Shareholders’ Equity

Common Stock. The number of shares of common stock, par value $0.50 per share, authorized, issued and outstanding and in treasury, was as follows:



	May 3, 2014	April 27, 2013
Authorized	100,000,000	100,000,000
Issued and outstanding	39,262,168	38,455,853
In treasury	1,342,188	1,342,188

Dividends

We paid dividends totaling $11.3 million, $10.3 million and $10.4 million during fiscal 2014, 2013 and 2012, respectively.

2010 Stock Plan

The 2010 Stock Plan permits a total of 2,000,000 shares of our common stock to be awarded to participants in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, and performance share units. The 2010 Stock Plan is designed to allow for "performance-based compensation" under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"). As such, qualified awards payable pursuant to the 2010 Stock Plan should be deductible for federal income tax purposes under most circumstances. In the event of a change in control, the vesting of all outstanding option awards will be accelerated. As of May 3, 2014, there were 476,000 shares available for award under the 2010 Stock Plan.

Stock Options Awarded Under the 2010 Stock Plan

In fiscal 2014, 2013 and 2012, our Compensation Committee awarded options to purchase 120,000 shares, 120,000 shares and 128,000 shares, respectively, of our common stock to our executive officers. The stock options have a ten-year term and will vest 33.3% each year over a three-year period. The exercise price is the closing price on the date granted.

The following tables summarize the stock option activity and related information for the stock options granted under the 2010 Stock Plan for fiscal 2014, 2013 and 2012:



	Summary of Option Activity
	Shares		Wtd. Avg. Exercise Price
Outstanding at April 30, 2011	128,000		$	9.24
Awarded	128,000		10.70
Exercised	—		—
Cancelled	(16,000	)	9.97
Outstanding at April 28, 2012	240,000		9.97
Awarded	120,000		8.64
Exercised	—		—
Cancelled	—		—
Outstanding at April 27, 2013	360,000		9.53
Awarded	120,000		17.27
Exercised	(59,999	)	9.50
Cancelled	—		—
Outstanding at May 3, 2014	420,001		$	11.74



Options Outstanding at May 3, 2014
Shares	Exercise Price		Avg. Remaining Life (Years)
80,000	$	9.24	6.5
106,667	10.70		7.3
113,334	8.64		8.3
120,000	17.27		9.3
420,001	$	11.74



Options Exercisable at May 3, 2014
Shares	Exercise Price		Avg. Remaining Life (Years)
80,000	$	9.24	6.5
66,667	10.70		7.3
33,334	8.64		8.3
180,001	$	9.67

The options outstanding had an intrinsic value of $7.3 million at May 3, 2014. The intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of fiscal 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all options holders exercised their options on May 3, 2014.

We estimated the fair value of these stock options on the date of grant using the Black-Scholes option-pricing model with the following assumptions:



	2010 Stock Plan
	Fiscal 2014			Fiscal 2013			Fiscal 2012
	Awards			Awards			Awards
Average expected volatility	65.33		%	66.15		%	52.76		%
Average risk-free interest rate	0.65		%	0.39		%	0.63		%
Dividend yield	2.81		%	2.94		%	2.66		%
Expected life of options (in years)	7.61			7.18			7.03
Weighted-average grant-date fair value	$	8.39		$	4.13		$	4.27

Expected volatility was based on the monthly changes in our historical common stock prices over the expected life of the award. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant corresponding to the expected life of the options. Our dividend yield is based on the average dividend yield for the previous two years from the date of grant. The expected life of options is based on historical stock option exercise patterns and the terms of the options.

