Comfort Inn 2002 Annual Report Download - page 42

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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A summary of the option activity under the stock option plans is as follows as of December 31, 2002, 2001
and 2000:
2002 2001 2000
Fixed Options Shares
Weighted
Average
Exercise Price Shares
Weighted
Average
Exercise Price Shares
Weighted
Average
Exercise Price
Outstanding at beginning of year . . . 3,095,589 $13.56 4,306,584 $12.39 3,907,326 $11.19
Granted ....................... 601,895 $21.53 348,836 15.08 1,187,845 15.71
Exercised ...................... (442,869) $13.01 (1,363,050) 9.90 (288,634) 7.22
Cancelled ...................... (142,624) $16.83 (196,781) 15.52 (499,953) 15.10
Outstanding at end of year .... 3,111,991 $15.03 3,095,589 $13.56 4,306,584 $12.39
Options exercisable at year end ..... 1,533,471 $12.96 1,374,395 $12.52 2,035,332 $10.49
Weighted average fair value of
options granted during the year . . . $ 8.95 $ 7.67 $ 3.78
The following table summarizes information about stock options outstanding at December 31, 2002:
Options Outstanding Options Exercisable
Range of Exercise Prices
Number
Outstanding at
12/31/02
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise Price
Number
Exercisable at
12/31/02
Weighted
Average
Exercise Price
$ 5.00 to 9.00 ................. 111,741 3.8 years $ 7.27 75,741 $ 7.01
9.01 to 13.00 ................. 1,206,076 5.2 years $12.09 887,267 $12.02
13.01 to 17.00 ................. 1,208,147 6.2 years $15.59 566,463 $15.20
17.01 to 21.00 ................. 40,000 9.0 years $19.36 4,000 $17.80
21.01 to 25.00 ................. 506,027 9.0 years $21.22 — —
25.01 to 29.00 ................. 40,000 6.5 years $26.06 — —
3,111,991 6.2 years $15.03 1,533,471 $12.96
SFAS No. 123 “Accounting for Stock-Based Compensation,” requires companies to provide additional note
disclosures about employee stock-based compensation plans based on a fair value method of accounting. As
permitted by this accounting standard, the Company continues to account for these plans under APB Opinion 25.
For purposes of the pro forma disclosure included in the stock based compensation section of Note 1,
compensation cost for the Company’s stock option plan was determined based on the fair value at the grant dates
for awards under those plans consistent with the method of SFAS No. 123. The fair value of each option grant
has been estimated on the date of grant using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants in 2002, 2001 and 2000:
2002 2001 2000
Risk-free interest rate ........................... 3.58% 5.03% 5.10%
Volatility ..................................... 35.43% 43.3% 56.6%
Expected Lives ................................ 6 years 10 years 10 years
Dividend Yield ................................ 0% 0% 0%
The Company announced a stock repurchase program on June 25, 1998. Treasury stock is carried at cost in
the accompany consolidated balance sheets and consolidated statements of shareholders’ equity (deficit) and
comprehensive income. Through December 31, 2002, the Company had repurchased 26.5 million shares of its
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