Pep Boys 2014 Annual Report Download - page 70

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 31, 2015, February 1, 2014 and February 2, 2013
NOTE 15—EQUITY COMPENSATION PLANS (Continued)
underlying shares that may become exercisable will range from 0% to 175% depending on whether the
market condition is achieved. The Company used a Monte Carlo simulation to estimate a $9.13 per
unit and $13.41 per unit grant date fair value for the 2014 and 2013 PSUs, respectively. The non-vested
restricted stock award table reflects the maximum vesting of underlying shares for performance and
market based awards granted in both 2014 and 2013.
During fiscal 2014 and 2013, the Company granted approximately 900 and 4,000 restricted stock
units, respectfully, for officers’ deferred bonus matches under the Company’s non-qualified deferred
compensation plan, which vest over a three-year period. The fair value of these awards was $12.27 and
$11.25 per unit and the compensation expense recorded for these awards was immaterial. The
Company did not grant any restricted stock units for officers’ deferred bonus matches under the
Company’s non-qualified deferred compensation plan during fiscal 2012.
During fiscal 2014, the Company granted approximately 58,000 restricted stock units to its
non-employee directors of the board, which vest over a one-year period with a quarter vesting on each
of the first four quarters following their grant date. The fair value for these awards was $11.25 per unit.
During fiscal 2013, the Company granted approximately 54,000 restricted stock units to its
non-employee directors of the board, which vest over a one-year period with a quarter vesting on each
of the first four quarters following their grant date. The fair value for these awards was $12.05 per unit.
During fiscal 2012, the Company granted approximately 33,000 restricted stock units to its
non-employee directors of the board, which vest over a one-year period with a quarter vesting on each
of the first four quarters following their grant date. The fair value was $9.98 per unit.
The Company reflects in its consolidated statement of cash flows any tax benefits realized upon
the exercise of stock options or issuance of RSUs in excess of that which is associated with the expense
recognized for financial reporting purposes. The amounts reflected as financing cash inflows and
operating cash outflows in the Consolidated Statement of Cash Flows for fiscal 2014, 2013 and 2012 are
immaterial.
During fiscal 2011, the Company began an employee stock purchase plan which provides eligible
employees the opportunity to purchase shares of the Company’s stock at a stated discount through
regular payroll deductions. The aggregate number of shares of common stock that may be issued or
transferred under the plan is 2,000,000 shares. All shares purchased by employees under this plan will
be issued through treasury stock. The Company’s expense for the discount during fiscal years 2014,
2013 and 2012 was immaterial. As of January 31, 2015, there were 1,803,880 shares available for
issuance under this plan.
NOTE 16—INTEREST RATE SWAP AGREEMENT
In the third quarter of fiscal 2012, the Company settled its interest rate swap designated as a cash
flow hedge on $145.0 million of the Company’s Term Loan prior to its amendment and restatement.
The swap was used to minimize interest rate exposure and overall interest costs by converting the
variable component of the total interest rate to a fixed rate of 5.04%. Since February 1, 2008, this swap
was deemed to be fully effective and all adjustments in the interest rate swap’s fair value were recorded
to accumulated other comprehensive loss. The settlement of this swap resulted in an interest charge of
$7.5 million, which was previously recorded within accumulated other comprehensive loss. Immediately
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