CompUSA 2007 Annual Report Download - page 92

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49
At December 31, 2007, there was approximately $5,500,000 of unrecognized compensation costs related to unvested stock
options, which is expected to be recognized over a weighted average period of 1.6 years. The total fair value of stock
options vested during the years ended December 31, 2007, 2006 and 2005 was $671,000, $1,502,000 and $761,000,
respectively.
Restricted Stock and Restricted Stock Units
In October 2004, the Company granted 1,000,000 restricted stock units under the 1999 Plan to a key employee who is also
a Company director. A restricted stock unit represents the right to receive a share of the Company’s common stock. The
restricted stock units have none of the rights as other shares of common stock until common stock is distributed, other than
rights to cash dividends. The restricted stock unit award was a non-performance award which vests at the rate of 20% on
May 31, 2005 and 10% per year on April 1, 2006 and each year thereafter. The share-based expense for restricted stock
awards was determined based on the market price of the Company’s stock at the date of the award. Compensation expense
related to the restricted stock award was approximately $574,000 in 2007 and 2006 and $1,005,000 in 2005. Share-based
compensation expense for restricted stock issued to Directors was $75,000 in each of the years ended December 31, 2007
and 2006.
Under the provisions of SFAS 123(R), the balance sheet recognition of unearned compensation is no longer allowed. As of
January 1, 2006, the balance of Unearned Restricted Stock Compensation was reversed into Additional Paid-in Capital on
the Company’s balance sheet. As of December 31, 2007, there was unrecognized stock-based compensation of $3.0 million
related to the restricted stock award, which is expected to be recognized over a weighted-average period of 5.0 years.
Prior to the Adoption of SFAS 123(R)
Prior to 2006, the Company elected to follow the accounting provisions of APB Opinion 25 for stock-based compensation
and to provide the pro forma disclosures required under SFAS 148, “Accounting for Stock-Based Compensation –
Transition and Disclosure.” Accordingly, the Company did not recognize compensation expense for stock option grants
made at an exercise price equal to or in excess of the market value of the underlying stock on the date of grant for periods
prior to January 1, 2006. The following table illustrates the effect on net income per share had compensation costs of the
plans been determined under a fair value alternative method as stated in SFAS 123, “Accounting for Stock-Based
Compensation” (in thousands, except per share data):
2005
Net income - as reported $11,441
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects
647
Deduct: Stock-based employee compensation expense
determined under fair value based method, net of related tax
effects
915
Pro forma net income $11,173
Basic net income per common share:
Net income – as reported $.33
Net income – pro forma $.32
Diluted net income per common share:
Net income – as reported $.31
Net income – pro forma $.31
The weighted average remaining contractual life of the stock options outstanding was 6.7 years at December 31, 2005.