Stock-Based Compensation

9 Months Ended

Sep. 25, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 5. STOCK-BASED COMPENSATION

Stock-based compensation cost recognized in operating results (included in selling, general, and administrative expenses) for the three and nine months ended September 25, 2011 was $1.4 million and $6.2 million ($1.1 million and $4.6 million, net of tax), respectively. For the three and nine months ended September 26, 2010, the total compensation expense was $2.9 million and $7.4 million ($2.1 million and $5.2 million, net of tax), respectively. The associated actual tax benefit realized for the tax deduction from option exercises of share-based payment units and awards released equaled $1.1 million and $2.1 million for the nine months ended September 25, 2011 and September 26, 2010, respectively.

Stock Options

Option activity under the principal option plans as of September 25, 2011 and changes during the nine months ended September 25, 2011 were as follows:

	Number of Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 26, 2010	2,745,796	$ 19.11	5.32	$ 8,731
Granted	93,144	21.91
Exercised	(127,271)	12.40
Forfeited or expired	(64,633)	18.32
Outstanding at September 25, 2011	2,647,036	$ 19.55	4.70	$    899
Vested and expected to vest at September 25, 2011	2,614,642	$ 19.55	4.65	$    893
Exercisable at September 25, 2011	2,164,386	$ 19.63	4.07	$    634

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the third quarter of fiscal 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 25, 2011. This amount changes based on the fair market value of the Company's stock. The total intrinsic value of options exercised for the nine months ended September 25, 2011 and September 26, 2010 was $1.1 million and $3.6 million, respectively.

As of September 25, 2011, $1.4 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.6 years.

The fair value of share-based payment units was estimated using the Black Scholes option pricing model. The table below presents the weighted-average expected life in years. The expected life computation is based on historical exercise patterns and post-vesting termination behavior. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The assumptions and weighted-average fair values were as follows:

Nine months ended	September 25, 2011		September 26, 2010
Weighted-average fair value of grants	$   9.88		$   7.40
Valuation assumptions:
Expected dividend yield	0.00	%	0.00	%
Expected volatility	49.85	%	48.22	%
Expected life (in years)	4.96		4.93
Risk-free interest rate	2.178	%	1.886	%

Restricted Stock Units

Nonvested service based restricted stock units as of September 25, 2011 and changes during the nine months ended September 25, 2011 were as follows:

	Number of Shares	Weighted- Average Vest Date (in years)	Weighted- Average Grant Date Fair Value
Nonvested at December 26, 2010	630,244	0.81	$ 20.48
Granted	247,392		$ 20.88
Vested	(154,342)		$ 21.41
Forfeited	(41,632)		$ 18.87
Nonvested at September 25, 2011	681,662	0.93	$ 20.51
Vested and expected to vest at September 25, 2011	629,482	0.90
Vested at September 25, 2011	62,590	—

The total fair value of restricted stock awards vested during the first nine months of 2011 was $3.3 million as compared to $2.4 million in the first nine months of 2010. As of September 25, 2011, there was $4.0 million of unrecognized stock-based compensation expense related to nonvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.8 years.

Other Compensation Arrangements

On March 15, 2010, we initiated a plan in which time-vested cash unit awards were granted to eligible employees. The time-vested cash unit awards under this plan vest one-third each year over three years from the date of grant. The total amount accrued related to the plan equaled $0.4 million at September 25, 2011, of which $0.2 million and $0.4 million was expensed for the three and nine months ended September 25, 2011. The total amount accrued related to the plan equaled $0.1 million at September 26, 2010, of which $0.1 million and $0.1 million was expensed for the three and nine months ended September 26, 2010. The associated liability is included in Accrued Compensation and Related Taxes in the accompanying Consolidated Balance Sheets.