Amazon.com 2000 Annual Report Download - page 66

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The fair value for each option granted was estimated at the date of grant using a Black-Scholes option-
pricing model, assuming no expected dividends and the following weighted average assumptions:
For the Years Ended
December 31,
2000 1999 1998
Average risk-free interest rates .......................... 6.2% 5.5% 4.7%
Average expected life (in years) .......................... 3.0 3.5 3.0
Volatility(1) ........................................ 89.6% 84.9% 81.6%
(1) Options granted prior to the Company’s initial public offering and by PlanetAll prior to its merger with the
Company were valued using the minimum value method and therefore volatility was not applicable.
The weighted average fair value of options granted during 2000, 1999 and 1998 was $22.12, $43.36 and
$19.07, respectively, for options granted with exercise prices at the current fair value of the underlying stock.
During 1998, some options were granted with exercise prices that were below the current fair value of the
underlying stock. The weighted average fair value of options granted with exercise prices below the current fair
value of the underlying stock during 1998 was $4.61. Compensation expense that is recognized in providing
pro forma disclosures might not be representative of the effects on pro forma earnings for future years because
SFAS No. 123, ‘‘Accounting for Stock-Based Compensation,’’ does not apply to stock option grants made
prior to 1995.
Common Stock Reserved for Future Issuance
At December 31, 2000, common stock reserved for future issuance is as follows (in thousands):
Stock options .................................................. 122,082
Shares issuable upon conversion of Convertible Subordinated Notes .......... 16,017
Shares issuable upon conversion of Euro Convertible Subordinated Notes ...... 6,575
Total ........................................................ 144,674
Note 11—EARNINGS (LOSS) PER SHARE
The following represents the calculations for net loss per share:
For the Years Ended December 31,
2000 1999 1998
(in thousands, except per share data)
Net loss — as reported ................................. $(1,411,273) $(719,968) $(124,546)
Weighted average shares outstanding ...................... 353,394 332,409 304,938
Weighted average common shares issued subject to repurchase
agreements ....................................... (2,521) (5,656) (8,594)
Shares used in computation of basic and diluted loss per share .... 350,873 326,753 296,344
Basic and diluted loss per share .......................... $ (4.02) $ (2.20) $ (0.42)
All of the Company’s stock options (see Note 10) are excluded from diluted loss per share since their
effect is antidilutive.
AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
58