Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Capital stock

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Note 5 - Capital stock
 3 Months Ended
Apr. 01, 2012
Stockholders' Equity Note Disclosure [Text Block]
5.        Capital stock

Common shares

Authorized share capital:

The authorized share capital of the Company at April 1, 2012 and January 2, 2011 consisted of:

 
(i)
26,000,000 shares of common stock, par value $0.01 per share: Holders are entitled to one vote per share and the right to share in dividends pro rata subject to any preferential dividend rights of any then outstanding preferred stock.

 
(ii)
5,000,000 shares of special voting stock, par value $0.01 per share: From time to time the Company may issue special voting stock in one or more series and will fix the terms of that series at the time it is created.

Issued and outstanding:

The issued and outstanding number of common shares included in shareholders’ equity consisted of the following as of April 1, 2012:

   
Number
of shares
     
$
 
Common Stock
           
Exchangeable shares:
           
Balance at beginning of the three month period
    554,748     $ 5,249  
Shares retired pursuant to:
               
Conversion to common stock
    (81,050 )     (767 )
Balance at end of the period
    473,698     $ 4,482  
                 
Common shares:
               
Balance at beginning of the three month period
    15,651,026     $ 382  
Shares issued pursuant to:
               
Exercise of stock options
    94,799       1  
Conversion of exchangeable shares
    81,050       1  
Balance at end of the period
    15,826,875     $ 384  
                 
Special voting stock:
               
Balance at beginning of the three month period
    1     $ —  
Balance at end of the period
    1     $ —  
Total Common stock
    16,300,574     $ 4,866  

Exchangeable shares:

Exchangeable shares of SMTC Manufacturing Corporation of Canada (“SMTC Canada”), an indirect subsidiary of the Company, can be exchanged on a one-for-one basis for one share of the common stock of the Company. Each exchangeable share of SMTC Canada, as nearly as practicable, is intended to be the economic equivalent of a share of common stock of the Company and holders of the exchangeable shares of SMTC Canada are able to exercise essentially the same voting rights with respect to the Company as they would have if they had exchanged their exchangeable shares of SMTC Canada for common stock of the Company. Upon the earlier of July 27, 2015, or the number of outstanding exchangeable shares falling below 500,000, subject to certain adjustment and acceleration provisions, SMTC Canada will have the right to exchange all of the outstanding exchangeable shares by delivering common shares of the Company on a one-for-one basis. During the three month period ended April 1, 2012, the number of outstanding exchangeable shares fell below 500,000, and SMTC Canada began the process to exercise its aforementioned rights, and has set a transaction date of May 25, 2012, at which point the exchangeable shares will no longer be outstanding.

Stock options

For information regarding the Company’s stock option arrangements, see Note 6 of Form 10-K. There were no stock options granted during the three month period ended April 1, 2012. The Company generally issues new shares when options are exercised. A summary of stock option activity for the three month period ended April 1, 2012 is as follows:

   
Number
of options
   
Weighted
average
exercise
price
   
Aggregate
intrinsic
value
   
Weighted
average
remaining
contractual
term (years)
 
Outstanding at January 1, 2012
    1,202,826     $ 2.82              
Options exercised
    (94,799 )   $ 1.52              
Outstanding at April 1, 2012
    1,108,027     $ 2.89     $ 1,248       4.1  
Exercisable at April 1, 2012
    267,195     $ 3.04     $ 34       3.0  

During the three month periods ended April 1, 2012 and April 3, 2011, the Company recorded stock-based compensation expense and a corresponding increase in additional paid-in capital of $101 and $76, respectively. At April 1, 2012, compensation expense of $759 related to non-vested stock options had not been recognized.

Deferred share units

In previous periods, Deferred Share Units were granted to directors and the former Chief Executive Officer of the Company as remuneration. No deferred share units were granted in the three months ended April 1, 2012 or April 3, 2011. There were no deferred share units outstanding at either January 1, 2012 or April 1, 2012. Cash payments of $128 were made for 46,688 deferred share units during the three months ended April 3, 2011. There were no cash payments made during the three months ended April 1, 2012.

Deferred Share Unit compensation recovery for the three months ended April 3, 2011 was $21 reflecting mark-to-market adjustments.   There will be no further Deferred Share Unit compensation recoveries or expenses since there are no deferred share units outstanding.