SHARE BASED COMPENSATION

3 Months Ended

Apr. 01, 2012

SHARE BASED COMPENSATION

NOTE 5 – SHARE BASED COMPENSATION

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

	13 Weeks Ended
	April 1,		April 3,
	2012		2011
Nonvested stock awards, service based	$	60	$	112
Nonvested stock awards, performance based		138		99
Stock options		505		255
Total share-based compensation expense	$	703	$	466

Stock Options

The weighted-average fair value of stock options granted in 2012 was estimated at $0.91 per share, using the Black-Scholes option-pricing model.  Expense will be amortized on a straight-line basis over a 4-year vesting period.  The significant assumptions used to estimate the fair value of the options are as follows:

Risk-free interest rate	0.7%
Dividend yield	0.0%
Expected term	4 years
Expected volatility	79.3%

A summary of our stock option activity and related information for 2012 is as follows:

	Number			Weighted-
	of			Average
	Shares			Exercise Price
Outstanding at January 1, 2012		3,991,139		$	7.12
Granted		234,000			1.57
Exercised		-			-
Forfeited/Canceled		(131,685	)		13.53
Outstanding at April 1, 2012		4,093,454		$	6.59

Performance-Based Stock Awards

During the first quarter of 2012, the Company awarded performance-based restricted stock that will be earned based on the financial performance of the Company.  Fifty percent of the shares will be earned upon achievement of a one-year performance goal for 2012 of which half will vest upon the achievement of the goal and half will vest one year after achievement of the goal.  The remaining fifty percent of the shares will be earned upon achievement of a two-year cumulative performance goal for 2012-2013 which will vest one year after they are earned.

The performance goals allow partial vesting if a minimum level of performance is attained.  If the minimum level of the performance goals is not attained, the applicable portion of the stock award will be forfeited and canceled, and all expense recognized to that date will be reversed.  In certain circumstances, additional shares will be granted upon performance above the target level.

The fair value of the performance-based stock awards was based on the closing market price of our common stock on the date of award.  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.  We recognize compensation expense for awards subject to performance criteria when it is probable that the performance goal will be achieved.  Compensation expense is being 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.

A summary of our performance-based stock award activity and related information for 2012 is as follows:

				Weighted-
	Number			Average
	of			Grant Date
	Shares			Fair Value
Nonvested at January 1, 2012		556,985		$	3.89
Granted		1,062,632			1.57
Vested		(37,977	)		5.82
Forfeited/Canceled		(449,075	)		3.37
Nonvested at April 1, 2012		1,132,565		$	1.85

Service-Based Stock Awards

The fair value of the service-based stock awards granted in 2012 was based on the closing market price of our common stock on the date of award and is being amortized to expense on a straight-line basis over a vesting period of 3 years.  A summary of our service-based stock award activity and related information for 2012 is as follows:

				Weighted-
	Number			Average
	of			Grant Date
	Shares			Fair Value
Nonvested at January 2, 2012		285,016		$	4.22
Granted		474,421			1.57
Vested		(6,084	)		9.48
Forfeited/Canceled		(275	)		9.48
Nonvested at April 1, 2012		753,078		$	2.51