Note 4 - Stock-Based Compensation

6 Months Ended

Mar. 29, 2014

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

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

(4) 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. As of March 29, 2014, there were 480,000 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 29, 2014 and March 30, 2013 are as follows:

	Three Months Ended						Six Months Ended
(In thousands)	March 29, 2014			March 30, 2013			March 29, 2014			March 30, 2013
Stock options:
Compensation expense	$	358		$	347		$	523		$	486
Excess tax benefits		(105	)		(295	)		(191	)		(331	)

As of March 29, 2014, the remaining unamortized compensation cost related to unvested stock option awards was $579,000, which is expected to be recognized over a weighted average period of 1.18 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 29, 2014 and March 30, 2013 was $6.93 and $7.17, respectively, based on the following assumptions:

	Six Months Ended
	March 29, 2014			March 30, 2013
Risk-free interest rate		1.56	%		1.25	%
Dividend yield		0.62	%		0.74	%
Expected volatility		41.46	%		48.15	%
Expected term (in years)		4.94			6.47

The following table summarizes stock option activity for the six-month period ended March 29, 2014:

	Options			Exercise Price Per Share							Contractual Term -		Aggregate Intrinsic
	Outstanding								Weighted		Weighted		Value
	(in thousands)			Range					Average		Average (years)		(in thousands)
Outstanding at September 28, 2013		918		$	5.43	-	$	20.27	$	12.65
Granted		67			19.08	-		19.08		19.08
Exercised		(90	)		6.89	-		13.06		10.58			$	804
Outstanding at March 29, 2014		895			5.43	-		20.27		13.34		6.02		5,318
Vested and anticipated to vest in the future at March 29, 2014		893								13.33		6.01		5,310
Exercisable at March 29, 2014		604								12.53		4.64		4,095

Stock option exercises included “net exercises,” pursuant to which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.

Restricted stock units. Restricted stock units (“RSUs”) granted under the Company’s equity incentive 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 compensation expense for the three- and six-month periods ended March 29, 2014 and March 30, 2013 is as follows:

	Three Months Ended				Six Months Ended
(In thousands)	March 29, 2014		March 30, 2013		March 29, 2014		March 30, 2013
Restricted stock unit grants:
Units		40		43		40		43
Market value	$	763	$	703	$	763	$	703
Compensation expense		462		433		705		607

As of March 29, 2014, 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 1.38 years.

The following table summarizes RSU activity during the six-month period ended March 29, 2014:

(Unit amounts in thousands)	Restricted Stock Units Outstanding			Weighted Average Grant Date Fair Value
Balance, September 28, 2013		221		$	13.20
Granted		40			19.08
Released		(49	)		13.63
Balance, March 29, 2014		212		$	14.21