SHAREHOLDERS' EQUITY

6 Months Ended

Mar. 30, 2012

SHAREHOLDERS' EQUITY

NOTE 4 – SHAREHOLDERS’ EQUITY

Stock Options

In the first quarter of 2010 the Company adopted the 2009 Incentive Plan (the “2009 Plan”). This plan replaced the Company’s 1993 Stock Incentive Plan, the 1996 Stock Incentive Plan, the 1999 Non-Qualified Stock Option Plan, the 2007 New Hire Incentive Plan, the Clarity Visual Systems, Inc. 1995 Plan and Non-Qualified Stock Option Plan as well as any individual inducement awards, which are collectively referred to as the “Prior Plans.” The 2009 Plan authorizes the issuance of 1,300,000 shares of common stock. In addition, up to 2,963,375 shares subject to awards outstanding under the Prior Plans may become available for issuance under the 2009 Plan to the extent that these shares cease to be subject to the original awards (such as by expiration, cancellation or forfeiture of the awards). The maximum number of shares that may be issued under the 2009 Plan is 4,263,375 shares, including shares that may become available from the Prior Plans.

The 2009 Plan provides for the granting of stock options, which generally vest and become exercisable over a three-year period and expire seven to ten years after the date of grant. Options were last granted in the second quarter of fiscal 2008.

Information regarding outstanding options is as follows:

	Number of Shares			Weighted Average Exercise Prices
Options outstanding at September 30, 2011		1,152,707		$	9.89
Granted		—			—
Exercised		—			—
Forfeited		—			—
Expired		(152,288	)		11.04
Options outstanding at March 30, 2012		1,000,419		$	9.71

No options were exercised in the first six months of 2012 and all options outstanding at March 30, 2012 were exercisable. As of March 30, 2012, the total pretax intrinsic value of options outstanding and options exercisable was $10 and the options had a weighted average remaining contractual term of 3.0 years.

Restricted Stock

The 2009 Plan provides for the issuance of restricted stock (“nonvested shares” per ASC Topic 718, “Compensation—Stock Compensation”). Shares issued generally vest over a one- to three-year period upon the passage of time, or upon meeting objective performance conditions.

Information regarding outstanding restricted stock awards is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock outstanding at September 30, 2011		1,385,934		$	3.34
Granted		507,500			1.99
Vested		(530,565	)		3.21
Canceled		(122,634	)		3.76
Restricted stock outstanding at March 30, 2012		1,240,235		$	2.80

Employee Stock Purchase Plan

In fiscal 2005 the Company adopted the 2004 Employee Stock Purchase Plan, which replaced the 1994 Employee Stock Purchase Plan. The 2004 Employee Stock Purchase Plan (“the Plan”) provides that eligible employees may contribute, through payroll deductions, up to 10% of their earnings toward the purchase of the Company’s Common Stock at 85% of the fair market value at specific dates. The fair value of the purchase rights is estimated on the first day of the offering period using the Black-Scholes model. In the second quarter of fiscal 2010, the Company’s shareholders approved an amendment to the Plan which increased the number of shares of common stock that may be purchased under the Plan from 400,000 shares to 1,400,000 shares. As of March 30, 2012, approximately 850,000 shares remained available for purchase.

Valuation and Expense Information

The following table summarizes share based compensation expense related to share based payment awards and employee stock purchases for the three and six months ended March 30, 2012 and April 1, 2011. The expense was allocated as follows:

	Three Months Ended Mar. 30, 2012		Three Months Ended Apr. 1, 2011		Six Months Ended Mar. 30, 2012		Six Months Ended Apr. 1, 2011
Cost of sales	$	23	$	13	$	36	$	30
Research and development	$	24	$	52	$	63	$	103
Sales and marketing		30		113		55		232
General and administrative		294		247		499		524
Share based compensation expense included in operating expenses	$	348	$	412	$	617	$	859
Share based compensation expense related to employee stock options and restricted stock awards	$	371	$	425	$	653	$	889

The Company recognizes compensation expense for all share based payment awards made to its employees and directors including employee stock options, restricted stock awards and employee stock purchases related to the Employee Stock Purchase Plan, based on estimated fair values. The Company calculates the value of employee stock options on the date of grant using the Black-Scholes model. This model is also used to estimate the fair value of employee stock purchases related to the Employee Stock Purchase Plan. The Company values restricted stock awards at the closing price of the Company’s shares on the date of grant. As share based compensation expense recognized in the Consolidated Statement of Operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures were estimated based on historical and anticipated future experience.