DSW 2008 Annual Report Download - page 60

Th
e
f
o
ll
ow
i
ng ta
bl
e presents t
h
eun
f
avora
bl
e
i
mpact o
f
FAS 123R stoc
kb
ase
d
compensat
i
on expense on
D
SW’s
i
ncome
b
e
f
ore
i
ncome taxes, net
i
ncome an
db
as
i
can
d dil
ute
d
earn
i
ngs per s
h
are
f
or t
h
e
f
o
ll
ow
i
ng years
e
nded
:
Januar
y
31,
2009
F
ebruar
y
2
,
2008
F
ebruar
y
3,
200
7
(In thousands, exce
p
t
p
er share amounts)
I
n
co
m
ebe
f
o
r
e
in
co
m
eta
x
es
.........................
$
(4,522) $(4,212) $(3,416
)
N
et incom
e
.....................................
$
(2,745) $(2,595) $(2,078
)
Earn
i
n
g
s per s
h
are
:
B
as
ic
........................................
$
(
0.06
)$(
0.06
)$(
0.05
)
D
il
ute
d
.......................................
$
(
0.06
)$(
0.06
)$(
0.05
)
Stoc
k
O
p
tion
s
For
f
e
i
tures o
f
opt
i
ons are est
i
mate
d
at t
h
e grant
d
ate
b
ase
d
on
hi
stor
i
ca
l
rates o
f
RVI’s stoc
k
opt
i
on act
i
v
i
ty an
d
r
e
d
uce t
h
e compensat
i
on expense reco
g
n
i
ze
d
.T
h
e expecte
d
term o
f
opt
i
ons
g
rante
di
s
d
er
i
ve
df
rom
hi
stor
i
ca
ld
ata
of RVI’s stock options due to the limited historical data on DSW stock activit
y
. The risk-free interest rate is based o
n
th
ey
i
e
ld f
or U.S. Treasury secur
i
t
i
es w
i
t
h
a rema
i
n
i
ng
lif
e equa
l
to t
h
e
fi
ve year expecte
d
term o
f
t
h
e opt
i
ons at t
he
grant
d
ate. Expecte
d
vo
l
at
ili
ty
i
s
b
ase
d
on t
h
e
hi
stor
i
ca
l
vo
l
at
ili
ty o
f
t
h
e DSW Common S
h
ares. T
h
e expecte
d
dividend
y
ield is zero, which is based on DSW’s intention of not declarin
g
dividends to shareholders combined with
th
e
li
m
i
tat
i
ons on
d
ec
l
ar
i
ng
di
v
id
en
d
s as set
f
ort
hi
n DSW’s cre
di
t
f
ac
ili
ty.
T
he followin
g
table illustrates the wei
g
hted-avera
g
e assumptions used in the Black-Scholes option-pricin
g
m
o
d
e
lf
or opt
i
ons grante
di
n eac
h
o
f
t
h
e per
i
o
d
s presente
d
.
January
31
,
2
009
F
ebruary
2,
2
008
F
ebruary
3
,
2
00
7
Y
ear
E
n
d
e
d
Assumpt
i
ons:
R
i
s
k-fr
ee
in
te
r
est
r
ate
.
.............................
2
.7% 4.
5
% 4.6%
Year end volatilit
y
of DSW common stoc
k
..............
48.
5
% 39.4% 39.9
%
Ex
p
ected o
p
tion term
.
.............................
4
.
9
y
ears
5
.0
y
ears 4.8
y
ear
s
D
ividend
y
ield . . .
................................
0
.
0% 0
.
0% 0
.
0%
T
he wei
g
hted avera
g
e
g
rant date fair value of each option
g
ranted in fiscal 2008, 2007 and 2006 was
$
5.77
,
$17.27 and $13.01 respectivel
y
. As of Januar
y
31, 2009, the total compensation cost related to nonvested options not
y
et recognized was approximately
$
10.1 million, with a weighted average expense recognition period remaining of
3.5 years. The following tables summarize the Company’s stock option plan and related per share Weighted
A
vera
g
e Exercise Prices (“WAEP”) and wei
g
hted avera
g
e
g
rant date fair value usin
g
the Black-Scholes option
p
r
i
c
i
ng mo
d
e
l
(s
h
ares an
di
ntr
i
ns
i
cva
l
ue
i
nt
h
ousan
d
s):
S
hares WAE
P
Year Ended
January
31
,
2009
O
utstandin
g
be
g
innin
g
of
y
ear
.......................................
1,520 $28.65
Granted
........................................................
1,112 $12.8
7
Exerc
i
se
d
.
......................................................
(1)
$12.9
2
For
f
e
i
te
d
.......................................................
(
506
)$
21.85
O
utstan
di
ng en
d
o
f
year ...........................................
.
2
,
125
$
22.04
O
ptions exercisable end of year ......................................
5
3
3
$
24.7
7
F-
14
D
S
W INC
.
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)