Harris Teeter 2008 Annual Report Download - page 49

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45
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
first quarter of fiscal 2006 utilizing the modified prospective method which requires fair-value accounting for
all share-based payments to employees for new awards and previously granted awards that were not vested as
of the adoption date.
Stock awards are being expensed ratably over the employees’ five-year requisite service period in accordance
with the graded vesting schedule, resulting in more expense being recognized in the early years. Compensation
expense related to restricted awards totaled $5,339,000, $3,529,000 and $1,901,000 for fiscal years 2008, 2007
and 2006, respectively. The remaining unamortized expense as of September 28, 2008 is $7,560,000, with a
weighted average recognition period of 1.81 years.
Compensation expense related to stock options totaled $37,000, $324,000 and $645,000 for fiscal years
2008, 2007 and 2006, respectively. The fair value of the stock options was estimated at the date of grant using the
Black-Scholes option pricing model. The Company used historical data to estimate the expected life, volatility
and expected forfeitures of the stock option value. The risk-free rate was based on the U.S. Treasury rate in
effect at the time of grant. The weighted average fair value for stock options granted in fiscal 2008 was $11.28
per option and was based on the following weighted average assumptions: an expected life of 6.32 years; a risk-
free interest rate of 3.23%; volatility of 31.51%; and a dividend yield of 1.38%. No options were granted in fiscal
years 2007 or 2006.
A summary of the status of the Company’s restricted stock awards as of September 28, 2008, September
30, 2007 and October 1, 2006, changes during the periods ending on those dates and weighted average grant-date
fair value (WAGFV) is presented below (shares in thousands):
Stock Awards September 28, 2008 September 30, 2007 October 1, 2006
Shares WAGFV Shares WAGFV Shares WAGFV
Non-vested at beginning of period ........... 477 $25.17 325 $20.92 116 $22.47
Granted ................................ 278 36.69 269 28.63 233 20.21
Vested ................................. (90) 23.62 (50) 21.55 (15) 22.06
Forfeited ............................... (76) 29.02 (67) 21.09 (9) 21.64
Non-vested at end of period . . . . . . . . . . . . . . . . 589 $30.34 477 $25.17 325 $20.92
The total fair value of stock awards that vested during fiscal years 2008, 2007 and 2006 was $3,280,000,
$1,417,000 and $304,000, respectively.
A summary of the status of the Company’s stock option plans as of September 28, 2008, September 30,
2007, and October 1, 2006, changes during the years ending on those dates and related weighted average exercise
price is presented below (shares in thousands):
Stock Options 2008 2007 2006
Shares Price Shares Price Shares Price
Outstanding at beginning of year .............. 731 $16.01 1,179 $15.82 1,544 $15.78
Granted .................................. 10 35.24 — — — —
Exercised ................................. (248) 16.01 (440) 15.50 (339) 15.47
Forfeited ................................. (8) 16.70 (7) 16.40 (7) 15.84
Expired .................................. (2) 15.11 (1) 15.83 (19) 19.07
Outstanding at end of year . . . . . . . . . . . . . . . . . . . 483 $16.40 731 $16.01 1,179 $15.82
Options exercisable at year end . . . . . . . . . . . . . . . 386 $16.27 447 $15.85 611 $15.59