eTrade 2000 Annual Report Download - page 92

Stock Purchase Plan
In July 1996, the shareowners of the Company approved the 1996 Stock Purchase Plan (the “Purchase Plan”), and reserved
2,600,000 shares of common stock for sale to associates at a price no less than 85% of the lower of the fair market value of the
common stock at the beginning of the two-year offering period or the end of each of the six-month purchase periods. At September 30,
2000, 905,989 shares were available for purchase under the Purchase Plan.
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Additional Stock Plan Information
In accordance with SFAS No. 123, the Company applied APB Opinion 25 and related interpretations in accounting for its stock
option plans, and accordingly does not record compensation costs on grants to associates. If the Company had elected to recognize
compensation cost based on the fair value of the option granted at the grant date as prescribed by SFAS No. 123, net income (loss) and
income (loss) per share, basic and diluted, would have been reduced (increased) to the pro forma amounts shown below (in thousands,
except per share amounts):
Years Ended September 30,
2000 1999 1998
As Reported
Net income (loss) $ 19,152 $ (56,769 ) $ (402 )
Income (loss) per share-basic $ 0.06 $ (0.21 ) $ (0.01 )
Income (loss) per share-diluted $ 0.06 $ (0.21 ) $ (0.01 )
Pro Forma
Net loss $ (108,913 ) $ (131,877 ) $ (25,745 )
Loss per share-basic $ (0.36 ) $ (0.48 ) $ (0.13 )
Loss per share-diluted $ (0.36 ) $ (0.48 ) $ (0.13 )
The Company’ s calculations were made using the minimum value method and Black-Scholes option pricing models with the
following weighted average assumptions applied to grants made in the fiscals:
Years Ended September 30,
200
0
1999 1998
Dividend yield — — —
Expected volatility 85 % 105 % 75 %
Risk-free interest rate 6 % 6 % 6 %
Expected life of option following vesting (in months) 17 12 12
Under SFAS No. 123, the fair value of stock-based awards to associates is calculated using option pricing models, even though such
models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which
significantly differ from the Company’ s stock option awards. These models also require subjective assumptions, including future stock
price volatility and expected time to exercise, which greatly affect the calculated values.
The Company’ s calculations are based on a multiple option valuation approach and forfeitures are recognized as they occur. The
valuations of the computed weighted average fair values of option grants under SFAS No. 123 in fiscal 2000, 1999 and 1998 were
$12.78, $8.41 and $2.95, respectively.
2002. EDGAR Online, Inc.