ADP 2001 Annual Report Download - page 33

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A summary of changes in the stock option plans for the three years ended June 30, 2001 is as follows:
(In thousands, except per share amounts) Number of Options Weighted Average Price
Years ended June 30, 2001 2000 1999 2001 2000 1999
Options outstanding, beginning of year 46,694 47,467 45,596 $29 $24 $18
Options granted 10,740 9,646 11,616 $57 $46 $38
Options exercised (7,956) (6,736) (6,154) $18 $16 $12
Options canceled (1,982) (3,683) (3,591) $38 $32 $24
Options outstanding, end of year 47,496 46,694 47,467 $37 $29 $24
Options exercisable, end of year 19,929 18,719 16,898 $25 $19 $15
Shares available for future grants, end of year 1,720 10,478 1,691
Shares reserved for issuance under stock option plans 49,216 57,172 49,158
Summarized information about stock options outstanding as of June 30, 2001 is as follows:
Outstanding Exercisable
Exercise Number Remaining Average Number Average
Price of Options Life Exercise of Options Exercise
Range (In thousands) (In years) Price (In thousands) Price
Under $15 5,077 2.4 $12 5,020 $12
$15 to $25 8,645 4.9 $20 6,671 $20
$25 to $35 7,017 6.5 $29 3,673 $29
$35 to $45 13,231 7.8 $41 3,805 $41
$45 to $55 6,459 9.3 $52 607 $51
Over $55 7,067 9.2 $60 153 $59
The Company has stock purchase plans under which
eligible employees have the ability to purchase shares of
common stock at 85% of the lower of market value as of
the date of purchase election or as of the end of the plans.
Approximately 2.4 million and 2.2 million shares are sched-
uled for issuance on December 31, 2002 and 2001, respec-
tively. Approximately 2.5 million and 3.1 million shares
were issued during the years ended June 30, 2001 and
2000, respectively. At June 30, 2001 and 2000, there were
approximately 5.7 million and 7.2 million shares, respec-
tively, reserved for purchase under the plans. Included in
liabilities as of June 30, 2001 and 2000 are employee stock
purchase plan withholdings of approximately $94 million
and $86 million, respectively.
The Company follows APB 25 to account for its stock
plans. The pro forma net income impact of options
and stock purchase plan rights granted subsequent
to July 1, 1995 is shown below. The fair value for these
instruments was estimated at the date of grant using a
Black-Scholes option pricing model with the following
weighted average assumptions:
Years ended June 30, 2001 2000 1999
Risk-free interest rate 5.3-6.0% 6.0-6.7% 4.5-5.7%
Dividend yield .7-.8% .8-.9% 1.0%
Volatility factor 27.9-28.2% 22.0-26.7% 19.7-21.8%
Expected life:
Options 6.3 6.4 6.3
Purchase rights 2.0 2.0 2.0
Weighted average fair value:
Options $21.31 $16.89 $11.63
Purchase rights $20.58 $19.73 $12.29
The Company’s pro forma information, amortizing the
fair value of the stock options and stock purchase plan
rights issued subsequent to July 1, 1995 over their vesting
period, is as follows:
(In millions, except per share amounts)
Years ended June 30, 2001 2000 1999
Pro forma net earnings $818 $762 $638
Pro forma basic earnings per share $1.30 $1.22 $1.04
Pro forma diluted earnings per share $1.27 $1.18 $1.01
The Company has a restricted stock plan under which
shares of common stock have been sold for nominal con-
sideration to certain key employees. These shares are
restricted as to transfer and in certain circumstances must
be resold to the Company at the original purchase price.
The restrictions lapse over periods of up to six years. Dur-
ing the years ended June 30, 2001, 2000 and 1999 the