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Stockholders' Equity
 12 Months Ended
Dec. 28, 2012
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

Note 13 — Stockholders’ Equity

 

Common Stock

 

During fiscal year 2012, the Company issued 114,500 shares of restricted stock to certain employees. Restricted shares are issued at fair market value on the date of grant, vest over a period of one to four years, and are subject to forfeiture until vested or the service period is achieved and the restriction is lapsed or terminated.    As the restriction lapses and the stock vests, the expense is included in stock-based compensation. As of December 28, 2012 none of these restricted shares had vested.

   

Share-Based Payments

 

The Company issues new shares upon option exercise once the optionee remits payment for the exercise price. The compensation cost that has been charged against income is set forth below (in thousands):

 

    Fiscal Year Ended  
    December 28,
2012		     December 30,
2011		     December 31,
2010		  
Stock based compensation expense   $ 2,595     $ 1,361     $ 852  
Restricted stock expense     590       466       285  
Consultant compensation     23       87       111  
Total   $ 3,208     $ 1,914     $ 1,248  

 

There was no net income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements as the Company fully offsets net deferred tax assets with a valuation allowance (see Note 11).  In addition, the Company capitalized $150,000 $121,000, and $85,000, of stock based compensation to inventory for the fiscal years ended December 28, 2012, December 30, 2011, and December 31, 2010, respectively, and recognizes those amounts as expense in Cost of Sales as the inventory is sold.

 

Stock Option Plans

 

In fiscal year 2003, the Board of Directors approved the 2003 Omnibus Equity Incentive Plan (the “2003 Plan”) authorizing awards of equity compensation, including options to purchase common stock and restricted shares of common stock. The 2003 Plan amends restates and replaces the 1991 Stock Option Plan, the 1995 Consultant Stock Plan, the 1996 Non-Qualified Stock Plan and the 1998 Stock Option Plan (the “Restated Plans”). Under provisions of the 2003 Plan, all of the unissued shares in the Restated Plans are reserved for issuance in the 2003 Plan. The 6,500,000 maximum shares were reached on January 1, 2007. On May 19, 2010, the stockholders of STAAR approved the Restated 2003 Omnibus Plan, which increased the number of shares available for grants under the Plan by 2,000,000 shares and extended the term of the plan to May 18, 2020.

  

Shares subject to grants under the 2003 Omnibus Plan and Restated Plans that lapse or terminate in accordance with their terms become available for new grants under the 2003 Omnibus Plan. As of December 28, 2012, approximately 968,535 shares were authorized and available for grants under the 2003 Omnibus Plan. The 2003 Plan provides for various forms of stock-based incentives. To date, of the available forms of awards under the 2003 Plan, the Company has granted only stock options and restricted stock. Options under the plan are granted at fair market value on the date of grant, become exercisable generally over a three- or four-year service period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the 2003 Plan). Restricted stock grants under the 2003 Plan generally vest over a period of one, three or four years. Pursuant to the plan, options for 3,376,279 shares were outstanding at December 28, 2012 with exercise prices ranging between $0.95 and $11.02 per share. There were 204,500 shares of restricted stock outstanding at December 28, 2012.

 

In fiscal year 1998, the Board of Directors approved the 1998 Stock Option Plan, authorizing the granting of options to purchase common stock or awards of common stock. Pursuant to the plan, options for 2,000 shares were outstanding at December 28, 2012 with an exercise price of $3.60 per share.  No further awards may be made under this plan.

 

During the fiscal year ended December 28, 2012, officers, employees and others exercised 324,162 options from the 1995, 1998, and 2003 stock option plans at prices ranging from $0.95 to $7.86 resulting in net cash proceeds to the Company totaling $1,514,000.

