Note 16 - Stock Based Compensation

9 Months Ended

Mar. 25, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

16. Stock Based Compensation

On October 29, 2008, the shareholders of the Company approved the 2008 Unifi, Inc. Long-Term Incentive Plan (“2008 LTIP”). The 2008 LTIP authorized the issuance of up to 2,000 shares of common stock pursuant to the grant or exercise of stock options, including incentive stock options, non-qualified stock options and restricted stock, but not more than 1,000 shares may be issued as restricted stock. Option awards are granted with an exercise price not less than the market price of the Company’s stock at the date of grant.  The 2008 LTIP replaced the 1999 Unifi, Inc. Long-Term Incentive Plan (“1999 LTIP”).  The 2008 LTIP is the Company’s sole share-based compensation plan, except that prior grants under the 1999 LTIP remain subject to that plan’s provisions.

Stock options subject to service conditions:

During the first quarter of fiscal year 2012, under the 2008 LTIP the Compensation Committee (“Compensation Committee”) of the Board authorized, and the Company issued, 127 stock options to certain key employees.  The stock options vest ratably over the required three year service period and have ten year contractual terms.  The exercise price of the options is $12.47 per share.  The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $7.88 per share.  The valuation model used the following assumptions for the options granted in fiscal year 2012:

Expected terms (years)	6.3
Interest rate	2.0	%
Volatility	68.2	%
Dividend yield	—

The Company uses historical data to estimate the expected life, volatility and estimated forfeitures of an option.  The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

A summary of the Company’s non-vested shares related to options subject to service conditions as of March 25, 2012, and changes during the current fiscal year is as follows:

	Under the 1999 LTIP		Under the 2008 LTIP			Total Shares			Weighted-Average Grant-Date Fair Value
Non-vested at June 26, 2011		—		373			373		$	3.34
Granted		—		127			127			7.88
Vested		—		(186	)		(186	)		3.34
Forfeited		—		(2	)		(2	)		3.31
Non-vested at March 25, 2012		—		312			312		$	5.19

The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company’s stock options subject to service conditions for selected price ranges as of March 25, 2012:

					Options Outstanding					Options Exercisable
Exercise Price					Number of Options Outstanding	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining (Years)		Number of Options Exercisable		Weighted Average Exercise Price
$	5.73	-	$	10.00	833	$	6.27		6.0		648	$	6.99
$	10.01	-	$	20.00	179		11.92		7.8		52		10.59
$	20.01	-	$	29.79	20		26.63		0.4		20		26.63
Totals					1,032	$	8.01	6.2		720		$	7.79

At March 25, 2012, the remaining unrecognized compensation cost related to the unvested stock options subject to service conditions was $643 which is expected to be recognized over a weighted average period of 2.1 years. The Company recorded $574 and $417 of compensation expense for the stock options subject to service conditions within SG&A expenses for the nine month periods ended March 25, 2012 and March 27, 2011, respectively.

Stock options subject to market conditions:

There were no options granted in the nine month period ended March 25, 2012 that contained market condition vesting provisions.  A summary of the Company’s non-vested shares related to options subject to market conditions as of March 25, 2012, and changes during the current fiscal year is as follows:

	Under the 1999 LTIP		Under the 2008 LTIP			Total Shares			Weighted-Average Grant-Date Fair Value
Non-vested at June 26, 2011		494		83			577		$	5.66
Granted		—		—			—			—
Vested		—		—			—			—
Forfeited		—		(10	)		(10	)		7.47
Non-vested at March 25, 2012		494		73			567		$	5.63

The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company’s stock options subject to market conditions, for selected price ranges as of March 25, 2012:

					Options Outstanding					Options Exercisable
Exercise Price					Number of Options Outstanding	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining (Years)		Number of Options Exercisable		Weighted Average Exercise Price
$	8.00	-	$	10.00	494	$	8.15		5.6		—	$	—
$	10.01	-	$	13.00	73		12.48		6.7		—		—
Totals					567	$	8.71	5.7		—		$	—

The remaining unrecognized compensation cost related to the stock options subject to market conditions at March 25, 2012 was nil. The Company had $0 and $41 of compensation expense for the stock options subject to market conditions for the nine month periods ended March 25, 2012 and March 27, 2011, respectively.

