The components and classification of stock-based compensation expense were as follows (in thousands):
	Year Ended
	December 30,		December 31,		January 1,
	2011		2010		2010
Stock options	$	2,511	$	2,617	$	2,631
Restricted stock and units		4,526		4,267		2,573
401(k) stock contribution		5,045		-		-
Total stock-based compensation expense	$	12,082	$	6,884	$	5,204

Cost of sales	$	4,184	$	509	$	398
Selling, general and administrative		6,630		5,982		4,375
Research, development and engineering		1,268		393		431
Total stock-based compensation expense	$	12,082	$	6,884	$	5,204

During 2010 and 2009, the Company reversed approximately $0.3 million and $2.6 million, respectively, of performance stock-based compensation expense as it was no longer probable that the performance metrics would be achieved on those awards. During 2010, the Company recorded $0.7 million of stock-based compensation expense related to the accelerated vesting of equity awards issued to the Company's former Senior Vice President - Orthopaedics, who died during the year.

The Company's 1998 Stock Option Plan, 2002 Restricted Stock Plan and Non-Employee Directors Plan have been frozen to any new award issuances. Stock option and restricted stock awards remain outstanding under these plans.

The Company's 2005 Stock Incentive Plan (“2005 Plan”), as amended, authorizes the issuance of up to 2,450,000 shares of equity incentive awards including nonqualified and incentive stock options, restricted stock, restricted stock units, stock bonuses and stock appreciation rights subject to the terms of the 2005 Plan. The 2005 Plan limits the amount of restricted stock, restricted stock units and stock bonuses that may be awarded in the aggregate to 850,000 shares of the 2,450,000 shares authorized by the 2005 Plan.

The Company's 2009 Stock Incentive Plan (“2009 Plan”) authorizes the issuance of up to 1,350,000 shares of equity incentive awards including nonqualified and incentive stock options, restricted stock, restricted stock units, stock bonuses and stock appreciation rights subject to the terms of the 2009 Plan. The 2009 Plan limits the amount of restricted stock, restricted stock units and stock bonuses that may be awarded in the aggregate to 200,000 shares of the 1,350,000 shares authorized.

In 2011, stockholders of the Company approved the Greatbatch, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan authorizes the issuance of up to 1,000,000 shares of equity incentive awards including nonqualified and incentive stock options, restricted stock, restricted stock units, stock bonuses and stock appreciation rights, subject to the terms of the 2011 Plan. The 2011 Plan does not limit the amount of restricted stock, restricted stock units or stock bonuses that may be awarded.

As of December 30, 2011, there were 894,936, 626,402 and 313,020 shares available for future grants under the 2011 Plan, 2009 Plan and 2005 Plan, respectively. Due to plan sub-limits, of the shares available for grant, only 731 shares and 18,426 shares may be awarded under the 2009 Plan and the 2005 Plan, respectively, in the form of restricted stock, restricted stock units or stock bonuses.

Stock options granted generally vest over a three or four year period, expire 10 years from the date of grant, and are granted at exercise prices equal to or greater than the fair value of the Company's common stock on the date of grant. Performance-based stock options only vest if certain performance metrics are achieved. The performance metrics generally cover a three-year performance period beginning in the year of grant and include the achievement of revenue, adjusted operating earnings and adjusted operating cash flow targets. In 2010, the Company began issuing all performance stock-based awards in the form of restricted stock units.

The Company utilizes the Black-Scholes option pricing model to determine the fair value of stock options. Management is required to make certain assumptions with respect to selected model inputs. Expected volatility is based on the historical volatility of the Company's stock over the most recent period commensurate with the estimated expected life of the stock options. The expected life of stock options, which represents the period of time that the stock options are expected to be outstanding, is based on historical data. The expected dividend yield is based on the Company's history and expectation of future dividend payouts. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period commensurate with the estimated expected life. If factors change and result in different assumptions, the stock option expense that the Company records for future grants may differ significantly from what the Company recorded in the current period. Stock-based compensation expense is only recorded for those awards that are expected to vest. Pre-vesting forfeiture estimates for determining appropriate stock-based compensation expense are estimated at the time of grant based on historical experience. Revisions are made to those estimates in subsequent periods if actual forfeitures differ from estimated forfeitures. For retirement eligible employees, whose awards immediately vest, a 0% forfeiture rate is used.

The weighted-average fair value and assumptions used are as follows:

	Year Ended
	December 30,		December 31,		January 1,
	2011		2010		2010
Weighted average grant date fair value	$	9.37	$	8.24	$	8.63
Risk-free interest rate		2.02%		2.62%		2.03%
Expected volatility		40%		40%		39%
Expected life (in years)		5.3		5.4		5.6
Expected dividend yield		0%		0%		0%
Annual prevesting forfeiture rate		9%		9%		9%

The following table summarizes time-vested stock option activity:
		Number of Time-Vested Stock Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value (In Millions)
Outstanding at January 2, 2009		1,498,294	$	24.28
	Granted	243,920		26.53
	Exercised	(13,736)		15.45
	Forfeited or expired	(366,355)		27.27
Outstanding at January 1, 2010		1,362,123		23.94
	Granted	243,155		20.57
	Exercised	(34,196)		19.26
	Forfeited or expired	(107,526)		24.43
Outstanding at December 31, 2010		1,463,556		23.46
	Granted	306,449		23.98
	Exercised	(84,237)		21.41
	Forfeited or expired	(126,997)		26.47
Outstanding at December 30, 2011		1,558,771	$	23.42	6.1	$	1.5
Expected to vest at December 30, 2011		1,529,168	$	23.42	6.1	$	1.5
Exercisable at December 30, 2011		1,236,993	$	23.51	5.6	$	1.3

