Overstock.com 2005 Annual Report Download - page 101

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
16. STOCK OPTION PLANS
The Company's board of directors adopted the Amended and Restated 1999 Stock Option Plan and the 2002 Stock Option Plan
(collectively, the "Plans"), in May 1999 and April 2002, respectively. Under these Plans, the Board of Directors may issue incentive
stock options to employees and directors of the Company and non-qualified stock options to consultants of the Company. Options
granted under these Plans generally expire at the end of five years and vest in accordance with a vesting schedule determined by the
Company's Board of Directors, usually over four years from the grant date. As of the initial public offering, the Amended and
Restated 1999 Stock Option Plan was terminated. Future shares will be granted under the 2002 Stock Option Plan. As of
December 31, 2005, 1,100,000 shares are available for future grants under these Plans.
The following is a summary of stock option activity:
2003 2004 2005
Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price
Outstanding—beginning of year 1,415 $ 5.37 1,780 $ 8.39 1,512 $ 8.39
Granted at fair value 854 12.77 474 24.14 220 44.44
Exercised (197 ) 4.69 (468 ) 6.75 (298 ) 8.56
Canceled/forfeited (292 ) 9.12 (274 ) 13.26 (135 ) 24.08
Outstanding—end of year 1,780 8.39 1,512 12.90 1,299 18.09
Options exercisable at year-end 614 5.44 608 7.51 739 11.33
The following table summarizes information about stock options as of December 31, 2005:
Options Outstanding at
December 31, 2005
Options Exercisable at
December 31, 2005
Range of Exercise Prices Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract Life Shares
Weighted
Average
Exercise
Price
$ 2.00-$ 4.99 83 $ 4.27 1.50 69 $ 4.14
$ 5.00-$ 6.99 269 5.07 0.94 263 5.07
$ 7.00-$11.99 96 10.32 1.78 76 10.71
$12.00-$17.99 303 13.22 2.55 166 13.26
$18.00-$53.45 548 30.62 3.57 165 22.67
1,299 18.09 2.52 739 11.33
The weighted-average grant-date fair value of options granted during 2003, 2004 and 2005 was $8.27, $15.39 and $26.81 per
share, respectively. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions:
2003 2004 2005
Risk-free interest rate 2.63 % 2.61 % 4.44 %
Expected life (in years) 3 3 4
Volatility 104 % 101 % 73 %
Expected dividend yield 0 % 0 % 0 %
F-31