Note 16 - Stock-based Compensation

3 Months Ended

Sep. 28, 2014

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

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

16. Stock-based Compensation

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 Unifi, Inc. Long-Term Incentive Plan (the “2008 LTIP”). No additional awards will be granted under the 2008 LTIP; however, prior awards 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.

Stock options

During the quarters ended September 28, 2014 and September 29, 2013, the Company granted stock options to purchase 150 and 92 shares of common stock, respectively, to certain key employees. The stock options vest ratably over the required three-year service period and have ten-year contractual terms. For the quarters ended September 28, 2014 and September 29, 2013, the weighted average exercise price of the options was $27.38 and $22.22 per share, respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $17.31 and $14.63 per share, respectively.

For options granted, the valuation models used the following assumptions:

	For the Three Months Ended
	September 28, 2014			September 29, 2013
Expected term (years)		7.3			7.5
Risk-free interest rate		2.2	%		2.1	%
Volatility		62.6	%		65.9	%
Dividend yield		—			—

The Company uses historical data to estimate the expected term and volatility. 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 28, 2014 is as follows:

	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 29, 2014		800	$	9.77
Granted		150	$	27.38
Exercised		—	$	—
Forfeited		—	$	—
Expired		—	$	—
Outstanding at September 28, 2014		950	$	12.56		6.3	$	13,064
Vested and expected to vest as of September 28, 2014		942	$	12.46		6.3	$	13,045
Exercisable at September 28, 2014		684	$	8.58		5.3	$	12,002

At September 28, 2014, 13 non-vested options are subject to a market condition that vests the options on the date that the closing price of the Company’s common stock on the New York Stock Exchange has been at least $30 per share for thirty consecutive trading days. As of June 29, 2014, 14 options subject to a similar market condition at a threshold of $24 per share were vested and remain outstanding. The weighted average exercise price of such 27 options subject to a market condition is $8.16.

At September 28, 2014, the remaining unrecognized compensation cost related to unvested stock options was $2,756, which is expected to be recognized over a weighted average period of 2.6 years.

For the quarters ended September 28, 2014 and September 29, 2013, the total intrinsic value of options exercised was $0, and $4,442, respectively. The amount of cash received from the exercise of options was $0 and $2,373 and the tax benefit realized from stock options exercised was $0 and $1,759 for the quarters ended September 28, 2014 and September 29, 2013, respectively.

Restricted stock units

No RSUs were granted during the quarter ended September 28, 2014.

During the quarter ended September 29, 2013, the Company granted 22 restricted stock units (“RSUs”) 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, and will be converted into an equivalent number of shares of stock (for distribution to the grantee) on each vesting date, unless the grantee has elected 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 quarter ended September 29, 2013 to be $22.08 per RSU.

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 28, 2014 is as follows:

	Non-vested			Weighted Average Grant Date Fair Value		Vested		Total		Weighted Average Grant Date Fair Value
Outstanding at June 29, 2014		49		$	16.11		152		201	$	14.19
Granted		—		$	—		—		—	$	—
Vested		(28	)	$	14.47		28		—	$	14.47
Converted		—		$	—		—		—	$	—
Forfeited		—		$	—		—		—	$	—
Outstanding at September 28, 2014		21		$	18.35		180		201	$	14.19

At September 28, 2014 the number of RSUs vested and expected to vest was 201 with an aggregate intrinsic value of $5,255. The aggregate intrinsic value of the 180 vested RSUs at September 28, 2014 was $4,711.

The remaining unrecognized compensation cost related to the unvested RSUs at September 28, 2014 is $175, which is expected to be recognized over a weighted average period of 1.7 years.

For the quarters ended September 28, 2014 and September 29, 2013, the total intrinsic value of RSUs converted was $0 and $696, respectively. The tax benefit realized from the conversion of RSUs was $0 and $275 for the quarters ended September 28, 2014 and September 29, 2013, respectively.

Summary

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

	For the Three Months Ended
	September 28, 2014		September 29, 2013
Stock options	$	464	$	156
RSUs		62		103
Total compensation cost	$	526	$	259

The total income tax benefit recognized for stock-based compensation was $101 and $75 for the quarters ended September 28, 2014 and September 29, 2013, respectively.

As of September 28, 2014, total unrecognized compensation costs related to all unvested stock-based compensation arrangements was $2,931. The weighted average period over which these costs are expected to be recognized is 2.6 years.

As of September 28, 2014, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2013 Plan	1,000
Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP	—
Less: Service-condition options granted	(155	)
Less: RSUs granted to non-employee directors	(25	)
Available for issuance under the 2013 Plan	820