The following table summarizes performance-vested stock option activity:
		Number of Performance-Vested Stock Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value (In Millions)
Outstanding at January 2, 2009		798,564	$	23.62
	Granted	310,407		26.53
	Forfeited or expired	(106,987)		24.00
Outstanding at January 1, 2010		1,001,984		24.48
	Forfeited or expired	(257,461)		26.81
Outstanding at December 31, 2010		744,523		23.68
	Exercised	(26,478)		22.53
	Forfeited or expired	(239,681)		22.29
Outstanding at December 30, 2011		478,364	$	24.44	5.9	$	0.0
Expected to Vest at December 30, 2011		308,299	$	23.29	5.3	$	0.0
Exercisable at December 30, 2011		251,610	$	22.56	5.0	$	0.0

Intrinsic value is calculated for in-the-money options (exercise price less than market price) outstanding and/or exercisable as the difference between the market price of the Company's common shares as of December 30, 2011 ($22.10) and the weighted average exercise price of the underlying stock options, multiplied by the number of options outstanding and/or exercisable. As of December 30, 2011, $2.7 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 2 years. Shares are distributed from the Company's authorized but unissued reserve upon the exercise of stock options or treasury stock if available. The Company does not intend to purchase treasury shares to fund the future exercises of stock options.

Proceeds from the exercise of stock options are credited to common stock at par value and the excess is credited to additional paid-in capital. A portion of the options outstanding qualify as incentive stock options (“ISO”) for income tax purposes. As such, a tax benefit is not recorded at the time the compensation cost related to the stock options is recorded for book purposes due to the fact that an ISO does not ordinarily result in a tax benefit unless there is a disqualifying disposition. Stock option grants of non-qualified stock options result in the creation of a deferred tax asset, which is a temporary difference, until the time that the option is exercised.

The following table provides certain information relating to the exercise of stock options (in thousands):

	Year Ended
	December 30,		December 31,		January 1,
	2011		2010		2010
Intrinsic value	$	501	$	112	$	80
Cash received		2,401		659		212
Tax (expense) benefit realized		(146)		(41)		24

Time-vested restricted stock and restricted stock unit awards granted typically vest 50% on the second fiscal year-end from the date of the award and 25% on the third and fourth fiscal year-ends from the date of the award. The fair value of time-based as well as nonmarket-based performance restricted stock and restricted stock unit awards is equal to the fair value of the Company's stock on the date of grant. The following table summarizes time-vested restricted stock and unit activity:

			Time-Vested Activity		Weighted Average Fair Value
Nonvested at		January 2, 2009	183,765	$	22.84
	Granted		100,358		26.17
	Vested		(104,412)		23.79
	Forfeited		(18,713)		23.49
Nonvested at		January 1, 2010	160,998		24.22
	Granted		124,747		21.11
	Vested		(147,434)		23.05
	Forfeited		(14,925)		23.45
Nonvested at		December 31, 2010	123,386		22.57
	Granted		31,625		23.49
	Vested		(80,825)		22.80
	Forfeited		(4,244)		22.98
Nonvested at		December 30, 2011	69,942	$	22.69

Performance-vested restricted stock granted prior to 2010 vests upon the achievement of certain annual diluted EPS targets by the Company, or the seventh anniversary date of the award.

The performance-based restricted stock units granted in 2010 and 2011 only vest if certain market-based performance metrics are achieved. The amount of shares that ultimately vest range from 0 shares to 513,243 shares based upon the total shareholder return of the Company relative to the Company's compensation peer group over a three year performance period beginning in the year of grant. The fair value of the restricted stock units was determined by utilizing a Monte Carlo simulation model, which projects the value of Greatbatch stock versus the peer group under numerous scenarios and determines the value of the award based upon the present value of these projected outcomes. The following table summarizes performance-vested restricted stock and stock unit activity related to the Company's plans:

			Performance-Vested Activity		Weighted Average Fair Value
Nonvested at		January 2, 2009	24,000	$	23.07
Nonvested at		January 1, 2010	24,000		23.07
	Granted		289,654		14.43
	Vested		(21,558)		15.12
	Forfeited		(8,299)		14.56
Nonvested at		December 31, 2010	283,797		15.10
	Granted		279,415		18.21
	Vested		(6,600)		17.94
	Forfeited		(26,869)		15.85
Nonvested at		December 30, 2011	529,743	$	16.68

The realized tax benefit (expense) from the vesting of restricted stock and restricted stock units was $0.008 million, $0.01 million and ($0.1 million) for 2011, 2010 and 2009, respectively. As of December 30, 2011, there was $6.0 million of total unrecognized compensation cost related to the restricted stock and restricted stock unit awards. That cost is expected to be recognized over a weighted-average period of approximately 2 years. The fair value of shares vested in 2011, 2010 and 2009 was $1.9 million, $4.1 million and $2.0 million, respectively.