STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 29, 2017

NOTE 7 - STOCKHOLDERS’ EQUITY

2017 Common Stock Offering

On January 25, 2017, the Company sold 3.5 million shares of common stock at $44.50 per share for gross proceeds of approximately $153.5 million. Total net proceeds, after underwriting discounts and commissions and offering expenses, were approximately $143.9 million. These proceeds were used to repay obligations under the revolving credit facility.

Employee Stock Incentive Plans

The Company has a 2007 Stock and Incentive Compensation Plan that provides for stock awards up to 500 shares of the Company’s common stock to employees, non-employee directors or independent contractors, with a maximum number of full value restricted share awards up to 200. As of December 29, 2017, options for 120 shares were outstanding under this plan, while 162 restricted shares had been awarded. There are no shares available for future grant.

The 2013 Stock and Incentive Compensation Plan provides for stock awards up to 700 shares of the Company’s common stock to employees, non-employee directors or independent contractors. As of December 29, 2017, options awarded and outstanding under this plan were 232 and 188, respectively, and restricted shares awarded and outstanding were 361 and 157, respectively. There are 97 shares available for future grant.

The 2017 Stock and Incentive Compensation Plan provides for stock awards up to 900 shares of the Company’s common stock to employees, non-employee directors or independent contractors. As of December 29, 2017, restricted shares awarded and outstanding were 14. There are 886 shares available for future grant.

Historically, the Company has issued restricted share and/or option awards to employees and non-employee directors. The Board of Directors determines the amount and terms of the options, which cannot exceed ten years. Under both the 2017 and 2013 Stock and Incentive Compensation Plans, restricted share awards cliff vest on the third anniversary, while option share awards vest annually in 25% increments over four years.

The Company has granted 97 performance-based, restricted share awards (“performance shares”) under the 2013 Stock and Incentive Compensation Plans to key executives. These performance shares entitle certain executives to receive a number of shares of our common stock based upon the Company’s satisfaction of certain performance criteria approved by the Board of Directors. The awards cliff-vest at the end of three years and were valued at the market price of a share of the Company’s stock on the date of grant assuming 100% achievement. Under the plan, achievement ranges from 0% to 200%. The Company recorded $2.6 million of stock compensation expense for these performance shares in 2017 and no compensation expense for these performance shares in 2016.

Changes in award shares outstanding are summarized as follows:


	Performance shares			Restricted shares			Options

		Wtd. Avg.			Wtd. Avg.			Wtd. Avg.
	Shares	Grant Price		Shares	Grant Price		Shares	Ex. Price
December 30, 2016	55		36.03	158		34.93	501		27.69
Granted	42		49.05	46		50.35	42		49.05
Vested or Exercised	(38)		41.62	(85)		32.53	(219)		23.99
Forfeited	(1)		(36.03)	(6)		(38.70)	(16)		(33.20)
December 29, 2017	58	$	43.35	113	$	41.80	308	$	32.93

Aggregate intrinsic value represents the estimated value of the Company’s common stock at end of the period in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value of options outstanding and exercisable at December 29, 2017 is $6,905 and $4,868, respectively. The total intrinsic value of stock options exercised during 2017, 2016 and 2015 was $6,868, $442 and $171, respectively.

The following table summarizes information about stock options at December 29, 2017:


	Options Outstanding				Options Exercisable
		Wtd. Avg.				Wtd. Avg.
Range of		Remaining	Wtd. Avg.			Remaining	Wtd. Avg.
Exercise		Contractual	Exercise			Contractual	Exercise
Price	Shares	Life	Price		Shares	Life	Price
$0.00-20.00	9	5.36	$	19.52	9	5.36	$	19.52
$20.01-30.00	99	5.31	$	21.67	93	4.55	$	23.10
Over $30.00	200	5.96	$	39.15	81	3.57	$	36.26
	308	5.73	$	32.93	183	4.16	$	28.75

The following table details exercisable options and related information for year end:


	2017		2016		2015
Exercisable at end of year		183		352		312
Weighted average price	$	28.75	$	25.91	$	25.49

Weighted average fair value of options granted during the year	$	25.18	$	18.80	$	12.35

The following table details unvested option activity for the year ended December 29, 2017:


		Wtd. Avg.
	Shares	Ex. Price
December 30, 2016	149	$	31.91
Vested	61		28.94
Granted	42		49.05
Forfeited	(5)		(32.50)
December 29, 2017	125	$	39.09

The fair value of each option award is estimated on the date of grant using the Monte Carlo option valuation model with suboptimal exercise behavior. The Monte Carlo model places greater emphasis on market evidence and predicts more realistic results because it considers open form information including volatility, employee exercise behaviors and turnover. Stock options have a contractual term of 10 years. The following assumptions were used in determining the fair value of option awards:


	Equivalent		Expected		Implied
Grant date	interest rate		volatility		expected lives
March 10, 2017	2.36	%	46.00	%	7.74
March 4, 2016	1.68	%	49.00	%	8.35
March 2, 2015	2.07	%	32.50	%	6.86

Expected volatility is based on an analysis that looks at the unbiased standard deviation of the Company’s common stock over the option term. The expected life of the options represents the period of time that the Company expects the options granted to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option for the expected term of the instrument. A 0% dividend yield was assumed as no dividend payout over the term of the award is expected.

As of December 29, 2017, there was $3,385 of total unrecognized compensation cost, including performance restricted shares at 100% of target, after estimated forfeitures, related to unvested share-based compensation granted under the plans. That cost is expected to be recognized over a weighted-average period of 2.05 years. The total fair value of option shares vested during 2017 and 2016 was $568 and $697, respectively.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“2009 ESPP”) which, if implemented, could provide employees of the Company and its subsidiaries with an opportunity to participate in the growth of the Company and to further align the interest of the employees with the interests of the Company through the purchase of shares of the Company’s Common Stock. Under the 2009 ESPP, 300 shares of the Company’s Common Stock have been authorized for issuance. As of December 29, 2017, all 300 shares remain available for issuance.

ALMOST FAMILY INC 10-K