Accounting for Sharebased Compensation

6 Months Ended

Jun. 01, 2013

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 1, 2012.

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 13weeks and 26 weeks ended June 1, 2013and June 2, 2012were calculated using the following weighted average assumptions:

	13 Weeks Ended		26 Weeks Ended
	June 1, 2013	June 2, 2012	June 1, 2013	June 2, 2012
Expected life (in years)	4.75	4.75	4.75	4.75
Weighted-average expected volatility	47.65%	51.29%	48.00%	51.76%
Expected volatility	47.65%	51.29%	47.65% - 48.02%	51.29% - 51.76%
Risk-free interest rate	0.69%	0.84%	0.73%	0.71%
Expected dividend yield	1.04%	1.02%	0.87%	1.06%
Weighted-average fair value of grants	$14.27	$12.97	$15.09	$11.43

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 materially 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 $2,895 and $2,217 was included in ourCondensed Consolidated Statements of Income for the 13weeks ended June 1, 2013 and June 2, 2012, respectively.Total share-based compensation expenseof $6,215 and $5,012 was included in ourCondensed Consolidated Statements of Income for the 26weeks ended June 1, 2013 and June 2, 2012, respectively.All share-based compensation expense was recorded as selling, general and administrative expense. For the 13 weeks ended June 1, 2013 and June 2, 2012 there was $225 and $158 of excess tax benefit recognized, respectively. For the 26 weeks ended June 1, 2013 and June 2, 2012 there was $2,029 and $1,039 of excess tax benefit recognized, respectively.

As of June 1, 2013, there was $9,794 of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 1.9 years. Unrecognized compensation costs related to unvested restricted stock shares was $9,364 and unvested restricted stock units was $2,914, both of which are expected to be recognized over a weighted-average period of 1.6 years.

Share-based Activity

A summary of option activity as of June 1, 2013 and changes during the 26 weeksthen ended is presented below:

			Weighted-
			Average
	Options		Exercise Price
Outstanding at December 1, 2012	2,429,750	$	21.63
Granted	452,229		39.58
Exercised	(236,277)		18.50
Forfeited or cancelled	(11,902)		24.43
Outstanding at June 1, 2013	2,633,800	$	24.98

The total fair values of options granted during the 13 weeks ended June 1, 2013 and June 2, 2012 were $277 and $61, respectively. Total intrinsic values of options exercised during the 13 weeks ended June 1, 2013 and June 2, 2012 were $533 and $549, 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 26 weeks ended June 1, 2013 and June 2, 2012 were $6,823 and $5,842, respectively. Total intrinsic values of options exercised during the 26 weeks ended June 1, 2013 and June 2, 2012 were $4,770 and $4,087, respectively. Proceeds received from option exercises during the 13 weeks ended June 1, 2013 and June 2, 2012 were $597 and $806, respectively and $4,371 and $6,031during the 26 weeks ended June 1, 2013 and June 2, 2012, respectively.

A summary of nonvested restricted stock as of June 1, 2013 and changes during the 26 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 1, 2012	141,184	245,231	386,415	$	25.41	0.9
Granted	62,701	183,752	246,453		39.60	2.1
Vested	(64,112)	(109,424)	(173,536)		37.75	-
Forfeited	(357)	(1,291)	(1,648)		28.76	1.5
Nonvested at June 1, 2013	139,416	318,268	457,684	$	33.57	1.6

Total fair values of restricted stock vested during the 13 weeks ended June 1, 2013 and June 2, 2012 were $278 and $228, respectively. Total fair values of restricted stock vested during the 26 weeks ended June 1, 2013 and June 2, 2012 were $6,550 and $4,439, respectively. The total fair value of nonvested restricted stock at June 1, 2013 was $12,278.

We repurchased 1,972 and 2,331restricted stock shares during the 13 weeks ended June 1, 2013 and June 2, 2012, respectively and 61,624 and 52,975 restricted stock shares during the 26 weeks ended June 1, 2013 and June 2, 2012, respectively. The repurchases relate to statutory minimum tax withholding.

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 June 1, 2013, and changes during the 26 weeks then ended is presented below:

	Non-employee
	Directors	Employees	Total
Units outstanding December 1, 2012	338,769	68,662	407,431
Participant contributions	7,258	1,468	8,726
Company match contributions	807	163	970
Payouts	(18,564)	(4,647)	(23,211)
Units outstanding June 1, 2013	328,270	65,646	393,916

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