Share-Based Compensation:

Share-based compensation includes stock option and restricted stock unit awards and certain transactions under our Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is recognized based on grant date fair value of all stock options and restricted stock unit awards plus a discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the grant date market value and the employee’s purchase price.

There were no significant modifications to the Company's share-based compensation plans during fiscal 2012.

Share-based compensation expense including changes in expense for modifications of awards was $17.6 million, $15.0 million and $11.8 million for fiscal 2012, 2011 and 2010, respectively.

Stock Options

Under our 2009 Stock Incentive Plan, options may be granted to officers, non-employee directors and other employees. The per share exercise price of options granted shall not be less than the fair market value of the stock on the date of grant and such options will expire no later than ten years from the date of grant. Vesting of options commences at various anniversary dates following the dates of grant.

Under the terms of the 2009 Stock Incentive Plan, a maximum of 6,200,000 shares are available for grant as stock options or other awards. At December 29, 2012, we had 4,003,636 shares available for future equity awards under the Company’s 2009 Stock Incentive Plan.

The fair value is separately estimated for each option grant. The fair value of each option is recognized as compensation expense ratably over the vesting period. We have estimated the fair value of all stock option awards as of the date of the grant by applying a Black-Scholes pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The ranges of key assumptions used in determining the fair value of options granted during fiscal 2012, 2011 and 2010, as well as a summary of the methodology applied to develop each assumption, are as follows:



	Fiscal Year
	2012	2011	2010
Expected price volatility	37.1 – 38.5%	38.0 – 38.7%	38.5 – 38.9%
Risk-free interest rate	0.6 – 0.8%	0.9 – 2.4%	1.0 – 2.7%
Weighted average expected lives (in years)	4.7	4.7 – 5.6	4.8 – 5.8
Forfeiture rate	7.0%	5.5 – 7.6%	5.4 – 7.7%
Dividend yield	0.7%	0.8 – 1.0%	0.0 – 1.0%

Expected Price Volatility — This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. Prior to 2012, we used actual historical changes in the market value of the stock to determine volatility. Beginning in 2012, we use a blended volatility approach, weighting (i) actual historical changes in the market value of the stock at 75% and (ii) average implied volatility using tradable option data at 25%. To calculate historical changes in market value, we use daily market value changes from the date of grant over a past period generally representative of the expected life of the options to determine volatility. To derive implied volatility, we rely on publicly traded options, with maturities of six months or greater. We believe this blended calculation of historical and expected price volatility provides the most relevant indicator of future volatility. An increase in the expected volatility will increase compensation expense.

Risk-Free Interest Rate — This is the U.S. Treasury Constant Maturity rate over a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Weighted Average Expected Lives — This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted generally have a maximum term of ten years. An increase in the expected life will increase compensation expense.

Forfeiture Rate — This is the estimated percentage of options granted that are expected to be forfeited or cancelled before becoming fully vested. This estimate is based on historical experience. An increase in the forfeiture rate will decrease compensation expense.

Dividend Yield —This is the estimated dividend yield for the weighted average expected life of the option granted. An increase in the dividend yield will decrease compensation expense.

We issue shares for options when exercised. A summary of stock option activity is as follows:



	Options		Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding December 26, 2009	5,300,844		$	18.53			6.4	$	47,413
Granted	908,728		26.70		$	10.32
Exercised	(1,550,077	)	14.28
Canceled	(144,638	)	21.82

Outstanding December 25, 2010	4,514,857		$	21.52			6.7	$	121,350
Granted	546,655		52.18		$	17.73
Exercised	(1,444,007	)	20.17
Canceled	(65,630	)	33.29

Outstanding December 31, 2011	3,551,875		$	26.57			6.5	$	154,782
Granted	573,252		85.57		$	26.26
Exercised	(1,066,448	)	22.08
Canceled	(28,488	)	60.78

Outstanding December 29, 2012	3,030,191		$	38.95			6.6	$	147,229

Exercisable at December 29, 2012	1,875,189		$	24.33			5.5	$	118,401

The aggregate intrinsic values in the table above represents the total difference between our closing stock price at each year-end and the option exercise price, multiplied by the number of in-the-money options at each year-end. As of December 29, 2012, total unrecognized compensation expense related to non-vested stock options is $14.4 million with a weighted average expense recognition period of 1.4 years.

There were no material modifications to options in 2012, 2011 or 2010.

Other information relative to option activity during fiscal 2012, 2011 and 2010 is as follows (in thousands):



	2012		2011		2010
Total fair value of stock options vested	$	8,826	$	7,590	$	8,417
Total intrinsic value of stock options exercised	$	71,879	$	59,712	$	31,388

Restricted Stock Units

We issue shares for restricted stock unit awards once vesting occurs and related restrictions lapse. The units vest over a one to three-year term; some plan participants have elected to defer receipt of shares of common stock upon vesting of restricted stock units, and as a result, shares are not issued until a later date. The status of restricted stock units is presented below:



Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Restricted at December 26, 2009	558,784		$	19.04
Granted	148,862		27.37
Exercised	(119,184	)	22.10
Forfeited	(38,284	)	19.28

Restricted at December 25, 2010	550,178		$	20.61
Granted	63,484		53.23
Exercised	(88,390	)	20.82
Forfeited	—		—

Restricted at December 31, 2011	525,272		$	24.52
Granted	40,017		87.10
Exercised	(263,592	)	20.99
Forfeited	—		—

Restricted at December 29, 2012	301,697		$	37.52

Other information relative to restricted unit activity during fiscal 2012, 2011 and 2010 is as follows (in thousands):



	2012		2011		2010
Total grant date fair value of restricted units vested and issued	$	5,533	$	1,840	$	2,634
Total intrinsic value of restricted units vested and issued	$	21,694	$	4,915	$	3,329

For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld by the Company for the minimum statutory tax withholding requirements, which we pay on behalf of our employees. We issued 179,962, 68,007, and 90,203 shares as a result of vested restricted stock units during fiscal 2012, 2011 and 2010, respectively. Although shares withheld are not issued, they are treated similar to common stock repurchases as they reduce the number of shares that would have been issued upon vesting. The amounts are net of 83,630, 20,383, and 28,981 shares withheld to satisfy $6.8 million, $1.1 million, and $0.8 million of employees’ tax obligations during fiscal 2012, 2011 and 2010, respectively.

There were no material modifications to restricted stock units in 2012, 2011 or 2010.

As of December 29, 2012, total unrecognized compensation expense related to non-vested restricted stock units is $3.5 million with a weighted average expense recognition period of 1.6 years.

Employee Stock Purchase Plan

The ESPP provides our employees the opportunity to purchase, through payroll deductions, shares of common stock at a 15% discount. Pursuant to the terms of the ESPP, we issued 47,918, 53,333 and 74,788 shares of common stock during fiscal 2012, 2011 and 2010, respectively. The total cost related to the ESPP, including the compensation expense calculations, was approximately $0.8 million, $0.6 million and $0.4 million in fiscal 2012, 2011 and 2010, respectively. At December 29, 2012, there were 6,198,601 shares of common stock reserved for future issuance under the ESPP.