Restricted Stock Awards and Restricted Stock Units Awarded Under the 2010 Stock Plan

During fiscal 2012, our Compensation Committee awarded 100,000 shares of common stock subject to performance-based restricted stock awards ("RSAs") to certain non-executive members of management. The performance measure is the Company's internal enterprise value at the end of fiscal 2015. The internal enterprise value shall equal the product of (i) fiscal 2015 EBITDA and (ii) 7.5 (the historic multiple of EBITDA), subject to an adjustment for cash, short-term investments, debt, preferred stock, certain equity issuances, certain acquisitions and the changes in the dividend rate. The restricted stock awards will vest, i.e., the restriction will lapse, one-third as of the end of fiscal 2015, one-third as of the end of fiscal 2016 and the final one-third as of the end of fiscal 2017, based on the enterprise value as of the end of fiscal 2015, to the extent the performance goals have been achieved and provided the employee remains employed. The remaining shares will be forfeited.

During fiscal 2011, the Compensation Committee awarded 640,000 shares of RSAs to certain executive officers. The performance measure will be the Company's internal enterprise value at the end of fiscal 2015. The internal enterprise value shall equal the product of (i) fiscal 2015 EBITDA and (ii) 7.5 (the historic multiple of EBITDA), subject to an adjustment for cash, short-term investments, debt, preferred stock, certain equity issuances, certain acquisitions and the changes in the dividend rate. The restricted stock awards will vest, i.e., the restrictions will lapse, at the end of fiscal 2015 to the extent the performance goals have been achieved. The remaining shares will be forfeited.

During fiscal 2011, our Compensation Committee awarded 320,000 shares of common stock subject to time-based restricted stock units ("RSUs") to certain executive officers. The restricted stock units will vest 20% each year on the last day of our fiscal year and be 100% vested on the last day of fiscal 2015, provided the executive remains employed. The shares of common stock underlying the vested RSUs will not be delivered to the employee until after the employee terminates employment from the Company or upon change of control.

Below are key elements related to the performance-based restricted stock awards and time-based restricted stock units issued in fiscal 2014, 2013, 2012 and 2011 under the 2010 Stock Plan:

Bonus in Lieu of Dividends - For the performance-based restricted stock awards, bonuses in lieu of dividends will not be paid until the restrictions lapse (i.e., not in first 5 years). At such time as the restrictions lapse, the executive will be paid a “dividend catch-up” bonus calculated based on the dividends declared during the restricted period and the number of shares earned. For the time-based restricted stock units, once the restricted stock units vest and until the shares are delivered, the executive will be paid a quarterly bonus in lieu of dividends calculated based on declared dividends and the total number of vested restricted stock units held.

Tandem Cash Award - The executives were also granted RSA tandem cash awards. These cash incentive awards will become payable if performance under the RSAs described above exceeds target performance. If the performance measure target for the RSAs is exceeded, the amount payable under the RSA tandem cash awards will equal the product of the closing price of our common stock as of May 1, 2015 and the number of RSAs awarded to such executive officers not to exceed 40% of the awarded RSAs. In fiscal 2014 and 2013 respectively, we recorded a compensation expense of $3.9 million and $2.1 million related to the tandem cash awards. Prior to those periods, we had not recorded any expense for the tandem cash awards. The applicable accounting guidance required the Company to record this expense in light of management's current expectations for fiscal 2015 performance. The expense recorded assumes that the Company will achieve the maximum level of performance under these awards.

Change of Control (Performance-based Restricted Stock Awards) - In the event of a change of control, employee shall vest in the percentage of restricted shares that, extrapolated from the Company's external enterprise value as of the date of the change of control, would have vested on the vesting date. External enterprise value equals the fair market value per share of the Company's common stock as determined by the bona fide offer for the Company's common stock causing the change of control.

Change of Control (Time-based Restricted Stock Units) - In the event of a change in control prior to the end of the 5-year period, the vesting accelerates and the restrictions on any unvested shares will lapse.

