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Shareholders' Equity
 3 Months Ended
Apr. 01, 2012
Shareholders' Equity [Abstract]  
SHAREHOLDERS' EQUITY
7. SHAREHOLDERS’ EQUITY

a. Common Stock

In February 2012, we issued 16,271 shares of common stock to our non-employee directors, valued at $76.

b. Treasury Stock

At April 1, 2012 and December 31, 2011, we had 1,372,757 shares of treasury stock outstanding, valued at $7,658.

c. Stock Options

We have various stock-based employee compensation plans, for which we follow the provisions of the Financial Accounting Standards Board’s (“FASB”) guidance on share-based payments, which requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

 

Our shareholders have approved various equity-based plans that permit the grant of stock options, restricted stock and other equity-based awards. In addition, our shareholders have approved certain grants of stock options outside of these plans.

In June 2004, shareholders adopted the 2004 Long-Term Incentive Plan (“LTIP”) pursuant to which we were authorized to issue up to 750,000 shares of common stock and grant stock options, restricted stock awards, stock appreciation rights and other stock-based awards. Through shareholder approved amendments to the LTIP in 2006, 2008 and 2011, the total number of authorized shares under the LTIP increased to 2,900,000.

Stock options granted under the LTIP are either Incentive Stock Options (“ISOs”) or Non-Qualified Stock Options (“NQSOs”). Key employees are eligible to receive ISOs and NQSOs; however, directors and consultants are eligible to receive only NQSOs. Most ISOs vest over a three- or five-year period and expire on the sixth or seventh anniversary of the grant date. All NQSOs issued to non-employee directors vest immediately and expire on either the sixth or seventh anniversary of the grant date. Some NQSOs issued to non-employees vest immediately and expire within three years; others have the same vesting characteristics as options issued to employees. As of April 1, 2012, there were 2,239,528 stock options outstanding under the LTIP.

On December 19, 2005, we granted our former President and Chief Executive Officer, John D. Kavazanjian, an option to purchase 48,000 shares of common stock at $12.96 per share outside of any of our equity-based compensation plans, subject to shareholder approval. Shareholder approval was obtained on June 8, 2006. The stock option is fully vested and expires on June 8, 2013.

On March 7, 2008, in connection with his becoming employed by us, we granted our Chief Financial Officer and Treasurer, Philip A. Fain, an option to purchase 50,000 shares of common stock at $12.74 per share outside of any of our equity-based compensation plans. The stock option is fully vested and expires on March 7, 2015.

On December 30, 2010, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, options to purchase shares of common stock under the LTIP as follows: (i) 50,000 shares at $6.42, vesting in annual increments of 12,500 shares over a four-year period commencing December 30, 2011; (ii) 250,000 shares at $6.42, vesting in annual increments of 62,500 shares over a four-year period commencing December 30, 2011; (iii) 200,000 shares at $10.00, with vesting to begin on the date the stock reaches a closing price of $10.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date; and (iv) 200,000 shares at $15.00, with vesting to begin on the date the stock reaches a closing price of $15.00 per share for 15 trading days within a 30-day trading period, with such vesting in annual increments of 50,000 shares over the four anniversary dates of that date. All such options in items (i) and (ii) shall expire on December 30, 2017. All such options in items (iii) and (iv) shall expire as of the later of December 30, 2017 and five years after the initial vesting commences, but in no event later than December 30, 2020. The options set forth in items (ii), (iii) and (iv) were subject to shareholder approval of an amendment to the LTIP, which approval was obtained on June 7, 2011.

On January 3, 2011, pursuant to the terms of his employment agreement, we granted our President and Chief Executive Officer, Michael D. Popielec, an option to purchase 50,000 shares of common stock at $6.58 under the LTIP. The option vests in annual increments of 12,500 shares over a four-year period commencing December 30, 2011. The option expires on December 30, 2017.

 

In conjunction with FASB’s guidance for share-based payments, we recorded compensation cost related to stock options of $264 and $239 for the three-month periods ended April 1, 2012 and April 3, 2011, respectively. As of April 1, 2012, there was $1,493 of total unrecognized compensation cost related to outstanding stock options, which is expected to be recognized over a weighted average period of 2.14 years.

We use the Black-Scholes option-pricing model to estimate the fair value of non-market performance stock-based awards. The following weighted average assumptions were used to value non-market performance stock options granted during the three-month periods ended April 1, 2012 and April 3, 2011.

 

                 
    Three-Month Periods Ended  
    April 1,
2012		     April 3,
2011		  

Risk-free interest rate

     0.66 %      1.64 % 

Volatility factor

     62.93 %      54.61 % 

Dividends

     0.00 %      0.00 % 

Weighted average expected life (years)

     3.91       3.89  

We use a Monte Carlo simulation option-pricing model to estimate the fair value of market performance stock-based awards. There were no market performance stock options granted during the three-months ended April 1, 2012 and April 3, 2011.

We calculate expected volatility for stock options by taking an average of historical volatility over the past five years and a computation of implied volatility. The computation of expected term was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant.

Stock option activity for the first three months of 2012 is summarized as:

 

                                 
   

Number

of Shares

    

Weighted
Average
Exercise Price

Per Share

     Weighted
Average
Remaining
Contractual
Term		     Aggregate
Intrinsic
Value		  

Shares under option at January 1, 2012

     2,356,228     $ 8.34                  

Options granted

     31,000       3.98                  

Options exercised

     (24,000 )      4.12                  

Options forfeited

     (4,200 )      4.59                  

Options expired

     (21,500 )      17.12                  
   

 

 

    

 

 

    

 

 

    

 

 

  

Shares under option at April 1, 2012

     2,337,528     $ 8.25       4.76 years     $ 681  
   

 

 

    

 

 

    

 

 

    

 

 

  

Vested and expected to vest as of April 1, 2012

     2,074,104     $ 8.62       4.64 years     $ 565  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options exercisable at April 1, 2012

     1,045,537     $ 9.21       2.89 years     $ 252  

 

The total intrinsic value of stock options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the three-month period ended April 1, 2012 was $24.

FASB’s guidance for share-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised stock options in excess of the deferred tax asset attributable to stock compensation costs for such stock options. We did not record any excess tax benefits in the first three months of 2012 and 2011. Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended April 1, 2012 and April 3, 2011 was $99 and $53, respectively.

d. Restricted Stock Awards

No restricted stock was awarded during the three-month periods ended April 1, 2012 and April 3, 2011.

The activity of restricted stock awards for the three months of 2012 is summarized as follows:

 

                 
          Weighted Average  
    Number of Shares     Grant Date Fair Value  

Unvested at December 31, 2011

     1,218     $ 11.33  

Granted

     —         —    

Vested

     (1,218 )      11.33  

Forfeited

     —         —    
   

 

 

    

 

 

  

Unvested at April 1, 2012

     —       $ —    
   

 

 

    

 

 

  

We recorded compensation cost related to restricted stock awards of $1 and $(32) for the three-month periods ended April 1, 2012 and April 3, 2011, respectively. As of April 1, 2012, we had $-0- of total unrecognized compensation cost related to restricted stock awards. The total fair value of these grants that vested during the three-month period ended April 1, 2012 was $5.