The stock option activity for the nine month period ended March 25, 2012 for all plans and all vesting conditions is as follows:

	Options Outstanding			Weighted Average Exercise Price
Shares under option at June 26, 2011		1,692		$	9.62
Granted		127			12.47
Exercised		(10	)		7.24
Expired		(198	)		22.36
Forfeited		(12	)		11.35
Shares under option at March 25, 2012		1,599		$	8.26

The total intrinsic value of options exercised was $40 and $123 in the year-to-date periods for fiscal years 2012 and 2011, respectively.  The amount of cash received from the exercise of options was $71 and $118 in the year-to-date periods for fiscal years 2012 and 2011, respectively.

Restricted stock units – non-employee directors:

During the second quarter of fiscal year 2012, under the 2008 LTIP the Compensation Committee authorized, and the Company issued, 49 restricted stock units (“RSUs”) to the Company’s non-employee directors.  The RSUs became fully vested on the grant date.  The RSUs convey no rights of ownership in shares of Company stock until such RSUs have been distributed to the grantee in the form of Company stock.  The vested RSUs will be converted into an equivalent number of shares of Company common stock and distributed to the grantee following the grantee’s termination of services as a member of the Board.  The grantee may elect to defer receipt of the shares of stock in accordance with the deferral options provided under the Unifi, Inc. Director Deferred Compensation Plan.  The Company estimated the fair value of the award to be $9.10 per RSU based on the fair value of the Company’s common stock at the award grant date.

A summary of the Company’s RSUs issued to non-employee directors as of March 25, 2012 and changes during the current fiscal year are as follows:

	Units	Weighted-Average Grant-Date Fair Value
Non-vested at June 26, 2011	21	$	13.89
Granted	49		9.10
Vested	(70)		10.56
Forfeited	—		—
Non-vested at March 25, 2012	—	$	—

The remaining unrecognized compensation cost related to the unvested RSUs at March 25, 2012 is nil. The Company recorded $566 and $166 of compensation expense for the RSUs within SG&A expenses for the nine month periods ended March 25, 2012 and March 27, 2011, respectively.

Restricted stock units – key employees:

During the first quarter of fiscal year 2012, the Compensation Committee authorized, and the Company issued, 64 RSUs from the 2008 LTIP to certain key employees.  The RSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such RSUs have vested and been distributed to the grantee in the form of Company stock.  The RSUs vest ratably over a three year period.  The RSUs will be converted into an equivalent number of shares of stock on each vesting date and distributed to the grantee, or the grantee may elect to defer the receipt of the shares of stock until separation from service.  If after July 27, 2012 and prior to the final vesting date the grantee has a separation from service without cause, the remaining unvested RSUs will become fully vested and will be converted to an equivalent number of shares of stock and issued to the grantee.  The Company estimated the grant-date fair value of the award to be $12.47 per RSU based on the fair value of the Company’s stock at the award grant date.

A summary of the Company’s RSUs issued to key employees as of March 25, 2012 and changes during the current fiscal year is as follows:

	Units	Weighted-Average Grant-Date Fair Value
Non-vested at June 26, 2011	—	$	—
Granted	64		12.47
Vested	—		—
Forfeited	—		—
Non-vested at March 25, 2012	64	$	12.47

The remaining unrecognized compensation cost related to the unvested RSUs at March 25, 2012 is $273 which is expected to be recognized over a weighted average period of 0.3 years. The Company recorded $519 and $0 of compensation expense for the RSUs within SG&A expenses for the nine month periods ended March 25, 2012 and March 27, 2011, respectively.

The total compensation cost that was charged against income related to all share-based compensation arrangements for the third quarter of fiscal years 2012 and 2011 was $395 and $242, respectively, and was $1,659 and $624 for the year-to-date periods, respectively.  These costs were recorded as SG&A expenses with a corresponding offset to Capital in excess of par value.  The total income tax benefit recognized for share-based compensation was not material for all periods presented.

A summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

	Shares
Authorized under the 2008 LTIP		2,000
Less: Market condition options granted		(93	)
Less: Service condition options granted		(694	)
Less: RSUs granted to non-employee directors		(75	)
Less: RSUs granted to key employees		(64	)
Plus: Options forfeited		27
Plus: RSUs forfeited		—
Available for issuance under the 2008 LTIP		1,101