Quarterly report pursuant to Section 13 or 15(d)

Equity Based Compensation

 v2.3.0.11
Equity Based Compensation
6 Months Ended
Jul. 02, 2011
Equity Based Compensation  
Equity Based Compensation

NOTE F — EQUITY BASED COMPENSATION

     Equity-based compensation expense for the quarters ended July 3, 2010, and July 2, 2011, was $2,184 and $1,567, respectively. The related tax benefit for these periods was $787 and $568, respectively. Expense for the six months ended July 3, 2010, and July 2, 2011, was $4,140 and $4,802, respectively. The related tax benefit for these periods was $1,514 and $1,751, respectively.

     During the quarter ended July 2, 2011, certain executives left the Company, which resulted in the cancellation of these executives' equity awards. The recapture of equity compensation expense related to the cancellation of unvested equity awards reduced equity-based compensation expense for the quarter and six months ended July 2, 2011 by $1,230. The related tax impact for these cancellations was $424.

     The following table shows the remaining unrecognized compensation expense on a pre-tax basis for all types of equity awards that were outstanding as of July 2, 2011. This table does not include an estimate for future grants that may be issued.

Remainder of 2011 $ 5,480
2012   9,083
2013   5,457
2014   3,419
2015 and beyond   1,611
  $ 25,050

 

The cost above is expected to be recognized over a weighted-average period of 2.1 years.

     During the quarter ended July 2, 2011, the Company's shareholders approved a 5,000 increase in the number of new shares authorized for issuance under the Company's 2006 Equity Incentive Award Plan (the "2006 Plan"). This increase brings the total shares authorized under the 2006 Plan to 10,000. The 2006 Plan is currently the only plan utilized by the Company for the issuance of equity awards. As of July 2, 2011, a total of 4,971 units had been issued under this plan, comprising 4,849 stock-settled stock appreciation rights, 114 deferred stock units, and 8 stock options. Also, as of July 2, 2011, 761 units had been cancelled and added back to the number of units available for issuance under the 2006 Plan.

 

     A summary of the Company's stock option and stock-settled stock appreciation right activity for the six months ended July 2, 2011 is as follows:

          Weighted-    
          average    
        Weighted- remaining   Aggregate
        average contractual   intrinsic
  Shares     grant price term   value*
Outstanding at January 1, 2011 4,047   $ 32.46 3.5 $ 45,263
Granted 25     39.31      
Exercised (57 )   28.66      
Canceled or expired (558 )   31.74      
Outstanding at July 2, 2011 3,457   $ 32.69 3.1 $ 13,672
Exercisable at July 2, 2011 1,209   $ 33.37 2.7 $ 4,385

 

*      Aggregate intrinsic value is defined as the difference between the current market value at the reporting date (the closing price of the Company's common stock on the last trading day of the period) and the exercise price of awards that were in-the-money. The closing price of the Company's common stock at January 1, 2011 and July 2, 2011, was $43.45 and $33.54, respectively.

     The weighted-average fair value of stock-settled stock appreciation rights that were granted during the six-month periods ended July 3, 2010, and July 2, 2011 was $15.50 and $17.47, respectively. The total intrinsic value of awards that were exercised during the six-month periods ended July 3, 2010, and July 2, 2011 was $246 and $555, respectively.

     The following table includes weighted-average assumptions that the Company has used to calculate the fair value of equity awards that were granted during the periods indicated. Deferred stock units are full-value shares at the date of grant and have been excluded from the table below:

    Quarter Ended   Six Months Ended  
    July 3,   July 2,   July 3,     July 2,  
    2010   2011   2010     2011  
 
Expected volatility   54.8 % *   54.9 %   54.8 %
Risk-free interest rate   2.0 % *   2.0 %   1.5 %
Expected life   4.2 yrs. *   4.2 yrs.   4.2 yrs.
Expected dividend yield   -   *   -     -  
Weighted-average grant price $ 35.47   * $ 34.46   $ 39.31  

 

*      No equity awards were issued during the quarter ended July 2, 2011.