Stock-Based Compensation

6 Months Ended

Jul. 30, 2011

Stock-Based Compensation

5. Stock-Based Compensation

Total stock-based compensation expense related to stock options, nonvested stock awards and restricted stock units (“RSUs”) was $2.2 million and $3.6 million for the thirteen weeks ended July 30, 2011 and July 31, 2010, respectively, and $5.1 million and $7.8 million for the twenty-six weeks ended July 30, 2011 and July 31, 2010, respectively.

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

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 30,		July 31,		July 30,		July 31,
	2011		2010		2011		2010
	(In thousands)
Cost of sales, buying and occupancy	$	293	$	245	$	566	$	384
Selling, general and administrative		1,962		2,148		3,698		5,283
Merger-related costs		—		1,210		885		2,088
Total	$	2,255	$	3,603	$	5,149	$	7,755

Stock Options

The weighted-average fair value of options granted during the twenty-six weeks ended July 30, 2011 and July 31, 2010, estimated as of the grant date using the Black-Scholes option pricing model, was $4.20 and $10.40 per option, respectively. Key assumptions used to apply this pricing model were as follows:

	Twenty-Six Weeks Ended
	July 30,			July 31,
	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		81.4	%		79.7	%
Expected dividend yield		0.0	%		0.0	%

The following is a summary of stock option activity for the twenty-six weeks ended July 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		1,403,857			5.66
Exercised		(400	)		2.36
Forfeited or expired		(2,695,653	)		33.70
Outstanding at July 30, 2011		5,823,445		$	16.52		5.4	$	1,292
Exercisable at July 30, 2011		3,841,237		$	22.21		3.6	$	816

As of July 30, 2011, there was $5.2 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 2.4 years.

Nonvested Stock Awards and RSUs

The following is a summary of nonvested stock awards and RSU activity for the twenty-six weeks ended July 30, 2011:

				Weighted
				Average Grant
	Number of			Date Fair Value
	Shares			per Share
Nonvested at January 29, 2011		2,367,214		$	11.34
Granted		676,051			5.66
Vested		(1,073,334	)		12.26
Forfeited		(194,180	)		6.42
Nonvested at July 30, 2011		1,775,751		$	9.04

As of July 30, 2011, there was $10.1 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 1.8 years.