Share-Based Compensation

3 Months Ended

Mar. 29, 2014

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 three months ended March 29, 2014 and March 30, 2013:

	Three Months Ended
	March 29, 2014			March 30, 2013
Risk-free interest rate		1.10	%		0.55	%
Expected dividend yield		0	%		0	%
Expected option life		4 years			4 years
Expected volatility		42.5	%		48.4	%
Weighted-average expected volatility		42.5	%		48.4	%

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 $1,251 and $1,100 for the three months ended March 29, 2014 and March 30, 2013, respectively.

A summary of stock option activity and weighted-average exercise prices for the three months ended March 29, 2014 follows:

	Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value as of March 29, 2014
Outstanding at January 1, 2014		814,291		$	39.56
Granted		213,229			57.54
Forfeited		(4,001	)		46.57
Exercised		(43,826	)		36.95
Outstanding at March 29, 2014		979,693		$	43.52		4.8	$	9,917
Options exercisable at March 29, 2014		539,644		$	36.49		3.7	$	8,631

The weighted-average grant-date fair value of the stock options granted during the three months ended March 29, 2014 and March 30, 2013 was $19.79 and $14.64 per option, respectively. The total intrinsic value of stock options exercised during the three months ended March 29, 2014 and March 30, 2013 was $0.9 million and $2.0 million, respectively. The fair value of stock options vested during the three months ended March 29, 2014 and March 30, 2013 was $3.6 million and $3.4 million, respectively.

The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the three months ended March 29, 2014:

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2014		31,448		$	41.39
Granted		832			57.54
Forfeited		—			—
Vested		(2,382	)		42.57
Non-vested at March 29,2014		29,898		$	41.74

As of March 29, 2014, there was $8.2 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 3.5 years.