Amazon.com 2001 Annual Report Download - page 78

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value for each option granted was estimated at the date of grant using a Black-Scholes option-
pricing model, assuming no expected dividends and the following weighted average assumptions:
For the Years Ended
December 31,
2001 2000 1999
Average risk-free interest rates .................................. 4.1% 6.2% 5.5%
Average expected life (in years) ................................. 3.3 3.0 3.5
Volatility ................................................... 98.0% 89.6% 84.9%
The weighted average fair value of options granted during 2001, 2000 and 1999 was $5.98, $22.12 and
$43.36, respectively, for options granted with exercise prices at the current fair value of the underlying stock.
Compensation expense that is recognized in providing pro forma disclosures might not be representative of the
effects on pro forma earnings for future years because SFAS No. 123 does not apply to stock option grants made
prior to 1995.
Common Stock Reserved for Future Issuance
At December 31, 2001, common stock reserved for future issuance is as follows (in thousands):
Stock options .............................................................. 129,324
Shares issuable upon conversion of 4.75% Convertible Subordinated Notes ............ 16,017
Shares issuable upon conversion of 6.875% PEACS ............................... 8,129
Total .................................................................... 153,470
Note 10—EARNINGS (LOSS) PER SHARE
The following represents the calculations for net loss per share:
For the Years Ended December 31,
2001 2000 1999
(in thousands, except per share data)
Loss before change in accounting principle ...................... $(556,754) $(1,411,273) $(719,968)
Cumulative effect of change in accounting principle ............... (10,523) — —
Net loss .................................................. $(567,277) $(1,411,273) $(719,968)
Weighted average shares outstanding .......................... 365,180 353,394 332,409
Weighted average common shares issued subject to repurchase
agreements ............................................. (969) (2,521) (5,656)
Shares used in computation of basic and diluted loss per share ....... 364,211 350,873 326,753
Basic and diluted loss per share:
Prior to cumulative effect of change in accounting principle ........ $ (1.53) $ (4.02) $ (2.20)
Cumulative effect of change in accounting principle ............... (0.03) — —
$ (1.56) $ (4.02) $ (2.20)
All of the Company’s stock options (see Note 9) are excluded from diluted loss per share since their effect is
antidilutive.
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