Royal Caribbean Cruise Lines 2001 Annual Report Download - page 49

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Notes to the Consolidated Financial Statements (continued)
Royal Caribbean Cruises Ltd. 47
STOCK OPTION ACTIVITY
2001 2000 1999
Weighted Weighted Weighted
Number of Average Number of Average Number of Average
Options Exercise Price Options Exercise Price Options Exercise Price
Outstanding options at January 1 11,291,784 $27.17 6,894,172 $24.82 6,492,390 $16.78
Granted 6,525,775 $12.41 5,036,100 $30.21 2,285,500 $39.23
Exercised (104,526) $13.22 (186,436) $12.68 (1,318,714) $11.01
Canceled (690,792) $29.84 (452,052) $30.65 (565,004) $23.03
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Outstanding options at December 31 17,022,241 $21.49 11,291,784 $27.17 6,894,172 $24.82
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Options exercisable at December 31 4,679,421 $20.79 2,707,234 $16.02 1,649,180 $12.53
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Available for future grants at December 31 5,871,763 3,839,246 8,553,864
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STOCK OPTIONS OUTSTANDING
As of December 31, 2001 Options Outstanding Options Exercisable
Weighted Weighted Weighted
Number Average Average Number Average
Exercise Price Range Outstanding Remaining Life Exercise Price Exercisable Exercise Price
$ 7.24 – $ 9.90 5,846,545 9.2 years $ 9.79 432,870 $ 8.83
$11.19 – $20.30 3,912,196 6.7 years $17.35 2,354,826 $15.55
$21.92 – $28.78 3,961,250 7.5 years $25.72 1,153,550 $24.09
$28.88 – $48.00 3,302,250 7.7 years $42.05 738,175 $39.34
17,022,241 7.9 years $21.49 4,679,421 $20.79
We use the intrinsic value method of accounting for stock-
based compensation. Had the fair value based method been
used to account for such compensation, compensation costs
would have reduced net income by $37.0 million, $28.8 million
and $15.0 million or $0.19, $0.15 and $0.08 per share in 2001,
2000 and 1999, respectively. The weighted-average fair value
of options granted during 2001, 2000 and 1999 was
$4.35, $12.43 and $15.52, respectively. Fair value information
for our stock options was estimated using the Black-Scholes
option-pricing model based on the following weighted
average assumptions:
2001 2000 1999
Dividend yield 2.5% 2.0% 1.0%
Expected stock price volatility 43.3% 38.4% 35.6%
Risk-free interest rate 4% 6% 5%
Expected option life 5 years 6 years 6 years
Note 8. Earnings Per Share
Below is a reconciliation between basic and diluted earnings per share for the years ended December 31, 2001, 2000 and 1999
(in thousands, except per share data):
Year Ended December 31,
2001 2000 1999
Per Per Per
Income Shares Share Income Shares Share Income Shares Share
Net income $254,457 $445,363 $383,853
Less: preferred stock dividends –(1,933) (12,506)
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Basic earnings per share 254,457 192,231 $1.32 443,430 189,397 $2.34 371,347 172,319 $2.15
Effect of dilutive securities:
Stock options 1,250 1,428 3,508
Convertible preferred stock –– 1,933 2,110 12,506 10,629
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Diluted earnings per share $254,457 193,481 $1.32 $445,363 192,935 $2.31 $383,853 186,456 $2.06