Shareholders' Equity

3 Months Ended

Mar. 30, 2013

Shareholders' Equity

Shareholders' Equity

8. Shareholders’ Equity

The 2005 Plan was approved at our 2005 Annual Meeting of Shareholders and initially reserved for issuance of 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.

Restricted Common Stock and Performance Shares

Restricted share activity for the three months ended March 30, 2013 was as follows:

	Number		Weighted  Average Grant Date Fair Value
Balance, December 29, 2012	519,437		$	4.64
Granted	—		$	—
Vested	(99,140	)	$	3.39
Forfeited	(100,860	)	$	3.39
Balance at March 30, 2013	319,437		$	5.42

During the quarters ended March 30, 2013 and March 31, 2012, we recorded total share-based compensation expense from restricted stock of $0.1 million and $0.2 million, respectively.  As of March 30, 2013 the total unrecognized costs related to non-vested restricted stock awards granted was $0.6 million, which is expected to be recognized over a weighted average period of 1.1 years.  This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future.

Options

The following table summarizes stock option activity during the three months ended March 30, 2013:

	Options  Outstanding		Weighted  Average  Exercise Price		Aggregate  Intrinsic Value  (in-the-money options)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 29, 2012	1,222,727		$	3.26
Granted	5,000		$	7.38
Exercised	(218,227	)	$	1.84
Forfeited or expired	—		$	—
Outstanding at March 30, 2013	1,009,500		$	3.59	$	4,233,043	6.90

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $7.78 as of March 30, 2013, which would have been received by the option holders had all option holders exercised options and sold the underlying shares on that date.

We recorded total share-based compensation expense from stock options of approximately $0.1 million during each of the quarters ended March 30, 2013 and March 31, 2012.  As of March 30, 2013 the total unrecognized costs related to non-vested stock option awards granted was $0.8 million, which is expected to be recognized over a weighted average period of 2.5 years.  This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future.

The following table summarizes information about stock options outstanding and exercisable at March 30, 2013:

Range of Exercise Prices	Options  Outstanding	Weighted Average  Remaining  Contractual Life  (in years)	Weighted  Average  Exercise  Price		Options  Exercisable	Weighted  Average  Exercise  Price
$  1.59 - $1.86	261,100	5.09	$	1.75	177,600	$	1.76
$  2.26 - $3.44	330,200	6.21	$	2.87	181,600	$	2.81
$  3.60 - $6.55	413,200	8.54	$	5.27	64,500	$	4.15
$  7.38 - $7.38	5,000	9.92	$	7.38	—	$	—
	1,009,500	6.90	$	3.59	423,700	$	2.57

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 quarter ended March 30, 2013:

	Quarter Ended
	March 30,  2013
Expected dividend yield (%)	—
Expected volatility (%)	55
Risk-free interest rate (%)	1.9
Expected life (years)	6.5

The expected dividend yield was based on our expectation of future dividend payouts.  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.