Note 15 - Stock Based Compensation

3 Months Ended

Sep. 29, 2013

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

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

15. Stock Based Compensation

On October 29, 2008, the Company’s shareholders approved the 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. Awards may be made to employees, directors and consultants, as determined by the Compensation Committee of the Board of Directors. Option awards are granted with an exercise price not less than the market price of the Company’s stock at the date of grant and have ten year contractual terms. The 2008 LTIP replaced the 1999 Unifi, Inc. Long-Term Incentive Plan (“1999 LTIP”), however, prior grants outstanding under the 1999 LTIP remain subject to that plan’s provisions.

Stock options

During the quarters ended September 29, 2013 and September 23, 2012, the Company granted stock options to purchase 92 and 138 shares of common stock, respectively, to certain key employees. The stock options vest ratably over the required three year service period. For the quarters ended September 29, 2013 and September 23, 2012, the weighted average exercise price of the options was $22.22 and $11.15 per share, respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $14.63 and $7.28 per share, respectively.

The valuation models used the following assumptions:

	For the Three Months Ended
	September 29, 2013		September 23, 2012
Expected term (years)		7.5		7.5
Interest rate		2.1%		1.0%
Volatility		65.9%		66.9%
Dividend yield		—		—

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

A summary of stock option activity for the quarter ended September 29, 2013 is as follows:

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2013		1,541		$	8.41
Granted		92		$	22.22
Exercised		(302	)	$	7.86
Forfeited		(33	)	$	13.69
Expired		—		$	—
Outstanding at September 29, 2013		1,298		$	9.38		5.4	$	18,498
Vested and expected to vest as of September 29, 2013		1,293		$	9.35		5.3	$	18,465
Exercisable at September 29, 2013		1,078		$	8.17		4.7	$	16,662

At September 29, 2013, the remaining unrecognized compensation cost related to unvested stock options was $1,476, which is expected to be recognized over a weighted average period of 2.5 years.

For the quarters ended September 29, 2013 and September 23, 2012, the total intrinsic value of options exercised was $4,442, and $26, respectively. The amount of cash received from the exercise of options was $2,373 and $29 and the tax benefit realized from stock options exercised was $1,759 and $1 for the quarters ended September 29, 2013 and September 23, 2012, respectively.

Restricted stock units

During the quarters ended September 29, 2013 and September 23, 2012, the Company granted 22 and 32 restricted stock units (“RSUs”), respectively, 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 over a three year period. The RSUs do not have a contractual term and 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 the first anniversary of the grant date and prior to the final vesting date the grantee has a separation from service without cause for any reason other than the employee’s resignation, 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 fair value of the awards granted during the quarters ended September 29, 2013 and September 23, 2012 to be $22.08 and $11.23 per RSU, respectively.

No RSUs were granted to non-employee directors in either period.

The Company estimates the fair value of RSUs based on the market price of the Company’s common stock at the award grant date.

A summary of the RSU activity for the quarter ended September 29, 2013 is as follows:

	Non-vested			Weighted Average Grant Date Fair Value		Vested			Total			Weighted Average Grant Date Fair Value
Outstanding at June 30, 2013		75		$	11.94		112			187		$	11.78
Granted		22		$	22.08		—			22		$	22.08
Vested		(46	)	$	11.99		46			—		$	11.99
Converted		—		$	—		(31	)		(31	)	$	12.06
Forfeited		(2	)	$	22.08		—			(2	)	$	22.08
Outstanding at September 29, 2013		49		$	16.11		127			176		$	12.92

At September 29, 2013 the number of RSUs vested and expected to vest was 176 with an aggregate intrinsic value of $4,169. The aggregate intrinsic value of the 127 vested RSUs at September 29, 2013 was $3,007.

The remaining unrecognized compensation cost related to the unvested RSUs at September 29, 2013 is $497, which is expected to be recognized over a weighted average period of 2.6 years.

For the quarters ended September 29, 2013 and September 23, 2012, the total intrinsic value of RSUs converted was $696 and nil, respectively. The tax benefit realized from the conversion of RSUs was $275 and nil for the quarters ended September 29, 2013 and September 23, 2012, respectively.

Summary

The total cost charged against income related to all stock based compensation arrangements was as follows:

	For the Three Months Ended
	September 29, 2013		September 23,  2012
Stock options	$	156	$	237
RSUs		103		112
Total compensation cost	$	259	$	349

The total income tax benefit recognized for stock based compensation was $75 and $76 for the quarters ended September 29, 2013 and September 23, 2012, respectively.

As of September 29, 2013, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2008 LTIP	2,000
Less: Market condition options granted	(93	)
Less: Service condition options granted	(924	)
Less: RSUs granted to non-employee directors	(104	)
Less: RSUs granted to key employees	(118	)
Plus: Options forfeited	60
Plus: RSUs forfeited	2
Available for issuance under the 2008 LTIP	823

Subsequent Event

On October 23, 2013, the Company’s shareholders approved the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan replaced the 2008 LTIP. No additional awards will be granted under the 2008 LTIP, however, prior grants outstanding under the 2008 LTIP remain subject to that plan’s provisions. The 2013 Plan authorized the issuance of 1,000 shares of common stock, subject to certain increases in the event outstanding awards under the 2008 LTIP expire, are forfeited or otherwise terminate unexercised.