Creative 2002 Annual Report Download - page 40

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38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – EMPLOYEE SHARE PURCHASE AND STOCK OPTION PLANS (Cont’d)
Because the exercise prices for the aforementioned grants are below the deemed fair value per ordinary share of $4.50,
the grants give rise to a deferred share compensation expense of approximately $9.2 million. The compensation expense
is being amortized over the four-year vesting period of the underlying options and amortization of deferred share
compensation expense is subject to changes due to the impact of future grants and cancellation of options, if any.
In fiscal 2001, the subsidiary granted 0.9 million options under the 2000 Plan at a weighted average exercise price of $2.45.
Included in the options granted during the fiscal year were replacement options granted to certain employees of Creative
Technology Ltd to acquire 235,000 and 30,000 of the subsidiary company’s shares at an exercise price of $2.50 and $1.00
per share respectively. These options were granted in lieu of the cancellation of 470,000 shares at an exercise price of $2.50
per share and 60,000 shares at $1.00 per share. The replacement options vested immediately on grant date and the share
compensation expense arising from replacement of options amounted to $0.7 million which was expensed in fiscal 2001.
The subsidiary did not grant options in fiscal 2002.
A summary of options granted to employees, consultants and directors under the subsidiary’s stock option plan is presented
below:
Options Outstanding
Weighted Average
Number of Shares Exercise Price
(’000) ($)
Balance as of June 30, 2000 3,841 1.98
Options granted 899 2.45
Options canceled (2,540) 1.80
Balance as of June 30, 2001 2,200 2.39
Options granted ––
Options canceled (2,195) 2.39
Balance as of June 30, 2002 5 2.50
The following table summarizes option information for the subsidiary employee stock option plan as at June 30, 2002:
Range of Weighted Average
Exercise Price Number Outstanding Remaining Contractual Life Number Exercisable
(’000) (years) (’000)
$2.50 5 8.05 2