Chesapeake Energy 2000 Annual Report Download - page 75

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Chesapeake's pro forma information follows:
-64-
For purposes of the pro forma disclosures, the estimated fair value of the options is amortized to expense over
the options' vesting period, which is four years. Because our stock options vest over four years and additional awards
are typically made each year, the above pro forma disclosures are not likely to be representative of the effects on pro
forma net income for future years. A summary of our stock option activity and related information follows:
The following table summarizes information about stock options outstanding at December 31, 2000:
The exercise of certain stock options results in state and federal income tax benefits to us related to the
difference between the market price of the common stock at the date of disposition and the option price. During
2000, we recognized a tax benefit of $3.8 million, which was recorded as adjustments to additional paid-in capital
and deferred income taxes with respect to such benefits. There was no similar tax benefit in 1998 or 1999.
Range of
Exercise Prices
Options Outstanding Options Exercisable
Number
Outstanding
@ 12/31/00
Weighted-Avg.
Remaining
Contractual Life Weighted-Avg.
Exercise Price
Number
Exercisable
12/31/00 Weighted-Avg.
Exercise Price
$0.08-$0.78 694,282 3.04 $0.63 694,282 $0.63
0.94-1.00 2,090,445 8.09 0.94 312,258 0.95
1.13-2.06 5,574,715 7.36 1.15 2,341,978 1.17
2.25-2.25 2,346,300 8.95 2.25 46,250 2.25
2.25-3.8 1 1,341,275 4.15 2.50 1,307,405 2.49
4.00-4.00 2,629,000 9.31 4.00 31,250 4.00
4.06-5.50 97,569 7.26 4.75 62,336 4.91
5.56-5.92 3,041,663 9.74 5.57 91,313 5.81
6.13-8.75 439,663 5.66 7.09 398,187 7.10
10.69-30.63 144,250 5.43 25.14 137,625 25.66
$0.08-$30.63 18,399,162 7.86 $2.83 5,422,884 $2.61
Years Ended December 31,
1998 1999 2000
Options Weighted-Avg
Exercise Price Options Weighted-Avg
Exercise Price Options Weighted-Avg
Exercise Price
Outstanding Beginning of Period 8,330,381 $5.49 11,260,375 $1.86 12,858,429 $1.76
Granted 14,580,063 2.78 3,210,493 1.11 8,143,280 4.08
Exercised (108,761) 1.35 (622,120) 0.99 (2,177,644) 1.21
Cancelled/Forfeited (11,541,308) 5.64 (990,319) 1.87 (424,903) 2.47
Outstanding End of Period 11,260,375 $1.86 12,858,429 $1.76 18,399,162 $2.83
Exercisable End of Period 3,535,126 $2.99 5,040,302 $2.66 5,422,884 $2.61
Shares Authorized for Future Grants 1,761,359 2,560,687 588,435
Fair Value of Options Granted During the
Period $2.34 $0.77 $2.63
Years Ended December 31,
1998 1999 2000
($ in thousands, except per share amounts)
Net Income (Loss)
As reported $(933,854) $33,266 $455,570
Pro forma (948,014) 24,802 444,865
Basic Earnings (Loss) per Share
As reported $(9.97) $0.17 $3.52
Pro forma (10.12) 0.08 3.43
Diluted Earnings (Loss) per Share
As reported $(9.97) $0.16 $3.01
Pro forma (10.12) 0.08 2.94