Accounting for Sharebased Compensation

9 Months Ended

Sep. 01, 2012

Disclosure Of Share Based Compensation [Abstract]

Share Based Compensation Note

Note 3: Accounting for Share-Based Compensation

Overview: We have various share-based compensation programs, which provide for equity awards including stock options, restricted stock shares, restricted stock units and deferred compensation. These equity awards fall under several plans and are described in detail in our Annual Report filed on Form 10-K as of December 3, 2011.

Grant-DateFair Value: We use the Black-Scholes option-pricing model to calculate the grant-date fair value of an award. The fair value of options granted during the 13 weeks and 39 weeks ended September 1, 2012 and August 27, 2011were calculated using the following assumptions:

	13 Weeks Ended		39 Weeks Ended
	September 1, 2012	August 27, 2011	September 1, 2012	August 27, 2011
Expected life (in years)	4.75	4.75	4.75	4.75
Weighted-average expected volatility	50.62%	50.45%	51.75%	52.18%
Expected volatility	50.62%	50.45%	50.62% - 51.76%	50.45% - 52.30%
Risk-free interest rate	0.72%	1.63%	0.71%	1.93%
Expected dividend yield	1.02%	1.17%	1.06%	1.29%
Weighted-average fair value of grants	$12.83	$10.10	$11.44	$9.21

Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.

Expected volatility – Volatility is calculated using our historical volatility for the same period of time as the expected life. We have no reason to believe that our future volatility will differ from the past.

Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.

Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.

Expense Recognition: We use the straight-line attribution method to recognize share-based compensation expense for option awards with graded vesting and restricted stock share and restricted stock units with graded and cliff vesting. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

Total share-based compensation expense of $2,143 and $1,842 was included in ourCondensed Consolidated Statements of Income for the 13weeks ended September 1, 2012 and August 27, 2011, respectively.Total share-based compensation expense of $7,155 and $5,213 was included in ourCondensed Consolidated Statements of Income for the 39weeks ended September 1, 2012 and August 27, 2011, respectively.No share-based compensation was capitalized. All share-based compensation was recorded as selling, general and administrative expense. For the 13 weeks ended September 1, 2012 there was $105of excess tax benefit recognized. For the 13 weeks ended August 27, 2011 there was $136 of excess tax benefit recognized. For the 39 weeks ended September 1, 2012 and August 27, 2011 there was $1,144 and $269 of excess tax benefit recognized, respectively.

As of September 1, 2012, there was $7,085 of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of1.6 years. Unrecognized compensation costs related to unvested restricted stock shares was $4,563 and unvested restricted stock units was $2,235, which both are expected to be recognized over a weighted-average period of 1.1 years.

Share-based Activity

A summary of option activity as of September 1, 2012 and changes during the 39 weeksthen ended is presented below:

			Weighted-
			Average
	Options		Exercise Price
Outstanding at December 3, 2011	2,423,366	$	19.29
Granted	514,900		28.47
Exercised	(383,457)		17.57
Forfeited or cancelled	(85,366)		20.89
Outstanding at September 1, 2012	2,469,443	$	21.42

The total fair values of options granted during the 13 weeks ended September 1, 2012and August 27, 2011 were $49 and $159, respectively. Total intrinsic values of options exercised during the 13 weeks ended September 1, 2012and August 27, 2011 were $317 and $293, respectively.Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. The total fair values of options granted during the 39 weeks ended September 1, 2012 and August 27, 2011 were $5,891 and $4,658, respectively. Total intrinsic values of options exercised during the 39 weeks ended September 1, 2012 and August 27, 2011 were $4,420 and $2,573, respectively. Proceeds received from option exercises during the 13 weeks ended September 1, 2012and August 27, 2011 were $619 and $512, respectively and $6,650 and $5,755 during the 39 weeks ended September 1, 2012 and August 27, 2011, respectively.

A summary of nonvested restricted stock as of September 1, 2012, and changes during the 39 weeks then ended is presented below:

						Weighted-
					Weighted-	Average
					Average	Remaining
					Grant	Contractual
					Date Fair	Life
	Units	Shares	Total		Value	(in Years)
Nonvested at December 3, 2011	127,117	271,762	398,879	$	23.18	1.0
Granted	88,536	120,707	209,243		28.47	2.4
Vested	(50,370)	(134,810)	(185,180)		24.58	-
Forfeited	(13,927)	(9,082)	(23,009)		24.13	1.8
Nonvested at September 1, 2012	151,356	248,577	399,933	$	25.21	1.1

Total fair values of restricted stock vested during the 13 weeks ended September 1, 2012 and August 27, 2011 were $47 and $11, respectively and $4,552 and $2,752 for the 39 weeks ended September 1, 2012 and August 27, 2011, respectively. The total fair value of nonvested restricted stock at September 1, 2012 was $10,084.

We repurchased710 restricted stock shares during the 13 weeks ended September 1, 2012and 53,685 and 31,640 restricted stock shares during the 39 weeks ended September 1, 2012 and August 27, 2011, respectively. The repurchases relate to statutory minimum tax withholding. We did not repurchase any restricted stock shares during the 13 weeks ended August 27, 2011.

We have a Directors' Deferred Compensation plan that allows non-employee directors to defer all or a portion of their retainer and meeting fees in a number of investment choices, including units representing shares of our common stock. We also have a Key Employee Deferred Compensation Plan that allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units, representing shares of our common stock. We provide a 10 percent match on deferred compensation invested into units, representing shares of our common stock. A summary of deferred compensation units as of September 1, 2012, and changes during the 39 weeks then ended is presented below:

	Non-employee
	Directors	Employees	Total
Units outstanding December 3, 2011	314,560	77,273	391,833
Participant contributions	27,831	2,343	30,174
Company match contributions	1,919	413	2,332
Payouts	(10,333)	(8,547)	(18,880)
Units outstanding September 1, 2012	333,977	71,482	405,459

Deferred compensation units are fully vested at the date of contribution.