5.	STOCK-BASED COMPENSATION

As of

March 3, 2019,

the Company had a

2018

Stock Option Plan (the

“2018

Plan”) and

other stock-based compensation plan. The

2018

Plan was adopted by the Board of Directors of the Company on

May 8, 2018

and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on

July 24, 2018.

Prior to the

2018

Plan, the Company had the

2002

Stock Option Plan (the

“2002

Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the

2018

Plan and

2002

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 such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date an option is granted. Options granted under the Plans 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

800,000

shares of common stock were authorized for grant under the

2018

Plan. At

March 3, 2019,

540,709

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

2002

Plan, and

800,000

options were available for future grant under the

2018

Plan.

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

March 3, 2019

was

$435,

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

1.05

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

2019,

2018

and

2017

fiscal years:

	Fiscal Year
	2019	2018	2017

Weighted average fair value per share of option grants	$3.66	-	$3.15
Risk-free interest rates	2.83%	-	1.77%
Expected stock price volatility	24.7%	-	28.9%
Expected dividend yields	2.32%	-	2.23%
Estimated option terms (in years)	5.2	-	5.3

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

2019

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

During the

2019

fiscal year, the Company recorded non-cash charges of

$528

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

$4.25

per share special cash dividend paid by the Company in

February 2019.

During the

2018

fiscal year the Company recorded non-cash charges of

$513

related to 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 the

2019

fiscal year included

$1,249

of stock option expenses compared to

$1,445

of such expenses in the

2018

fiscal year.

Information with respect to stock option activity follows:

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

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 25, 2018		885,554		$	17.55
Granted		2,650			13.50
Exercised		(244,382	)		12.18
Terminated or expired		(103,113	)		18.75
Balance, March 3, 2019		540,709		$	13.49		4.48
Vested and exercisable, March 3, 2019		508,359		$	13.84		4.38
Expected to vest, March 3, 2019		508,889		$	13.49		4.48

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

2019,

2018

and

2017

fiscal years were

$1,157,

$44

and

$0,

respectively.

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

March 3, 2019,

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		196,238		$	6.09
Granted		2,650			3.66
Vested		(169,287	)		6.02
Terminated or expired		(4,001	)		5.98
Non-vested, end of year		25,600		$	3.50