Pep Boys 2007 Annual Report Download - page 90

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2008, February 3, 2007 and January 28, 2006
(dollar amounts in thousands, except share data)
ACCOUNTING FOR STOCK-BASED COMPENSATION At February 2, 2008, the Company has
three stock-based employee compensation plans, which are described in Note 12, ‘‘Equity
Compensation Plans.’’
Effective January 29, 2006, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123 (revised 2004), ‘‘Share-Based Payment’’ (SFAS No.123R) requiring that
compensation cost relating to share-based payment transactions be recognized in the financial
statements. The cost is measured at the grant date, based on the calculated fair value of the award, and
is recognized as an expense over the employee’s requisite service period (generally the vesting period of
the equity award). Prior to January 29, 2006, the Company accounted for share-based compensation to
employees in accordance with Accounting Principles Board Opinion No. 25, ‘‘Accounting for Stock
Issued to Employees’’ (APB No. 25), and related interpretations. The Company also followed the
disclosure requirements of Statement of Financial Accounting Standards No. 123, ‘‘Accounting for
Stock-Based Compensation’’. The Company adopted SFAS No. 123R using the modified prospective
method and, accordingly, financial statement amounts for periods prior to January 29, 2006 have not
been restated to reflect the fair value method of recognizing compensation cost relating to share-based
compensation.
The Company recognized approximately $3,060 and $1,340 of compensation expense related to
stock options, and approximately $6,696 and $1,711 of compensation expense related to restricted stock
units (RSUs), in its operating results (included in selling, general and administrative expenses) for fiscal
2007 and 2006, respectively. The related tax benefit recognized was approximately $3,624 and $894 for
fiscal 2007 and 2006. Compensation expense for RSUs was $2,049 for fiscal 2005 and was included in
selling, general and administrative expenses. The cumulative effect from adopting the provisions of
SFAS No. 123R in fiscal year 2006 was $189 benefit, net of tax.
The following table illustrates the effect on net earnings and earnings per share if the Company
had applied the fair value recognition provisions of SFAS No. 123, ‘‘Accounting for Stock-Based
Compensation,’’ to stock-based employee compensation for the fiscal year ended as follows:
January 28,
2006
Net loss:
As reported .................................................... $(37,528)
Add: Stock-based compensation for RSU’s, net of tax ..................... 1,301
Less: Total stock-based compensation expense determined under fair value-based
method, net of tax ............................................. (3,121)
Pro forma ..................................................... $(39,348)
Net loss per share:
Basic:
As reported ................................................ $ (0.69)
Pro forma .................................................. $ (0.72)
Diluted:
As reported ................................................ $ (0.69)
Pro forma .................................................. $ (0.72)
44
10-K