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Note 16 - Stock Based Compensation
 3 Months Ended
Sep. 23, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

16. Stock Based Compensation


On October 29, 2008, the shareholders of the Company approved the 2008 Unifi, Inc. Long-Term Incentive Plan (“2008 LTIP”). The 2008 LTIP authorized the issuance of up to 2,000 shares of common stock pursuant to the grant or exercise of stock options, including incentive stock options, non-qualified stock options and restricted stock, but not more than 1,000 shares may be issued as restricted stock. Option awards are granted with an exercise price not less than the market price of the Company's stock at the date of grant. The 2008 LTIP replaced the 1999 Unifi, Inc. Long-Term Incentive Plan (“1999 LTIP”), however, prior grants outstanding under the 1999 LTIP remain subject to that plan's provisions.


Stock options subject to service conditions


During the quarter ended September 23, 2012, the Company issued 138 stock options under the 2008 LTIP to certain key employees. The stock options vest ratably over the required three year service period and have ten year contractual terms. The weighted average exercise price of the options was $11.15 per share. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $7.28 per share.


For options granted, the valuation models used the following weighted average assumptions:


 

September 23, 2012

Expected term (years)

    7.5

Interest rate

    1.0 %

Volatility

    66.9 %

Dividend yield

    —

The Company uses historical data to estimate the expected life, volatility and estimated forfeitures. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the options.


A summary of the Company's non-vested shares related to options subject to service conditions as of September 23, 2012, and changes during the current fiscal quarter is as follows:


 

Under the 2008 LTIP

Weighted Average

Grant Date Fair Value

Non-vested at June 24, 2012

    312   $ 5.19

Granted

    138   $ 7.28

Vested

    (227 )   $ 4.19

Forfeited

    —   $ —

Non-vested at September 23, 2012

    223   $ 7.50

The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options subject to service conditions for selected price ranges as of September 23, 2012:


Options Outstanding

Options Exercisable

Exercise Price

Number of
Options

Outstanding

Weighted
Average

Exercise Price

Weighted Average Contractual Life

Remaining

(Years)

Number of

Options

Exercisable

Weighted

Average

Exercise Price

$5.73 - $10.00     828   $ 6.73     5.5     828   $ 6.73
$10.01 - $15.00     315   $ 11.53     8.5     92   $ 11.24
$15.01 - $21.72     6   $ 20.55     1.3     6   $ 20.55

Total

    1,149   $ 8.13     6.3     926   $ 7.28

At September 23, 2012, the remaining unrecognized compensation cost related to the unvested stock options subject to service conditions was $1,215 which is expected to be recognized over a weighted average period of 2.6 years.


Stock options subject to market conditions


There were no options granted during the quarter ended September 23, 2012 that contained market condition vesting provisions. A summary of the Company's non-vested shares related to options subject to market conditions as of September 23, 2012, and changes during the current fiscal quarter is as follows:


 

Under the 1999 LTIP

Under the 2008 LTIP

Total Shares

Weighted Average

Grant Date Fair Value

Non-vested at June 24, 2012

    494     73     567   $ 5.63

Granted

    —     —     —   $ —

Vested

    —     —     —   $ —

Forfeited

    —     —     —   $ —

Non-vested at September 23, 2012

    494     73     567   $ 5.63

The stock options are subject to a market condition which vests the options on the date that the closing price of the Company's common stock on the New York Stock Exchange has been at least $18, $24 or $30 per share (depending on the terms of the specific award) for thirty consecutive trading days.


The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options subject to market conditions, for selected price ranges as of September 23, 2012:


Options Outstanding

Options Exercisable

Exercise Price

 

Number of

Options Outstanding

 

Weighted

Average

Exercise Price

 

Weighted Average Contractual Life

Remaining

(Years)

 

Number of

Options

Exercisable

 

Weighted

Average

Exercise Price

$ 8.00

- $ 10.00     494   $ 8.15     5.1     —   $ —

$ 10.01

- $ 12.48     73   $ 12.48     6.2     —   $ —

Total

              567   $ 8.71     5.2     —   $ —

The remaining unrecognized compensation cost related to the stock options subject to market conditions at September 23, 2012 was nil.


