Shareholders' Equity (Notes)

12 Months Ended

Jan. 03, 2015

Stock-Based Compensation Expense

Total stock-based compensation expense was as follows (in thousands):



	2014		2013		2012
Stock options	$	2,125	$	2,698	$	3,688
Stock awards	4,673		1,534		6,618
Total stock-based compensation expense⁽¹⁾⁽²⁾	6,798		4,232		10,306
Income tax benefit	2,284		1,447		3,576
Total stock-based compensation expense, net of tax	$	4,514	$	2,785	$	6,730

⁽¹⁾ Includes $(0.5) million and $5.6 million of CEO transition (benefit) costs in 2013 and 2012, respectively. See CEO Transition Costs on page 57.

⁽²⁾ Reflects a $1.2 million benefit in 2014 related to a change in estimated forfeitures due to employee turnover.

Stock Options

A summary of our stock option activity was as follows (in thousands, except per share amounts and years):



	Stock Options		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value ⁽¹⁾
Outstanding at December 28, 2013	1,754		$	15.77	5.6	$	11,812
Granted	201		17.96
Exercised	(244	)	12.15
Canceled/Forfeited	(198	)	20.19
Outstanding at January 3, 2015	1,513		$	16.06	5.6	$	16,642

Exercisable at January 3, 2015	1,088		$	14.32	4.5	$	13,800

Vested and expected to vest at January 3, 2015	1,455		$	15.86	5.5	$	16,279


⁽¹⁾	Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.

Other information pertaining to options is as follows (in thousands, except per share amounts):



	2014		2013		2012
Weighted-average grant date fair value of stock options granted	$	9.33	$	10.57	$	14.28
Total intrinsic value (at exercise) of stock options exercised	$	2,478	$	7,726	$	12,724

Cash received from the exercise of stock options for the fiscal year ended January 3, 2015 was $2.9 million. Our tax benefit related to the exercise of stock options for the fiscal year ended January 3, 2015 was $1.0 million.

At January 3, 2015, there was $2.9 million of total stock option compensation expense related to non-vested stock options not yet recognized, which is expected to be recognized over a weighted-average period of 1.6 years.

The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows:



Valuation Assumptions	2014		2013		2012
Expected dividend yield	0	%	0	%	0	%
Expected volatility	58	%	61	%	63	%
Risk-free interest rate	1.8	%	0.9	%	1.1	%
Expected term (in years)	5.3		5.7		5.6

Stock Awards

Stock award activity was as follows (in thousands, except per share amounts):



	Time- Based Stock Awards		Weighted-Average Grant Date Fair Value	Performance- and Market-Based Stock Awards		Weighted-Average Grant Date Fair Value
Outstanding at December 28, 2013	239		$18.86	461		$17.39
Granted	319		17.96	409		17.75
Vested	(60	)	13.30	(130	)	9.05
Canceled/Forfeited	(26	)	18.04	(110	)	18.23
Outstanding at January 3, 2015	472		$19.00	630		$18.61

At January 3, 2015, there was $4.4 million of unrecognized compensation expense related to non-vested time-based stock awards, which is expected to be recognized over a weighted-average period of 2.0 years and $6.7 million of unrecognized compensation expense related to non-vested performance- and market-based stock awards, which is expected to be recognized over a weighted-average period of 2.1 years.

During fiscal 2014, 126,550 market-based stock awards were granted and had a weighted-average grant date fair value of $14.90 per award. These stock awards are reflected in the "Performance- and Market-Based Stock Awards" column in the stock award activity table above. The assumptions used to calculate the fair value of the market-based stock awards using a Monte Carlo simulation model included an expected divided yield of 0%, expected volatility of 58% and a risk-free interest rate of 0.9%. No market-based stock awards were granted in fiscal 2013 or 2012.

Repurchases of Common Stock

Repurchases of our common stock were as follows (in thousands):



	2014		2013		2012
Amount repurchased under Board-approved share repurchase program	$	45,044	$	40,037	$	30,023
Amount repurchased in connection with the vesting of employee restricted stock grants	1,448		2,035		4,869
Total amount repurchased	$	46,492	$	42,072	$	34,892

As of January 3, 2015, the remaining authorization under our Board-approved share repurchase program was $235 million. There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to retained earnings.

CEO Transition Costs

In February 2012, we announced that William R. McLaughlin, then President and Chief Executive Officer, would retire from the Company effective June 1, 2012. In recognition of Mr. McLaughlin’s contributions, the Company’s Compensation Committee approved the modification of Mr. McLaughlin’s unvested stock awards, including performance stock awards. As a result of these modifications, we recorded incremental non-cash compensation of $5.6 million ($3.7 million, net of income tax) in 2012. The performance stock awards are subject to applicable performance adjustments through 2014 based on actual performance versus performance targets. During 2013, we recorded a non-cash compensation benefit of $0.5 million ($0.4 million, net of income tax) resulting from performance-based stock award adjustments. There were no performance-based stock award adjustments in 2014.

Net Income per Common Share

The components of basic and diluted net income per share are as follows (in thousands, except per share amounts):



	2014		2013		2012
Net income	$	67,974	$	60,081	$	78,094

Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding	53,452		54,866		55,516
Effect of dilutive securities:
Options	387		554		1,059
Restricted shares	354		383		501
Diluted weighted-average shares outstanding	54,193		55,803		57,076

Net income per share – basic	$	1.27	$	1.10	$	1.41
Net income per share – diluted	$	1.25	$	1.08	$	1.37

Additional potential dilutive stock options totaling 0.8 million, 1.3 million and 0.3 million for 2014, 2013 and 2012, respectively, have been excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock).