Note 13. Stock Based Compensation

The Plan is administered by the Compensation Committee or such other Board committee (or the entire Board) as may be designated by the Board (the “Committee”). At July 3, 2016, the Company has reserved approximately 10.5 million shares of common stock for issuance, including options previously authorized for issuance under the 1999 Stock Incentive Plan.

The amounts of stock-based compensation expense recognized in the periods presented are as follows:

	Years Ended
	July 3, 2016		June 28, 2015		June 29, 2014
	(in thousands, except per share data)
Stock options	$	432	$	459	$	420
Restricted stock awards		5,911		5,503		4,244
Total		6,343		5,962		4,664
Deferred income tax benefit		1,987		2,087		1,738
Stock-based compensation expense, net	$	4,356	$	3,875	$	2,926

Stock based compensation expense is recorded within the following line items of operating expenses:

	Years Ended
	July 3, 2016		June 28, 2015		July 29, 2014
	(in thousands)
Marketing and sales	$	2,306	$	1,866	$	1,261
Technology and development		493		392		298
General and administrative		3,544		3,704		3,105
Total	$	6,343	$	5,962	$	4,664

Stock-based compensation expense has not been allocated between business segments, but is reflected as part of Corporate overhead. (Refer to Note 15. Business Segments).

Stock Options

The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model, were as follows:

	Years ended
	July 3, 2016 (1)		June 28, 2015			June 29, 2014

Weighted average fair value of options granted		n/a	$	4.86		$	3.16
Expected volatility		n/a		52	%		61	%
Expected life (in years)		n/a		7.3			6.6
Risk-free interest rate		n/a		1.9	%		1.6	%
Expected dividend yield		n/a		0.0	%		0.0	%


	(1)	No options were granted during the fiscal year ended July 3, 2016.

The expected volatility of the option is determined using historical volatilities based on historical stock prices. The Company estimated the expected life of options granted based upon the historical weighted average. The risk-free interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%.

The following table summarizes stock option activity during the year ended July 3, 2016:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (000s)

Outstanding beginning of period		3,345,146		$	2.93
Granted		-		$	-
Exercised		(1,044,255	)	$	3.36
Forfeited/Expired		(118,657	)	$	7.33
Outstanding end of period		2,182,234		$	2.49		4.8	$	14,236

Options vested or expected to vest at end of period		2,117,259		$	2.49		4.8	$	13,821
Exercisable at July 3, 2016		1,261,234		$	2.45		4.6	$	8,271

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company

’s closing stock price on the last trading day of fiscal 2016 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 July 3, 2016. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the years ended July 3, 2016, June 28, 2015 and June 29, 2014 was $4.2 million, $3.6 million, and $0.4 million, respectively

The following table summarizes information about stock options outstanding at July 3, 2016:

			Options Outstanding						Options Exercisable
Exercise Price			Options Outstanding		Weighted - Average Remaining Contractual Life (years)		Weighted - Average Exercise Price		Options Exercisable		Weighted - Average Exercise Price
$1.69	–	1.79		1,001,000		4.3	$	1.79		626,000	$	1.79
$2.22	–	2.44		42,000		6.3	$	2.43		42,000	$	2.43
$2.63	–	2.63		1,010,000		0.9	$	2.63		508,000	$	2.63
$2.88	–	10.20		129,234		4.1	$	6.85		85,234	$	6.23
				2,182,234		4.8	$	2.49		1,261,234	$	2.45

As of July 3, 2016, the total future compensation cost related to non-vested options not yet recognized in the statement of operations was $1.2 million and the weighted average period over which these awards are expected to be recognized was 2.9 years.

Restricted Stock

The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service conditions and, in certain cases, holding periods (Restricted Stock).

The following table summarizes the activity of non-vested restricted stock during the year ended July 3, 2016:

	Shares			Weighted Average Grant Date Fair Value

Non-vested – beginning of period		2,342,052		$	5.62
Granted		1,027,706		$	9.01
Vested		(879,863	)	$	5.21
Forfeited		(472,826	)	$	8.85
Non-vested - end of period		2,017,069		$	6.78

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of July 3, 2016, there was $7.4 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over a weighted-average period of 2.1 years.