Pottery Barn 2006 Annual Report Download - page 70

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As a result of adopting SFAS No. 123R, during fiscal 2006, our compensation expense recognized was based on
the following:
•Stock Options – Amortization related to the remaining unvested portion of all stock options granted
prior to January 30, 2006 based on the grant date fair value estimated in accordance with the provisions
of SFAS No. 123, as amended by SFAS No. 148, and all stock options granted during fiscal 2006 based
on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R.
•Stock-Settled Stock Appreciation Rights – Amortization of all stock-settled stock appreciation rights
granted during fiscal 2006 based on the grant date fair value estimated in accordance with the provisions
of SFAS No. 123R.
•Restricted Stock Units – Amortization related to the unvested portion of all restricted stock units granted
to date based on the market value of our stock on the date prior to the grant date.
The following tables summarize our stock option, stock-settled stock appreciation right and restricted stock unit
activity during fiscal 2006, fiscal 2005 and fiscal 2004.
Stock Options
The following table summarizes our stock option activity during fiscal 2006, fiscal 2005 and fiscal 2004:
Shares
Weighted Average
Exercise Price
Weighted Average
Contractual Term
Remaining
(Years) Intrinsic Value1
Balance February 1, 2004 11,779,658 $16.58
Granted (weighted average fair
value of $20.58) 1,626,811 32.57
Exercised (1,817,308) 14.41 $ 35,270,000
Canceled (488,734) 20.81
Balance at January 30, 2005 11,100,427 19.08
Granted (weighted average fair
value of $23.77) 1,754,990 39.07
Exercised (1,829,082) 15.30 $ 42,844,000
Canceled (716,426) 26.81
Balance at January 29, 2006 10,309,909 22.63
Granted (weighted average fair
value of $13.83) 146,700 40.21
Exercised (913,330) 15.26 $ 20,669,000
Canceled (516,990) 33.59
Balance at January 28, 2007 9,026,289 23.04 5.17 $109,551,000
Exercisable at January 30, 2005 5,461,541 $14.26
Exercisable at January 29, 2006 5,704,164 16.00
Exercisable at January 28, 2007 6,624,338 19.02 4.29 $102,640,000
1Intrinsic value is defined as the difference between the grant price and the current market value on the last business day of
fiscal 2006.
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