Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

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

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

Note 10 - Stock-Based Compensation

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):

	Three Months Ended
	March 31,		April 1,
	2017		2016
Employee stock options	$	268	$	4,896
Restricted stock		40		225
Restricted stock units		202		2,280
Nonemployee stock options		—		57
Total	$	510	$	7,458

The Company recorded stock-based compensation cost in the following categories on the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended
	March 31,		April 1,
	2017		2016
Cost of sales	$	2	$	560
General and administrative		264		3,394
Marketing and selling		116		1,531
Research and development		128		1,973
Total stock compensation expense		510		7,458
Amounts capitalized as part of inventory		52		152
Total	$	562	$	7,610

Stock Option Plan

The Amended and Restated 2003 Omnibus Equity Incentive Plan (“the Plan”) provides for various forms of stock-based incentives. To date, of the available forms of awards under the Plan, the Company has granted only stock options, restricted stock, unrestricted share grants, and restricted stock units (RSUs). Options under the plan are granted at fair market value on the date of grant, become exercisable generally over a three-year 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 and pre-established financial metrics are met (as defined in the Plan). Grants of restricted stock outstanding under the Plan generally vest over periods of one to three years. Grants of RSUs outstanding under the Plan generally vest based on service, performance or a combination of both. As of March 31, 2017, there were 1,216,847 shares authorized and available for grant under the Plan.

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 expected term of options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that options granted are expected to be outstanding. The Company has calculated a 5.4% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.

	Three Months Ended
	March 31, 2017			April 1, 2016
Expected dividend yield		0			0	%
Expected volatility		57	%		57	%
Risk-free interest rate		1.96	%		1.40	%
Expected term (in years)		5.67			5.57

A summary of option activity under the Plan for the period ended March 31, 2017 is presented below:

	Options
	Shares
	(000’s)
Outstanding at December 30, 2016		3,502
Granted		739
Exercised		(116)
Forfeited or expired		(7)
Outstanding at March 31, 2017		4,118
Exercisable at March 31, 2017		2,842

A summary of restricted stock and restricted stock units activity under the Plan for the period ended March 31, 2017 is presented below:

	Restricted		Restricted
	Shares		Units
	(000’s)		(000’s)
Outstanding at December 30, 2016		23		274
Granted		—		261
Vested		—		(62)
Forfeited		—		—
Outstanding at March 31, 2017		23		473

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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