NOTE 14 – SHARE-BASED COMPENSATION

We have two plans under which share-based awards currently can be granted; the 2011 Equity Incentive Plan (2011 Plan), which provides for the granting of a maximum of 5,780,000 shares, and the 2002 Equity Incentive Plan (2002 Plan), which provides for the granting of a maximum of 3,500,000 shares. A committee of the Board of Directors (Committee) administers the plans and has the authority to determine to whom awards will be made, the amount of the awards, and the other terms and conditions of the awards. Key employees, including any executive officer or employee-director, and non-employee directors are eligible to receive awards under the plans.

Both plans permit the grant of incentive or nonqualified stock options, restricted stock awards, performance share awards, and stock appreciation rights. Under the 2011 Plan, awards in any form other than options or stock appreciation rights are counted as two shares for every one share actually issued. The contractual term and exercise price for stock options granted under the plans are determined by the Committee. However, the contractual term may not exceed ten years, and the exercise price may not be lower than the fair market value of a share on the date of grant. Options vest over periods determined when granted, generally four years, and are exercisable until the contractual term expires.

Under both plans, shares subject to restricted stock award may be issued when the award is granted or at a later date. The stock awards are subject to terms determined by the Committee, have voting rights, and may include specified performance objectives. The sale or transfer of these shares is restricted during the vesting period. Recipients of restricted stock awards prior to April 23, 2009 had the right to receive dividends during the vesting period. Recipients of restricted stock awards after April 23, 2009 earn dividends during the vesting period that are paid only if the shares vest.

Total share-based compensation expense by type of award is as follows:

	2011		2010		2009

Stock awards, service-based	$	497	$	444	$	458
Stock awards, performance-based		248		430		38
Stock options		1,160		1,017		973
Total share-based compensation expense		1,905		1,891		1,469
Tax effect on share-based compensation expense		757		751		583
Net share based compensation expense	$	1,148	$	1,140	$	886

Stock Options

The weighted-average fair value of stock options granted in 2011, 2010, and 2009, was estimated at $1.63, $2.75, and $1.91 per share using the Black-Scholes option-pricing model based on the following assumptions:

Risk-Free Interest Rate: We base the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the options being valued.

Dividend Yield: We calculate the expected dividend yield based on our projection of future stock prices and dividends expected to be paid. The range of expected dividends used was $0.05 to $0.10 per share.

Expected Term: The expected term represents the period of time that our stock options are expected to be outstanding and is based on our historic exercise behavior.

Expected Volatility: We calculate the expected volatility factor based on the Company’s historical stock prices for a period of time equal to the expected term of the award.

The weighted-average of significant assumptions used to estimate the fair value of options granted is as follows:

	2011			2010			2009

Risk-free interest rate		1.4	%		1.9	%		1.6	%
Dividend yield		4.5	%		3.7	%		4.8	%
Expected term	4 years			4 years			4 years
Expected volatility		79.9	%		75.7	%		66.9	%

A summary of our stock option activity and related information for 2011 is as follows:

						Weighted-
				Weighted-		Average
	Number			Average		Remaining	Aggregate
	of			Exercise		Contractual	Intrinsic
	Shares			Price		Life	Value

Outstanding at January 2, 2011		2,817,650		$	9.54
Granted		1,526,924			3.37
Exercised		-			-
Forfeited/Canceled		(353,435	)		10.25
Outstanding at January 1, 2012		3,991,139		$	7.12	7 years		-
Fully vested or expected to vest at January 1, 2012		3,623,442		$	7.43	7 years		-
Exercisable at January 1, 2012		1,606,949		$	11.30	5 years		-

Expense is amortized on a straight-line basis over the vesting period, generally four years, and is based on the number of options ultimately expected to vest and therefore has been reduced for estimated forfeitures. As of January 1, 2012, there was a total of $2,640 of share-based compensation related to stock options that will be amortized to expense over a weighted-average remaining service period of 1.4 years.

Service-Based Stock Awards

We have awarded nonvested stock to employees and directors that vest based on service requirements. The fair value of the service-based stock awards is based on the closing market price of our common stock on the date of award. Expense is amortized on a straight-line basis over the vesting period, generally four years, and is based on the number of awards ultimately expected to vest and therefore has been reduced for estimated forfeitures. The weighted-average grant date fair value of service-based nonvested stock issued in 2011, 2010, and 2009 was $3.39, $4.34, and $5.22 per share. The total fair value of stock that vested during 2011, 2010, and 2009 was $229, $253, and $169. As of January 1, 2012, there was a total of $870 of share-based compensation related to service-based nonvested stock that will be amortized to expense over a weighted-average remaining service period of 1.5 years.

A summary of our service-based stock award activity and related information for 2011 is as follows:

				Weighted-
	Number			Average
	of			Grant Date
	Shares			Fair Value

Nonvested at January 2, 2011		198,556		$	5.66
Granted		153,400			3.39
Vested		(66,441	)		6.56
Forfeited/Canceled		(499	)		10.38
Nonvested at January 1, 2012		285,016		$	4.22

Performance-Based Stock Awards

The fair value of performance-based stock awards is based on the closing market price of our common stock on the date of award. Performance-based stock awards vest only upon the achievement of specific measurable performance criteria, and continued employment for two additional years. These shares have voting rights and accrue dividends during the performance period which will be paid if the shares vest.

We recognize compensation expense for stock awards subject to performance criteria when it is probable that the performance goal will be achieved. Compensation expense is recognized for the total amount of performance-based shares expected to vest and is subject to adjustment based on the actual level of achievement of the performance goal. Expense for performance-based awards with graded vesting is recognized under the accelerated recognition method, whereby each vesting is treated as a separate award with expense for each vesting recognized ratably over the requisite service period.

In 2011, the Company awarded 472,575 shares of performance-based restricted stock, of which 29,500 were canceled in 2011. We did not recognize any expense for these awards because we did not believe the performance goal would be achieved. Since the performance goal was not achieved, the remaining nonvested shares will be canceled in 2012.

Performance-based stock awards issued in 2010 allowed partial vesting if a minimum level of performance was attained in 2010. Based on the level of performance achieved, 163,574 shares were earned, and the remaining shares were forfeited and cancelled in March 2011. An additional 8,763 shares were cancelled in 2011 and the remaining nonvested shares earned vest as follows: 25% in March 2012 and 50% in March 2013. The total fair value of stock that vested during 2011 was $134.

As of January 1, 2012, there was a total of $170 of share-based compensation related to performance-based nonvested stock that will be amortized to expense over a remaining service period of 1.2 years.

A summary of our performance-based stock award activity and related information for 2011 is as follows:

				Weighted-
	Number			Average
	of			Grant Date
	Shares			Fair Value

Nonvested at January 2, 2011		240,550		$	5.82
Granted		472,575			3.39
Vested		(40,898	)		5.82
Forfeited/Canceled		(115,242	)		5.20
Nonvested at January 1, 2012		556,985		$	3.89