Jamba Juice 2007 Annual Report Download - page 102

Table of Contents
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A summary of option activity under both plans as of November 28, 2006 and June 28, 2006, and changes during the 22 Week Period and fiscal 2006
are presented below (shares in thousands):
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Options outstanding—beginning of period 6,238 6,380 $ 2.87 $ 2.36
Options granted 55 1,286 6.03 5.10
Options exercised (157) (189) 2.05 1.68
Options canceled (281) (1,239) 4.00 2.75
Options outstanding 5,855 6,238 $2.86 $ 2.87 6.85 7.28
Options exercisable 4,014 3,863 $2.31 $ 2.17 6.12 6.31
Options vested and expected to vest—end of period 5,855 6,238 $2.86 $ 2.87 6.85 7.28
The weighted-average grant-date fair value of options granted during the 22 Week Period and fiscal 2006, 2005 and 2004 was $1.50, $0.90, $0.50, and
$0.24, respectively. The total intrinsic value of options exercised during the 22 Week Period and fiscal 2006, 2005, and 2004 was $624,000, $561,000,
$96,000, and $41,000, respectively.
Jamba Juice Company recorded total compensation expense of $83,000 related to options that vested during the 22 Week Period, and all of which relates
to awards granted after the date of adoption. As of November 28, 2006, there was no unrecognized compensation cost related to nonvested stock options
granted under the plans. The total income tax benefit recognized in the consolidated statements of income for stock-based compensation arrangements was
approximately $35,000, $0, $0, and $0 for the 22 Week Period and fiscal 2006, 2005, and 2004, respectively.
In October 2005, the board of directors of Jamba Juice Company approved accelerated stock option vesting for certain level of employees upon a change
of control. The accelerated vesting applies to all Jamba Juice Company option holders who are District Managers, Support Center Managers, Department or
Regional Directors, and Vice Presidents and above. There are 114 employees who are eligible for acceleration as of November 28, 2006. The total number of
accelerated shares held by those employees eligible for acceleration is 1,054,325. The estimated intrinsic value of the options with the acceleration feature is
$2.7 million. The intrinsic value at the time of grant was $0.
Stock Option Exchange Program—During the six months prior and subsequent to the implementation of a stock option exchange program in fiscal
year 2002, Jamba Juice Company granted approximately 523,000 options, at an average exercise price of $4.00 per share. Subsequent to the grant, certain
employees were given the opportunity to exchange their options for new options with an exercise price equal to the fair value of Jamba Juice Company’s
common stock six months from the exchange date. The fair value was established at $1.86 per share. Due to the exchange, the options granted within six
months of the exchange program are subject to variable plan accounting of which 47,150 were outstanding as of November 28, 2006. Under variable plan
accounting, Jamba Juice Company is required to record a non-cash compensation charge for the options until the options are exercised, forfeited or canceled
without replacement. The compensation charge is based on any excess of the fair value of the stock at the end of the reporting period or date of exercise,
forfeiture or cancellation without replacement, if earlier, over the exercise price of the related options. The resulting
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