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As of December 29, 2013, there was $9.0 million of total unrecognized compensation cost, net of forfeitures, related to nonvested restricted stock awards. That cost is expected to be recognized over a weightedaverage period of 1.2 fiscal years.
Performance Units: The Company’s performance unit program provides a cash award based on the achievement of specific performance criteria. A target number of units are granted at the beginning of a threeyear performance period. The number of units earned at the end of the performance period is determined by multiplying the number of units granted by a performance factor ranging from 0% to 200%. Awards are determined by multiplying the number of units earned by the stock price at the end of the performance period, and are paid in cash and accounted for as a liability based award. The compensation expense associated with these units is recognized over the period that the performance targets are expected to be achieved. The Company granted 98,056 performance units, 122,675 performance units, and 89,828 performance units during fiscal years 2013, 2012, and 2011, respectively. The weighted-average per-share grant-date fair value of performance units granted during fiscal years 2013, 2012, and 2011 was $34.06, $26.18, and $26.71, respectively. The total compensation expense related to these performance units was $1.4 million, $7.1 million, and $3.7 million for fiscal years 2013, 2012, and 2011, respectively. As of December 29, 2013, there were 282,044 performance units outstanding subject to forfeiture, with a corresponding liability of $4.8 million recorded in accrued expenses and long-term liabilities.
Stock Awards: The Company’s stock award program provides non-employee Directors an annual equity award. For fiscal years 2013, 2012, and 2011 the award equaled the number of shares of the Company’s common stock which has an aggregate fair market value of $100,000 on the date of the award. The stock award is prorated for non-employee Directors who serve for only a portion of the year. The compensation expense associated with these stock awards is recognized when the stock award is granted. In fiscal years 2013, 2012, and 2011, each non-employee Director was awarded 3,263 shares, 3,580 shares, and 3,544 shares, respectively. The Company also granted 955 shares to a new non-employee Director during fiscal year 2012. The weighted-average per-share grant-date fair value of stock awards granted during fiscal years 2013, 2012, and 2011 was $30.65, $27.87, and $28.22, respectively. In fiscal years 2013, 2012, and 2011, the total compensation expense recognized related to these stock awards was $0.7 million, $0.7 million and $0.8 million, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Employee Stock Purchase Plan: In April 1999, the Company’s shareholders approved the 1998 Employee Stock Purchase Plan. In April 2005, the Compensation and Benefits Committee of the Board voted to amend the Employee Stock Purchase Plan, effective July 1, 2005, whereby participating employees have the right to purchase common stock at a price equal to 95% of the closing price on the last day of each six-month offering period. The number of shares which an employee may purchase, subject to certain aggregate limits, is determined by the employee’s voluntary contribution, which may not exceed 10% of the employee’s base compensation.
During fiscal year 2013, the Company issued 89,521 shares of common stock under the Company’s Employee Stock Purchase Plan at a weighted-average price of $30.51 per share. During fiscal year 2012, the Company issued 53,961 shares under this plan at a weighted-average price of $24.51 per share. During fiscal year 2011, the Company issued 102,970 shares under this plan at a weighted-average price of $21.33 per share. At December 29, 2013 there remains available for sale to employees an aggregate of 1.1 million shares of the Company’s common stock out of the 5.0 million shares authorized by shareholders for issuance under this plan.
Note 19: Stockholders’ Equity
The components of accumulated other comprehensive income consisted of the following:
During fiscal year 2013, pre-tax losses of $4.8 million were reclassified from accumulated other comprehensive income into interest and other expense, net, related to previously settled cash flow hedges, which includes $2.8 million for the remaining unamortized derivative losses that were reclassified when the Company redeemed all of its 2015 Notes. The Company recognized a tax provision of $1.9 million related to these amounts reclassified out of accumulated other comprehensive income for fiscal year 2013. During both fiscal years 2012 and 2011, pre-tax losses of $2.0 million were reclassified from accumulated other comprehensive income into interest and other expense, net related to previously settled cash flow hedges. The Company recognized a tax provision of $0.8 million related to these amounts reclassified out of accumulated other comprehensive income in both fiscal years 2012 and 2011. During fiscal years 2013, 2012, and 2011, pre-tax expense of $0.7 million, pretax expense of $0.1 million, and pre-tax income of $0.1 million, respectively, were reclassified from accumulated other comprehensive income into selling, general and administrative expenses as a component of net periodic benefit cost.
Stock Repurchase Program:
On October 24, 2012, the Board of Directors (the “Board”) authorized the Company to repurchase up to
6.0 million shares of common stock under a stock repurchase program (the “Repurchase Program”). The Repurchase Program will expire on October 24, 2014 unless terminated earlier by the Board, and may be NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) suspended or discontinued at any time. During fiscal year 2013, the Company repurchased approximately
3.6 million shares of common stock in the open market at an aggregate cost of $123.0 million, including commissions, under the Repurchase Program. During fiscal year 2012, the Company did not repurchase any shares of common stock under any stock repurchase program. During fiscal year 2011, the Company repurchased approximately 4.0 million shares of common stock in the open market at an aggregate cost of $107.8 million, including commissions. The repurchases made during fiscal year 2011 were made pursuant to the Company’s stock repurchase program originally announced in October 2008 that expired in October 2012. As of December 29, 2013, approximately 2.4 million shares authorized by the Board under the Repurchase Program remained available for repurchase.
