XML 54 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
Note 7 - Shareholders' Equity
 3 Months Ended
Mar. 31, 2013
Stockholders' Equity Note Disclosure [Text Block]
7.  
SHAREHOLDERS’ EQUITY

a. Treasury Stock

At March 31, 2013 and December 31, 2012, we had 1,372,757 shares of treasury stock outstanding, valued at $7,658.

b. 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 March 31, 2013, there were 2,166,356 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 or 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 $190 and $264 for the three-month periods ended March 31, 2013 and April 1, 2012, respectively.  As of March 31, 2013, there was $1,060 of total unrecognized compensation cost related to outstanding stock options, which is expected to be recognized over a weighted average period of 2.32 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 March 31, 2013 and April 1, 2012.

   
Three-Month Periods Ended
 
   
March 31,
2013
   
April 1,
2012
 
             
Risk-free interest rate
    0.65 %     0.66 %
Volatility factor
    63.17 %     62.93 %
Dividends
    0.00 %     0.00 %
Weighted average expected life (years)
    4.03       3.91  

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 March 31, 2013 and April 1, 2012.

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 2013 is summarized as:

   
 
 
Number
of Shares
   
Weighted
Average
Exercise Price
Per Share
   
Weighted
Average
Remaining
Contractual
Term (years)
   
 
Aggregate
Intrinsic
Value
 
                         
Shares under option at January 1, 2013
    2,211,488     $ 7.47              
Options granted
    114,000       3.39              
Options exercised
    (3,000 )     3.91              
Options forfeited
    (25,132 )     4.40              
Options expired
    (33,000 )     11.87              
Shares under option at March 31, 2013
    2,264,356     $ 7.23       4.73     $ 475  
                                 
Vested and expected to vest as of March 31, 2013
    2,055,554     $ 7.49       4.63     $ 390  
Options exercisable at March 31, 2013
    1,045,897     $ 7.31       3.29     $ 110  

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 March 31, 2013 was $1.

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 2013 and 2012.  Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended March 31, 2013 and April 1, 2012 was $12 and $99, respectively.

c. Restricted Stock Awards

No restricted stock was awarded during the three-month periods ended March 31, 2013 and April 1, 2012. No expense was incurred related to restricted stock awards in the current quarter and $1 of expense was recognized in the three-month period ended April 1, 2012. There is no unrecognized compensation cost related to restricted stock awards as of March 31, 2013.