Shareholders' Equity

12 Months Ended

Jan. 03, 2015

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders' Equity

Common Stock

The Company acquired and retired 500,000 shares of its common stock in the third quarter of 2014 at an average cost of $69.94 per share for a total of $35.0 million.

The Board of Directors has approved a repurchase program of up to 3.0 million common shares of Company stock. Management is authorized to effect purchases from time to time in the open market or through privately negotiated transactions.

During 2012, the Company sold 3.2 million shares of common stock for general corporate purposes, working capital and the potential funding of acquisitions.

Share Based Compensation

The Company recognized approximately $11.9 million, $11.4 million and $9.0 million in share-based compensation expense in 2014, 2013 and 2012, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award. As of January 3, 2015, total unrecognized compensation cost related to share-based compensation awards was approximately $21.9 million, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 2.0 years.

During 2013, the Company's shareholders approved the 2013 Equity Incentive Plan ("2013 Plan"). The 2013 Plan authorizes the issuance of 3.5 million shares of common stock for equity-based awards, and terminates any further grants under prior equity plans. Approximately 3.0 million shares were available for future grant or payment under the 2013 Plan at January 3, 2015.

Options and Stock Appreciation Rights

The Company uses several forms of share-based incentive awards, including non-qualified stock options, incentive stock options, and stock appreciation rights (“SAR's”). Options and SAR's generally vest over 5 years and expire 10 years from the grant date. All grants are made at prices equal to the fair market value of the stock on the grant date. The majority of the Company’s annual share-based incentive awards are made in the fiscal second quarter. For both years ended January 3, 2015 and December 28, 2013, expired and canceled shares were immaterial.

The table below presents share-based compensation activity for the three fiscal years ended 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Total intrinsic value of share-based incentive awards exercised	$	5.2	$	4.0	$	11.1
Cash received from stock option exercises	1.9		1.5		4.2
Income tax benefit from the exercise of stock options	2.0		0.8		2.2
Total fair value of share-based incentive awards vested	5.5		8.5		6.6

The assumptions used in the Company's Black-Scholes valuation related to grants for options and SAR's were as follows:

	2014			2013			2012
Per share weighted average fair value of grants	$	28.01		$	23.01		$	22.45
Risk-free interest rate	2.0		%	1.1		%	1.3		%
Expected life (years)	7.0			7.0			7.0
Expected volatility	37.7		%	38.5		%	37.6		%
Expected dividend yield	1.2		%	1.2		%	1.2		%

The average risk-free interest rate is based on U.S. Treasury security rates in effect as of the grant date. The expected dividend yield is based on the projected annual dividend as a percentage of the estimated market value of the Company's common stock as of the grant date. The Company estimated the expected volatility using a weighted average of daily historical volatility of the Company's stock price over the expected term of the award. The Company estimated the expected term using historical data adjusted for the estimated exercise dates of unexercised awards.

Following is a summary of share-based incentive plan grant activity (options and SAR's) for fiscal 2014.

Number of Shares Under Options and SAR's	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Outstanding at December 28, 2013	1,563,270		$	56.04
Granted	148,955		75.76
Exercised	(163,742	)	43.01
Forfeited	(59,651	)	60.21
Outstanding at January 3, 2015	1,488,832		59.34		5.8	$	23.9
Exercisable at January 3, 2015	878,489		53.20		4.4	19.5

As of January 3, 2015, there was $11.3 million of unrecognized compensation cost related to non-vested options and SAR's that is expected to be recognized as a change to earnings over a weighted average period of 2.9 years.

The amount of options expected to vest is materially consistent with those outstanding and not yet exercisable.

Restricted Stock Awards and Restricted Stock Units

Restricted stock awards ("RSA") and restricted stock units ("RSU") consist of shares or the rights to shares of the Company's stock. The awards are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, or death, disability or normal retirement of the grantee.

Following is a summary of RSA award activity for fiscal 2014:

	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSAs at December 28, 2013	40,717		$	66.50	0.8
Granted	12,144		75.76
Vested	(28,047	)	67.83
Forfeited	—		—
Unvested RSAs January 3, 2015	24,814		$	69.53	0.3

RSAs vest on either the first (for RSAs granted in 2013 and later) or the third (for RSAs granted prior to 2013) anniversary of the grant date, provided the holder of the shares is continuously employed by or in the service of the Company until the vesting date. Compensation expense recognized related to the RSA's was $1.5 million for fiscal 2014.

As of January 3, 2015, there was $0.4 million of unrecognized compensation cost related to non-vested RSA's that is expected to be recognized as a charge to earnings over a weighted average period of 0.3 years.

Following is a summary of RSU award activity for fiscal 2014:

	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSUs at December 28, 2013	210,264		$	65.57	1.9
Granted	89,050		74.77
Vested	(53,503	)	69.01
Forfeited	(7,865	)	64.36
Unvested RSUs at January 3, 2015	237,946		$	68.28	1.8

RSU shares vest on the third anniversary of the grant date, provided the holder of the shares is continuously employed by the Company until the vesting date. Compensation expense recognized related to the RSU's was $4.4 million for fiscal 2014.

As of January 3, 2015, there was $9.3 million of unrecognized compensation cost related to non-vested RSU's that is expected to be recognized as a charge to earnings over a weighted average period of 1.8 years.

Performance Share Units

Performance share unit ("PSU") awards consist of shares or the rights to shares of the Company's stock which are awarded to employees of the Company. These shares are payable upon the determination that the Company achieved certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSU's have a performance period of 3 years. As set forth in the individual grant agreements, acceleration of vesting may occur under a change in control, death or disability. There are no voting rights with these instruments until vesting occurs and a share of stock is issued. The PSU awards are valued using a Monte Carlo simulation method as of the grant date.

Following is a summary of PSU award activity for fiscal 2014:

	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested PSUs at December 28, 2013	35,730		$	56.71	2.4
Granted	25,310		83.74
Vested	—		—
Forfeited	(1,925	)	57.83
Unvested PSUs January 3, 2015	59,115		$	68.25	2.0

Compensation expense for awards granted are recognized based on the targeted payout of 100.0%, net of estimated forfeitures. Compensation expense recognized related to PSUs was $1.0 million for fiscal 2014 and $0.4 million for fiscal 2013. Total unrecognized compensation expense for all PSUs granted as of January 3, 2015 is estimated to be $2.6 million recognized as a charge to earnings over a weighted average period of 2.0 years.