8x8 2000 Annual Report Download - page 54

8X8, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company repurchased 46,296, 257,685 and 46,638 unvested shares, respectively. As of March 31, 2000, 9,569 shares were not vested.
In conjunction with the Offering, the Company recorded a deferred compensation charge of approximately $7,267,000 with respect to options
repriced and certain additional options granted in fiscal 1997. In addition, the Company recorded an additional deferred compensation charge
of approximately $406,000 in connection with certain options granted to non-officer employees in fiscal 2000. The Company recognized
$161,000, $416,000 and $1,265,000 of said amounts as compensation expense in the fiscal years ended March 31, 2000, 1999 and 1998,
respectively. The Company recognizes deferred compensation over the related vesting period of the options (which is generally 48 months). At
March 31, 2000 the balance of deferred compensation was $376,000. Deferred compensation is subject to reduction for any employee who
terminates employment prior to the expiration of such employee's option vesting period.
For disclosure under the provisions of FAS 123, the fair value of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model, using the multiple option approach with the following weighted-average assumptions:
1996 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1996 Stock Purchase Plan (the "Purchase Plan") was adopted in June 1996 and became effective upon the closing of the
Offering. Under the Purchase Plan, a total of 500,000 shares of common stock were initially reserved for issuance to participating employees
who meet certain eligibility requirements. At the start of each fiscal year, the number of shares of common stock subject to the Purchase Plan
increases so that 500,000 shares remain available for issuance. This provision resulted in an increase of 187,491 shares issuable under the
Purchase Plan during the fiscal year ended March 31, 2000. During fiscal 2000 and 1999, 180,910 and 187,491 shares, respectively, were
issued under the Purchase Plan.
The Purchase Plan permits eligible employees to purchase common stock through payroll deductions at a price equal to 85% of the fair market
value of the common stock at the beginning of each two year offering period or the end of a six month purchase period, whichever is lower.
The contribution amount may not exceed ten percent of an employee's base compensation, including commissions but not including bonuses
and overtime, In the event of a merger of the Company with or into another corporation or the sale of all or substantially all of the assets of the
Company, the Purchase Plan provides that a new exercise date will be set for each option under the plan which exercise date will occur before
the date of the merger or asset sale.
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YEAR ENDED MARCH 31,
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2000 1999 1998
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Expected volatility...................... 70% 71% 65%
Expected dividend yield.................. 0.0% 0.0% 0.0%
Risk-free interest rate.................. 5.5% to 6.4% 4.2% to 5.6% 5.7% to 6.5%
Weighted average expected option term.... 5.3 years 5.3 years 5.3 years
Weighted average fair value of options
granted................................ $5.12 $2.76 $4.89