NOTE 10: STOCK-BASED COMPENSATION

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. Such awards include restricted and unrestricted stock awards, performance share units, stock options, and shares purchased under an employee stock purchase plan (“ESPP”).

Total stock-based compensation expense recognized in the consolidated financial statements (in millions):



	2011		2010		2009
Restricted stock and performance share units expense	$	6.7	$	5.9	$	5.6
Stock option expense	0.4		1.0		1.1
ESPP expense	0.3		0.3		0.4
Total stock-based compensation expense in the Consolidated Statements of Operations	$	7.4	$	7.2	$	7.1

Total related tax benefit recognized	$	2.8	$	2.3	$	2.7

No capitalized stock-based compensation was included in Property and equipment, net on the Consolidated Balance Sheets for 2011, 2010 or 2009.

Restricted stock and performance share units

Stock-based awards are issued under our 2005 Amended Long-Term Equity Incentive Plan. Restricted stock is granted to officers and key employees and vests annually over periods ranging from three to four years. Stock granted to our directors vests immediately. Restricted stock-based compensation expense is calculated based on the grant-date market value. We recognize compensation expense on a straight-line basis over the vesting period for the awards that are expected to vest.

Performance share units have been granted to executives since 2010. Vesting of the performance share units is contingent upon the achievement of revenue and profitability goals at the end of each three year performance period. Each performance share unit is equivalent to a share of common stock. Compensation expense is calculated based on the grant-date market value of our stock and is recognized ratably over the performance period for the performance share units which are expected to vest. Our estimate of the performance units expected to vest is reviewed and adjusted as appropriate each quarter.

Restricted stock and performance share units activity for the year ended December 30, 2011 is as follows (shares in thousands):



	Shares		Price (1)
Nonvested at beginning of period	882		$	13.14
Granted	777		$	14.72
Vested	(376	)	$	13.86
Forfeited	(17	)	$	12.86
Nonvested at the end of the period	1,266		$	13.92

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(1)	Weighted average market price on grant date.

As of December 30, 2011, total unrecognized stock-based compensation expense related to non-vested restricted stock was approximately $6.4 million, of which $5.8 million is expected to be recognized over a weighted average period of 1.6 years through 2015. As of December 30, 2011, total unrecognized stock-based compensation expense related to performance share units assuming achievement of maximum financial goals was approximately $5.6 million, of which $3.4 is expected to be recognized over a weighted average period of 2.6 years through 2015. The total fair value of restricted shares vesting during 2011, 2010 and 2009 was $5.2 million, $5.4 million and $5.0 million, respectively.

Stock options

Our 2005 Amended Long-Term Equity Incentive Plan provides for both nonqualified stock options and incentive stock options (collectively, “stock options”) for directors, officers, and certain employees. We issue new shares of common stock upon exercise of stock options. The majority of our unvested stock options “cliff vest” in three years from the date of grant and expire if not exercised within seven years from the date of grant. The maximum contractual term for our outstanding awards is ten years.

The fair value of each stock option granted is estimated on the grant date using the Black-Scholes valuation model, and the resulting expense is recognized over the requisite service period for each separately vesting portion of the award. The assumptions used to calculate the fair value of options granted reflect market conditions and our experience. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on our historical experience and future expectations.

There were no stock options granted during 2011. A summary of the weighted average assumptions and results for options granted during the periods presented is as follows:



	2011			2010			2009
Expected life (in years)	—			3.36			3.35
Expected volatility	—		%	59.6		%	53.0		%
Risk-free interest rate	—		%	1.3		%	1.4		%
Expected dividend yield	—		%	—		%	—		%
Weighted average fair value of options granted during the period	$	—		$	6.24		$	3.52

Stock option activity for the year ended December 30, 2011 is as follows (shares in thousands):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (millions)
Outstanding, December 31, 2010	1,119		$	15.62
Granted	—		$	—
Exercised	(8	)	$	13.20
Expired/Forfeited	(1	)	$	16.98
Outstanding, December 30, 2011	1,110		$	15.64	2.4	$	1.5
Exercisable, December 30, 2011	812		$	18.03	1.8	$	0.1
Options expected to vest, December 30, 2011	298		$	9.14	4.0	$	1.4

The aggregate intrinsic value in the table above is the amount by which the market value of the underlying stock exceeded the exercise price of outstanding options, before applicable income taxes and represents the amount optionees would have realized if all in-the-money options had been exercised on the last business day of the period indicated. The closing per share market value of the Company’s stock on December 30, 2011 was $13.88.

As of December 30, 2011, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $0.1 million, which is expected to be recognized over a weighted average period of 0.4 years through 2013. The total intrinsic value of options exercised during 2011 was de minimis, and was $0.2 million in 2010 and 2009, respectively, determined as of the date of exercise.

Cash received from option exercises, net of tax withholdings, during 2011, 2010 and 2009 was $0.1 million, $0.2 million and $0.1 million, respectively. There was de minimis tax benefit realized for the tax deduction from option exercises during 2011, 2010 and 2009.

Employee stock purchase plan

Our 2010 Employee Stock Purchase Plan (“2010 ESPP”) became effective on July 1, 2010, replacing our 1996 Employee Stock Purchase Plan, which expired on June 30, 2010. Our ESPP allows eligible employees to contribute up to 10% of their base earnings toward the monthly purchase of the Company’s common stock. The employee’s purchase price is the lesser of 85% of the fair market value of shares on either the first day or the last day of each month.

Summary of transactions under our ESPP from fiscal year 2009 through 2011 (shares in thousands):

Under the 2010 Employee Stock Purchase Plan, 1.0 million shares of common stock had been reserved for purchase, of which 0.1 million shares had been purchased.

We consider our ESPP to be a component of our stock-based compensation and accordingly we recognize compensation expense over the requisite service period for stock purchases made under the plan. The requisite service period begins on the enrollment date and ends on the purchase date, the duration of which is one month.

Average Price Per
Share

Issued during fiscal year 2011

Issued during fiscal year 2010

Issued during fiscal year 2009