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Stock Plans
12 Months Ended
Jan. 01, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Plans
Stock Plans

Stock-Based Compensation:
 
In addition to the Company’s Employee Stock Purchase Plan, the Company formerly had three stock-based compensation plans, the Amended and Restated 2001 Incentive Plan, the 2005 Incentive Plan and the Amended and Restated Life Sciences Incentive Plan (collectively the “Prior Plans”), under which the Company’s common stock was made available for stock option grants, restricted stock awards, and stock grants as part of the Company’s compensation programs. On April 28, 2009, the Company’s shareholders approved the 2009 Incentive Plan (the “2009 Plan”). Under the 2009 Plan, 10.0 million shares of the Company’s common stock, as well as shares of the Company’s common stock previously granted under the Amended and Restated 2001 Incentive Plan and the 2005 Incentive Plan that were cancelled or forfeited without the shares being issued, are authorized for stock option grants, restricted stock awards, and stock grants as part of the Company’s compensation programs. The 2009 Plan replaced the Prior Plans. Awards granted under the Prior Plans prior to the approval of the 2009 Plan remain outstanding.
 
The following table summarizes total pre-tax compensation expense recognized related to the Company’s stock options, restricted stock, restricted stock units, performance units and stock grants, net of estimated forfeitures, included in the Company’s consolidated statements of operations for fiscal years 2011, 2010, and 2009:
 
 
January 1,
2012
 
January 2,
2011
 
January 3,
2010
 
(In thousands)
Cost of product and service revenue
$
1,139

 
$
882

 
$
1,173

Research and development expenses
583

 
518

 
413

Selling, general and administrative and other expenses
13,760

 
11,151

 
11,202

Continuing operations stock-based compensation expense
15,482

 
12,551

 
12,788

Discontinued operations stock-based compensation expense

 
1,214

 
1,048

Total stock-based compensation expense
$
15,482

 
$
13,765

 
$
13,836


 
The total income tax benefit recognized in the consolidated statements of operations for stock-based compensation was $5.1 million in fiscal year 2011, $4.7 million in fiscal year 2010 and $4.8 million in fiscal year 2009. Stock-based compensation costs capitalized as part of inventory were $0.3 million as of both January 1, 2012 and January 2, 2011. The excess tax benefit recognized from stock awards, classified as a financing cash activity, was $9.3 million in fiscal year 2011, $2.4 million in fiscal year 2010 and $0.2 million in fiscal year 2009.
 
Stock Options:    The Company has granted options to purchase common shares at prices equal to the market price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant. Options are generally exercisable in equal annual installments over a period of three years, and will generally expire seven years after the date of grant. Options replaced in association with business combination transactions are issued with the same terms of the respective plans under which they were originally issued.
 
The fair value of each option grant is estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated primarily based on the historical volatility of the Company’s stock. The average expected life was based on the contractual term of the option and historic exercise experience. The risk-free interest rate is based on United States Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures. The Company’s weighted-average assumptions used in the Black-Scholes option pricing model are as follows for the fiscal years ended:
 
 
January 1,
2012
 
January 2,
2011
 
January 3,
2010
Risk-free interest rate
1.9
%
 
1.8
%
 
1.6
%
Expected dividend yield
1.1
%
 
1.4
%
 
1.9
%
Expected lives
4 years

 
4 years

 
4 years

Expected stock volatility
38.1
%
 
37.5
%
 
35.0
%


The following table summarizes stock option activity for the three fiscal years ended January 1, 2012:
 
 
January 1, 2012
 
January 2, 2011
 
January 3, 2010
 
Number
of
Shares
 
Weighted-
Average
Price
 
Number
of
Shares
 
Weighted-
Average
Price
 
Number
of
Shares
 
Weighted-
Average
Price
 
(Shares in thousands)
Outstanding at beginning of year
6,983

 
$
21.86

 
8,415

 
$
21.27

 
9,424

 
$
24.81

Granted
847

 
24.20

 
784

 
21.16

 
2,254

 
13.26

Exercised
(1,138
)
 
20.86

 
(1,543
)
 
18.82

 
(459
)
 
13.59

Canceled
(1,237
)
 
30.29

 
(267
)
 
25.19

 
(2,601
)
 
28.50

Forfeited
(109
)
 
18.27

 
(406
)
 
17.67

 
(203
)
 
21.27

Outstanding at end of year
5,346

 
$
20.57

 
6,983

 
$
21.86

 
8,415

 
$
21.27

Exercisable at end of year
3,549

 
$
20.74

 
4,787

 
$
23.78

 
4,909

 
$
23.95


 
The aggregate intrinsic value for stock options outstanding at January 1, 2012 was $8.6 million with a weighted-average remaining contractual term of 3.6 years. The aggregate intrinsic value for stock options exercisable at January 1, 2012 was $5.4 million with a weighted-average remaining contractual term of 2.6 years. At January 1, 2012, there were 4.9 million stock options that were vested, and expected to vest in the future, with an aggregate intrinsic value of $7.8 million and a weighted-average remaining contractual term of 3.6 years.
 
The weighted-average per-share grant-date fair value of options granted during fiscal years 2011, 2010, and 2009 was $7.03, $5.99, and $3.33, respectively. The total intrinsic value of options exercised during fiscal years 2011, 2010, and 2009 was $6.9 million, $6.1 million, and $2.0 million, respectively. Cash received from option exercises for fiscal years 2011, 2010, and 2009 was $23.7 million, $29.0 million, and $6.2 million, respectively. The total compensation expense recognized related to the Company’s outstanding options was $4.5 million in fiscal year 2011, $6.6 million in fiscal year 2010 and $8.7 million in fiscal year 2009.
 
