Shareholders' Equity:

12 Months Ended

Dec. 29, 2012

Shareholders' Equity:

Shareholders' Equity:

8. Shareholders’ Equity:

Restricted Stock Awards

We have issued shares of restricted common stock as incentives to certain officers and members of the Board of Directors.  Restricted stock awards granted to officers contain performance restrictions which are required to be achieved over a three year measurement period in order for the shares to be awarded.  The number of performance-based restricted stock awards ultimately awarded varies based on whether we achieve certain financial results.  Restricted stock awards granted to members of the Board of Directors are granted with a one year service period.  We record compensation expense each period based on the market price of our common stock at the time of grant and our estimate of the most probable number of awards issued under grants of performance-based restricted stock awards.  The related stock-based compensation expense is included in selling, general and administrative expenses.  Additionally, the compensation expense is adjusted for our estimate of forfeitures.  Recipients of restricted common stock are entitled to receive any dividends declared on our common stock and have voting rights, regardless of whether such shares have vested.

During fiscal years 2011 and 2012, restricted share activity was as follows:

	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Balance, December 25, 2010	299,334		$	3.20
Granted	176,000		4.09
Vested	(69,667	)	3.00
Forfeited	—		—
Balance, December 31, 2011	405,667		$	3.62
Granted	177,437		6.49
Vested	(63,667	)	3.30
Forfeited	—		—
Balance, December 29, 2012	519,437		$	4.64

During the years ended December 29, 2012 and December 31, 2011, the total stock-based compensation expense from restricted stock recognized in the financial statements was $0.5 million and $0.6 million respectively.  There were no stock-based compensation costs which were capitalized.  As of December 29, 2012 and December 31, 2011 the total unrecognized costs related to non-vested restricted stock awards granted were $0.8 million and $0.9 million respectively.  We expect to recognize such costs in the financial statements over a weighted-average period of 0.85 years.

Preferred Stock

We have authorized 50,000 shares of $100 par value Preferred Stock, none of which is outstanding.  We may issue such shares of Preferred Stock in the future without shareholder approval.

Stock Options

The 2005 Plan was approved at our 2005 Annual Meeting of Shareholders and initially reserved for issuance 410,518 shares of Common Stock, which is the number of reserved but unissued shares available for issuance under the 1995 Plan.  The number of shares of Common Stock reserved for issuance has been increased since 2005 to a total of 2,710,518 as of the date of this filing, pursuant to a series of amendments to the 2005 Plan approved by our shareholders.  If any shares of Common Stock subject to awards granted under the 2005 Plan are canceled, those shares will be available for future awards under the 2005 Plan.  The 2005 Plan expires in May 2015, and awards granted under the 2005 Plan may include: nonqualified stock options, incentive stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and stock-reference awards.  Prior to May 2008, all stock option grants had a five year term.  The fair value of these stock option grants is amortized to expense over the vesting period, generally five years for employees and one year for the Board of Directors.  In May 2008, our Board of Directors approved a 10 year term for all future stock option grants, with vesting periods of five years and one year for employees and Board of Director members, respectively.

As of December 29, 2012, there were 430,292 shares of Common Stock available for Awards under the 2005 Plan, plus 562,238 shares of Common Stock available for any Awards under the 2005 Plan other than Incentive Stock Options.

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the years ended:

	2012	2011
Expected dividend yield (%)	0	0
Expected volatility (%)	56-58	58
Risk-free interest rate (%)	1.7 - 3.5	3.2 - 3.5
Expected life (years)	5.5-6.5	6.5

The expected dividend yield was based on the fact that we have never issued a dividend and have no near term intent to do so.  The volatility assumption was based on historical volatility during the time period that corresponds to the expected life of the option.  The expected life (estimated period of time outstanding) of stock options granted was estimated based on historical exercise activity.  The risk-free interest rate assumption was based on the interest rate of U.S. Treasuries on the date the option was granted.

During fiscal years 2012 and 2011, stock option activity was as follows:

	Options Outstanding		Weighted Average Exercise Price
Balance, December 25, 2010	2,145,500		$	2.37
Granted	215,500		4.17
Forfeited or expired	(79,500	)	1.90
Exercised	(495,000	)	2.67
Balance, December 31, 2011	1,786,500		$	2.52
Granted	197,500		6.55
Forfeited or expired	(133,900	)	2.84
Exercised	(627,373	)	2.28
Balance, December 29, 2012	1,222,727		$	3.26

The total stock-based compensation expense from stock options recognized in the financial statements was $0.7 million and $0.4 million for the years ended December 29, 2012 and December 31, 2011 respectively, which reduced income from operations accordingly.  There were no stock-based compensation costs which were capitalized.  As of December 29, 2012 and December 31, 2011 the total unrecognized costs related to non-vested stock options granted were $0.9 million and $0.7 million, respectively.  We expect to recognize such costs in the financial statements over a weighted average period of 2.7 years.  This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future.  We issue new shares upon the exercise of stock options, as opposed to reissuing treasury shares.

The following table summarizes information about stock options outstanding and exercisable at December 29, 2012:

Range of Exercise Prices	Options Outstanding	WeightedAverage Remaining ContractualLife (in years)	Weighted Average Exercise Price		Options Exercisable	Weighted Average Exercise Price
$ 1.59 - $1.86	406,000	5.4	$	1.74	322,500	$	1.74
$ 1.94 - $3.44	402,527	5.5	$	2.73	253,927	$	2.60
$ 3.60 - $4.28	216,700	8.3	$	4.10	62,500	$	4.15
$ 6.55 - $6.55	197,500	9.4	$	6.55	—	$	—
	1,222,727	6.6	$	3.26	638,927	$	2.32

The weighted average grant-date fair value of options granted during the years ended December 29, 2012 and December 31, 2011 was $3.57 and $2.44 respectively.

The intrinsic value related to total stock options outstanding was $3.8 million as of December 29, 2012 and $2.3 million as of December 31, 2011.  The intrinsic value related to vested stock options outstanding was $2.6 million as of December 29, 2012 and $1.7 million as of December 31, 2011.  The aggregate intrinsic value is based on the exercise price and our closing stock price of $6.31 as of December 29, 2012 and $3.74 as of December 31, 2011.

Treasury Stock

Our Board of Directors approved a stock repurchase program that was publicly announced on Form 8-K filed with the SEC on June 21, 2011 whereby up to $3 million of common stock could be purchased from time to time at the discretion of management (the “2011 program”).  The 2011 program expired on June 20, 2012.  No shares were repurchased under the 2011 program.