Build-A-Bear Workshop 2009 Annual Report Download - page 64

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
Notes to Consolidated Financial Statements (continued)
(b) Restricted Stock
The following table is a summary of the balance and
activity for the Plans related to unvested restricted stock
granted as compensation to employees and directors for the
periods presented:
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Outstanding, December 30, 2006 227,164 $29.88
Granted 259,622 26.28
Vested 78,430 28.81
Forfeited 29,406 28.25
Outstanding, December 29, 2007 378,950 27.77
Granted 558,694 7.92
Vested 130,680 26.21
Forfeited 93,208 17.75
Outstanding, January 3, 2009 713,756 13.82
Granted 1,144,343 4.72
Vested 294,545 12.47
Forfeited 113,246 9.72
Outstanding, January 2, 2010 1,450,308 $ 7.23
The vesting date fair value of shares that vested in 2009
and 2008 was $1.6 million and $1.1 million, respectively.
During 2009, 564,045 shares of non-vested restricted
stock were granted to employees of the Company. The shares
vest over a period of four years from the grant date at grant
date fair values ranging from of $4.41 to $5.14. An
additional 460,990 shares were granted to certain
employees at grant date fair values ranging from of $4.25 to
$4.49. These shares cliff vest three years from the grant date.
Various members of the Company’s board of directors were
granted an additional 119,308 shares in the aggregate of
non-vested restricted stock as compensation for services. The
shares were issued subject to a restriction of continued service
on the board of directors and all restrictions lapse one year
from the grant date or upon a director’s retirement upon the
completion of his or her term, if earlier.
During 2008, 454,288 shares of non-vested restricted
stock were granted to employees of the Company. The shares
vest over a period of four years from the grant date at a grant
date fair value of $8.75. Various members of the Company’s
board of directors were granted an additional 104,406
shares in the aggregate of non-vested restricted stock as
compensation for services. The shares were issued subject to
a restriction of continued service on the board of directors and
all restrictions lapse one year from the grant date or upon a
director’s retirement upon the completion of his or her term, if
earlier.
During 2007, 224,228 shares of non-vested restricted
stock were granted to employees of the Company. The shares
vest over a period of four years from the grant date at a grant
date fair value of $27.45. An additional grant of 8,400
shares was made to employees in the UK who were employed
at the time of the acquisition, as no grants were made to UK
employees in 2006. These shares vest over a period of three
years from the grant date at a grant date fair value of
$27.82. Various members of the Company’s board of
directors were granted an additional 26,994 shares in the
aggregate of non-vested restricted stock as compensation for
services. The shares were issued subject to a restriction of
continued service on the board of directors and all restrictions
lapse one year from the grant date or upon a director’s
retirement upon the completion of his or her term, if earlier.
The aggregate unearned compensation expense related
to options and restricted stock was $8.2 million as of
January 2, 2010. Based on the vesting provisions of the
underlying equity instruments, future compensation expense
related to previously issued restricted stock at January 2,
2010 was as follows (in thousands):
2010 $4,160
2011 2,589
2012 1,237
2013 233
$8,219
The outstanding restricted and non-vested stock is
included in the number of outstanding shares on the face of
the consolidated balance sheets, but is treated as outstanding
stock options for accounting purposes. The shares of restricted
and non-vested stock, accounted for as options, are included
in the calculation of diluted earnings per share using the
treasury stock method, with the proceeds equal to the sum of
unrecognized compensation cost and amounts to be collected
from the outstanding loans related to the restricted stock,
where applicable.
(c) Associate Stock Purchase Plan
In October 2004, the Company adopted an Associate
Stock Purchase Plan (ASPP). Under the ASPP, substantially all
full-time employees were given the right to purchase shares of
the Company’s common stock, subject to certain limitations, at
85% of the lesser of the fair market value on the purchase
date or the beginning of each purchase period. Up to
1,000,000 shares of the Company’s common stock were
available for issuance under the ASPP. The employees of the
Company purchased 56,144 shares at $5.72 per share
through the ASPP during fiscal 2008 and 30,105 shares at
$17.38 per share during fiscal 2007. The expense recorded
related to the ASPP during fiscal 2008 and 2007 was
determined using the Black-Scholes option pricing model and
the provisions of ASC section 718-50. The assumptions used
in the option pricing model for fiscal 2008 were (a) dividend
yield of 0%; (b) volatility ranging from 45% to 65%; (c) risk-
free interest rate ranging from 0.08% to 1.68%; and (d) an
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