Shareholders' Equity

3 Months Ended

Mar. 28, 2015

Stockholders' Equity:

Shareholders' Equity

9.Stockholders’ Equity

The Company’s Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”) was approved at our 2005 Annual Meeting of Stockholders and initially reserved for issuance of 410,518 shares of our common stock, which was the number of reserved but unissued shares available for issuance under the Company’s 1995 Stock Option Plan, as amended.  The number of shares of our 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 subsequent amendments to the 2005 Plan approved by our stockholders.  If any shares of our 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 the new 2015 Equity Incentive Plan is expected to be approved by our shareholders in May 2015 at the Company’s annual meeting.  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.

Restricted Common Stock

We have issued shares of restricted common stock in the form of restricted stock awards and restricted stock units as incentives to certain employees, officers and members of our board of directors (the “Board”).  Restricted stock awards and restricted stock units granted to members of the Board are granted with a one-year service period.  Restricted stock awards and restricted stock units granted to the Company’s officers vest over three years and typically contain performance restrictions that are required to be achieved over a three-year measurement period in order for the shares to be released.  The number of performance-based restricted stock ultimately released varies based on whether we achieve certain financial results.  Restricted stock units granted to non-officer employees generally vest over three or five years.  We record compensation expense each period based on the market price of our common stock at the time of grant and, for performance-based restricted stock awards and units, our estimate of the most probable number of shares that will ultimately be released.  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 the three months ended March 28, 2015 and March 29, 2014, the total stock-based compensation expense from restricted common stock recognized in the financial statements was $0.2 million and $0.1 million, respectively.  There were no stock-based compensation costs capitalized.

The following table summarizes activities related to restricted stock awards for the three months ended March 28, 2015:

	Number		Weighted Average Grant Date Fair Value
Nonvested balance at December 27, 2014	208,600		$	7.52
Granted	—		—
Vested and released, including shares withheld to cover taxes	(90,376	)	6.55
Forfeited	(21,724	)	6.55
Nonvested balance at March 28, 2015	96,500		$	8.65

As of March 28, 2015, the total unrecognized costs related to non-vested restricted stock awards was $0.4 million, which is expected to be recognized over a weighted average period of 1.12 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 activities related to restricted stock units for the three months ended March 28, 2015:

	Number	Weighted Average Grant Date Fair Value
Nonvested balance at December 27, 2014	144,929	$	13.21
Granted	—	—
Vested and released	—	—
Forfeited	—	—
Nonvested balance at March 28, 2015	144,929	$	13.21

As of March 28, 2015, the total unrecognized costs related to non-vested restricted stock units was $1.2 million, which is expected to be recognized over a weighted average period of 2.25 years.  This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future.

Stock Options

Stock-based compensation expense from stock options recognized in the financial statements totaled $0.1 million for the three months ended March 28, 2015 and March 29, 2014, which reduced income from operations accordingly.  There were no stock-based compensation costs capitalized.

The following table summarizes stock option activity during the three months ended March 28, 2015:

	Options Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value (in-the-money options)		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 27, 2014	732,852		$	5.27
Granted	—		$	—
Exercised	(13,000	)	$	3.70
Forfeited or expired	—		$	—
Outstanding at March 28, 2015	719,852		$	5.30	$	4,229,251	6.30

As of March 28, 2015, the total unrecognized costs related to non-vested stock options granted were $0.8 million.  We expect to recognize such costs in the financial statements over a weighted average period of 2.2 years.  This expected compensation expense does not reflect any new awards, or modifications to existing awards, that could occur in the future.

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $11.05 as of March 28, 2015, which would have been received by the option holders had all option holders exercised options and sold the underlying shares on that date.  The intrinsic value related to vested stock options outstanding was $2.8 million as of March 28, 2015 based on the exercise price and our closing stock price of $11.05 as of March 28, 2015.

The following table summarizes information about stock options outstanding and exercisable at March 28, 2015:

Range of Exercise Prices	Options Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Options Exercisable	Weighted Average Exercise Price
$1.70 - $3.20	182,200	3.7	$	1.91	179,600	$	1.90
$3.44 - $4.28	182,000	5.8	$	3.91	100,000	$	3.89
$6.55 - $7.21	301,500	7.7	$	6.92	92,200	$	6.87
$7.61 - $13.21	54,152	9.1	$	12.33	3,500	$	9.09
	719,852	6.3	$	5.30	375,300	$	3.72

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 service period, generally five years for employees and one year for members of the Board.  In May 2008, our Board approved a 10-year term for all future stock option grants, with service periods of five years for employees and one year for members of the Board.  We issue new shares upon the exercise of stock options, as opposed to reissuing treasury shares.