Papa Johns 2006 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2006 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

83
20. Stock Options (continued)
Information pertaining to option activity during 2006 is as follows (number of options and aggregate
intrinsic value in thousands):
Weighted
Weighted Average
Number Average Remaining Aggregate
of Exercise Contractual Intrinsic
Options Price Term Value
Outstanding at December 25, 2005 3,185 $16.09
Granted 612 32.70
Exercised (1,020) 14.91
Cancelled (106) 21.60
Outstanding at December 31, 2006 2,671 $20.15 3.10 $25,839
Vested or expected to vest at December 31, 2006 2,640 $20.01 3.08 $25,459
Exercisable at December 31, 2006 816 $14.87 2.75 $11,533
The following is a summary of the significant assumptions used in estimating the fair value of options
granted in 2006, 2005 and 2004:
2006 2005 2004
Assumptions (weighted average):
Risk-free interest rate 4.9% 3.9% 2.7%
Expected dividend yield 0.0% 0.0% 0.0%
Expected volatility 0.27 0.30 0.31
Expected term (in years) 3.5 3.0 1.8
The risk-free interest rate for the periods within the contractual life of an option is based on the U.S.
Treasury yield curve in effect at the time of grant. The estimated volatility is based on the historical
volatility of our stock and other factors. The expected term of options represents the period of time that
options granted are expected to be outstanding.
The weighted average grant-date fair value of options granted during 2006, 2005 and 2004 was $8.95,
$4.45 and $2.76, respectively. The Company granted 612,000, 1.4 million and 104,000 options in 2006,
2005 and 2004, respectively.
During the second quarter of 2006, we granted approximately 28,000 shares of performance-based
restricted stock to employees with a performance period of three years (there were no such grants in 2005
and 2004). The fair value of the restricted stock is based on the market price of the Company’s shares on
the grant date. The fair value of the restricted shares granted in 2006 was $32.65 per share.