The Board has authorized the Company to repurchase shares of common stock to satisfy minimum statutory tax withholding obligations in connection with the vesting of restricted stock awards and restricted stock unit awards granted pursuant to the Company’s equity incentive plans. During fiscal year 2013, the Company repurchased 127,544 shares of common stock for this purpose at an aggregate cost of $4.4 million. During fiscal year 2012, the Company repurchased 82,186 shares of common stock for this purpose at an aggregate cost of $2.1 million. During fiscal year 2011, the Company repurchased 84,243 shares of common stock for this purpose at an aggregate cost of $2.2 million.
The repurchased shares have been reflected as additional authorized but unissued shares, with the payments reflected in common stock and capital in excess of par value.
The Board declared a regular quarterly cash dividend of $0.07 per share in each quarter of fiscal years 2013 and 2012. At December 29, 2013, the Company has accrued $7.9 million for dividends declared on October 24, 2013 for the fourth quarter of fiscal year 2013 payable in February 2014. On January 24, 2014, the Company announced that the Board had declared a quarterly dividend of $0.07 per share for the first quarter of fiscal year 2014 that will be payable in May 2014. In the future, the Board may determine to reduce or eliminate the Company’s common stock dividend in order to fund investments for growth, repurchase shares or conserve capital resources.
Note 20: Derivatives and Hedging Activities The Company uses derivative instruments as part of its risk management strategy only, and includes derivatives utilized as economic hedges that are not designated as hedging instruments. By nature, all financial instruments involve market and credit risks. The Company enters into derivative instruments with major investment grade financial institutions and has policies to monitor the credit risk of those counterparties. The Company does not enter into derivative contracts for trading or other speculative purposes, nor does the Company use leveraged financial instruments. Approximately 60% of the Company’s business is conducted outside of the United States, generally in foreign currencies. The fluctuations in foreign currency can increase the costs of financing, investing and operating the business. The intent of these economic hedges is to offset gains and losses that occur on the underlying exposures from these currencies, with gains and losses resulting from the forward currency contracts that hedge these exposures.
In the ordinary course of business, the Company enters into foreign exchange contracts for periods consistent with its committed exposures to mitigate the effect of foreign currency movements on transactions denominated in foreign currencies. Transactions covered by hedge contracts include intercompany and thirdparty receivables and payables. The contracts are primarily in European and Asian currencies, have maturities that do not exceed 12 months, have no cash requirements until maturity, and are recorded at fair value on the Company’s consolidated balance sheets. Unrealized gains and losses on the Company’s foreign currency NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) contracts are recognized immediately in earnings for hedges designated as fair value and, for hedges designated as cash flow, the related unrealized gains or losses are deferred as a component of other comprehensive income in the accompanying consolidated balance sheets. Deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs and impacts earnings.
Principal hedged currencies include the British Pound, Euro, Japanese Yen and Singapore Dollar. The Company held forward foreign exchange contracts, designated as fair value hedges, with U.S. equivalent notional amounts totaling $138.4 million at December 29, 2013, $64.3 million at December 30, 2012, and $268.9 million at January 1, 2012, and the fair value of these foreign currency derivative contracts was insignificant. The gains and losses realized on foreign currency derivative contracts are not material. The duration of these contracts was generally 30 days or less during fiscal years 2013, 2012, and 2011.
As of December 29, 2013, the Company had no cash flow hedges outstanding, and as of December 30, 2012, the Company had two outstanding cash flow hedges. During fiscal year 2012, the Company entered into two forward foreign exchange contracts with settlement dates in fiscal year 2013 and combined Euro denominated notional amounts of €50.0 million, designated as cash flow hedges. During fiscal year 2013 the Company settled these Euro denominated forward foreign exchange contracts. The derivative gains were amortized into interest and other expense, net when the hedged exposures affected interest and other expense, net. Such amounts were not material for fiscal year 2013.
In May 2008, the Company settled forward interest rate contracts with notional amounts totaling $150.0 million upon the issuance of its 2015 Notes, and recognized $8.4 million, net of taxes of $5.4 million, of accumulated derivative losses in other comprehensive income. During each of fiscal years 2013, 2012, and 2011, the Company amortized a pre-tax loss of $2.0 million into interest and other expense, net. In addition, during fiscal year 2013, the Company redeemed all of its 2015 Notes and recognized a pre-tax loss of $2.8 million for the remaining unamortized derivative losses into interest and other expense, net.
The Company does not expect any pre-tax losses to be reclassified from accumulated other comprehensive income into interest and other expense, net within the next twelve months.