Harris Teeter 1997 Annual Report Download - page 27

Even Better
1997 ANNUAL REPORT
1125
grant date and which expire seven years from grant date. Additionally under the 1995 plan, the Company grants a single, one-
time option of 10,000 shares, generally vested immediately, to each of its outside directors. Under each of the plans the
exercise price of each option shall be no less than the market price of the Company’s stock on the date of grant and an
option’s maximum term is ten years. At the discretion of the Company, under certain plans a stock appreciation right may
be granted and exercised in lieu of the exercise of the related option (which is then forfeited). Under the plans, as of
September 28, 1997, the Company may grant additional options for the purchase of 859,600 shares.
A summary of the status of the Company’s stock option plans as of September 28, 1997, September 29, 1996 and October 1, 1995,
changes during the years ending on those dates and related weighted average exercise price is presented below:
(Shares in thousands) 1997 1996 1995
Shares Price Shares Price Shares Price
Outstanding at beginning of year 1,116 $ 10.40 696 $9.07 1,364 $ 7.11
Granted 120 13.45 573 11.50 124 9.72
Exercised (181) 9.05 (97) 7.21 (757) 5.59
Forfeited (44) 10.64 (56) 10.81 (35) 10.03
Outstanding at end of year 1,011 10.99 1,116 10.40 696 9.07
Options exercisable at year-end 422 $ 10.29 368 $ 9.14 404 $ 8.20
The following table summarizes options outstanding and options exercisable as of September 28, 1997, and the related
weighted average remaining contractual life (years) and weighted average exercise price (shares in thousands):
Options Outstanding Options Exercisable
Shares Remaining Shares
Option Price per Share Outstanding Life Price Exercisable Price
$5.23 to $ 8.13 84 0.7 $6.99 84 $6.99
9.16 to 11.44 743 4.4 10.98 249 10.68
11.94 to 14.38 184 7.0 12.88 89 12.34
$5.23 to $14.38 1,011 4.6 $10.99 422 $10.29
The weighted average fair value at date of grant for options granted during fiscal 1997 and 1996 was $3.82 and $2.95 per
option, respectively. The fair value of options at date of grant was estimated using the Black-Scholes model with the
following weighted average assumptions:
1997 1996
Expected life (years) 4.9 5.0
Risk-free interest rate 5.91% 5.74%
Volatility 28.65% 26.01%
Dividend yield 2.10% 2.40%
The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123,
“Accounting for Stock-Based Compensation.” Accordingly, no compensation cost has been recognized for the stock
options granted in 1997 or 1996. Had compensation cost been determined based on the fair value at the grant date
consistent with the provisions of this statement, the Company’s pro forma net income and net income per share would
have been as follows:
(In thousands, except per share data) 1997 1996
Net income – as reported $47,731 $42,802
– pro forma 47,381 42,375
Net income per share – as reported $ 1.02 $ .92
– pro forma 1.01 .91