 

 Assumptions

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model applying the assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination behavior. The expected term of options granted is derived from the historical exercise activity over the past 15 years, and represents the period of time that options granted are expected to be outstanding.  The Company has calculated a 9.92% estimated forfeiture rate used in the model for fiscal year 2012 option grants based on historical forfeiture experience.  The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 

    Fiscal Year Ended  
    December 28,
2012		     December 30,
2011		     December 31,
2010		  
Expected dividend yield     0 %     0 %     0 %
Expected volatility     79 %     77 %     80 %
Risk-free interest rate     .82 %     1.82 %     2.13 %
Expected term (in years)     5.21       5.49       5.60  

 

A summary of option activity under the Plans as of December 28, 2012 is presented below:

 

 

 

 

Options

  

 

 

Shares

(000’s)

     Weighted-
Average
Exercise
Price		     Weighted-
Average
Remaining
Contractual
Term		     Aggregate
Intrinsic
Value
(000’s)		  
Outstanding at December 30, 2011     3,064       4.79                  
Granted     680       10.31                  
Exercised     (324 )     4.67                  
Forfeited or expired     (44 )     6.87                  
Outstanding at December 28, 2012     3,376     $ 5.89       6.32     $ 19,873  
Exercisable at December 28, 2012     2,176     $ 4.62       4.99       10,061  

  

The weighted-average grant-date fair value of options granted during the fiscal years ended December 28, 2012, December 30, 2011, and December 31, 2010, was $6.65, $3.85, and $3.13, per option respectively.  The total fair value of options vested during fiscal years ended December 28, 2012, December 30, 2011, and December 31, 2010, was $1,830,000, $1,049,000, and $1,143,000, respectively. The total intrinsic value of options exercised during the fiscal years ended December 28, 2012, December 30, 2011, and December 31, 2010, was $1,240,000, $2,533,000, and $701,000, respectively.

 

A summary of the Company’s non-vested options as of December 28, 2012 and changes during the period is presented below:

 

 

Nonvested Options

  

 

Options

(000’s)

     Weighted-
Average
Grant Date
Fair Value		  
Nonvested at December 30, 2011     1,085     $ 5.35  
Granted     680       6.65  
Vested     (520 )     3.48  
Forfeited     (44 )     4.47  
Nonvested at December 28, 2012     1,201     $ 5.31  

 

As of December 28, 2012, there was $4.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.8 years.

 

The following table summarizes information about stock options outstanding and exercisable at December 28, 2012 (in thousands, except per share data):

 

 

 

Range of Exercise Prices

  

 

Number

Outstanding at

December 28,
2012

     Options
Outstanding
Weighted-Average
Remaining
Contractual Life		  

 

Weighted-
Average

Exercise
Price

    

 

Number

Exercisable at

December 28,
2012

    

 

Weighted-

Average

Exercise
Price

  
$0.95     40     6.25 Years   $ .95       40       .95  
$ 1.56 to $ 2.30     372     5.29 Years   $ 2.21       372     $ 2.21  
$ 2.45 to $ 3.60     266     6.38 Years   $ 3.25       203     $ 3.20  
$ 3.75 to $5.29     702     4.27 Years   $ 4.29       631     $ 4.23  
$ 5.39 to $7.32     1,181     6.83 Years   $ 5.86       748     $ 5.91  
$ 7.50 to $8.12     815     7.80Years   $ 10.08       182     $ 8.05  
      3,376     6.32 Years   $ 5.89       2,176     $ 4.62  

 

 

A summary of warrants to purchase Company stock issued to Broadwood as discussed in Note 10 as of December 28, 2012 is presented below:

  

 

 

 

 

Warrants

  

 

 

Shares

(000’s)

     Weighted-
Average
Exercise
Price		     Weighted-
Average
Remaining
Contractual
Term		     Aggregate
Intrinsic
Value
(000’s)		  
Outstanding at December 30, 2011     1,470     $ 4.10                  
Granted     —       —                  
Exercised     —       —                  
Forfeited or expired     —       —                  
Outstanding at December 28, 2012     1,470     $ 4.10       1.62     $ 6,020  
Exercisable at December 28, 2012     1,470     $ 4.10       1.62     $ 6,020  

 

A summary of restricted stock as of December 28, 2012 is presented below:

 

 

 

 

Restricted Stock

  

 

 

Shares

(000’s)

     Weighted
Average
Grant-Date
Fair Value
per Share		  
Outstanding at December 30, 2011     156     $ 5.49  
Granted     115       10.84  
Forfeited     (8 )     5.49  
Vested     (58 )     5.50  
Outstanding at December 28, 2012     205     $ 8.48