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STOCK OPTIONS
 9 Months Ended
Jun. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

11. STOCK OPTIONS


The Company has options outstanding under two stock option plans, the 2004 Stock Option Plan (the “2004 Plan) and the 2010 Stock Option Plan (the “2010 Plan”), which was approved by shareholders in the second quarter of 2010. Effective with this approval the Company terminated the 2004 Plan. This action terminated the 400 authorized but unissued options under the 2004 Plan, however it did not affect any of the options previously issued under the 2004 Plan. Options granted under the 2004 Plan are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted. The options expire ten years after the date of grant.


The 2010 Stock Option Plan is the Company’s only equity compensation plan currently in effect. Under the 2010 Stock Option Plan, 500,000 options were authorized for future grant. Options granted under the 2010 Plan are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted. The options expire ten years after the date of grant.


During 13-week period ended June 30, 2012, options to purchase 251,500 shares of common stock at an exercise price of $14.40 per share were granted and are exercisable as to 50% of the shares commencing on the first anniversary of the date of grant and as to an additional 50% commencing on the second anniversary of the date of grant. The grant date fair value of these stock options was $2.57 per share.


The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk free interest rate. The assumptions used for the 2012 grant include a risk free interest rate of 1.67%, volatility of 36.2%, a dividend yield of 6.1% and an expected life of 6.25 years.


A summary of stock option activity is presented below:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Weighted
Average
Exercise
Price

 

Weighted
Average
Contractual
Term

 

Aggregate
Intrinsic
Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, October 1, 2011

 

 

396,600

 

$

22.82

 

 

5.50 Years

 

$

202,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options:

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

251,500

 

$

14.40

 

 

2.00 Years

 

 

 

 

Exercised

 

 

—

 

 

 

 

 

 

 

 

 

 

Canceled or expired

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, June 30, 2012

 

 

648,100

 

$

19.56

 

 

6.75 Years

 

$

408,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at June 30, 2012

 

 

396,600

 

$

22.82

 

 

4.75 Years

 

$

398,640

 

 

 

 

 

 

 

 

 

 

 


Compensation cost charged to operations for the 39-week periods ended June 30, 2012 and July 2, 2011 was $29,000 and $190,000, respectively and for the 13-week periods ended June 30, 2012 and July 2, 2011 was $29,000 and $34,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the Consolidated Condensed Statements of Operations.


As of June 30, 2012, there was approximately $617,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of approximately two years.