6. Shareholders’ Equity:

Dividends

In 2012, the Company declared and paid quarterly cash dividends totaling $0.15 per share ($0.75 million) and a $5.00 per share special cash dividend (the “Special Dividend”). The Special Dividend totaled $25.4 million and was financed by a combination of cash on hand as well as net borrowings under the Line of Credit of $12.8 million. (See Note 7 — “Line of Credit”).

In 2011, the Company declared and paid quarterly cash dividends totaling $0.11 per share ($0.55 million).

Repurchase of Common Stock

In 2012, the Company repurchased 134,720 shares for an aggregate purchase price of $7.2 million or $53.60 per share. In 2011, the Company repurchased 99,494 shares for an aggregate purchase price of $3.5 million or $35.45 per share. Under the Board of Directors’ authorization, as of December 29, 2012 the Company has the ability to repurchase an additional 361,152 shares of its common stock. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing.

Stock Option Plans

The Company had authorized up to 750,000 shares of common stock be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2001 Stock Option Plan (“the 2001 Plan”). The 2001 Plan expired on February 20, 2011. The Company has authorized up to 250,000 shares of common stock to be reserved for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2010 Stock Option Plan (the “2010 Plan”).

Grants under the 2001 Plan and 2010 Plan are made by the Board of Directors or a Board-designated committee at a price of not less than 100% of the fair market value on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the voting rights of the Company’s common stock, the option exercise price may not be less than 110% of the fair market value on the date of grant. The term of the options may not exceed 10 years, except in the case of nonqualified stock options, whereby the terms are established by the Board of Directors or a Board-designated committee. Options may be exercisable in whole or in installments, as determined by the Board of Directors or a Board-designated committee.

The Company also sponsors a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”) and has reserved a total of 300,000 shares for issuance to directors of the Company who are not employees.

Stock option activity under the 2001 Plan, 2010 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of December 29, 2012 was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Intrinsic Value
Outstanding at December 25, 2010	644,220		$	20.45	6.82	$	7,571,000
Granted	93,000		45.55
Exercised	(68,606	)	16.85
Outstanding at December 31, 2011	668,614		24.31		6.62	22,101,800
Granted	120,000		54.26
Exercised	(174,887	)	19.77
Outstanding at December 29, 2012	613,727		$	31.46	7.06	$	16,010,000
Exercisable at December 29, 2012	351,463		$	21.79	5.81	$	12,568,600

The fair value of options granted under the Option Plans during 2012 and 2011 were estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and results:

	Year Ended
	December 29, 2012			December 31, 2011
Risk free interest interest rate	.88		%	1.54		%
Expected life (years)	6			6
Expected volatility	31.9		%	28.3		%
Dividend yield	2.05		%	.27		%
Option fair value	$	13.43		$	13.35

Options outstanding as of December 29, 2012 are exercisable as follows:

			Options Outstanding							Options Exercisable
Range of Exercise Price			Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price			Number Exercisable		Weighted Average Exercise Price
$12.75	-	$18.40		136,726		5.97		$	14.05		124,348		$	14.15
20.32	-	31.19		219,001		5.46		23.60			182,123		22.69
32.92	-	51.17		139,250		8.59		40.74			33,621		34.52
53.34	-	57.34		118,750		9.46		55.13			11,371		53.34
				613,727		7.06		$	31.46		351,463		$	21.79

The total intrinsic value of options exercised during 2012 and 2011 was $7.4 million and $1.8 million, respectively. The total fair value of shares vested during 2012 and 2011 was $2.8 million and $2.2 million, respectively.

During 2012 and 2011, option holders surrendered 31,351 shares and 2,208 shares of previously owned common stock as payment for option shares exercised as provided for by the Option Plans. All unexercised options at December 29, 2012 have an exercise price equal to the fair market value on the date of the grant.

Compensation expense of $930,200 and $755,700 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in 2012 and 2011, respectively. As of December 29, 2012, the Company had $2.7 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.7 years.