Petsmart 2010 Annual Report Download - page 73

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purchase until the ESPP plan termination date of July 31, 2012. Share purchases and proceeds were as follows (in
thousands):
January 30,
2011
January 31,
2010
February 1,
2009
Year Ended
Shares purchased ................................. 68 167 338
Aggregate proceeds ............................... $1,999 $3,784 $5,918
Stock-Based Compensation Expense
Stock-based compensation expense and the total income tax benefit recognized in the Consolidated Statements
of Income and Comprehensive Income were as follows (in thousands):
January 30,
2011
January 31,
2010
February 1,
2009
Year Ended
Stock options expense ............................. $ 9,668 $ 8,263 $ 7,959
Restricted stock expense ............................ 6,559 11,626 14,227
PSU expense .................................... 7,701 3,369 —
Employee stock purchase plan expense ................. — — 2,115
Stock-based compensation cost — equity awards ........ 23,928 23,258 24,301
MEU expense.................................... 5,481 1,534 —
Total stock-based compensation cost ................. $29,409 $24,792 $24,301
Tax benefit ...................................... $10,286 $ 8,824 $ 8,304
At January 30, 2011, the total unrecognized stock-based compensation expense, net of estimated forfeitures,
was $39.7 million and is expected to be recognized over a weighted average period of 1.3 years.
We estimated the fair value of stock options issued using a lattice option pricing model. Expected volatilities
are based on implied volatilities from traded call options on our stock, historical volatility of our stock and other
factors. We use historical data to estimate option exercises and employee terminations within the valuation model.
The expected term of options granted is derived from the output of the option valuation model and represents the
period of time we expect options granted to be outstanding. The risk-free rates for the periods within the contractual
life of the option are based on the monthly U.S. Treasury yield curve in effect at the time of the option grant using
the expected life of the option. Stock options are amortized straight-line over the vesting period net of estimated
forfeitures by a charge to income. Actual values of grants could vary significantly from the results of the
calculations. The following assumptions were used to value grants:
January 30,
2011
January 31,
2010
February 1,
2009
Year Ended
Dividend yield................................... 1.66% 0.62% 0.42%
Expected volatility................................ 31.0% 46.0% 36.2%
Risk-free interest rate ............................. 1.31% 1.17% 1.96%
Forfeiture rate ................................... 14.8% 15.1% 15.4%
Expected lives ................................... 5.1years 5.3 years 5.2 years
Vesting periods .................................. 4.0years 4.0 years 4.0 years
Term.......................................... 7.0years 7.0 years 7.0 years
Weighted average fair value ......................... $ 8.10 $ 6.68 $ 6.44
F-23
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)