Circuit City 2001 Annual Report Download - page 28

compensation stock options, stock appreciation rights, restricted stock and restricted unit grants, performance unit grants and other stock based
awards authorized by the Compensation Committee of the Board of Directors. Options issued under this plan expire ten years after the options
are granted and generally become exercisable ratably on the third, fourth, and fifth anniversary of the grant date. A maximum total number of
2.0 million shares may be granted under this plan of which a maximum of 800,000 shares may be of restricted stock and restricted stock units.
No award shall be granted under this plan after December 31, 2005. A total of 538,050 options were outstanding under this plan as of
December 31, 2001.
THE 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS - This plan provides for automatic awards of non-
qualified options
to directors of the company who are not employees of the Company or its affiliates. All options granted under this plan will have a ten year
term from grant date and are immediately exercisable. A maximum of 100,000 shares may be granted for awards under this plan. This plan will
terminate the day following the tenth annual stockholders meeting. A total of 47,000 options were outstanding under this plan as of December
31, 2001.
THE 1999 LONG-TERM STOCK INCENTIVE PLAN - This plan was adopted on October 25, 1999 with substantially the same terms and
provisions as the 1995 Long-Term Stock Incentive Plan, restricting the awards to non-qualified stock options authorized by the Compensation
Committee of the Board of Directors. A maximum total number of 2.0 million shares may be granted under this plan. No award shall be
granted under this plan after December 31, 2009. A total of 1,090,441 options were outstanding under this plan as of December 31, 2001.
The Company accounts for these plans in accordance with Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees", under which no compensation costs have been recognized for stock options. Had compensation costs of the plans been determined
under a fair value alternative method as stated in SFAS 123, "Accounting for Stock-
Based Compensations", the Company would have recorded
such amount in the accompanying consolidated financial statements as compensation expense. On a pro forma basis, net income (loss) would
have been ($0.1) million for 2001, ($42.6) million for 2000 and $33.9 million for 1999, and diluted earnings (loss) per common share would
have been ($.004) for 2001, ($1.24) for 2000 and $.95 for 1999. The Company arrived at the fair value of stock grant at the date of the grant by
using the Black-Scholes pricing option model with the following assumptions used for grants: risk-free interest rate of 6.1% (2001), 6.0%
(2000) and 6.0% (1999); expected dividend rate of 0% for 2001, 2000 and 1999; expected life of 3.17 years (2001), 3.72 years
(2000) and 3.67 years (1999); and expected volatility of 72% (2001), 62%
(2000) and 48% (1999). The stock options outstanding at December 31, 2001, 2000 and 1999 have a weighted average contractual life of 8.1
years, 6.7 years and 7.8 years, respectively. The following table reflects the plan activity for the years ended December 31, 2001, 2000 and
1999:
The following table summarizes information for the three years ended December 31, 2001 concerning currently outstanding and exercisable
options:
For Shares Option Prices
---------- ----------------
Outstanding, January 1, 1999 1,642,848 $12.38 to $39.06
Granted 848,700 $ 7.31 to $ 7.88
Cancelled (65,164) $12.38 to $18.41
---------- ----------------
Outstanding, December 31, 1999 2,426,384 $ 7.31 to $39.06
Granted 4,000 $ 7.19
Cancelled (303,752) $ 7.31 TO $18.41
---------- ----------------
Outstanding, December 31, 2000 2,126,632 $ 7.19 to $39.06
Granted 849,917 $ 1.95 to $ 2.45
Cancelled (1,301,058) $ 1.95 TO $26.88
---------- ----------------
Outstanding, December 31, 2001 1,675,491 $ 1.95 to $39.06
==========
2001 2000 1999
-------------------------- -------------------------- --------------------------
WEIGHTED-AVERAGE Weighted Average Weighted Average
SHARES EXERCISE PRICE Shares Exercise Price Shares Exercise Price
-------- ---------------- -------- ---------------- -------- ----------------
Outstanding at beginning of year 2,126,632 $14.70 2,426,384 $14.34 1,642,848 $18.04
Granted ......................... 849,917 $ 1.96 4,000 $ 7.19 848,700 $ 7.32
Cancelled ....................... (1,301,058) $17.52 (303,752) $11.72 (65,164) $17.14
----------- ----------- -----------
Outstanding at end of year ...... 1,675,491 $ 6.05 2,126,632 $14.70 2,426,384 $14.34
=========== =========== ===========
Options exercisable at year end.. 478,413 1,133,547 595,050
Weighted average fair value per
option granted during the year. $0.89 $5.60 $3.02
As of December 31, 2001:
Range of Weighted-Average Weighted-Average Weighted-Average
Exercise Number Remaining Exercise Number Exercise
Price Outstanding Contractual Life Price Exercisable Price
---------------- ----------- ---------------- ---------------- ----------- ----------------
$ 1.95 to $ 5.00 804,341 9.15 $ 2.45 4,000 $ 1.96