Stock-Based Compensation

9 Months Ended

Oct. 29, 2011

Stock-Based Compensation

6. Stock-Based Compensation

Total stock-based compensation expense related to stock options, nonvested stock awards and restricted stock units (“RSUs”) was $1.5 million and $3.7 million for the thirteen weeks ended October 29, 2011 and October 30, 2010, respectively, and $6.7 million and $11.5 million for the thirty-nine weeks ended October 29, 2011 and October 30, 2010, respectively.

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

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 29,			October 30,			October 29,			October 30,
	2011			2010			2011			2010
				(In thousands)
Cost of sales, buying and occupancy	$	328		$	283		$	894		$	667
Selling, general and administrative		1,273			2,263			4,971			7,546
Restructuring charges		(62	)		(26	)		(62	)		(26	)
Merger-related costs		—			1,210			885			3,298
Total	$	1,539		$	3,730		$	6,688		$	11,485

Stock Options

The weighted-average fair value of options granted during the thirty-nine weeks ended October 29, 2011 and October 30, 2010, estimated as of the grant date using the Black-Scholes option pricing model, was $4.18 and $10.40 per option, respectively. Key assumptions used to apply this pricing model were as follows:

	Thirty-Nine Weeks Ended
	October 29,			October 30,
	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		81.5	%		79.7	%
Expected dividend yield		0.0	%		0.0	%

The following is a summary of stock option activity for the thirty-nine weeks ended October 29, 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		1,415,422			5.64
Exercised		(400	)		2.36
Forfeited or expired		(3,175,893	)		31.15
Outstanding at October 29, 2011		5,354,770		$	16.47		5.1	$	426
Exercisable at October 29, 2011		3,628,559		$	21.66		3.3	$	286

As of October 29, 2011, there was $4.2 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 1.9 years.

Nonvested Stock Awards and RSUs

The following is a summary of nonvested stock awards and RSU activity for the thirty-nine weeks ended October 29, 2011:

				Weighted
				Average Grant
	Number of			Date Fair Value
	Shares			per Share
Nonvested at January 29, 2011		2,367,214		$	11.34
Granted		681,447			5.64
Vested		(1,098,089	)		12.23
Forfeited		(398,835	)		7.81
Nonvested at October 29, 2011		1,551,737		$	9.11

As of October 29, 2011, there was $7.6 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 1.4 years.