3Ware 2005 Annual Report Download - page 83

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
returned with a premium. If the closing market prize is below the pre-determined price, the Company will receive
a predetermined number of its shares. During the year ended March 31, 2005 upon settlement of the underlying
agreements, the Company received 2.5 million shares of its common stock at an effective purchase price of $3.03
per share from the settlements resulting in the delivery of shares and received cash totaling $48.3 million from
the settlements resulting in the return of the investment with a premium. The cash returned, including the
premium, is treated as an increase to additional paid in capital on the balance sheet in accordance with the
guidance issued in EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock.”
At March 31, 2005, the Company had four open structured stock repurchase agreements totaling $9.5
million that have varying maturities through May 31, 2005. Under the remaining agreements, the Company could
receive up to $10.3 million of cash, or the delivery of up to 3.0 million shares of its common stock.
Stock Options and Other Stock Awards
The Company has in effect several stock option plans under which non-qualified and incentive stock options
have been granted to employees and non-employee directors. Although certain of these plans allow the grant of
restricted stock units, none have been issued at March 31, 2005. The option plans include two stockholder-
approved plans (1992 Stock Option Plan and 1997 Directors’ Stock Option Plan) and two plans not approved by
stockholders (2000 Equity Incentive Plan and Cimaron’s 1998 Stock Incentive Plan assumed in the fiscal 1999
merger). Certain other outstanding options were assumed through the various acquisitions.
The Board of Directors determines eligibility, vesting schedules and exercise prices for options granted
under the plans. Options and other stock awards under the plans expire not more than ten years from the date of
grant and are either exercisable immediately after the date of grant and subject to certain repurchase rights by the
Company until such ownership rights have vested, or exercisable upon vesting. Vesting generally occurs over
four years. New hire grants generally vest and become exercisable at the rate of 25% after one year and ratably
on a monthly basis over a period of 36 months thereafter; subsequent option grants to existing employees
generally vest and become exercisable ratably on a monthly basis over a period of 48 months measured from the
date of grant.
At March 31, 2005 and 2004, there were no shares of common stock subject to repurchase. At March 31,
2003, 305,000 shares of common stock were subject to repurchase. Options are granted at prices at least equal to
fair value of the Company’s common stock on the date of grant.
A summary of the Company’s stock option activity and related information is as follows (options in
thousands):
Fiscal Years Ended March 31,
2005 2004 2003
Options
Weighted
Average
Exercise
Price Options
Weighted
Average
Exercise
Price Options
Weighted
Average
Exercise
Price
Outstanding at beginning of year ............... 63,762 $7.63 60,987 $8.39 25,807 $12.33
Granted and assumed .................... 17,481 2.77 18,206 4.91 42,604 5.99
Exercised ............................. (2,725) 1.06 (5,260) 3.92 (1,514) 1.78
Forfeited .............................. (11,804) 7.65 (10,171) 9.26 (5,910) 9.92
Outstanding at end of year .................... 66,714 $6.64 63,762 $7.63 60,987 $ 8.39
Vested at end of year ........................ 45,255 $7.89 44,474 $8.60 40,467 $ 9.18
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