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Changes in Kaplan stock options outstanding for the years ended
December 30, 2007, December 31, 2006 and January 1,
2006, were as follows:
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
Number
of
Shares
Average
Option
Price
2007 2006 2005
Beginning of
year . . . .
73,352 $1,480.11
62,229 $ 944.63 68,000 $ 596.17
Granted . .
3,262 2,115.00
29,785 1,833.00 10,582 2,080.00
Exercised. .
(6,952) 457.55
(18,662) 257.73 (16,153) 225.14
Forfeited . .
——
— — (200) 652.00
End of year . .
69,662 $1,611.89
73,352 $ 1,480.11 62,229 $ 944.63
The compensation committee awarded to a senior manager of
Kaplan shares equal in value to $4.8 million, $4.6 million and
$4.8 million for the 2007, 2006 and 2005 fiscal year,
respectively, and the expense of these awards was recorded in
the Company’s results of operations for each relevant fiscal year.
As a result, in the first quarter of 2008, 1,778 Kaplan shares will
be issued related to the 2007 share awards, based on the
January 2008 valuation of $2,700 per share value. In the first
quarter of 2007 and second quarter of 2006, 2,175 and
2,619 shares were issued related to the 2006 and 2005
Kaplan share awards. In the fourth quarter of 2007, a senior
manager exercised Kaplan stock options and received 1,750
Kaplan shares.
Kaplan recorded stock compensation expense of $41.3 million
for 2007, compared to $27.7 million for 2006 and $3.0 million
for 2005, excluding Kaplan stock compensation expense in
2006 of $8.2 million as a result of the change in accounting
under SFAS 123R. In 2007, 2006 and 2005, total net payouts
were $8.1 million, $31.1 million and $35.2 million,
respectively. At December 31, 2007, the Company’s accrual
balance related to Kaplan stock-based compensation totaled
$101.2 million.
As of December 30, 2007, total unrecognized stock-based
compensation expense related to stock options was
$13.6 million, which is expected to be recognized over a
weighted average period of approximately 2.70 years. The
total intrinsic value of options exercised during 2007 was
$11.5 million; a tax benefit from these stock option exercises
of $4.7 million was realized during 2007.
Information related to stock options outstanding and exercisable
at December 30, 2007 is as follows:
Exercise Price
Shares
Outstanding at
12/30/2007
Weighted
Average
Remaining
Contractual
Life (yrs.)
Shares
Exercisable at
12/30/2007
Weighted
Average
Remaining
Contractual
Life (yrs.)
Options Outstanding Options Exercisable
$ 526 10,533 3.8 10,533 3.8
652 2,000 4.0 2,000 4.0
1,625 13,500 4.0 10,800 4.0
1,833 29,785 4.0 7,447 4.0
2,080 10,582 4.0 5,291 4.0
2,115 3,262 4.0 — 4.0
69,662 4.0 36,071 3.9
At December 30, 2007, the intrinsic value for all options
outstanding, exercisable and nonvested was $75.8 million,
$48.3 million and $27.5 million, respectively. The intrinsic
value of a stock option is the amount by which the estimated
fair value of the underlying stock exceeds the exercise price of the
option. The estimated fair value of Kaplan’s stock was $2,700 at
December 30, 2007. At December 30, 2007, there were
33,591 nonvested options related to the plan with an average
exercise price of $1,883 and a weighted average remaining
contractual term of 4.0 years. At December 31, 2006, there
were 43,716 nonvested options with an average exercise price
of $1,837.
The fair value of Kaplan stock options at December 30, 2007
and December 31, 2006 was estimated using the Black-Scholes
method utilizing the following assumptions:
December 30,
2007
December 31,
2006
Expected life (years) .... 0–4 0–6
Interest rate. ......... 3.05%–3.34% 4.70%–5.00%
Volatility . . . ......... 34.24%–45.39% 34.78%–46.50%
Dividend yield........ 0% 0%
Refer to Note A for additional disclosures surrounding stock
option accounting.
Earnings Per Share. Basic earnings per share are based on the
weighted average number of shares of common stock outstanding
during each year. Diluted earnings per common share are based
on the weighted average number of shares of common stock
outstanding each year, adjusted for the dilutive effect of shares
issuable under outstanding stock options and restricted stock.
2007 FORM 10-K 69