Columbia Sportswear 2001 Annual Report Download - page 42

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Prior to its initial public oÅering of common stock on April 1, 1998, the Company elected to be treated as
an ""S'' corporation under provision of the Internal Revenue Code of 1986. Accordingly, payment of federal
and most state taxes on income earned in the United States was the responsibility of the shareholders rather
than the Company. In connection with the initial public oÅering the Company terminated its ""S'' corporation
status and entered into a tax indemniÑcation agreement with each of its shareholders, including Gertrude
Boyle, Timothy P. Boyle, Sarah Bany, Don Santorufo and certain trusts. The agreements provide that the
Company will indemnify and hold harmless each of these shareholders for federal, state, local or foreign
income tax liabilities and costs relating thereto, resulting from any adjustment to the Company's income that
is the result of an increase or change in character of the Company's income during the period it was treated as
an ""S'' corporation. The agreements also provide that if there is a determination that the Company was not an
""S'' corporation prior to the OÅerings, the shareholders will pay to the Company certain refunds actually
received by them as a result of the determination.
Note 13 Ì Stock Incentive Plan
The Company's 1997 Stock Incentive Plan (the ""Plan'') provides for issuance of up to 5,400,000 shares
of the Company's Common Stock of which 1,826,823 shares were available for future stock option grants
under the Plan at December 31, 2001. Options granted prior to 2001 generally become exercisable ratably over
a Ñve-year period beginning from the date of grant and expire ten years from the date of grant. Options granted
in 2001 generally become exercisable over a period of four years beginning one year after the date of grant and
expire ten years from the date of the grant.
The following table summarizes the stock option activity under the Company's option plan:
Outstanding Exercisable
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Shares Price Shares Price
Options outstanding at January 1, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,724,930 $ 9.43 400,553 $ 8.16
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 454,400 8.29
Cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (104,799) 8.97
Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (92,267) 6.47
Options outstanding at December 31, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏ 1,982,264 9.33 692,096 $ 8.95
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,028,424 15.03
Cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (136,806) 10.81
Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (498,959) 8.50
Options outstanding at December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏ 2,374,923 11.89 712,139 $10.37
Granted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 732,617 31.96
Cancelled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (178,146) 16.76
Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (670,191) 10.73
Options outstanding at December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏ 2,259,203 $18.37 618,855 $11.07
The Company continues to measure compensation cost for the Plan using the method of accounting
prescribed by Accounting Principles Board Opinion No. 25 (""APB 25''). Entities electing to remain with the
accounting in APB 25 must make pro forma disclosures of net income and, if presented, earnings per share, as
if the fair value based method of accounting deÑned in the Statement of Financial Accounting Standards
(""SFAS'') No. 123 ""Accounting for Stock-based Compensation'', had been adopted.
The Company has elected to account for the Plan under APB 25; however, the Company has computed,
for pro forma disclosure purposes, the value of all stock options granted during 2001, 2000 and 1999 using the
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