| NOTE 8 - COMMON STOCK: |
| The authorized number of shares of Class
A Common Stock no par value and Class B Common Stock no par value
are 110.0 million and 350.0 million, respectively. In fiscal year
1997 the Company announced a two-for-one stock split which was effected
in the form of a 100% stock dividend on outstanding Class A and Class
B Common Stock, paid October 23, 1996. In fiscal year 1996, a similar
two-for-one stock split was announced, paid October 30, 1995. Each
share of Class A Common Stock is convertible into one share of Class
B Common Stock. Voting rights of Class B Common Stock are limited
in certain circumstances with respect to the election of directors.
The Company's Employee Incentive Compensation Plan (the "1980 Plan") was adopted in 1980 and expired on December 31, 1990. The 1980 Plan provided for the issuance of up to 13.4 million shares of the Company's Class B Common Stock in connection with the exercise of stock options granted under such plan. No further grants will be made under the 1980 Plan. In 1990, the Board of Directors adopted, and the shareholders approved, the NIKE, Inc. 1990 Stock Incentive Plan (the "1990 Plan"). The 1990 Plan provides for the issuance of up to 25.0 million shares of Class B Common Stock in connection with stock options and other awards granted under such plan. The 1990 Plan authorizes the grant of incentive stock options, non-statutory stock options, stock appreciation rights, stock bonuses, and the sale of restricted stock. The exercise price for incentive stock options may not be less than the fair market value of the underlying shares on the date of grant. The exercise price for non-statutory stock options and stock appreciation rights, and the purchase price of restricted stock, may not be less than 75% of the fair market value of the underlying shares on the date of grant. No consideration will be paid for stock bonuses awarded under the 1990 Plan. The 1990 Plan is administered by a committee of the Board of Directors. The committee has the authority to determine the employees to whom awards will be made, the amount of the awards, and the other terms and conditions of the awards. As of May 31, 1998, the committee has granted substantially all non-statutory stock options at 100% of fair market value on the date of grant under the 1990 Plan. In addition to the option plans discussed above, the Company has several agreements outside of the plans with certain directors, endorsers and employees. As of May 31, 1998, 8.0 million options with exercise prices ranging from $0.417 per share to $53.625 per share had been granted. The aggregate compensation expenses related to these agreements is $21.1 million and is being amortized over vesting periods from October 1980 through December 2001. The outstanding agreements expire from December 1998 through December 2009. During 1995, the Financial Accounting Standards Board issued SFAS 123, "Accounting for Stock Based Compensation," which defines a fair value method of accounting for an employee stock option or similar equity instrument and encouraged, but does not require, all entities to adopt that method of accounting. Entities electing not to adopt the fair value method of accounting must make pro forma disclosures of net income and earnings per share, as if the fair value based method of accounting defined in this statement has been applied. The Company has elected not to adopt the fair value method; however, as required by SFAS 123, the Company has computed for pro forma disclosure purposes, the value of options granted during fiscal years 1998, 1997 and 1996 using the Black-Scholes option pricing model. The weighted average assumptions used for stock option grants for 1998, 1997 and 1996 were a dividend yield of 1%, expected volatility of the market price of the Company's common stock of 32% for 1998 and 30% for 1997 and 1996, a weighted-average expected life of the options of approximately five years and interest rates of 4.38% and 4.28% for fiscal 1998, 6.42% and 6.56% for fiscal 1997 and 5.92% and 5.97% for fiscal 1996. These interest rates are reflective of option grant dates made throughout the year. Options were assumed to be exercised over the 5 year expected life for purposes of this valuation. Adjustments for forfeitures are made as they occur. For the years ended May 31, 1998, 1997 and 1996, the total value of the options granted, for which no previous expense has been recognized, was computed as approximately $31.9 million, $29.1 million and $18.2 million respectively, which would be amortized on a straight-line basis over the vesting period of the options. The weighted average fair value per share of the options granted in 1998, 1997 and 1996 are $18.54, $17.39 and $7.15 respectively. |
The following information summarizes the stock option transactions under plans discussed above (adjusted for all applicable stock splits):
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