Value
								(In thousands)
Outstanding at January 29, 2011		7,115,641		$	25.17
Granted		1,292,701			5.84
Exercised		(400	)		2.36
Forfeited or expired		(2,105,862	)		35.90

Outstanding at April 30, 2011		6,302,080		$	17.89		5.2	$	3,554

Exercisable at April 30, 2011		4,364,947		$	23.27		3.4	$	2,237

As of April 30, 2011, there was $5.5 million of unrecognized compensation cost related to stock options that are expected to vest. These costs are expected to be recognized over a weighted average period of 2.6 years.

Nonvested Stock Awards and RSUs

The following is a summary of nonvested stock awards and RSU activity for the thirteen weeks ended April 30, 2011:


				Weighted
				Average Grant
	Number of			Date Fair Value
	Shares			per Share
Nonvested at January 29, 2011		2,367,214		$	11.34
Granted		620,919			5.84
Vested		(995,238	)		12.22
Forfeited		(170,676	)		5.96

Nonvested at April 30, 2011		1,822,219		$	9.48

As of April 30, 2011, there was $11.5 million of unrecognized compensation cost related to nonvested stock awards and RSUs that are expected to vest. These costs are expected to be recognized over a weighted average period of 2.0 years.