THE CHILDREN’S PLACE RETAIL STORES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. STOCK OPTION AND PURCHASE PLANS (Continued) The Company has two stock option plans: the 1996 Plan and the 1997 Plan. The 1996 Plan authorized the granting of incentive stock options with respect to 1,743,240 shares of Common Stock. The 1997 Plan was authorized and amended to grant options with respect to 2,500,000 shares of Common Stock. As of February 2, 2002, there were 57,300 shares available for grant under the 1996 Plan and 425,300 shares available for grant under the 1997 Plan. The fair value of issued stock options were estimated on the date of grant using the Black-Scholes option pricing model, incorporating the following assumptions: Both the 1996 Plan and the 1997 Plan are administered by the Board of Directors. Options granted under the 1996 Plan and the 1997 Plan have exercise prices established by the Board of Directors provided that the exercise price of incentive stock options may not be less than the fair market value of the underlying shares at the date of grant. The 1996 Plan and the 1997 Plan also contain certain provisions that require the exercise price of incentive stock options granted to stockholders owning greater than 10% of the Company be at least 110% of the fair market value of the underlying shares. Unless otherwise specified by the Board of Directors, options vest at 20% a year over a five year period. Changes in common shares under option for the three fiscal years in the period ended February 2, 2002 are summarized below: Fiscal Year Ended February 2, 2002 February 3, 2001 January 29, 2000 Dividend yield .......................................... 0% 0% 0% Volatility factor........................................ 59.00% 60.00% 57.00% Weighted average risk-free interest rate ........ 4.45% 6.21% 5.89% Expected life of options.............................. 5 years 5 years 5 years Weighted average fair value on grant date...... $13.90 per share $18.63 per share $13.22 per share February2, 2002 February 3, 2001 January 29, 2000 Weighted Average  Weighted Average Weighted Average Shares Exercise Price Shares Exercise Price Shares Exercise Price Beginning of year....................................................... 1,900,732 $15.41 1,965,856 $12.21 2,185,706 $6.43 Granted................................................................... 565,800 25.43 552,150 18.55 561,700 24.13 Exercised ................................................................. ( 255,769 ) 8.84 ( 371,474 ) 5.86 ( 713,560 ) 3.70 Canceled ................................................................. ( 130,120 ) 23.04 ( 245,800 ) 11.44 ( 67,990 ) 14.70 End of year............................................................... 2,080,643 $18.49 1,900,732 $15.41 1,965,856 $12.21 Exercisable at end of year............................................ 839,383 $12.95 768,800 $10.01 600,186 $7.83 35