Share-Based Compensation

9 Months Ended

Sep. 29, 2012

Share-Based Compensation

NOTE F – SHARE-BASED COMPENSATION

Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, typically the vesting period. The vesting period for the share-based compensation awarded by the Company is generally three years. The Company uses the Black-Scholes option pricing model to determine the fair value of stock option grants. The Company uses the closing market price of its common stock on the date of grant to determine the fair value of restricted stock and restricted stock units.

The Company used the following assumptions for the Black-Scholes option-pricing model to determine the fair value of options granted during the nine months ended September 29, 2012 and October 1, 2011:

	For the Nine Months Ended
	September 29, 2012	October 1, 2011
Risk-free interest rate	0.50% - 0.66%	0.66% and 1.83%
Expected dividend yield	0%	0%
Expected option life	4 years	4 years
Expected volatility	50.4% - 50.7%	47.9% - 48.7%
Weighted-average expected volatility	50.7%	48.7%

Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives of the options. The risk-free interest rate was based on yields of U.S. zero coupon issues and U.S. Treasury issues, with a term equal to the expected life of the option being valued.

The Company recorded total share-based compensation expense of $1,089 and $676 for the three months ended September 29, 2012 and October 1, 2011, respectively, and $3,022 and $2,070 for the nine months ended September 29, 2012 and October 1, 2011, respectively.

A summary of stock option activity and weighted-average exercise prices for the nine months ended September 29, 2012 follows:

	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value as of September 29, 2012
Outstanding at January 1, 2012		865,445		$	26.72
Granted		242,866			56.86
Forfeited		(18,724	)		30.95
Exercised		(256,331	)		23.82
Outstanding at September 29, 2012		833,256		$	36.31		4.8	$	7,936
Options exercisable at September 29, 2012		364,397		$	24.85		3.5	$	6,001

The weighted-average grant-date fair value of the stock options granted during the nine months ended September 29, 2012 and October 1, 2011 was $22.51 and $14.15 per option, respectively. The total intrinsic value of stock options exercised during the three months ended September 29, 2012 and October 1, 2011 was $0.5 million and $1.4 million, respectively. The total intrinsic value of stock options exercised during the nine months ended September 29, 2012 and October 1, 2011 was $7.1 million and $8.4 million, respectively. No stock options vested during the three months ended September 29, 2012 and October 1, 2011. The total fair value of stock options vested during the nine months ended September 29, 2012 and October 1, 2011 was $1.8 million and $1.6 million, respectively.

The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the nine months ended September 29, 2012:

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2012		43,527		$	32.31
Granted		12,719			49.98
Forfeited		(1,619	)		27.39
Vested		(23,391	)		30.28
Non-vested at September 29, 2012		31,236		$	45.80

As of September 29, 2012, there was $7.5 million of total unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements. The expense is expected to be recognized over a weighted average period of 2 years.