Note 5 - Stock-Based Compensation

Stock Options

The following table summarizes the stock option transactions pursuant to the stock-based compensation plans:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 29, 2011		342,718		$	14.70		2.25		3,393
Grants		0
Forfeited or expired		0
Exercised		(103,934	)		15.41
Outstanding October 29, 2011		238,784		$	14.39		1.65	$	3,196
Options outstanding at October 29, 2011, net of estimated forfeitures		238,775		$	14.39		1.65	$	3,196
Exercisable at October 29, 2011		236,283		$	14.42		1.60	$	3,158

The total fair value at grant date of previously non-vested stock options that vested during each of the thirty-nine week periods ended October 29, 2011 and October 30, 2010 was $32,000. No stock options were granted during the first nine months of fiscal 2011 or fiscal 2010.

The following table summarizes information regarding options exercised:

(In thousands)	Thirteen Weeks Ended October 29, 2011		Thirteen Weeks Ended October 30, 2010		Thirty-nine Weeks Ended October 29, 2011		Thirty-nine Weeks Ended October 30, 2010
Total intrinsic value (1)	$	690	$	94	$	1,055	$	324
Total cash received	$	1,253	$	114	$	1,601	$	438
Associated excess income tax benefits recorded	$	266	$	36	$	405	$	115

(1) Defined as the difference between the market value at exercise and the grant price of stock options exercised.

The following table summarizes information regarding outstanding and exercisable options at October 29, 2011:

		Options Outstanding					Options Exercisable
Range of Exercise Price		Number of Options Outstanding	Weighted Average Remaining Life		Weighted Average Exercise Price		Number of Options Exercisable	Weighted Average Exercise Price
$	11.44 – 13.68	131,984		2.05	$	12.54	129,483	$	12.55
$	13.87 – 17.12	106,800		1.16	$	16.68	106,800	$	16.68

The following table summarizes information regarding stock-based compensation expense recognized for non-vested options:

(In thousands)	Thirteen Weeks Ended October 29, 2011 (1)		Thirteen Weeks Ended October 30, 2010 (1)		Thirty-nine Weeks Ended October 29, 2011 (1)		Thirty-nine Weeks Ended October 30, 2010 (1)
Stock-based compensation expense before the recognized income tax benefit	$	2	$	18	$	19	$	57
Income tax benefit	$	1	$	7	$	7	$	22

(1)	Income tax benefit was calculated using an adjusted effective tax rate. The adjusted rate removes the tax effect from the favorable resolution of certain tax positions.

As of October 29, 2011, there was approximately $1,000 of unrecognized compensation expense, net of estimated forfeitures, remaining related to non-vested stock options. This expense is expected to be recognized over a weighted-average period of approximately 0.1 years.

Restricted Stock Awards

The following table summarizes the share transactions for restricted stock awards:

	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested at January 29, 2011		391,346		$	19.91
Granted		141,393			25.62
Vested		(276,549	)		20.83
Forfeited		(2,668	)		25.72
Non-vested at October 29, 2011		253,522		$	22.04

The total fair value at grant date of previously non-vested stock awards that vested during the first nine months of fiscal 2011 and the first nine months of fiscal 2010 was $5.8 million and $487,000, respectively. The weighted-average grant date fair value of stock awards granted during the thirty-nine week period ended October 29, 2011 was $25.62. The weighted-average grant date fair value of stock awards granted during the thirty-nine week period ended October 30, 2010 was $21.63.

The following table summarizes information regarding stock-based compensation expense recognized for restricted stock awards:

(In thousands)	Thirteen Weeks Ended October 29, 2011 (1)		Thirteen Weeks Ended October 30, 2010 (1)		Thirty-nine Weeks Ended October 29, 2011 (1)		Thirty-nine Weeks Ended October 30, 2010 (1)
Stock-based compensation expense before the recognized income tax benefit	$	533	$	1,066	$	2,188	$	3,193
Income tax benefit	$	203	$	405	$	834	$	1,218

(1)	Income tax benefit was calculated using an adjusted effective tax rate. The adjusted rate removes the tax effects from the favorable resolution of certain tax positions.