The following table summarizes the RSA and RSU activity for fiscal 2014, 2013 and 2012 under the 2010 Stock Plan:



	RSA Shares		RSU Shares
Unvested and unissued at April 30, 2011	640,000		256,000
Awarded	100,000		—
Vested	—		(60,000	)
Forfeited and Cancelled	(40,000	)	(16,000	)
Unvested and unissued at April 28, 2012	700,000		180,000
Awarded	—		—
Vested	—		(60,000	)
Forfeited and Cancelled	—		—
Unvested and unissued at April 27, 2013	700,000		120,000
Awarded	—		—
Vested	—		(60,000	)
Forfeited and Cancelled	—		—
Unvested and unissued at May 3, 2014	700,000		60,000



			Weighted Average Value		Probable Unearned Compensation Expense at May 3, 2014		Target Unearned Compensation Expense at May 3, 2014
Grant Fiscal Year	Number of Shares Granted, less Forfeitures	Vesting Period	Weighted Average Value		Probable Unearned Compensation Expense at May 3, 2014		Target Unearned Compensation Expense at May 3, 2014
2011	600,000	5-year RSA cliff, performance based	$	9.70	$	1.3	$	1.3
2011	300,000	5-year RSU, equal annual installments	9.70		0.1		N/A
2012	100,000	One-third per year, beginning in fiscal 2015, performance based	8.10		0.3		0.3

2007 Stock Plan

The 2007 Stock Plan permits a total of 1,250,000 shares of our common stock to be awarded to participants. Shares issued under the Stock Plan may be either authorized but unissued shares, or treasury shares. If any award terminates, expires, is canceled or forfeited as to any number of shares of common stock, new awards may be granted with respect to such shares. The total number of shares with respect to which awards may be granted to any participant in any calendar year shall not exceed 200,000 shares. As of May 3, 2014, there were 108,321 shares still available for award under the 2007 Stock Plan.

Upon adoption of the 2010 plan, the Board of Directors has determined that the 2007 Stock Plan will only be used for equity awards to our independent directors and non-executive employees.

Stock Options Awarded Under the 2007 Stock Plan

In fiscal 2014, 2013 and 2012, respectively, our Compensation Committee awarded options to purchase 42,500 shares, 42,500 shares and 52,500 shares of our common stock to certain non-executive members of the management team that vest one-third per year on each anniversary of the date of the grant. The stock options awarded under the 2007 Stock Plan have a ten-year term. The exercise price is the closing price on the date granted.

The following tables summarize the stock option activity and related information for the stock options granted under the 2007 Stock Plan as of May 3, 2014:



	Summary of Option Activity
	Shares		Wtd. Avg. Exercise Price
Outstanding at April 30, 2011	720,500		$	5.77

Awarded	52,500		8.10
Exercised	(10,000	)	6.46
Cancelled	(25,000	)	9.73
Outstanding at April 28, 2012	738,000		$	5.79

Awarded	42,500		8.64
Exercised	(2,500	)	8.10
Cancelled	—		—
Outstanding at April 27, 2013	778,000		$	5.94

Awarded	42,500		17.27
Exercised	(648,141	)	5.60
Cancelled	—		—
Outstanding at May 3, 2014	172,359		10.02

Options Outstanding

at May 3, 2014



Shares	Exercise Price		Avg. Remaining Life (Years)
60,690	$	6.46	5.3
10,000	10.55		6.3
29,168	8.10		7.5
30,001	8.64		8.3
42,500	17.27		9.3
172,359	$	10.02

Options Exercisable

at May 3, 2014



Shares	Exercise Price		Avg. Remaining Life (Years)
60,690	$	6.46	5.3
10,000	10.55		6.3
11,668	8.10		7.5
1,668	8.64		8.3
84,026	$	7.22

We estimated the fair value of these stock options on the date of grant using the Black-Scholes option-pricing model with the following assumptions:



	Fiscal 2014 Awards			Fiscal 2013 Awards			Fiscal 2012 Awards
Average expected volatility	65.33		%	66.15		%	52.76		%
Average risk-free interest rate	0.65		%	0.39		%	0.63		%
Dividend yield	2.81		%	2.94		%	2.66		%
Expected life of options	7.61 years			7.18 years			7.03 years
Weighted-average grant-date fair value	$	8.39		$	4.13		$	4.27

The options outstanding had an intrinsic value of $3.3 million at May 3, 2014.

