Best Buy 2001 Annual Report Download - page 47

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48
$ in thousands, except per share amounts
Stock Options, cont.
As permitted by SFAS N o. 123, the Company has elected to account for its stock option plans under the provisions of APB O pinion
N o. 25 . Accordingly, no compensation cost has generally been recognized for stock options granted. Had the Company adopted
SFAS N o. 123, the pro forma effects on net earnings, basic earnings per share and diluted earnings per share would have been
as follows:
2001 2000 1999
N et earnings
As reported $395,839 $347,070 $216 ,282
Pro forma 352,300 321,881 201,25 7
Basic earnings per share
As reported $ 1.9 2 $ 1.70 $ 1.09
Pro forma 1.7 0 1.58 1.01
Diluted earnings per share
As reported $ 1.8 6 $ 1.63 $ 1.03
Pro forma 1.6 7 1.52 .96
The fair value of each option was estimated on the date of the grant using the Black-Scholes option pricing model with the following
assumptions:
2001 2000 1999
Risk-free interest rate 6.1 % 6.4% 5.6%
Expected dividend yield 0% 0% 0%
Expected stock price volatility 60% 50% 50%
Expected life of options 4.5 years 4.5 years 4.9 years
The weighted average fair value of options granted during fiscal 2001, 2000 and 1999 used in computing pro forma compensation
expense was $34.59, $25.59 and $8.58 per share, respectively.
Best Buy Co., Inc.N otes