SHARE-BASED COMPENSATION

9 Months Ended

Apr. 01, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation

The Company’s incentive plan provides for equity and liability awards to employees and non-employee directors in the form of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, stock awards, stock units, performance shares, performance units, and other stock-based or cash-based awards. Compensation cost is recognized on a straight-line basis over the requisite employee service period, which is generally the vesting period, and is recorded as employee compensation expense in cost of goods sold, research, development and engineering, and selling, general and administrative expenses. Share-based compensation is recognized only for those awards that are expected to vest, with forfeitures estimated at the date of grant based on historical experience and future expectations.

In addition to service conditions, SARs contain a performance condition. The additional performance condition is based upon the achievement of Return on Invested Capital (ROIC) goals relative to a peer group. All awards with performance conditions are evaluated quarterly to determine the likelihood that performance metrics will be achieved during the performance period. These awards are charged to compensation expense over the requisite service period based on the number of shares expected to vest. The SARs cliff vest after a three-year period from date of grant and expire five years from date of grant.

The grant date fair value for the awards granted below were estimated using the Black Scholes option valuation method:



	October 28, 2016		July 26, 2016		July 29, 2015
SARs Granted	10,000		242,500		248,166
Strike Price	$	8.04	$	8.18	$	10.26
Fair Value	$	2.30	$	2.42	$	3.65

Total share-based compensation expense recognized during the three months ended April 1, 2017 and April 2, 2016 was approximately $169,000 and $204,000, respectively. Total share-based compensation expense recognized during nine months ended April 1, 2017 and April 2, 2016 was approximately $524,000 and $630,000, respectively. As of April 1, 2017, total unrecognized compensation expense related to unvested share-based compensation arrangements was approximately $0.9 million. This expense is expected to be recognized over a weighted average period of 1.72 years.

During the three months ended April 1, 2017 there were 10,000 SARs exercised with an immaterial amount of intrinsic value. No SARs were exercised during the three months ended April 2, 2016. SARs exercised during the nine months ended April 1, 2017 and April 2, 2016 were 127,000 and 13,333, respectively. There was approximately $385,000 of intrinsic value for SARs exercised during the nine months ended April 1, 2017, compared to an immaterial amount during the nine months ended April 2, 2016.