Petsmart 2014 Annual Report Download - page 101

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Table of Contents
PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan, or "ESPP," that allows essentially all employees who meet certain service
requirements to purchase our common stock on semi-annual offering dates at 95% of the fair market value of the shares on the
purchase date. A maximum of 4.0 million shares was authorized for purchase under the 2002 ESPP until the plan termination
date of July 31, 2012. The 2012 ESPP commenced on August 1, 2012, replacing the 2002 ESPP. A maximum of 2.5 million
shares is authorized for purchase under the 2012 ESPP until the plan termination date of July 31, 2022.
Share purchases and proceeds were as follows (in thousands):
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
(52 weeks) (53 weeks) (52 weeks)
Shares purchased 73 114 99
Aggregate proceeds $ 4,720 $ 6,664 $ 3,918
Stock-based Compensation Expense
Stock-based compensation expense, net of forfeitures, and the total income tax benefit recognized in the Consolidated
Statements of Income and Comprehensive Income were as follows (in thousands):
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
(52 weeks) (53 weeks) (52 weeks)
Stock options expense $ 10,850 $ 11,159 $ 11,435
Restricted stock expense 7,214 4,885 4,624
Performance share unit expense 10,236 13,913 11,930
Stock-based compensation expense – equity awards 28,300 29,957 27,989
Management equity unit expense 3,387 10,242 11,457
Total stock-based compensation expense $ 31,687 $ 40,199 $ 39,446
Tax benefit $ 12,404 $ 15,010 $ 14,764
At February 2, 2014, the total unrecognized stock-based compensation expense for equity awards, net of estimated
forfeitures, was $32.8 million and is expected to be recognized over a weighted average period of 1.9 years. At February 2,
2014, the total unrecognized stock-based compensation expense for liability awards, net of estimated forfeitures, was $0.5
million and is expected to be recognized over a weighted average period of 0.2 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 United
States 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.
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