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55
2000 Annual Report ■Barnes & Noble, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
expected stock price volatility. Because the Company’s
stock options have characteristics significantly different
from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair
value estimate, in management’s opinion, the Black-
Scholes model does not necessarily provide a reliable
measure of the fair value of its stock options.
Had compensation cost for the Company’s stock option
grants been determined based on the fair value of the
stock at the grant dates, the Company’s net earnings
and diluted earnings per share for fiscal 2000, 1999 and
1998, would have been reduced by approximately $8,529
or $0.13 per share, $6,298 or $0.09 per share, and $6,188
or $0.09 per share, respectively.
Because the application of the pro forma disclosure
provision of SFAS 123 are required only to be applied to
grants of options made by the Company during fiscal
1995 and after, the above pro forma amounts may not be
representative of the effects of applying SFAS 123 to
future years.
The weighted-average fair value of the options granted
during fiscal 2000, 1999 and 1998 were estimated at
$7.86, $10.00 and $12.96 respectively, using the Black-
Scholes option-pricing model with the following
assumptions: volatility of 35 percent, risk-free interest
rate of 6.50 percent in fiscal 2000, 5.90 percent in fiscal
1999, and 5.33 percent in fiscal 1998, and an expected
life of 6.0 years for fiscal 2000 and fiscal 1999 and 5.4
years for fiscal 1998.
A summary of the status of the Company’s stock options
is presented below:
Weighted-
Average
(Thousands of shares) Shares Exercise Price
Balance, January 31, 1998 9,664 $ 13.17
Granted 1,841 31.12
Exercised ( 837 ) 1 1.1 1
Forfeited ( 390 ) 22.35
Balance, January 30, 1999 10,278 16.22
Granted 2,148 22.31
Exercised ( 795 ) 11.39
Forfeited (488) 26.91
Balance, January 29, 2000 11,143 17.27
Granted 2,675 17.04
Exercised (995) 13.64
Forfeited ( 807) 22.76
Balance, February 3, 2001 12,016 $ 17.15
The following table summarizes information as of February 3, 2001 concerning outstanding and exercisable options:
Options Outstanding Options Exercisable
Weighted-
Average Weighted- Weighted-
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (000s) Life Price (000s) Price
$ 3.21 - $ 3.77 364 2.35 $ 3.59 364 $ 3.59
$ 10.00 - $ 16.75 6,924 4.77 $ 13.51 4,769 $ 12.05
$ 17.1 3 - $ 24.25 3,177 7.57 $ 20.10 1,496 $ 20.07
$ 26.50 - $ 34.75 1,551 7.52 $ 30.56 630 $ 31.79
$ 3.21 - $ 34.75 12,016 5.79 $ 17.15 7,259 $ 14.99