STOCK ARRANGEMENTS

6 Months Ended

Mar. 30, 2013

STOCK ARRANGEMENTS

STOCK ARRANGEMENTS

F. STOCK ARRANGEMENTS

The Company records stock-based compensation expense for the cost of stock options and stock grants as well as shares issued under the Company’s 1999 Employee Stock Purchase Plan, as amended. The fair value of each option awarded is calculated on the date of grant using the Black-Scholes option-pricing model. Stock-based compensation recognized in selling and administrative expenses in the accompanying financial statements in the second quarters of fiscal 2013 and 2012 was $331,000 and $345,000, respectively.  The related tax benefit recognized in the second quarters of fiscal 2013 and 2012 was $117,000 and $124,000, respectively.  For the first six months of fiscal 2013 and 2012, stock-based compensation was $672,000 and $767,000, respectively, and the related tax benefit recognized was $237,000 and $279,000, respectively.  Unrecognized stock-based compensation cost at March 30, 2013 was $1.9 million, to be recognized over a weighted-average period of 2.0 years.

The Company annually issues a combination of stock options and stock grants to its key employees under the Courier Corporation 2011 Stock Option and Incentive Plan (the “2011 Plan”).  Stock options and stock grants generally vest over three years. Such options and grants were historically issued in September each year.  However, beginning this past fiscal year, the Company shifted the timing of such awards to November. As a result, options and grants relating to fiscal 2012 were awarded in November 2012.  As such, no annual awards were issued during the fiscal year ended September 29, 2012.  In the first quarter of fiscal 2013, 54,635 stock options were awarded under the 2011 Plan with an exercise price of $11.01 per share, which was the stock price on the date of grant, and a weighted-average fair value of $1.75 per share. In addition, 64,028 stock grants were awarded in November 2012 with a weighted-average fair value of $11.01 per share.

The Company annually issues a combination of stock options and stock grants to its non-employee directors under the Courier Corporation 2010 Stock Equity Plan for Non-Employee Directors (the “2010 Plan”).  Stock options and stock grants generally vest over three years.  During the second quarter of fiscal 2013, 14,931 stock awards, with a weighted-average fair value of $11.77 per share, were granted to non-employee directors as well as 85,498 stock options with an exercise price of $11.77 per share, which was the stock price on the date of grant, and a weighted-average fair value of $2.05 per share. Directors may also elect to receive their annual retainer and committee chair fees as shares of stock in lieu of cash; 12,320 such shares were issued in the second quarter of fiscal 2013.

The weighted average Black-Scholes fair value assumptions for stock options awarded under the 2011 Plan and the 2010 Plan in the first six months of fiscal 2013 were as follows:

	2011 Plan		2010 Plan
Estimated life of options (years)	10		10
Risk-free interest rate	1.7	%	2.0	%
Expected volatility	41.5	%	41.6	%
Expected dividend yield	7.6	%	7.2	%