As of October 29, 2011, there was approximately $3.1 million of unrecognized compensation expense remaining related to both our performance-based and service-based non-vested stock awards. The cost is expected to be recognized over a weighted average period of approximately 1.7 years. This incorporates the current assumptions of the estimated requisite service period required to achieve the designated performance conditions for performance-based stock awards.

Cash-Settled Stock Appreciation Rights (SARs)

Cash-settled stock appreciation rights (SARs) were granted to certain non-executive employees in fiscal 2008 such that one-third of the shares underlying the SARs granted would vest and become fully exercisable on each of the first three anniversaries of the date of the grant and were assigned a five-year term from the date of grant. Each SAR entitles the holder, upon exercise, to receive cash in the amount equal to the closing price of our stock on the date of exercise less the exercise price. The maximum amount paid, however, cannot exceed 100% of the exercise price. In accordance with current authoritative guidance, cash-settled SARs are classified as Other liabilities on the Condensed Consolidated Balance Sheets.

The following table summarizes the SARs activity:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at January 29, 2011		50,686		$	9.72
Granted		0			0.00
Forfeited or expired		(2,668	)		9.72
Exercised		0			0.00
Outstanding at October 29, 2011		48,018		$	9.72		2.14
Exercisable at October 29, 2011		0		$	0.00		0.00

The fair value of these liability awards is remeasured at each reporting period until the date of settlement. Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. The weighted-average fair value of outstanding, non-vested SAR awards was $9.62 as of October 29, 2011.

The fair value was estimated using a trinomial lattice model with the following assumptions:

	October 29, 2011
Risk free interest rate yield curve		0.02% - 1.13	%
Expected dividend yield		0.0	%
Expected volatility		59.04	%
Maximum life	2.14 Years
Exercise multiple		1.71
Maximum payout	$	9.72
Employee exit rate		2.2% - 9.0	%

The risk free interest rate was based on the U.S. Treasury yield curve in effect at the end of the reporting period. We had not paid and did not include in our assumptions paying cash dividends; therefore, the expected dividend yield was assumed to be zero. Expected volatility was based on the historical volatility of our stock. The exercise multiple and employee exit rate are based on historical option data.

The following table summarizes information regarding stock-based compensation expense recognized for SARs:

(In thousands)	Thirteen Weeks Ended October 29, 2011 (1)		Thirteen Weeks Ended October 30, 2010 (1)		Thirty-nine Weeks Ended October 29, 2011 (1)		Thirty-nine Weeks Ended October 30, 2010 (1)
Stock-based compensation expense before the recognized income tax benefit	$	48	$	151	$	180	$	366
Income tax benefit	$	18	$	57	$	69	$	140

(1)	Income tax benefit was calculated using an adjusted effective tax rate. The adjusted rate removes the tax effectsfrom the favorable resolution of certain tax positions.

As of October 29, 2011, there was approximately $23,000 in unrecognized compensation expense related to non-vested SARs. The cost is expected to be recognized over a weighted-average period of approximately 0.1 years.

Employee Stock Purchase Plan

The following table summarizes information regarding stock-based compensation expense recognized for the employee stock purchase plan:

(In thousands)	Thirteen Weeks Ended October 29, 2011 (1)		Thirteen Weeks Ended October 30, 2010 (1)		Thirty-nine Weeks Ended October 29, 2011 (1)		Thirty-nine Weeks Ended October 30, 2010 (1)
Stock-based compensation expense before the recognized income tax benefit (2)	$	8	$	6	$	26	$	21
Income tax benefit	$	3	$	2	$	10	$	8

(1)	Income tax benefit was calculated using an adjusted effective tax rate. The adjusted rate removes the tax effects from the favorable resolution of certain tax positions.

(2)	Amounts are representative of the 15% discount employees are provided for purchases under the employee stock purchase plan.