Jamba Juice 2007 Annual Report Download - page 101

Table of Contents
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declared but unpaid dividends on each share from funds legally available for distribution. If there are insufficient funds to redeem the number of shares
requested, then Jamba Juice Company shall redeem the maximum number of shares for which funds exist. As of November 28, 2006, there were no funds
legally available for distribution.
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On June 28, 2006, Jamba Juice Company adopted Statement of Financial Accounting Standard No. 123R,  (“SFAS No. 123R”).
See Note 1 for a description of Jamba Juice Company’s adoption of SFAS No. 123R.
Jamba Juice Company maintains two stock option plans, the 1994 Stock Incentive Plan (the “1994 Plan”) and the 2001 Equity Incentive Plan (the
“2001 Plan”), which provide for granting incentive stock options and non-qualified stock options to employees and certain non-employee directors and
consultants. The objectives of these plans include attracting and retaining the best personnel, providing performance incentives, and promoting the success of
Jamba Juice Company by providing employees the opportunity to acquire common stock. The 2001 Plan is the only plan with stock option awards available
for grant. Under the plans, Jamba Juice Company reserved 10,600,000 shares of common stock for granting of stock options. Options were granted at an
exercise price equal to or greater than the fair market value of the Company’s common stock at the date of the grant and are exercisable for up to 10 years from
the date of grant. Options that remain outstanding under the 1994 Plan generally vested over four years. Options that remain outstanding under the 2001 Plan
granted prior to January 1, 2004 vested 20% at date of grant and 20% per year thereafter. Options granted under the 2001 Plan after January 1, 2004 generally
vest 25% on the first anniversary of the grant date and 25% per year thereafter. Shares available for grant were 970,369 as of November 28, 2006.
The fair value of options granted was estimated at the date of grant using a Black-Scholes option-pricing model. Option valuation models, including
Black-Scholes, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant date fair value of an
award. These assumptions include the risk-free rate of interest, expected dividend yield, expected volatility, and the expected life of the award. The risk-free
rate of interest is based on the zero coupon U.S. Treasury rates appropriate for the expected term of the award. Expected dividends are zero based on history of
not paying cash dividends on Jamba Juice Company’s common stock. Expected volatility for the 22 Week Period is based on historic, daily stock price
observations of Jamba Juice Company’s peers during the period immediately preceding the share-based award grant that is equal in length to the award’s
expected term. SFAS 123R also requires that estimated forfeitures be included as a part of the grant date estimate. Jamba Juice Company uses historical data to
estimate expected employee behaviors related to option exercises and forfeitures. There is currently no market-based mechanism or other practical application to
verify the reliability and accuracy of the estimates stemming from these valuation models or assumptions, nor is there a means to compare and adjust the
estimates to actual values, except for annual adjustments to reflect actual forfeitures. The following assumptions were used to calculate the weighted-average
fair value for the 22 Week Period and fiscal 2006, 2005, and 2004:
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









Weighted-average expected life 2 years 2 years 2 years 2 years
Volatility 37.9% 0% 0% 0%
Risk free interest rates 5.0% 4.60% 3.70% 2.90%
Dividend yield 0% 0% 0% 0%
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