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45
The effects of applying SFAS 123 in the above pro forma disclosure are not likely to be representative of the
effects disclosed in future years because the pro forma calculations exclude stock options granted before 1995.
For purposes of the SFAS 123 pro forma net income and earnings per share calculations, the fair value of
each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model. The
weighted-average assumptions used in determining fair value as disclosed for SFAS 123 are shown in the
following table:
2003 2002 2001
Risk-free interest rate 3.0 % 4.4 % 4.8
%
Dividend yield 0.0 % 0.0 % 0.0
%
Option life (years) 5.0 5.0 4.8
Stock price volatility 59.0 % 61.2 % 62.4
%
MPK Stock Option Plan
Effective December 31, 1992, the Company’s then majority shareholder established the MPK Stock Option
Plan pursuant to which he granted non-forfeitable options to certain officers to purchase 16,573,500 shares
of common stock owned by him at an exercise price of $.004175 per share. Options were exercised as
follows:
Transaction Year Number of Options Exercised
1994 1,844,892
1995 1,353,258
1997 545,746
1998 659,752
1999 1,743,992
2000 4,180,888
2001 2,751,732
2002 2,384,376
2003 1,108,864
Total 16,573,500
All options granted under the MPK Stock Option Plan were fully exercised as of December 31, 2003.
MPK Restricted Stock Plan
Effective upon the closing of our initial public offering in 1993, the then majority shareholder established
the MPK Restricted Stock Plan. Pursuant to this plan, the majority shareholder allocated 2,674,416 shares
of his common stock to be held in escrow for the benefit of those persons employed by the Company as of
December 31, 1992. The number of shares allocated to each employee was dependent upon the employee's
years of service and salary history. As a result of these grants, which provided for vesting based upon
continuous employment with the Company or our subsidiaries through January 1, 2000, we recorded a
capital contribution and offsetting deferred charge of approximately $2.8 million for unearned
compensation equal to the number of shares granted, times $1.0425 per share.
We filed a Registration Statement on Form S-3, which was effective on February 7, 1997, to modify the
terms of the MPK Restricted Stock Plan and provide participants the option to accelerate the vesting on
25% of their shares in exchange for the extension of the vesting period on their remaining shares through
January 1, 2003. Under the terms of this modification, participants who elected the acceleration were
granted options by us equal to the number of shares which became vested with an exercise price of $14.75
per share, the market price of the stock on the acceleration date.
As of December 31, 2003, all of these shares were vested under the modified terms.