WeightWatchers 2004 Annual Report Download - page 83

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. Stock Plans (Continued)
Under the 2004 Plan, grants may take the following forms at the committee’s sole discretion:
incentive stock options, stock appreciation rights, restricted stock and other stock-based awards. The
maximum number of shares available for grant under the 2004 Plan is 2,500 as of the plan’s effective
date. No awards have yet been made under the 2004 Plan.
Under the 1999 Plan, grants may take the following forms at the committee’s sole discretion:
incentive stock options, other stock options (other than incentive options), stock appreciation rights,
restricted stock, purchase stock, dividend equivalent rights, performance units, performance shares and
other stock-based grants. The maximum number of shares available for grant under this plan was 5,647
shares of authorized common stock as of the plan’s effective date. In 2001, the number of shares
available for grant was increased to 7,058 shares.
Under the stock purchase component of the 1999 Plan, 1,639 shares of common stock were sold to
45 members of WWI’s management group at a price of $2.13 to $4.04 per share.
Pursuant to the restricted stock component of the 1999 Plan, the Company granted 5 and 7 shares
of restricted stock to certain employees during fiscal 2004 and 2003, respectively. The weighted average
grant date fair value of these shares was $39.01 and $39.35 for shares granted in fiscal 2004 and 2003,
respectively. These shares vest over a period of three to five years and resulted in compensation
expense of $143 and $53 for the fiscal years ended January 1, 2005 and January 3, 2004, respectively.
Pursuant to the option component of the 1999 Plan, the Board of Directors authorized the
Company to enter into agreements under which certain members of management received
Non-Qualified Time and Performance Stock Options providing them the opportunity to purchase shares
of WWI’s common stock at an exercise price of $2.13 to $45.50. The options are exercisable based on
the terms outlined in the agreement. The exercise price was equivalent to the fair market value of
WWI’s common stock at the date of grant.
The fair value of each option is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:
January 1, January 3, December 28,
2005 2004 2002
Dividend yield ......................... 0% 0% 0%
Volatility ............................. 32.4% 36.5% 34.5%
Risk-free interest rate .................... 2.3%-4.4% 2.6%-3.7% 3.5%-5.2%
Expected term (years) .................... 5.8 5.6 7.0
F-21