Seagate 2004 Annual Report Download - page 84

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes information about options outstanding at July 1, 2005 (shares in millions).
Deferred Stock Compensation —In connection with certain stock options granted in fiscal year 2003, the Company has recorded deferred
stock compensation totaling $9.7 million, net of subsequent cancellations, representing the difference between the exercise price of the options
and the deemed fair value of the Company’s common shares on the dates the options were granted. This deferred stock compensation is being
amortized over the vesting periods of the underlying stock options of 48 months. Through July 1, 2005, the Company has amortized
approximately $7 million of such compensation expense.
Stock Purchase Plan —The Company established an Employee Stock Purchase Plan (the “ESPP”) in December 2002. A total of
20,000,000 shares of common stock have been authorized for issuance under the ESPP, plus an automatic annual increase on the first day of
the Company’s fiscal year beginning in 2003 equal to the lesser of 2,500,000 shares or 0.5% of the outstanding shares on the last day of the
immediately preceding fiscal year, or such lesser number of shares as is determined by the Company’s board of directors. In no event shall the
total number of shares issued under the ESPP exceed 75,000,000 shares. The ESPP permits eligible employees who have completed thirty days
of employment prior to the commencement of any offering period to purchase common stock through payroll deductions generally at 85% of
the fair market value of the common stock. The ESPP has two six-month purchase periods, and effective June 28, 2005, there is no longer a
“rollover” feature associated with the plan. The following table shows the associated shares issued and their respective weighted-average
purchase price since the inception of the ESPP.
Assumptions Used in Determining Pro Forma Information —See Note 1, Summary of Significant Accounting Policies, for pro forma
information on net income and net income per share required under SFAS 123, as amended by SFAS No. 148, “Accounting for Stock-Based
Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123.”
Up until the Company’s initial public offering of its common shares on December 11, 2002, the fair value of the Company’s stock
options was estimated using the Black-Scholes valuation method with minimum volatility.
80
Outstanding Options Exercisable Options
Range of
Exercise Prices
Number of
Shares
Weighted Average
Contractual Life
(in years)
Weighted Average
Exercise Price
Number of
Shares
Weighted Average
Exercise Price
$ 2.30
–
3.00
19.5
6.1
$
2.30
19.4
$
2.30
3.00
–
6.00
8.3
6.6
5.00
.4
5.00
6.00
–
9.00
1.6
7.6
8.22
.3
8.22
9.00
–
12.00
12.8
7.6
10.11
5.8
10.12
12.00
–
15.00
7.1
6.4
13.56
.2
13.21
15.00
–
18.00
2.5
6.9
16.93
.2
16.51
18.00
–
21.00
1.5
7.4
19.44
.3
19.78
21.00
–
24.00
1.4
8.1
21.44
.5
21.46
24.00
–
27.00
1.4
8.2
26.42
.6
26.44
27.00
–
29.85
.1
8.3
28.96
—
28.94
$ 2.30
–
$
29.85
56.2
6.8
$
8.32
27.7
$
5.32
January 31,
2005
July 30,
2004
January 30,
2004
July 31,
2003
Purchase date
Shares issued
2,482,278
2,483,953
2,483,371
2,496,495
Weighted
-
average purchase price per share
$
9.72
$
9.75
$
10.55
$
10.20