SHARE-BASED COMPENSATION

6 Months Ended

Jul. 01, 2012

SHARE-BASED COMPENSATION

NOTE 7 – SHARE-BASED COMPENSATION

Total compensation expense by type of award is as follows:

	13 Weeks Ended		26 Weeks Ended
	July 1,	July 3,	July 1,	July 3,
	2012	2011	2012	2011
Nonvested stock awards, service based	$           178	$             137	$           238	$             249
Nonvested stock awards, performance based	224	143	362	242
Stock options	188	415	692	670
Total compensation expense	$           590	$             695	$        1,292	$          1,161

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 is being 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		244,000			1.57
Exercised		-			-
Forfeited/Canceled		(326,247	)		9.48
Outstanding at July 1, 2012		3,908,892		$	6.57

Performance-Based Stock Awards

In 2012, the Company awarded shares of performance-based restricted stock that will be earned based on the financial performance of the Company.  Shares will be earned upon achievement of either a one-year performance goal or a two-year cumulative performance goal; a portion of which are then subject to an additional holding period.

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.

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		(530,020	)		3.13
Nonvested at July 1, 2012		1,051,620		$	1.86

Service-Based Stock Awards

The fair value of the service-based stock awards for 2012 is 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		(98,353	)		4.92
Forfeited/Canceled		(53,975	)		2.69
Nonvested at July 1, 2012		607,109		$	2.17