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NOTE 4—STOCKHOLDER'S EQUITY
AMCE has one share of Common Stock issued as of December 29, 2011, which is owned by Parent.
On December 6, 2011, AMCE used cash on hand to pay a dividend distribution to Parent in an aggregate amount of $109,581,000. Parent used the available funds to pay corporate overhead expenses incurred in the ordinary course of business, and on January 25, 2012, to redeem its Term Loan Facility due June 2012, plus accrued and unpaid interest.
Stock-Based Compensation
The Company has no stock-based compensation arrangements of its own, but Parent has adopted a stock-based compensation plan. The Company has recorded stock-based compensation expense of $153,000 and $156,000 within general and administrative: other during the thirteen weeks ended December 29, 2011, and December 30, 2010, respectively and $1,471,000 and $1,020,000 during the thirty-nine weeks ended December 29, 2011 and December 30, 2010, respectively. Compensation expense for stock options and restricted stock are recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The Company's financial statements reflect an increase to additional paid-in capital related to stock-based compensation of $1,471,000 during fiscal 2012. As of December 29, 2011, there was approximately $4,903,000 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements expected to be recognized over a weighted average 2.5 years.
2010 Equity Incentive Plan
The 2010 Equity Incentive Plan ("Plan") provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, other stock-based awards or performance-based compensation awards and permits a maximum of 39,312 shares of common stock of Parent to be issued under the Plan. As of December 29, 2011, approximately 28,580 shares were available for grant under the Plan, including 2,914 shares awarded that have not been granted. The Company accounts for stock options using the fair value method of accounting and has elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants, as it does not have enough historical experience to provide a reasonable estimate. The common stock value of $755 per share was based upon a contemporaneous valuation reflecting market conditions on June 22, 2011, which was prepared by an independent third party valuation specialist, and was used to estimate grant value of 1,346 shares of restricted stock (performance vesting) granted on June 22, 2011. The third party valuation was reviewed by management and provided to our Board of Directors and the Compensation Committee of our Board of Directors. In determining the fair market value of our common stock, the Board of Directors and the Compensation Committee of our Board of Directors considered the valuation report and other qualitative and quantitative factors that they considered relevant.
The award agreements, which consisted of grants of non-qualified stock options, restricted stock (time vesting), and restricted stock (performance vesting) to certain of its employees under the 2010 Equity Incentive Plan, generally have the following features, subject to discretionary approval by Parent's compensation committee:
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- Non-Qualified Stock Option Award Agreement: Twenty-five percent of the options will vest on each of the first four anniversaries of the date of grant; provided, however, that the options will become fully vested and exercisable if within one year following a Change of Control (as defined in the Plan), the participant's service is terminated by the Company without cause. The stock options have a ten year term from the date of grant. During the thirty-nine weeks ended December 29, 2011, there was a stock option grant for 7 shares.
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- Restricted Stock Award Agreement (Time Vesting): The restricted shares will become vested on the fourth anniversary of the date of grant; provided, however, that the restricted shares will become fully vested if within one year following a Change of Control, the participant's service is terminated by the Company without cause. During the thirty-nine weeks ended December 29, 2011, there was a restricted stock (time vesting) grant of 7 shares.
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- Restricted Stock Award Agreement (Performance Vesting): In fiscal 2011, the Board approved the award of 5,542 shares of restricted stock (performance vesting), of which 1,346 shares have been granted in fiscal 2012. Approximately twenty-five percent of the total restricted shares of 5,542 approved by the Board will be granted each year over a four-year period starting in fiscal 2011. Each grant has a vesting term of approximately one year conditioned upon the Company meeting certain pre-established annual performance targets; provided, however, that the restricted shares will become fully vested if within one year following a Change of Control, the participant's service is terminated by the Company without cause. The fiscal 2012 performance target was communicated on June 22, 2011 following ASC 718-10-55-95 and the estimated grant date fair value was $1,016,000, or approximately $755 per share. During the third quarter of fiscal 2012, it was determined to be improbable that the Company would meet its pre-established annual performance target for fiscal 2012. The Company discontinued recognizing compensation cost for the restricted stock (performance vesting) grant for fiscal 2012 and reversed compensation cost previously recognized in prior quarters.
A summary of stock option activity is as follows:
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Number of Shares(1) |
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Weighted Average Exercise Price Per Share |
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Outstanding at March 31, 2011 |
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35,684.168 |
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$ |
449.93 |
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Granted |
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|
7.000 |
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|
752.00 |
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Forfeited |
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(13.000 |
) |
|
752.00 |
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| |
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Outstanding at December 29, 2011 |
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35,678.168 |
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$ |
449.88 |
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| |
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|
|
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Exercisable at December 29, 2011 |
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|
19,375.698 |
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$ |
446.81 |
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| |
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- (1)
- Includes shares previously granted under the amended and restated 2004 Stock Option Plan. On July 23, 2010, the Board determined that the Company would no longer grant any awards of shares of common stock of the Company under the amended and restated 2004 Stock Option Plan.
The following table represents the unvested restricted stock (time vesting) and (performance vesting) activity for the thirty-nine weeks ended December 29, 2011:
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Shares of Restricted Stock |
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Weighted Average Grant Date Fair Value |
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Unvested at March 31, 2011 |
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|
5,372 |
|
$ |
752.00 |
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Granted |
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|
1,353 |
|
|
755.00 |
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Forfeited |
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(1,359 |
) |
|
755.00 |
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| |
|
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|
|
|
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Unvested at December 29, 2011 |
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|
5,366 |
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$ |
752.00 |
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