Foot Locker 2002 Annual Report Download - page 51

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Under the Co mpany’s 1994 Emplo yees Sto ck Purchase Plan,
participating emplo yees may co ntribute up to 10 percent of their
annual compensatio n to ac quire shares of commo n sto ck at 85
percent of the lo wer market price o n o ne o f two specified dates
in each plan year. Of the 8,000,000 shares o f co mmo n sto ck
authorized fo r purchase under this plan, 745 partic ipating
employees purchased 254,115 shares in 2002. To date, a to tal of
1,507,968 shares have been purchased under this plan.
When co mmo n sto ck is issued under these plans, the proceeds
fro m o ptio ns exercised o r shares purchased are credited to co m-
mo n sto ck to the extent o f the par value o f the shares issued and
the excess is credited to additio nal paid-in capital. When treasury
co mmo n sto ck is issued, the difference between the average c o st
of treasury sto ck used and the proceeds from o ptio ns exercised o r
shares awarded o r purchased is charged o r c redited, as appro pri-
ate, to either additional paid-in capital o r retained earnings. The
tax benefits relating to amo unts deductible fo r federal inco me tax
purposes, which are no t included in inco me fo r financial repo rting
purposes, have been credited to additio nal paid-in capital.
The fair values of the issuance o f the sto ck-based co mpensatio n pursuant to the Co mpany’s vario us sto ck o ption and purchase plans
were estimated at the grant date using a Black- Scho les o ptio n pricing mo del.
Sto c k Optio n Plans Sto ck Purchase Plan
2002 2001 2000 2002 2001 2000
Weighted- average risk free rate o f interest 4.1 7% 4.17% 6.43% 2.59% 3.73% 5.36%
Expected vo latility 42% 48% 55% 35 % 40% 46%
Weighted- average expected award life 3.5 years 4.0 years 3.9 ye ars .7 years .7 years .7 years
Dividend yield 1.2 % — — —— —
Weighted- average fair value $5.11 $5.31 $4.99 $4 .23 $4.42 $2.86
The Black-Scho les o ptio n valuatio n model was develo ped fo r
estimating the fair value o f traded o ptions that have no vesting
restrictions and are fully transferable. Because o ptio n valuatio n
mo dels require the use of subjective assumptio ns, changes in
these assumptio ns can materially affect the fair value of the
o ptio ns, and bec ause the Co mpany’s o ptio ns do no t have the char-
acteristics of traded o ptio ns, the o ptio n valuatio n models do no t
nec essarily pro vide a reliable measure of the fair value o f its
o ptio ns.
The info rmatio n set fo rth in the fo llo wing table co vers o ptio ns g ranted under the Co mpany’s sto ck o ption plans:
2002 2001 2000
Wei ght ed- Weig hted- Weig hted-
Number Average Number Ave rage Numb er Average
of Exercise o f Exe rcise of Exe rcise
( in tho usands, exc ept prices per share) Shares Price Shares Price Shares Price
Optio ns o utstanding at beg inning of year 7,5 57 $ 14.6 3 7,696 $14.49 9,923 $15.12
Granted 1 ,640 $ 1 5.7 2 2,324 $12.81 2,167 $10.50
Exe rcised 7 83 $ 6.67 995 $ 7.28 811 $ 5.17
Expired o r c anceled 73 8 $ 19.8 0 1,468 $15.98 3,583 $15.93
Optio ns o utstanding at end of year 7,6 7 6 $1 5.1 8 7,557 $14.63 7,696 $14.49
Optio ns exercisable at end of ye ar 4,4 81 $ 15.9 4 4,371 $16.83 4,047 $18.78
Optio ns available fo r future g rant at end o f year 6,739 7,389 8,652
The follo wing table summarizes info rmatio n abo ut sto ck o ptio ns o utstanding and exercisable at February 1, 2003:
Optio ns Outstanding Optio ns Exercisable
Weighte d-
Average We ig hted- We ig hted-
Remaining Average Average
( in tho usands, except prices per share) Co ntrac tual Exercise Exercise
Range o f Exercise Prices Shares Life Price Shares Price
$4.53 to $11.91 2, 354 7.0 $ 9.83 1,616 $ 9.14
$12.31 to $15.75 1,955 6.8 13.80 980 14.39
$15.85 to $22.19 2,437 7.0 17.56 955 19.93
$22.41 to $30.38 930 4.1 25.45 930 25.45
$4.53 to $30.38 7,676 6.6 $15.18 4,481 $15.94