The Black-Scholes option valuation model was used to calculate the fair market value of the options at the grant date for the purpose of disclosures required by FAS 123. The following assumptions were used in the calculation:

The following table summarizes the information regarding stock options outstanding at January 28, 2001 (number of shares in thousands):

A summary of the information relative to the Company’s stock purchase plans follows:

Note 12 – Financial Instruments

The Company enters into interest rate swap and collar agreements to reduce the impact of changes in interest rates on its variable-rate debt and amounts outstanding under the Lease Facility. The swap agreements are contracts to exchange variable-rate for fixed-interest payments periodically over the life of the agreements without the exchange of the underlying notional amounts. The collar agreements are contracts to effectively limit the variability of interest on a portion of the Company’s variable-rate debt. The notional amounts of these agreements are used to measure interest paid or received and do not represent the amount of exposure to credit loss.

As of January 28, 2001, and January 23, 2000, the Company had the following interest rate instruments in effect:

During fiscal 2001, the Company entered into interest rate swaps with notional amounts of $50.0 and $100.0, which effectively converted variable rate U.S. dollar-denominated borrowings to fixed rates of 5.1% and 5.2%, respectively. These swap agreements expire one year from the date the Company entered into the agreements.

Note 13 – Segment Information

The Company is organized based upon the following operating segments: domestic Borders stores, international Borders and Books etc. stores, Walden stores, online retailing through Borders.com, and other (consisting of interest expense and certain corporate governance costs).

The accounting policies of the segments are the same as those described in the ‘‘Summary of Significant Accounting Policies.’’ Segment data includes charges allocating all corporate headquarters costs to each segment. Transactions between segments, consisting principally of inventory transfers, are recorded primarily at cost. The Company evaluates the performance of its segments and allocates resources to them based on anticipated future contribution. Amounts relating to All Wound Up have been reclassified from the Waldenbooks segment to discontinued operations.