Equity

12 Months Ended

Dec. 31, 2011

Equity

Equity

I. Equity

• Equity Compensation Plans

        Currently, we have equity based options outstanding from five plans and have the ability to issue equity-based options from three of these plans. Under the 2000 Stock Option Plan, we may grant non-qualified options to our employees for up to 34,000 shares of common stock. Under the 2004 Equity Incentive Plan, we may grant incentive options, non-qualified options or restricted stock awards to our employees and non-qualified options or restricted stock awards to our Board of Directors for up to 105,000 shares of common stock. Under the 2009 Equity Incentive Plan, we may grant incentive options to our employees and may award non-qualified options, restricted stock and other stock awards, restricted stock units, stock appreciation rights, performance share awards and other stock awards to our Board of Directors and non-employee consultants for up to 337,000 shares of common stock. We also have options outstanding under the 1996 Stock Option Plan for Non-Employee Directors and the 1999 Stock Option Plan.

        The maximum term for options is 10 years, the exercise price of each option is equal to the closing market price of our stock on the date of grant and the options and awards become exercisable or vest in one of two vesting schedules that comprise nearly all of the current outstanding options. The first vesting schedule is in annual increments of 25% beginning one year after the grant date and the second schedule is to vest 25% of the option awards immediately and 25% each year thereafter, beginning one year after the date of grant. Upon the exercise of stock options or the vesting of awards, new shares are issued from the authorized, unissued common stock.

        The following table summarizes the stock option activity for the fiscal year ended December 31, 2011:

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding on January 1, 2011		296,080		$	6.02		7.71	$	—
Granted		140,050			4.15
Exercised		(12,874	)		3.06
Forfeited/Cancelled		(108,556	)		6.59
Outstanding on December 31, 2011		314,700		$	5.11		7.75	$	436,774
Vested or expected to vest at December 31, 2011		290,136			5.22		7.67	$	391,903
Exercisable on December 31, 2011		176,276			6.12		6.90	$	191,673

        The total fair value of the options that vested during 2011 was $0.2 million. The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) was approximately $23,000 for fiscal 2011 and nil for fiscal years 2010 and 2009.

        The fair value of each stock option was estimated on the date of the grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of stock options granted during fiscals 2011, 2010 and 2009 was $2.66, $1.73 and $1.96, respectively.

	Fiscal Year Ended
Black-Scholes Option Valuation Assumptions(1)	December 31, 2011			January 1, 2011			January 2, 2010
Risk-free interest rate(2)		0.1 - 2.0	%		0.3 - 3.4	%		0.5 - 3.8	%
Expected dividend yield		—			—			—
Expected stock price volatility(3)		65.4 - 96.6			76.4 - 104.9			73.2 - 114.3
Expected life of stock options (in years)(4)		4.1			4.1			3.8

(1)

Forfeitures are estimated and based on historical experience.

(2)

Based on the U.S. Treasury zero-coupon bond with a term consistent with the expected life of the options.

(3)

Expected stock price volatility is based on historical experience.

(4)

Expected life of stock options is based upon historical experience.

        Approximately 13,000 options were exercised during fiscal 2011. No options were exercised during fiscals 2010 and 2009. The actual income tax benefit realized from stock option exercises totaled nil in fiscal years 2011, 2010 and 2009.

        Total stock option expense included in our Consolidated Statements of Operations for the fiscal year 2011, 2010 and 2009 was $0.2 million, nil and $0.5 million, respectively. The tax benefit recorded for the same periods were $12,000, nil and $42,000, respectively. This tax benefit is offset against our valuation allowance for our deferred tax assets.

        As of December 31, 2011, there was $0.1 million of unrecognized compensation expense related to unvested option awards that were expected to vest over a weighted average period of one year.

• Stock Awards

        In fiscal 2011, we granted 132,450 stock awards to our employees, of which 25% vested immediately and 25% each year thereafter, beginning one year after the date of grant. The fair value of each stock award is equal to the closing price of our stock as measured on the grant date.

        In addition, annually on or about the first business day of the fiscal year, each of the non-chair independent members of the Board of Directors is awarded 200 shares of fully vested common stock, whereas our independent board chair is awarded 400 shares of fully vested common stock.

        The following table summarizes the stock award activity for fiscal 2011:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2011		—		$	—
Granted		132,450			4.25
Vested		(34,011	)		(4.20	)
Forfeited		(10,313	)		(4.44	)
Non-vested at December 31, 2011		88,126		$	4.24

        Total stock award expense included in our Consolidated Statements of Operations for the fiscal year 2011, 2010 and 2009 was $0.3 million, nil and nil, respectively. The tax benefit recorded for the same periods were $54,000, nil, and nil, respectively. This tax benefit is offset against our valuation allowance for our deferred tax assets.

        The total fair value of stock awards that vested during fiscal years 2011, 2010, and 2009 was approximately $143,000, $4,000, and $5,000, respectively.

        As of December 31, 2011, there was $0.2 million of unrecognized compensation expense related to unvested stock awards that were expected to vest over a weighted average period of one year.

• Reverse Stock Split

        On February 26, 2010, we amended our Articles of Incorporation to effect a one-for-five reverse stock split (the "Reverse Stock Split") of our common stock, par value $0.10 per share (the "Common Stock"). As a result of the Reverse Stock Split, every five shares of our Common Stock were automatically converted into one share of our Common Stock immediately prior to the opening of trading on March 1, 2010. All fractional shares were rounded down and any shareholder that would be entitled to receive a fractional share would be paid the fair market value of the fractional share in cash.

        To reflect the effect of the Reverse Stock Split, we have retroactively adjusted all share and per share data to reflect the Common stock and Additional capital line in our Consolidated Balance Sheets as of January 2, 2010 and the weighted-average shares outstanding in our Consolidated Statements of Operations and related disclosures for the periods presented.

        The Reverse Stock Split also resulted in proportionate adjustments under our then-existing Amended and Restated Rights Agreement having an effective date of February 27, 2008 (the "Amended Rights Plan") in (a) the number of shares issuable under the Amended Rights Plan and (b) the Purchase Price.

• Amended Rights Plan

        Under our common stock shareholder rights plan, the Board of Directors declared a dividend of one common share purchase right for each outstanding share of common stock and stock options granted and available for grant. The rights, which were extended by the Board of Directors on February 26, 2008 to expire on February 27, 2018, are exercisable only under certain conditions, and when exercisable the holder will be entitled to purchase from us one share of common stock at a price of $30.00, subject to certain adjustments. The rights will become exercisable after a person or group acquires beneficial ownership of 15% or more of our common stock or after a person or group announces an offer, the consummation of which would result in such person or group owning 15% or more of the common stock.

        If we are acquired at any time after the rights become exercisable, the rights will be adjusted so as to entitle a holder to purchase a number of shares of common stock of the acquiring company equal to $30.00 divided by one-half the then-current market price of the acquirer's stock for each right owned by a holder. If any person or group acquires beneficial ownership of 15% or more of our shares, the rights will be adjusted so as to entitle a holder (other than such person or group whose rights become void) to purchase a number of shares of common stock of Analysts International Corporation equal to $30.00 divided by one-half the then-current market price of Analysts International Corporation's common stock or the Board of Directors may exchange the rights, in whole or in part, at an exchange ratio of one common share per right (subject to adjustment).

        At any time prior to an acquisition by a person or group of beneficial ownership of 15% or more of our shares, the Board of Directors may redeem the rights at $.001 per right.