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The company has stock option plans for employees and nonemployee directors. The company's policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. The company follows APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its employee stock options. Under APB Opinion No. 25, when the exercisable price of employee stock options equals the underlying stock on the date of grant, no compensation expense is recorded. Options are exercisable upon grant and expire at various dates ranging from fiscal 2001 to 2010.
Following is a summary of stock option activity:
(In Thousands Weighted-average Except Per Share Data) Shares Option Price Balance October 25, 1997 5,092 $11.40 Granted 826 14.69 Exercised (373) 10.48 Balance Oclober 31, 1998 5,545 11.95 Granted 916 15.97 Exercised (393) 10.93 Forfeitures (18) 12.73 Balance October 30, 1999 6,050 12.62 Granted 849 19.27 Exercised (271) 10.75 Forfeitures (2) 15.91 Balance October 28, 2000 6,626 $13.55 |
Pro forma information regarding net income and earnings per share is required by SFAS No. 123, "Accounting for Stock-Based Compensation," assuming the company accounted for its employee stock options using the fair value method. The fair value of options was estimated at the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 2000, 1999 and 1998, respectively; risk free interest rate of 5.8%, 6.3% and 4.5%; a dividend yield of 2.4%, 1.8% and 2.0%; expected volatility of 24.4%, 23.6% and 24.3%; and an expected option life of seven years. The weighted-average fair value of options granted in fiscal 2000, 1999 and 1998 was $5.56, $5.13 and $4.04, respectively. Exercise prices ranged from $10.25 to $20.31 with a remaining average contractual life of six years at October 28, 2000. Pro forma net earnings and diluted earnings per share are as follows:
(In Thousands, Except Per Share Data) 2000 1999 1998 Pro forma net income $168,334 $162,148 $138,828 Pro forma diluted earnings per share 1.19 1.10 0.92 Diluted earnings per share - as reported 1.20 1.11 0.93 |
The number of shares available for future grants was 8,151,000, 138,244 and 1,279,454 at October 28, 2000, October 30, 1999, and October 31, 1998, respectively.
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