Share-Based Compensation

3 Months Ended

Jul. 02, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company's share-based compensation consists of stock-settled stock appreciation rights (SARs), time-based restricted stock unit awards (time-based RSUs), performance-based restricted stock unit awards (performance-based RSUs), and an employee stock purchase plan. The performance-based RSUs specify certain performance or market-based conditions that must be achieved in order for the awards to vest.

The Company recognizes expense related to the fair value of SARs and employee stock purchase plan using the Black-Scholes model to estimate the fair value of awards on the date of grant. SARs grant the right to receive shares of the Company's stock equivalent to the increase in stock value of a specified number of shares over a specified period of time, divided by the stock price at the time of exercise. The fair value of time-based RSUs and performance-based RSUs contingent on performance criteria are measured on the grant date based on the market value of our common stock. The performance-based RSUs contingent on market conditions must achieve the total shareholder return (TSR) measures in order for the awards to vest, and the fair value of the awards is calculated on the grant date using a Monte Carlo simulation model.

The Company recognizes compensation expense for all share-based compensation awards, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. The compensation cost on performance-based RSUs contingent on TSR measure is recognized over the related service period, even if the market condition is never satisfied.

The Company granted a total of 495,500 time-based RSUs and 195,000 performance-based RSUs contingent on a TSR measure during the first quarter of 2017, but did not grant any SARs.

Share-based compensation expense was included in the Company’s Condensed Consolidated Statements of Operations as follows:



	Fiscal quarter ended
(In thousands)	July 2, 2016		June 27, 2015
Cost of sales	$	120	$	129
Selling, general and administrative	977		715
Research, development and engineering	194		219
Total share-based compensation expense	$	1,291	$	1,063

The Company does not capitalize share-based compensation costs. As of July 2, 2016, the Company had $9.9 million of total unrecognized share-based compensation costs, net of estimated forfeitures, which are expected to be recognized over a weighted average period of 2.0 years.