The stock option activity for the quarter ended September 23, 2012 for all plans and all vesting conditions is as follows:


 

Options Outstanding

Weighted

Average

Exercise Price

Shares under option at June 24, 2012

    1,583   $ 8.06

Granted

    138   $ 11.15

Exercised

    (5 )   $ 5.73

Expired

    —   $ —

Forfeited

    —   $ —

Shares under option at September 23, 2012

    1,716   $ 8.32

For the quarters ended September 23, 2012 and September 25, 2011, the total intrinsic value of options exercised was $26 and $26, respectively. The amount of cash received from the exercise of options was $29 and $49 for the quarters ended September 23, 2012 and September 25, 2011, respectively. The tax benefit realized from stock options exercised was not material for all periods presented.


Restricted stock units – non-employee directors


There were no new restricted stock units (“RSUs”) issued to non-employee directors during the quarter ended September 23, 2012. The total number of vested RSUs issued to non-employee directors outstanding as of September 23, 2012 was 70 which is unchanged from June 24, 2012. For the RSUs issued to non-employee directors, there were no unvested stock units and no unrecognized compensation cost at September 23, 2012.


Restricted stock units – key employees


During the quarter ended September 23, 2012, the Company issued 32 RSUs from the 2008 LTIP to certain key employees. The RSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such RSUs have vested and been distributed to the grantee in the form of Company stock. The RSUs vest ratably over a three year period with one third of the RSUs vesting on each of the following dates: August 25, 2013, July 25, 2014 and July 25, 2015. The RSUs will be converted into an equivalent number of shares of stock on each vesting date and distributed to the grantee, or the grantee may elect to defer the receipt of the shares of stock until separation from service. If after July 25, 2013 and prior to the final vesting date the grantee has a separation from service without cause for any reason other than the employee's resignation, the remaining unvested RSUs will become fully vested and will be converted to an equivalent number of shares of stock and issued to the grantee. The Company estimated the grant-date fair value of the award to be $11.23 per RSU based on the fair value of the Company's stock at the award grant date.


A summary of the Company's RSUs issued to key employees and changes during the quarter ended September 23, 2012 consist of the following:


 

Units

Weighted

Average Grant Date Fair Value

Non-vested at June 24, 2012

    64   $ 12.47

Granted

    32   $ 11.23

Vested

    (21 )   $ 12.47

Forfeited

    —   $ —

Non-vested at September 23, 2012

    75   $ 11.94

The remaining unrecognized compensation cost related to the unvested RSUs at September 23, 2012 is $323, which is expected to be recognized over a weighted average period of 2.9 years.


The activity for the quarter ended September 23, 2012 for all RSUs, for all grantees, was as follows:


 

RSUs Outstanding

RSUs outstanding at June 24, 2012

    134

Granted

    32

Converted

    —

Forfeited

    —

RSUs outstanding at September 23, 2012

    166

Summary:


The total cost charged against income related to all stock based compensation arrangements was as follows:


 

September 23, 2012

September 25, 2011

Stock options subject to service conditions

  $ 237   $ 189

Stock options subject to market conditions

    —     (18 )

RSUs issued to non-employee directors

    —     69

RSUs issued to key employees

    112     128

Total compensation cost

  $ 349   $ 368

The total income tax benefit recognized for stock based compensation was not material for all periods presented.


As of September 23, 2012, total unrecognized compensation costs related to all unvested stock based compensation arrangements was $1,538. The weighted average period over which these costs are expected to be recognized is 2.6 years.


As of September 23, 2012, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:


Authorized under the 2008 LTIP

    2,000

Less: Market condition options granted

    (93 )

Less: Service condition options granted

    (832 )

Less: RSUs granted to non-employee directors

    (75 )

Less: RSUs granted to key employees

    (96 )

Plus: Options forfeited

    27

Plus: RSUs forfeited

    —

Available for issuance under the 2008 LTIP

    931