This excerpt taken from the FL 10-K filed Mar 29, 2005.
The Company accounts for stock-based compensation plans in accordance with the intrinsic-value based method permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123) which has not resulted in compensation cost for stock options and shares purchased under employee stock purchase plans. No compensation expense for employee stock options is reflected in net income, as all stock options granted under those plans had an exercise price not less than the quoted market price at the date of grant. The market value at date of grant of restricted stock is recorded as compensation expense over the period of vesting.
The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS No. 123 to measure stock-based compensation expense during the three-year period ended January 29, 2005.
On December 15, 2004, the FASB issued SFAS No. 123R, Share-Based Payment (SFAS No. 123R). SFAS No. 123R requires companies to measure compensation cost for share-based payments at fair value. The Statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The Company has not yet determined the effect of this statement on its consolidated financial position, results of operations or cash flows.