Stock-based compensation

12 Months Ended

Dec. 28, 2012

Stock-based compensation [Abstract]

Stock-based compensation

(12)           Stock-based compensation

 We have an incentive compensation plan for our employees and outside directors.  One component of this plan is restricted stock units, which grants the recipient the right of ownership of our common stock, generally conditional on continued service for a specified period.  Another component is stock options.  The following table presents the stock-based compensation expense included in the Consolidated Statements of Operations for the years ended December 28, 2012, December 30, 2011 and December 31, 2010 (in thousands):

	2012		2011		2010
Restricted stock	$	957	$	1,054	$	1,833
Stock options		932		769		13
Income tax benefit		--		--		(646	)
Total after-tax stock-based compensation expense		1,889		1,823		1,200
Total stock-based compensation included in:
Selling, general and admistrative expenses		1,889		1,639		1,846
Severance, impairment and other associated costs		--		184		--

The income tax benefit for the period ended December 28, 2012 and December 30, 2011 is $0 due to the establishment of a full valuation allowance on deferred tax assets in the fourth quarter of 2011. 

Restricted stock and units:

The value of restricted stock and units issued is based on the market price of the stock at the award date.  We retain the restricted shares until the continued service requirement has been met.  The market value of the shares at the date of grant is charged to expense on a straight-line basis over the three-year vesting period, except for shared granted to outside directors which are expensed on a straight-line basis over one year. Cash awards, which are no longer issued, but have been made in the past, were intended to assist recipients with their resulting personal tax liability. These cash awards were based on the market value of the shares and were accrued over the vesting period.  If the recipient made an election under Section 83(b) of the Internal Revenue Code, the expense related to the cash award was generally fixed based on the value of the awarded stock on the grant date.  If the recipient did not make the election under Section 83(b), the expense related to the cash award would fluctuate based on the current market value of the shares, subject to limitations set forth in our restricted stock plan.  The Company does not expect to make these types of cash awards in the future.

A summary of our restricted stock activity for the years ended December 28, 2012, December 30, 2011, and December 31, 2010, is as follows (in thousands, except per share data):

	2012					2011					2010
	Shares			Weighted Average Stock  Grant Price (Per Share)		Shares			Weighted Average Stock  Grant Price (Per Share)		Shares			Weighted Average Stock  Grant Price (Per Share)
Opening nonvested restricted stock and units		580		$	3.97		420		$	6.69		330		$	11.92
Granted		589			1.12		369			3.47		238			3.76
Vested		(103	)		1.36		(112	)		11.77		(123	)		15.03
Forfeited/canceled		(31	)		1.06		(97	)		4.87		(25	)		5.80
Ending nonvested restricted stock and units		1,035		$	2.69		580		$	3.97		420		$	6.69

As of December 28, 2012, there was approximately $0.9 million of total unrecognized compensation cost related to restrict stock grants.  This unrecognized compensation is expected to be recognized over a weighted-average period of approximately 1.4 years.

Stock options: 

Stock options are granted at no cost to the employee and, under our plan agreement, the exercise price of these options cannot be less than the fair market value of our common shares on the date of grant.  These options expire seven years from the date of grant and generally vest pro rata over four years.  We value our stock options according to the fair value method using the Black-Scholes option pricing model.

A summary of our stock option activity for the years ended December 28, 2012, December 30, 2011, and December 31, 2010, respectively, is as follows (in thousands, except per share data):

	2012							2011							2010
	Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value		Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value		Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value
Opening stock options outstanding		1,252		$	4.64				157		$	7.41				82		$	17.53
Granted		43			0.73				1,269			4.66				480			4.97
Exercised		--			--				(1	)		3.72				--			--
Forfeited/canceled		(22	)		4.83				(173	)		7.25				(405	)		6.58
Ending stock options outstanding		1,273			4.51		--		1,252			4.64		20		157			7.41		--
Ending stock options exercisable		240		$	4.37		--		16		$	4.75		--		38		$	16.55		--

The weighted-average fair value of all stock options issued during 2012 was calculated as $0.73per share on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions of our stock options issued during 2012, 2011 and 2010 based on the date of grant are as follows:

	2012			2011			2010
Dividend yield		1.4	%		1.4	%		2.0	%
Volatility		80.4	%		80.4	%		76.6	%
Risk-free interest rate		1.7	%		1.7	%		2.1	%
Expected life (years)		4.8			4.8			4.8

The exercise prices of the options outstanding as of December 28, 2012 range from $0.73 per share to $6.15 per share.  As of December 28, 2012, there was approximately $1.6 million of total unrecognized compensation costs related to our outstanding stock option grants.  Tax benefits from deductions in excess of the compensation cost of stock options exercised are required to be classified as cash inflows from financing activities.  There was no effect on the current or prior year net cash used in or provided by operating activities or the net cash used in or provided by financing activities.  In the year ended December 30, 2011, there were 900 stock options exercised, however we have not realized any excess tax benefits in connection with the exercise of these stock options due to the fact that we have recorded a net loss in the period. There were no stock options exercised during the years ended December 28, 2012 and December 31, 2010. There have been no amounts of stock-based compensation cost capitalized into inventory or other assets during any period presented in the Consolidated Financial Statements.