Capital stock

9 Months Ended

Oct. 01, 2011

Stockholders Equity Note Disclosure Text Block

6. Capital stock

(a) Capital stock

Transactions involving capital stock for the quarter and three quarters ended October 1, 2011 and October 2, 2010 were as follows:

		Quarter ended		Quarter ended
		October 1, 2011		October 2, 2010
		Number	Amount	Number	Amount
			$		$
Balance, beginning of period		65,683,807	181,489	65,170,331	179,218
Common shares issued on exercise of
	options by employees and directors	21,540	97	90,940	201
Common shares issued as part of the
	Company's employee stock purchase plan	37,521	165	37,777	168
Balance, end of period		65,742,868	181,751	65,299,048	179,587


		Three quarters ended		Three quarters ended
		October 1, 2011		October 2, 2010
		Number	Amount	Number	Amount
			$		$
Balance, beginning of period		65,500,091	180,661	64,982,968	178,694
Common shares issued on exercise of
	options by employees and directors	150,279	586	140,420	297
Common shares issued as part of the
	Company's employee stock purchase plan	92,498	504	173,160	596
Common shares issued to the Company's
	Chief Executive Officer as part of an
	award granted February 8, 2007	-	-	2,500	-
Balance, end of period		65,742,868	181,751	65,299,048	179,587

(b) Warrants

On February 5, 2010 (the “First Tranche”), and June 11, 2010 (the “Second Tranche”), the Company issued warrants pursuant to an Advisory Services Agreement. A fair value of $441 and $1,722, respectively, was assigned to these warrants using the Black-Scholes option pricing model, and were expensed in full during the quarter of issuance with the offset recorded as an increase to additional paid in capital. The Second Tranche of warrants were issued following the consummation of the sale of the Canadian Food Distribution business (note 3(c)) and the cost was included as part of the gain on sale of discontinued operations. As at October 1, 2011, the First Tranche and Second Tranche of warrants had not been exercised. Inputs used in the Black-Scholes option pricing model for the warrants were as follows:

	February 5, 2010	June 11, 2010

Number of warrants issued	250,000	600,000
Exercise price	$3.25	$5.11
Expected volatility	72.0%	72.1%
Risk-free interest rate	2.5%	2.1%
Dividend yield	0%	0%
Expected life (in years)	5	5

The fair value of the warrants is based on estimates of the number of warrants that management expects to vest, which was estimated to be 100% of the granted amounts.

There were 821,500 options granted to employees and directors during the three quarters ended October 1, 2011 (October 2, 2010 – 681,000). The inputs used in the Black-Scholes model to determine the fair value of the options granted were as follows:

	Three quarters ended	Three quarters ended
	October 1, 2011	October 2, 2010

Number of options issued	821,500	681,000
Weighted average exercise price	$7.36	$4.48
Weighted average expected volatility	68.0%	68.2%
Weighted average risk-free interest rate	1.9%	2.3%
Dividend yield	0%	0%
Expected life (in years)	6	6

The weighted average fair value of the options granted during the three quarters ended October 1, 2011 amounted to $4.55 per option (October 2, 2010 - $2.79). The fair value of the options is based on estimates of the number of options that management expects to vest, which was estimated to be 85% of the granted amounts.

On May 19, 2011, the Company's shareholders approved an amendment to the Company's 2002 Amended and Restated Stock Option Plan to increase the number of common shares reserved for issuance upon the exercise of options granted thereunder by 2,500,000 common shares. The amendment was approved by the Company's Board of Directors on March 8, 2011 based on the recommendation of the Compensation Committee. At October 1, 2011, 2,838,601 (January 1, 2011 - 823,480) options are remaining to be granted under this plan.

- Definition

Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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