SHAREHOLDERS’ EQUITY

We recorded non-cash stock compensation expense in each period as follows:

	Three-month periods ended				Six-month periods ended
	July 1 ,		July 2 ,		July 1 ,		July 2 ,
	2018		2017		2018		2017
Stock Options	$	186	$	352	$	309	$	388
Restricted Stock Grants		19		4		35		8
Total	$	205	$	356	$	344	$	396

We have stock options outstanding from various stock-based employee compensation plans for which we record compensation cost relating to share-based payment transactions in our financial statements. As of

July 1, 2018,

there was

$844

of total unrecognized compensation cost related to outstanding stock options, which is expected to be recognized over a weighted average period of

1.4

years.

The following table summarizes stock option activity for the

six

-month period ended

July 1, 2018:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2018		1,860,211		$	6.10
Granted		216,500			9.68
Exercised		(290,476	)		4.56
Forfeited or Expired		(116,199	)		11.53
Outstanding at July 1, 2018		1,670,036		$	6.45		3.86	$	5,886
Vested and Expected to Vest at July 1, 2018		1,563,589		$	6.43		3.72	$	5,584
Exercisable at July 1, 2018		981,556		$	4.86		3.02	$	4,648

The following assumptions were used to value stock options granted during the

six

months ended

July 1, 2018:

Risk-Free Interest Rate	2.6	%
Volatility Factor	47	%
Weighted Average Expected Life (Years)	5
Dividends	0.0	%

The weighted average grant date fair value of options granted during the

six

months ended

July 1, 2018

was

$4.22.

July 25, 2018,

the Company’s Board of Directors, at the recommendation of the Compensation and Management Committee and pursuant to the Company’s Amended and Restated

2004

Long-Term Incentive Plan, modified the option previously granted to the Company’s President and Chief Executive Officer to purchase an aggregate

200,000

shares of the Company’s common stock at

$10.00,

such that the option will vest immediately upon the Company’s common stock

first

reaching a closing price

$10.00

for

trading days in a

trading-day period. The option expires

December 30, 2020.

The transaction will be accounted for as an equity award modification pursuant to Accounting Standards Codification Topic

718,

Compensation – Stock Compensation. The Company will recognize for the

third

quarter

2018

compensation cost of approximately

$182,

representing the incremental fair value of the modified award computed as of the modification date as the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified. The incremental fair value was determined using a Monte Carlo simulation option-pricing model consistent with the valuation methodology used to value and recognize the original award.

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

six

months of

2018

2017.

Cash received from stock option exercises under our stock-based compensation plans for the

three

-month periods ended

July 1, 2018

and

July 2, 2017

was

$354

and

$248,

respectively. Cash received from stock option exercises under our stock-based compensation plans for the

six

-month periods ended

July 1, 2018

and

July 2, 2017

was

$1,293

and

$989,

respectively.

January 2018,

17,500

shares of restricted stock were awarded to certain of our employees. These shares vest in equal annual installments over

three

years. The weighted average grant date fair value of these awards was

$7.16

per share. Unrecognized compensation cost related to these restricted shares was

$91

July 1, 2018.