WeightWatchers 2005 Annual Report Download - page 101

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The fair value of each option, as calculated for purposes of Note 2, is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted average assumptions:
December 31, January 1, January 3,
2005 2005 2004
Dividend yield ............................. 0% 0% 0%
Volatility ................................. 28.30% 32.40% 36.50%
Risk-free interest rate ........................ 3.3-4.5% 2.3%-4.4% 2.6%-3.7%
Expected term (years) ....................... 5.8 5.8 5.6
A summary WWI’s stock option activity is as follows:
December 31,
2005 January 1, 2005 January 3, 2004
Weighted Weighted Weighted
Number average Number average Number average
of exercise of exercise of exercise
Shares price Shares price Shares price
Options outstanding,
Beginning of year ......................... 4,330 $14.80 4,501 $ 8.19 4,896 $ 3.68
Granted ................................ 690 $46.75 855 $38.41 543 $40.61
Exercised ............................... (1,870) $ 2.41 (732) $ 2.51 (855) $ 2.29
Cancelled ............................... (325) $37.94 (294) $12.83 (83) $14.63
Options outstanding, end of year ................ 2,825 $28.14 4,330 $14.80 4,501 $ 8.19
Options exercisable, end of year ................ 1,406 $14.45 2,872 $ 3.56 2,971 $ 2.80
Options available for grant, end of year ........... 2,201 263 827
Weighted-average fair value of options granted during
the year ................................ $16.63 $14.40 $16.01
The following table summarizes information about WWI stock options outstanding at
December 31, 2005 by range of exercise price:
Options Outstanding
Options Exercisable
Weighted
Average Weighted Weighted
Range of Shares Remaining Average Shares Average
Exercise Prices Outstanding Contractual Life (Yrs.) Exercise Price Exercisable Exercise Price
$2.13-$2.34 770 4.13 $ 2.13 770 $ 2.13
$4.04 209 5.51 $ 4.04 191 $ 4.04
$35.86-$42.27 1,204 5.20 $38.79 416 $39.92
$42.36-$56.21 642 6.36 $47.21 29 $44.04
2,825 1,406
WeightWatchers.com Stock Incentive Plan of Weight Watchers International, Inc. and Subsidiaries:
In April 2000, the Board of Directors of WWI adopted the WeightWatchers.com Stock Incentive
Plan of Weight Watchers International, Inc. and Subsidiaries, pursuant to which selected employees
F-25