There was $4.8 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested stock options granted as of January 1, 2012. This cost is expected to be recognized over a weighted-average period of 1.7 years, and will be adjusted for any future changes in estimated forfeitures.
 
Restricted Stock Awards:    The Company has awarded shares of restricted stock and restricted stock units that contain time-based vesting provisions and performance-based vesting provisions to certain employees at no cost to them, which cannot be sold, assigned, transferred or pledged during the restriction period. These awards were granted under the Company’s 2009 Plan, 2005 Incentive Plan and 2001 Incentive Plan. Recipients of the restricted stock have the right to vote such shares and receive dividends.
 
Restricted Stock Awards (Time-based Vesting)—The Company grants restricted stock and restricted stock units that vest through the passage of time, assuming continued employment. The fair value of the award at the time of the grant is expensed on a straight line basis primarily in selling, general and administrative expenses over the vesting period, which is generally three years.
 
Restricted Stock Awards (Performance-based Vesting)—The Company grants restricted stock and restricted stock units that vest based on certain specified performance criteria, assuming employment at the time the performance criteria are met. The fair value of the shares is expensed over the period of performance primarily in selling, general and administrative expenses, once achievement of criteria is deemed probable.
 
The following table summarizes the restricted stock awards activity for the three fiscal years ended January 1, 2012:
 
 
January 1, 2012
 
January 2, 2011
 
January 3, 2010
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
Number
of
Shares
 
Weighted-
Average
Grant-
Date Fair
Value
 
(Shares in thousands)
Nonvested at beginning of year
578

 
$
22.00

 
451

 
$
22.49

 
321

 
$
24.54

Granted
460

 
26.31

 
413

 
21.20

 
283

 
13.24

Vested
(272
)
 
23.96

 
(147
)
 
20.45

 
(118
)
 
15.45

Forfeited
(94
)
 
24.58

 
(139
)
 
21.17

 
(35
)
 
23.80

Nonvested at end of year
672

 
$
23.62

 
578

 
$
22.00

 
451

 
$
22.49


 
The weighted-average per-share grant-date fair value of restricted stock awards granted during fiscal years 2011, 2010, and 2009 was $26.31, $21.20, and $13.24, respectively. The fair value of restricted stock awards vested during fiscal years 2011, 2010, and 2009 was $6.5 million, $3.0 million, and $1.8 million, respectively. The total compensation expense recognized related to the restricted stock awards was $6.5 million in fiscal year 2011, $4.3 million in fiscal year 2010 and $2.3 million in fiscal year 2009.
 
As of January 1, 2012, there was $9.3 million of total unrecognized compensation cost, net of forfeitures, related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.6 fiscal years.
 
Performance Units:    The Company’s performance unit program provides a cash award based on the achievement of specific performance criteria. A target number of units are granted at the beginning of a three-year performance period. The number of units earned at the end of the performance period is determined by multiplying the number of units granted by a performance factor ranging from 0% to 200%. Awards are determined by multiplying the number of units earned by the stock price at the end of the performance period, and are paid in cash and accounted for as a liability based award. The compensation expense associated with these units is recognized over the period that the performance targets are expected to be achieved. The Company granted 89,828 performance units, 129,879 performance units, and 205,900 performance units during fiscal years 2011, 2010, and 2009, respectively. The weighted-average per-share grant-date fair value of performance units granted during fiscal years 2011, 2010, and 2009 was $26.71, $20.89, and $13.17, respectively. The total compensation expense related to these performance units was $3.7 million, $2.0 million, and $2.1 million for fiscal years 2011, 2010, and 2009, respectively. As of January 1, 2012, there were 346,308 performance units outstanding subject to forfeiture, with a corresponding liability of $8.4 million recorded in accrued expenses.
 
Stock Awards:    The Company’s stock award program provides non-employee Directors an annual equity award. For fiscal years 2011, 2010, and 2009 the award equaled the number of shares of the Company’s common stock which has an aggregate fair market value of $100,000 on the date of the award. The stock award is prorated for non-employee Directors who serve for only a portion of the year. The shares are granted in May following the annual meeting of shareholders, on the third business day after the Company’s first quarter earnings release. The compensation expense associated with these stock awards is recognized when the stock award is granted. In fiscal years 2011, 2010, and 2009, each non-employee Director was awarded 3,544 shares, 4,337 shares, and 5,790 shares, respectively. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2011, 2010, and 2009 was $28.22, $23.06, and $17.27, respectively. The total compensation expense recognized related to these stock awards was $0.8 million in each of the fiscal years 2011, 2010, and 2009.
 
Employee Stock Purchase Plan:    In April 1999, the Company’s shareholders approved the 1998 Employee Stock Purchase Plan. In April 2005, the Compensation and Benefits Committee of the Board voted to amend the Employee Stock Purchase Plan, effective July 1, 2005, whereby participating employees have the right to purchase common stock at a price equal to 95% of the closing price on the last day of each six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee’s voluntary contribution, which may not exceed 10% of the employee’s base compensation. During fiscal year 2011, the Company issued 102,970 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $21.33 per share. During fiscal year 2010, the Company issued 85,607 shares under this plan at a weighted-average price of $21.80 per share. During fiscal year 2009, the Company issued 195,406 shares under this plan at a weighted-average price of $16.05 per share. At January 1, 2012 there remains available for sale to employees an aggregate of 1.2 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.