Note 8 – Stock-Based Compensation

The Company has various stockholder-approved programs which allow for the grant of stock-based compensation to officers, employees, and non-employee directors of the Company.

The amount of compensation cost related to stock-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Company determines compensation cost for restricted stock units ("RSUs"), phantom stock units, and restricted stock based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.

The following table summarizes stock-based compensation expense recognized:

	Fiscal quarters ended				Nine fiscal months ended
	September 28, 2013		September 29, 2012		September 28, 2013			September 29, 2012

Stock options	$	-	$	13	$	18		$	60
Restricted stock units		382		1,128		(1,336	)		3,396
Phantom stock units		-		-		108			93
Total	$	382	$	1,141	$	(1,210	)	$	3,549

The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes. Stock-based compensation for the nine fiscal months ended September 28, 2013, as presented in the table above, includes the material reversal of stock-based compensation expense recognized for the performance-based RSUs scheduled to vest on January 1, 2014 recorded in the second fiscal quarter of 2013. $1,778 of these reversed costs had been originally reported as a separate line item upon cessation of employment of certain former executives in 2011, and accordingly, this adjustment is also reported as a separate line item in the consolidated condensed statements of operations.

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at September 28, 2013 (amortization periods in years):

	Unrecognized Compensation Cost		Weighted Average Remaining Amortization Periods

Stock options	$	-		0.0
Restricted stock units		12,432		1.4
Phantom stock units		-		0.0
Total	$	12,432

2007 Stock Incentive Plan

The Company's 2007 Stock Incentive Program (the "2007 Program") permits the grant of up to 3,000,000 shares of restricted stock, unrestricted stock, RSUs, and stock options, to officers, employees, and non-employee directors of the Company. Such instruments are available for grant until May 22, 2017.

Stock Options

In addition to stock options outstanding pursuant to the 2007 Program, during the periods presented, the Company had stock options outstanding under previous stockholder-approved stock option programs. These programs are more fully described in Note 12 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2012. No additional options may be granted pursuant to these programs.

At December 31, 2012 and September 28, 2013, there were 109,000 options outstanding with a weighted average exercise price of $15.24. At September 28, 2013, the weighted average remaining contractual life of all outstanding options was 3.49 years.

During the nine fiscal months ended September 28, 2013, 30,000 options vested. At September 28, 2013, there were no unvested options outstanding.

The pretax aggregate intrinsic value (the difference between the closing stock price on the last trading day of the third fiscal quarter of 2013 of $12.97 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 28, 2013 is $8. This amount changes based on changes in the market value of the Company's common stock. During the nine fiscal months ended September 28, 2013, no options were exercised.

Restricted Stock Units

RSU activity under the 2007 Program as of September 28, 2013 and changes during the nine fiscal months then ended are presented below (number of RSUs in thousands):

	Number of RSUs			Weighted Average Grant-date Fair Value per Unit
Outstanding:
January 1, 2013		1,316		$	12.53
Granted		374			12.76
Vested*		(500	)		9.82
Cancelled or forfeited		-			-
Outstanding at September 28, 2013		1,190		$	13.74

Expected to vest at September 28, 2013		570

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* The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.

The number of performance-based RSUs that are scheduled to vest on January 1, 2014 and January 1, 2015 is fixed based on the full achievement of the defined target performance criteria. The number of performance-based RSUs that are scheduled to vest on January 1, 2016 increases ratably based on the achievement of defined performance criteria between the established target and maximum levels. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest	Not Expected to Vest	Total
January 1, 2014	-	233	233
January 1, 2015	-	276	276
January 1, 2016	111	111	222

Phantom Stock Plan

The Company maintains a phantom stock plan for certain senior executives. The plan authorizes the grant of up to 300,000 phantom stock units to the extent provided for in the Company's employment agreements with such senior executives. Each phantom stock unit entitles the recipient to receive a share of common stock at the individual's termination of employment or any other future date specified in the applicable employment agreement. The phantom stock units are fully vested at all times.

Phantom stock unit activity under the phantom stock plan as of September 28, 2013 and changes during the nine fiscal months then ended are presented below (number of phantom stock units in thousands):

	Number of units		Grant-date Fair Value per Unit
Outstanding:
January 1, 2013		97
Granted		10	$	10.75
Redeemed for common stock		-
Outstanding at September 28, 2013		107