Stock-Based Compensation

9 Months Ended

Sep. 23, 2012

Stock Based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Stock-Based Compensation

Our 2008 Equity Incentive Plan authorizes us to issue up to 3.5 million shares of common stock as incentive and non-qualified stock options, stock appreciation rights, restricted stock and performance units to our officers, key employees, non-employee directors and consultants.  At September 23, 2012, there were 2.1 million shares available for future grants under this plan. No more than 100,000 shares may be used under the plan as “full value” awards, which include restricted stock and performance units.  It is our policy to issue shares from authorized but not issued shares upon the exercise of stock options.  Options are granted at not less than fair market value on the date of grant and expire no later than ten years after the date of grant.  Options and restricted shares granted under the plan require no less than a three year ratable vesting period.

During the first three quarters of 2012 and 2011, we granted options for a total of 247,500 and 273,200 shares, respectively.  The weighted average fair values at the grant dates for options issued during the first three quarters of 2012 and 2011 were $5.10 and $5.75 per option, respectively. The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the first three quarters of 2012 and 2011, respectively: (i) dividend yield on our common stock of 3.74 percent and 3.86 percent; (ii) expected stock price volatility of 41.2 percent and 37.7 percent; (iii) a risk-free interest rate of 1.36 percent and 2.65 percent; and (iv) an expected option term of 6.9 years for both periods.  During the first three quarters of 2012, the number of stock options exercised totaled 52,325 and 146,750 options were canceled. During the first three quarters of 2011, stock options totaling 279,973 were exercised, and 352,425 options were canceled.

During the first three quarters of 2012 and 2011, we also granted restricted shares, or “full value” awards, totaling 33,550 and 28,250 shares, respectively. The fair values of each issued restricted share on the dates of grant averaged $16.92 and $22.47 for the first three quarters of 2012 and 2011, respectively. Restricted share awards, which are subject to forfeiture if employment terminates prior to the shares vesting, are expensed ratably over the vesting period. Shares of restricted stock are considered issued and outstanding shares at the date of grant and have the same dividend and voting rights as other common stock. Dividends paid on the restricted shares are non-forfeitable if the restricted shares do not ultimately vest.

Stock-based compensation expense related to our unvested stock options and restricted share awards was allocated as follows:

(Dollars in thousands)	Thirteen Weeks Ended					Thirty-nine Weeks Ended
	September 23, 2012			September 25, 2011		September 23, 2012			September 25, 2011
Cost of sales	$	49		$	135	$	187		$	351
Selling, general and administrative expenses	456			481		1,319			1,440
Stock-based compensation expense before income taxes	505			616		1,506			1,791
Income tax benefit	(133		)	—		(385		)	—
Total stock-based compensation expense after income taxes	$	372		$	616	$	1,121		$	1,791

As discussed in Note 9 – Income Taxes, we had previously provided valuation allowances on our U.S. deferred tax assets.  Consequently, the income tax benefit on our stock-based compensation expense in the first three quarters of 2011 was entirely offset by changes in valuation allowances.  As of September 23, 2012, a total of $3.2 million of unrecognized compensation cost related to non-vested awards is expected to be recognized over a weighted average period of approximately 2.1 years.  There were no significant capitalized stock-based compensation costs at September 23, 2012 and December 25, 2011.