Note 5 - Stock-Based Compensation

6 Months Ended

Mar. 30, 2013

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

(5) Stock-Based Compensation

 Under the Company’s equity incentive plans, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 21, 2012, the Company’s 2005 Equity Incentive Plan was amended to increase the number of shares available for future grants by 900,000 shares. As of March 30, 2013, there were 683,000 shares available for future grants under the plans.

Stock options. Under the Company’s equity incentive plans, employees and directors may be granted options to purchase shares of the Company’s common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense and excess tax benefits associated with stock options for the three- and six-month periods ended March 30, 2013 and March 31, 2012 are as follows:

	Three Months Ended						Six Months Ended
(In thousands)	March 30, 2013			March 31, 2012			March 30, 2013			March 31, 2012
Stock options:
Compensation expense	$	347		$	319		$	486		$	448
Excess tax benefits		(295	)		(126	)		(331	)		(131	)

As of March 30, 2013, the remaining unamortized compensation cost related to unvested stock option awards was $623,000, which is expected to be recognized over a weighted average period of 1.39 years.

The fair value of each option grant is estimated on the date of grant using a Monte Carlo valuation model based upon assumptions that are evaluated and revised, as necessary, to reflect market conditions and actual historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield is calculated based on the Company’s annual dividend as of the option grant date. The expected volatility is derived using a term structure based on historical volatility and the volatility implied by exchange-traded options on the Company’s common stock. The expected term for options is based on the results of a Monte Carlo simulation model, using the model’s estimated fair value as an input to the Black-Scholes-Merton model, and then solving for the expected term.

The estimated fair value of stock options granted during the three- and six-month periods ended March 30, 2013 and March 31, 2012 was $7.17 and $6.06, respectively, based on the following assumptions:

	Six Months Ended
	March 30, 2013			March 31, 2012
Risk-free interest rate		1.25	%		1.18	%
Dividend yield		0.74	%		0.92	%
Expected volatility		48.15	%		54.67	%
Expected term (in years)		6.47			5.75

The following table summarizes stock option activity for the six-month period ended March 30, 2013:

	Options			Exercise Price Per Share							Contractual Term -		Aggregate Intrinsic
	Outstanding (in thousands)			Range					Weighted Average		Weighted Average (years)		Value (in thousands)
Outstanding at September 29, 2012		1,160		$	0.36	-	$	20.27	$	11.09
Granted		65			16.45	-		16.45		16.45
Exercised		(254	)		0.36	-		12.43		8.89			$	1,799
Outstanding at March 30, 2013		971			5.43	-		20.27		12.02		6.76		4,446
Vested and anticipated to vest in the future at March 30, 2013		965								12.01		6.75		4,422
Exercisable at March 30, 2013		632								12.03		5.61		2,970

Restricted stock units.On January 21, 2009, the Executive Compensation Committee of the Board of Directors approved a change in the equity compensation program such that awards of restricted stock units (“RSUs”) to employees and directors would be made in lieu of awards of restricted stock. RSUs granted under these plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one to three years from the date of the grant. RSUs do not have voting rights. RSU grants and compensation expense for the three- and six-month periods ended March 30, 2013 and March 31, 2012 are as follows:

	Three Months Ended				Six Months Ended
(In thousands)	March 30, 2013		March 31, 2012		March 30, 2013		March 31, 2012
Restricted stock unit grants:
Units		43		54		43		54
Market value	$	703	$	703	$	703	$	703
Compensation expense		433		438		607		678

As of March 30, 2013, the remaining unrecognized compensation cost related to unvested RSUs was $1.1 million, which is expected to be recognized over a weighted average vesting period of 1.55 years.

The following table summarizes RSU activity during the six-month period ended March 30, 2013:

(Unit amounts in thousands)	Restricted Stock Units Outstanding			Weighted Average Grant Date Fair Value
Balance, September 29, 2012		293		$	10.74
Granted		43			16.45
Forfeited		(5	)		10.72
Released		(67	)		10.40
Balance, March 30, 2013		264			11.75