8x8 2003 Annual Report Download - page 67

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64
*These amounts have been adjusted to reflect a correction to the forfeiture rate, which resulted in reductions in the
pro forma net losses for 2002 and 2001 of $6.5 million and $3.1 million, respectively.
For the purposes of the disclosure above, the fair value of each of the Company's option grants, excluding those
options issued under the Netergy and Centile Plans, has been estimated on the date of grant using the Black-Scholes
pricing model with the following assumptions:
The fair value of grants under the Netergy and Centile stock option plans, for purposes of the pro forma disclosure,
have also been estimated on the date of grant using the Black-Scholes pricing model using the weighted average
assumptions noted below. The expected volatility factors for the Netergy and Centile plans reflect the fact that the
underlying shares of Netergy and Centile are not publicly traded and therefore the Company's overall volatility
factor has been reduced by 50% for these plans. The various risk free interest rates used in the computations reflect
the different rates in effect at the respective grant dates.
For the purpose of providing pro forma disclosures, the estimated fair value of stock purchase rights granted under
the Purchase Plan were estimated using the Black-Scholes pricing model with the following weighted-average
assumptions:
Year Ended Mar c h 3 1 ,
2003 2002 2001
Expected volatility............................................................
.
81% 67% 70%
Expected dividend yield..................................................
.
0.0% 0.0% 0.0%
Risk-free interes t rate.......................................................
.
2.8% to 4.8% 4.1% to 4.8% 4.7% to 5.1%
Weighted average expected option term......................
.
5.16 years 5.25 years 5 years
Netergy weighted average fair value
of options granted.......................................................... $ 0.34 $ 0.31 $ 31%
Centile weighted average fair value
of options granted.......................................................... $ 0.29 $ 0.26 $ 0.26
Year Ended Mar c h 3 1 ,
2003 2002 2001
Expected volatility............................................................
.
162% 135% 141%
Expected dividend yield..................................................
.
0.0% 0.0% 0.0%
Risk-free interes t rate.......................................................
.
2.8% to 4.7% 3.5% to 4.9% 4.7% to 6.8%
Weighted average expected option term......................
.
5.1 years 5.1 years 5 years
Weighted average fair value of options
granted.............................................................................
.
$0.45$0.96$5.17