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Table of Contents
Index to Financial Statements
The following table summarizes information on outstanding and exercisable stock options at December 31, 2004:
Stock Purchase Plan
Options Outstanding
Options Exercisable
Option Exercise Price
Number
Outstanding
(in thousands)
Weighted-
Average
Contractual
Life (Years)
Weighted
-
Average
Exercise
Price
Number
Exercisable
(in thousands)
Weighted
-
Average
Exercise
Price
$0.01
–
$
4.52
7,206
6.33
$
3.58
6,454
$
3.52
$4.54
–
$
6.91
7,153
6.46
$
5.70
5,859
$
5.73
$6.96
–
$
7.66
8,010
7.35
$
7.44
4,442
$
7.27
$7.76
–
$
11.15
8,191
8.45
$
10.30
1,923
$
9.20
$11.19
–
$
14.59
7,351
8.94
$
13.77
882
$
12.88
$14.75
–
$
20.38
2,469
5.81
$
16.60
2,236
$
16.77
$20.59
–
$
58.19
2,409
4.85
$
25.48
2,408
$
25.48
$0.01
–
$
58.19
42,789
7.28
$
9.68
24,204
$
8.94
In July 1996, the Company’s shareholders approved the 1996 Stock Purchase Plan (the “1996 Purchase Plan”), and reserved 2,600,000
shares of common stock for sale to employees 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. During 2002, the reserved shares of the 1996
Purchase Plan were reduced to zero, with 341,904 additional shares remaining to be purchased by employees. In May 2002, the Company’s
shareholders approved an increase in the authorized shares by 341,904, which were subsequently purchased by employees. As a result, these
shares were accounted for as variable plan options on which the Company recognized a charge of $0.4 million in 2002 during the time they
were in escrow. Also in May 2002, the shareholders of the Company approved the 2002 Employee Stock Purchase Plan (the “2002 Purchase
Plan”), and reserved 5,000,000 shares of common stock for sale to employees at a price no less than 85% of the lower of the fair market value
of the common stock at the beginning of the one-year offering period or the end of each of the six-month purchase periods. At December 31,
2004, 1,985,612 shares were available for purchase under the 2002 Purchase Plan.
Additional Stock Plan Information
As permitted by SFAS No. 123, the Company applied APB Opinion No. 25 and related interpretations in accounting for its stock option
plans, and accordingly does not record compensation costs on grants to employees for options with no intrinsic value. If the Company had
elected to recognize compensation cost based on the fair value of options at the grant date as prescribed by SFAS No. 123, the related pro
forma
expense that would have been recorded is described in Note 2.
The Company’s calculations were made using the Black-Scholes option-pricing models with the following weighted-
average assumptions
applied to grants made in the following periods:
Under SFAS No. 123, the fair value of stock-based awards to employees is calculated using option pricing models, even though such
models were developed to estimate the fair value of freely tradable, fully transferable
105
Year Ended December 31,
2004
2003
2002
Dividend yield
—
—
—
Expected volatility
55
%
66
%
71
%
Risk
-
free interest rate
3
%
3
%
4
%
Expected life of option following vesting (in months)
23
19
36