8x8 2006 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2006 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 85

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85

66
The fair value of grants under the Netergy and Centile stock option plans, for purposes of the 2003 pro forma
disclosures, have also been estimated on the date of grant using the Black-Scholes pricing model using the weighted
average assumptions noted below. The expected volatility factors for the Netergy and Centile plans reflect the fact
that the underlying shares of Netergy and Centile are not publicly traded and therefore the Company's overall
volatility factor was reduced by 50% for these plans. The various risk free interest rates used in the computations
reflect the different rates in effect at the respective grant dates.
For the purpose of providing pro forma disclosures for the fiscal years during which the Purchase Plan was in effect,
the estimated fair value of stock purchase rights granted under the Purchase Plan were estimated using the Black-
Scholes pricing model with the following weighted-average assumptions:
10. EMPLOYEE BENEFIT PLAN
401(k) Savings Plan
In April 1991, the Company adopted a 401(k) savings plan (the Savings Plan) covering substantially all of its U.S.
employees. Eligible employees may contribute to the Savings Plan from their compensation up to the maximum
allowed by the Internal Revenue Service. No matching contributions were made in fiscal 2006, 2005 or 2004. The
Savings Plan does not allow employee contributions to be invested in 8x8 common stock.
11. SEGMENT REPORTING
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information,” establishes annual and
interim reporting standards for an enterprise’s business segments and related disclosures about its products, services,
geographic areas and major customers. Under SFAS No. 131, the method for determining what information to report
is based upon the way management organizes the operating segments within the Company for making operating
decisions and assessing financial performance. The Company has only one reportable segment.
Ye ar Ende d
March 31,
2003
Expected volatility.................................................................
.
81%
Expected dividend yield........................................................ --
Risk-free interest rate............................................................
.
2.8% to 4.8%
Weighted average expected option term...........................
.
5.16 years
Netergy weighted average fair value
of options granted...............................................................
.
$0.34
Centile weighted average fair value
of options granted...............................................................
.
$0.29
Ye ar Ende d
March 31, March 31,
2006 2005
Expected volatility.................................................................
.
135% 141%
Expected dividend yield........................................................ -- --
Risk-free interest rate............................................................
.
3.95% 1.79%
Weighted average expected rights term............................. 0.72 years 0.5 years
Weighted average fair value of rights
granted..................................................................................
.
$1.14$0.33