Shareholders' Equity

9 Months Ended

Sep. 27, 2014

Stockholders' Equity Note [Abstract]

Shareholders' Equity

SHAREHOLDERS’ EQUITY

Repurchase of Common Stock

The Company acquired and retired 500,000 shares of its common stock in the quarter ended September 27, 2014, at an average cost of $69.94 per share for a total use of cash of $35.0 million. The repurchases were under the 3.0 million share repurchase program approved by the Company’s Board of Directors.

Share Based Compensation

The Company recognized approximately $2.2 million and $2.9 million in share-based compensation expense for the three months endedSeptember 27, 2014 and September 28, 2013, respectively. Share-based compensation expense for the nine months endedSeptember 27, 2014 and September 28, 2013 was $8.5 million and $8.3 million, respectively. The total excess income tax benefit recognized relating to share-based compensation for the nine months endedSeptember 27, 2014 and September 28, 2013 was approximately $1.2 million and $0.7 million, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award. As of September 27, 2014, total unrecognized compensation cost related to share-based compensation awards was approximately $24.6 million, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 2.3 years.

Approximately 3.0 million shares were available for future grant under the 2013 Equity Incentive Plan at September 27, 2014.

The Company uses several forms of share-based incentive awards, including non-qualified stock options, incentive stock options, and stock appreciation rights (“SARs”). Historically, the majority of the Company’s annual share-based incentive awards are made in the fiscal second quarter. For the nine months endedSeptember 27, 2014, and September 28, 2013, respectively, 148,955 and 174,775 share-based incentive awards were granted. The per share weighted average fair value of share-based incentive awards granted during those respective periods was $28.01 and $23.01.

Options and Stock Appreciation Rights

Options and SARs generally vest over 5 years, are granted at prices equal to the fair market value of the stock on the grant dates, and expire 10 years from the grant date. Compensation expense recognized related to the options and SARs was $1.0 million and $1.1 million for the three months ended September 27, 2014 and September 28, 2013, respectively, and $3.6 million and $4.0 million for the nine months endedSeptember 27, 2014 and September 28, 2013, respectively.

As of September 27, 2014, there was $12.7 million of unrecognized compensation cost related to non-vested options and SAR's that is expected to be recognized as a charge to earnings over a weighted average period of 3.1 years.

The assumptions used in the Company's Black-Scholes valuation related to grants for options and SARs were as follows:

	September 27, 2014		September 28, 2013
Risk-free interest rate	2.0	%	1.1	%
Expected life (years)	7.0		7.0
Expected volatility	37.7	%	38.5	%
Expected dividend yield	1.2	%	1.2	%

The weighted average fair value of SARs granted during the nine months endedSeptember 27, 2014 was $28.01. There were no options granted during the nine months endedSeptember 27, 2014.

A summary of share-based awards (options and SARs) as of September 27, 2014 follows below. Forfeitures of share-based awards during the nine months endedSeptember 27, 2014 were immaterial.

Number of Shares	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Outstanding	1,498,486	$59.27	6.1	$	13.2
Exercisable	878,054	$53.10	4.7	12.3

Restricted Stock Awards and Restricted Stock Units

Restricted stock awards ("RSA") and restricted stock units ("RSU") consist of shares or the rights to shares of the Company's stock. The awards are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer. RSU awards are typically granted to eligible employees outside of the United States. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, or death, disability or normal retirement of the grantee.

Following is a summary of RSA award activity for the nine months endedSeptember 27, 2014:

	Shares	Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (Years)
Unvested RSAs at December 28, 2013	40,717	$	66.50	0.8
Granted	12,144	75.76
Vested	28,047	67.83
Forfeited	—	—
Unvested RSAs September 27, 2014	24,814	$	69.53	0.6

RSAs vest on either the first (for RSAs granted in 2013 and later) or the third (for RSAs granted prior to 2013) anniversary of the grant date, provided the holder of the shares is continuously employed by or in the service of the Company until the vesting date. Compensation expense recognized related to the RSAs was $0.3 million and $0.5 million for the three months ended September 27, 2014 and September 28, 2013, respectively, and $1.2 million and $0.9 million for the nine months endedSeptember 27, 2014 and September 28, 2013, respectively.

As of September 27, 2014, there was $0.7 million of unrecognized compensation cost related to non-vested RSAs that is expected to be recognized as a charge to earnings over a weighted average period of 0.6 years.

Following is a summary of RSU award activity for the nine months ended September 27, 2014:

	Shares	Weighted Average Fair Value at Grant Date	Weighted Average Remaining Contractual Term (Years)
Unvested RSUs at December 28, 2013	210,264	65.57	1.9
Granted	83,850	75.41
Vested	47,048	70.89
Forfeited	5,885	63.51
Unvested RSUs at September 27, 2014	241,181	68.00	2.0

RSU shares vest on the third anniversary of the grant date, provided the holder of the shares is continuously employed by the Company until the vesting date. Compensation expense recognized related to the RSUs was $0.6 million and $1.0 million for the three months ended September 27, 2014 and September 28, 2013, respectively, and $3.0 million and $3.0 million for the nine months endedSeptember 27, 2014 and September 28, 2013, respectively.

As of September 27, 2014, there was $10.4 million of unrecognized compensation cost related to non-vested RSUs that is expected to be recognized as a charge to earnings over a weighted average period of 2.0 years.

Performance Share Units

Performance share unit ("PSU") awards consist of shares or the rights to shares of the Company's stock which are awarded to employees of the Company. These shares vest and become payable upon the determination that the Company achieved certain established performance targets and can range from 0% to 200.0% of the targeted payout based on the actual results. PSUs have a performance period of 3 years. There are no voting rights with these instruments until vesting occurs and a share of stock is issued. PSU awards are valued using a Monte Carlo simulation method as of the grant date.

The assumptions used in the Company's Monte Carlo simulation related to grants for PSUs were as follows:

	September 27, 2014		September 28, 2013
Risk-free interest rate	0.9	%	0.3	%
Expected life (years)	3.0		3.0
Expected volatility	32.0	%	35.0	%
Expected dividend yield	1.1	%	1.2	%

Following is a summary of PSU activity for the nine months ended September 27, 2014:

	Shares	Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (Years)
Unvested PSUs at December 28, 2013	35,730	$	56.71	2.4
Granted	25,310	83.74
Vested	—	—
Forfeited	1,645	56.71
Unvested PSUs at September 27, 2014	59,395	$	68.23	2.2

Compensation expense for awards granted is based on the targeted payout of 100%, net of estimated forfeitures. Compensation expense recognized related to PSUs was $0.3 million and $0.2 million for the three months ended September 27, 2014 and September 28, 2013, respectively, and $0.7 million and $0.3 million for the nine months endedSeptember 27, 2014 and September 28, 2013, respectively. Total unrecognized compensation expense for all PSUs granted as of September 27, 2014 is estimated to be $3.0 million recognized as a charge to earnings over a weighted average period of 2.2 years.