Stock-Based Compensation

3 Months Ended

Mar. 24, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

7. STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The Company recognized compensation expense of $3,659 and $3,281 and related income tax benefits of $1,182 and $1,054 for grants under its stock-based compensation plans in the statements of operations for the 12 weeks ended March 24, 2012 and March 26, 2011, respectively.

Stock-based compensation expense recognized in the consolidated condensed statements of operations for the 12 weeks ended March 24, 2012 and March 26, 2011, is based on awards ultimately expected to vest and, as such, has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

The Company estimated the fair value of employee stock options on the date of grant using the Black-Scholes model. The estimated weighted-average fair value for each option granted was $10.78 and $10.41 for the 12 weeks ended March 24, 2012 and March 26, 2011, respectively, with the following weighted-average assumptions:

	12 Weeks Ended
	March 24,			March 26,
	2012			2011
Expected market price volatility (1)		37.9	%		38.6	%
Risk-free interest rate (2)		0.6	%		1.9	%
Dividend yield (3)		1.3	%		1.6	%
Expected term (4)		4 years			4 years

(1) Based on historical volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price of the stock over the four years prior to the grant.

(2) Represents the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant.

(3) Represents the Company’s cash dividend yield for the expected term.

(4) Represents the period of time that options granted are expected to be outstanding. As part of the determination of the expected term, the Company concluded that all employee groups exhibit similar exercise and post-vesting termination behavior.

The Company issued 673,594 and 747,319 shares of common stock in connection with the exercise of stock options and new restricted stock grants made during the 12 weeks ended March 24, 2012 and March 26, 2011, respectively. The Company cancelled 10,692 and 3,965 shares, respectively, of common stock issued under restricted stock awards as a result of forfeitures during the 12 weeks ended March 24, 2012 and March 26, 2011, respectively.