5 .	STOCK-BASED COMPENSATION

As of

February 25, 2018,

the Company had a

2002

Stock Option Plan (the “Plan”) and

other stock-based compensation plan. The Plan has been approved by the Company’s shareholders and provides for the grant of stock options to directors and key employees of the Company. All options granted under the Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant, which, pursuant to the terms of the Plan, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plan become exercisable

25%

one

year after the date of grant, with an additional

25%

exercisable each succeeding anniversary of the date of grant, and expire

years after the date of grant. Options to purchase a total of

1,800,000

shares of common stock were authorized for grant under the Plan. At

February 25, 2018,

1,459,130

shares of common stock of the Company were reserved for issuance upon exercise of stock options under the Plan, and

573,576

options were available for future grant under the Plan.

The

2002

Stock Option Plan will terminate on

May 21, 2018,

and the authority to grant options under such Plan will expire on such date. On

May 8, 2018,

the Board of Directors of the Company adopted the

2018

Stock Option Plan, which is similar to the

2002

Stock Option Plan, subject to shareholder approval at the Annual Meeting of Shareholders on

July 24, 2018,

providing, during the

ten

-year term of the Plan, for the grant of options, to employees, directors and consultants to the Company to purchase a total of

900,000

shares of Common Stock.

The compensation expense for stock options includes an estimate for forfeitures and is recognized on a straight-line basis over the requisite service period.

The future compensation expense to be recognized in earnings before income taxes for options outstanding at

February 25, 2018

was

$1,258,

which is expected to be recognized ratably over a weighted average vesting period of

0.92

years.

The Company records its stock-based compensation at fair value. The weighted average fair value for options was estimated at the dates of grants, using the Black-Scholes option pricing model.

The following table represents the weighted average fair value and valuation assumptions used for options granted in the

2018,

2017

and

2016

fiscal years:

	Fiscal Year
	2018	2017			2016

Weighted average fair value per share of option grants	-	$	3.15				$5.30
Risk-free interest rates	-		1.77	%		1.57	-	1.86%
Expected stock price volatility	-		28.9	%		27.91	-	31.71%
Expected dividend yields	-		2.23	%		1.84	-	2.76%
Estimated option terms (in years)	-		5.3			5.3	-	7.9

The risk-free interest rates are based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated term of the options at the date of grant. Volatility factors are based on historical volatility of the Company’s common stock. The expected dividend yields are based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the

2018

fiscal year. The estimated terms of the options are based on evaluations of the historical and expected future employee exercise behavior.

During the

2018

fiscal year, the Company recorded non-cash charges of

$513

resulting from the modification of previously granted employee stock options resulting from the

$3.00

per share special cash dividend paid by the Company in

February 2018.

Selling, general and administrative expenses in

2018

fiscal year included

$1,445

of stock option expenses compared to

$1,214

of such expenses in

2017

fiscal year.

Information with respect to stock option activity follows:

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

Balance, March 1, 2015		966,692		$	22.55
Granted		379,450			17.82
Exercised		(2,500	)		19.91
Terminated or expired		(117,250	)		21.53
Balance, February 28, 2016		1,226,392		$	21.19
Granted		1,250			14.07
Exercised		-			-
Terminated or expired		(157,113	)		21.66
Balance, February 26, 2017		1,070,529		$	21.08
Granted		-			-
Exercised		(6,900	)		13.36
Terminated or expired		(178,075	)		22.55
Balance, February 26, 2017		885,554		$	17.55		5.00	$	-
Vested and exercisable, February 26, 2017		689,317		$	18.00		4.38	$	-
Expected to vest, February 26, 2017		832,421		$	17.55		5.00	$	-

The aggregate intrinsic values realized (the market value of the underlying shares on the date of exercise, less the exercise price, times the number of shares acquired) from the exercise of options during the

2018,

2017

and

2016

fiscal years were

$44,

and

$4,

respectively.

A summary of the status of the Company’s non-vested options at

February 25, 2018,

and changes during the fiscal year then ended, is presented below:

	Shares Subject to Options			Weighted Average Grant Date Fair Value

Non-vested, beginning of year		308,312		$	6.09
Granted		-			-
Vested		(93,112	)		5.17
Terminated or expired		(18,962	)		6.13
Non-vested, end of year		196,238		$	6.09