Stock Options and Stock Awards

6 Months Ended

Sep. 01, 2012

Stock Options and Stock Awards

Stock Options and Stock Awards

8. Stock Options and Stock Awards

        The Company recognizes share-based compensation expense over the requisite service period of the award, net of an estimate for the impact of forfeitures. Operating results for the twenty-six week periods ended September 1, 2012 and August 27, 2011 include $8,653 and $7,523, respectively, of compensation costs related to the company's stock-based compensation arrangements.

        The total number and type of newly awarded grants and the related weighted average fair value for the thirteen week periods ended September 1, 2012 and August 27, 2011 are as follows:

	September 1, 2012				August 27, 2011
	Shares		Weighted Average Fair Value		Shares		Weighted Average Fair Value
Stock options granted		12,020	$	0.91		17,714	$	0.82
Stock awards granted		5,450	$	1.31		8,526	$	1.23
Total awards		17,470				26,240

        Typically, stock options granted vest, and are subsequently exercisable in equal annual installments over a four-year period for employees. During fiscal 2012, certain employee stock options and awards were issued that vest 50% in year 3 and 50% in year four. Stock awards granted to non-employee directors vest 80% in year one, 10% in year two and 10% in year three.

        The Company calculates the fair value of stock options using the Black- Scholes-Merton option pricing model. The following assumptions were used in the Black-Scholes-Merton option pricing model:

	Twenty-Six Week Period Ended
	September 1, 2012			August 27, 2011
Expected stock price volatility		85	%		79	%
Expected dividend yield		0	%		0	%
Risk-free interest rate		0.7	%		1.5	%
Expected option life		5.5 years			5.5 years

        As of September 1, 2012, there was $23,260 of total unrecognized pre-tax compensation costs related to unvested stock options, net of estimated forfeitures. These costs are expected to be recognized over a weighted average period of 2.7 years. As of September 1, 2012, there was $12,569 of total unrecognized pre-tax compensation costs related to unvested restricted stock grants, net of estimated forfeitures. These costs are expected to be recognized over a weighted average period of 2.5 years.