THQ 2006 Annual Report Download - page 77

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69
The exercise price per share of all options granted in the fiscal years ended March 31, 2006, 2005 and 2004,
has been the closing market price of the stock on the date of the grant.
2006 2005 2004
Shares
Weighted
Average
Exercise Price Shares
Weighted
Average
Exercise Price Shares
Weighted
Average
Exercise Price
Outstanding at beginning of
year ................... 9,880,253$ 1 3.10 10,177,268 $ 11.7310,906,494 $ 13.19
Granted................ 3,276,07820.48 4,578,969 13.51 3,621,63810.73
Exercised.............. (3,187,569) 12.03 (4,189,155)10.22 (1,302,285) 5.47
Cancelled .............. (894,159) 14.44 (686,829)13.17 (3,048,579) 18.03
Outstanding at end of year .9,074,603 $ 1 6.00 9,880,253 $ 13.10 10,177,268 $ 1 1.73
Exercisable at end of year..3,480,265 $15.20 4,494,209 $14.15 5,353,334 $11.56
The estimated fair value of the employee stock-based compensation granted in the fiscal years ended
March 31, 2006, 2005 and 2004 was $26.8 million, $22.7 million and $20.6 million, respectively.
Additionally, during fiscal 2006 we began issuing PARS and PARSUs. We issued 263,786 shares of PARS
and 20,250 units of PARSUs with an estimated fair value of $5.1million and $0.4 million, respectively, in
the fiscal year ended March 31, 2006.
The following table summarizes information about stock options outstanding and exercisable at March 31,
2006:
Options Outstanding Options Exercisable
Range of Exercise Price
Number
Outstanding at
March 31, 2006
Weighted Average
Remaining
Contractual Life
Weighted Average
Exercise Price
Shares Exercisable
at March 31, 2006
Weighted Average
Exercise Price
$ 0.99 - $0.9975,741 0.41 $0.9975,741 $0.99
$ 6.18 - $8.80 596,884 2.01 $8.35412,924 $8.18
$ 8.90 - $12.82 2,589,325 2.93 $11.82 997,415 $11.67
$12.84 - $19.00 2,788,319 3.02 $16.39 1,064,421 $15.60
$19.01 - $23.53 2,536,444 3.30 $20.43 910,638 $20.21
$23.55 - $26.96 487,890 4.59 $24.53 19,126 $25.43
9,074,603 3.07 $16.00 3,480,265 $15.20
Non-Employee Warrants. In prior years, we have granted stock warrants to third parties in connection
with the acquisition of licensing rights for intellectual property. The warrants generally vest upon grant and
are exercisable over the term of the warrant. The exercise price of third-party warrants is equal to their fair
market value of our common stock at the date of grant. No third-party warrants were granted during the
fiscal year ended March 31, 2006.
In fiscal 2005 we granted 240,000 warrants to third parties to purchase up to 240,000 shares of our common
stock at an exercise price of $13.49 per share in connection with a license agreement that allows us to
utilize intellectual propertyowned by such third parties. The warrants vested upon grant and have a six-
year term. The fair value of the warrants was determined using theBlack-Scholes pricing model, assuming
a risk-free rate of 2.9%, a volatility factor of 67% and the six-year term as noted above. The fair value of
these warrants was $2.0 million.
In fiscal 2004 we granted 150,000 warrants to a third party to purchase up to 150,000 shares of our common
stock at an exercise price of $10.45 per share in connection with a license agreement that allows us to
utilize intellectual property owned by the third party. The warrants vested upon grant and have a 10-year
term. The fair value of the warrants was determined using the Black-Scholes pricing model, assuming a