Note 5 - Stock-Based Compensation

Restricted Stock Awards

The following table summarizes the status of the Company’s non-vested restricted stock awards, (in thousands):

Market-Based Vesting:	For the Three-Month Period Ending
	March 28, 2016					March 30, 2015
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value

Non-vested at beginning of year		484			1.50		617			1.09
Granted		15			0.54		-
Vested		-					(213	)		-
Forfeited		(3	)				(100	)		-
Non-vested at end of quarter		496			1.32		304			1.32

Service-Based Vesting:
Non-vested at beginning of year		697			1.62		624			1.09
Granted		15			0.54		-
Vested		(200	)				(34	)
Forfeited		(3	)
Non-vested at end of quarter		509			1.62		590			1.62

Board of Directors Vesting:
Granted		-					6
Vested		-					(6	)

Total Awards:
Non-vested at beginning of year		1,181			1.57		1,241			1.09
Granted		30			0.54		6
Vested		(200	)				(253	)
Forfeited		(6	)				(100	)
Non-vested at end of quarter		1,005			1.57		894			1.59

The fair value of restricted stock awards is based on the closing price of our common stock on the grant date. The total intrinsic value of restricted shares vested during the three months ended March 28, 2016 and March 30, 2015 was $1.0 million and $3.3 million, respectively. At March 28, 2016, unrecognized compensation expense related to restricted stock grants expected to vest totaled $1.2 million and will be recognized over a weighted average period of 2.8 years and is recorded in general and administrative expenses in our consolidated statements of operations.

For the shares issued during the three months ended March 28, 2016 and March 30, 2015, 50% of each grant vests over time (“Service-Vested Shares”) and 50% of each grant vests upon achievement of certain stock price targets (“Market-Based Shares”), subject to the following vesting schedules:

(a)

The Service-Vested Shares will vest in four equal installments, with 25% vesting on each of the first, second, third and fourth anniversaries of the Date of Award, provided that the grantee remains in the continuous employ of the Company through each such vesting date.

The Market-Based Shares will vest in four equal installments, provided that (a) the grantee remains in the continuous employ of the Company from and after the Date of Award and through the defined vesting dates, and (b) specified escalating price targets for the Company’s common stock are achieved for at least 30 consecutive trading days. During the three-month period ended March 28, 2016, an immaterial amount and value of previously issued restricted stock was forfeited. During the three-month period ended March 30, 2015, previously issued shares of restricted common stock of approximately 0.1 million were forfeited with a value of $0.1 million based on the closing price of our common stock on the date of the grant. During the three months ended March 30, 2015, 213,000 market-based restricted shares vested in February 2015. There we no market-based restricted shares that vested in three months-ended March 28, 2016.

Stock Option Activity

	Number of Options			Weighted Average Fair Value		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 28, 2015		6,463			3.62		1.2		-
Granted		-			-
Exercised		-			-
Cancelled/Expired		(213	)		-				-

Outstanding as of March 28, 2016		6,250			2.80		1.2		-

Exercisable as of March 28, 2016		5,000			2.80		1.2		-

There were 6,250 outstanding, out-of-the-money stock options as of March 28, 2016 with exercise prices ranging from $2.80- $27.76. No stock options were exercised during any of the fiscal years presented. As of the end of March 28, 2016, the outstanding stock options had no intrinsic value as they were all out-of-the-money.

As of March 28, 2016, there was an immaterial amount of total unrecognized compensation cost related to stock option arrangements granted under the Company’s plans, which is expected to be recognized over a weighted average period of 2.0 years.

Compensation Expense

In accordance with ASC 718-10-25, Compensation – Stock Compensation, we recognize stock-based compensation expense according to the fair value recognition provision which generally requires, among other things, that all employee share-based compensation is measured using a fair value method and that all the resulting compensation expense is recognized in the consolidated financial statements. In accordance with the standard, our stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is the vesting term. As a result, we recognized stock compensation expense, net of forfeitures, of approximately $0.2 million and $0.1 million during the three months ended March 28, 2016 and March 30, 2015, respectively, within the general and administrative expense in the accompanying Statements of Operations. We measure the estimated fair value of our granted stock options using a Black-Scholes pricing model and of our restricted stock based on the fair market value of a share of registered stock on the date of the grant.