Restricted Stock Awards Awarded Under the 2007 Stock Plan

In April 2007, 225,000 shares of common stock subject to performance-based RSAs granted to our CEO in fiscal 2006 and 2007 were converted to RSUs. The RSUs were subject to the same vesting schedule and other major provisions of the RSAs they replaced, except the shares for stock underlying the RSUs will not be issued and delivered until the earlier of: (1) thirty days after the CEO’s date of termination of employment with the Company and all of its subsidiaries and affiliates; or (2) the last day of our fiscal year in which the payment of common stock in satisfaction of the RSUs becomes deductible to the Company under Section 162(m) of the Code. The RSUs are not entitled to voting rights or dividends, however a bonus in lieu of dividends is paid. The RSU’s were fully vested as of May 3, 2014. As of May 3, 2014, no shares have been delivered in connection with the RSUs.

At the beginning of fiscal 2014, there were no RSAs outstanding under the 2007 Stock Plan. We issued 27,000, 27,000 and 28,860 restricted shares to our independent directors, in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, all of which vested immediately upon grant.

The following table summarizes the RSA activity under the 2007 Stock Plan:



	Fiscal 2014		Fiscal 2013		Fiscal 2012
Unvested at beginning of fiscal year	—		—		—
Awarded	27,000		27,000		28,860
Vested	(27,000	)	(27,000	)	(28,860	)
Forfeited	—		—		—
Unvested at end of period	—		—		—

2000 and 2004 Stock Plans

Stock Options Outstanding Under the 2000 and 2004 Stock Plans

There were no stock options under the 2000 and 2004 Stock Plans outstanding as of May 3, 2014. Options to purchase 1,410, 128,105 and 96,934 shares of our common stock expired during fiscal 2014, 2013 and fiscal 2012, respectively.

The following tables summarize the stock option activity and related information for the stock options granted under the 2000 and 2004 Stock Plans for fiscal 2014, 2013 and 2012:



	Options Outstanding				Exercisable Options
	Shares		Wtd. Avg. Exercise Price		Shares	Wtd. Avg. Exercise Price
April 30, 2011	282,767		$	10.82	282,767	$	10.82

Granted	—		—
Exercised	(21,975	)	9.02
Cancelled	(9,427	)	11.32
April 28, 2012	251,365		10.96		251,365	10.96

Granted	—		—
Exercised	(50,675	)	11.44
Cancelled	(128,105	)	10.50
April 27, 2013	72,585		$	11.44	72,585	$	11.44

Granted	—		—
Exercised	(71,175	)	11.44
Cancelled	(1,410	)	11.44
May 3, 2014	—		—		—	—

Stock-based Compensation

We recognize pre-tax compensation expense for stock options, RSA's and RSU's under our 2010, 2007, 2004 and 2000 Stock Plans in the selling and administrative section of our consolidated statement of operations. Our awards subject to graded vesting are recognized using the accelerated recognition method. As of May 3, 2014, we had $2.5 million of unrecognized equity-based compensation cost that we expect to recognize over a weighted average period of 1.6 years.

The table below summarizes the expense related to the equity awards for fiscal 2014, 2013 and 2012.



	Compensation Expense
	Fiscal 2014		Fiscal 2013		Fiscal 2012
2010 Stock Plan:
RSAs	$	1.5	$	1.5	$	1.4
RSUs	0.3		0.5		0.9
Stock options	0.8		0.5		0.6
Total 2010 Stock Plan	$	2.6	$	2.5	$	2.9

2007 Stock Plan:
RSAs	$	0.4	$	0.2	$	0.3
Stock options	0.3		0.6		0.8
Total 2007 Stock Plan	$	0.7	$	0.8	$	1.1

Total Compensation Expense	$	3.3	$	3.3	$	4.0