7. STOCKHOLDERS’ EQUITY 8. STOCK OPTION AND PURCHASE PLANS The Company accounts for its stock option plans in accordance with the provisions of SFAS 123. Accordingly, no compensation expense has been recognized for stock- based compensation, since the options granted were at prices that equaled or exceeded their estimated fair market value at the date of grant. If compensation expense for the Company’ stock options issued in fiscal 2001, fiscal 2000 and fiscal 1999 had been determined based on the fair value method of accounting, the Company’ net income would have been reduced to the pro forma amounts indicated below for the three fiscal years in the period ended February 2, 2002: The Company’s stockholders’ equity is comprised of the following: February 2, 2002 February 3, 2001  Common stock: Authorized number of shares, $0.10 par value ........................ 100,000,000 100,000,000 Issued and outstanding number of shares ............................. 26,372,144 26,095,296 Preferred stock: Authorized number of shares, $1.00 par value ........................ 1,000,000 1,000,000 Issued and outstanding number of shares ............................. 0 0 Stock Option Plans Fiscal Year Ended February 2, 2002 February 3, 2001 January 29, 2000 Net income As reported ........................................ $46,582,000 $42,690,000 $35,049,000 Pro forma .......................................... $43,308,000 $39,644,000 $33,111,000 Pro forma diluted net income per share As reported ........................................ $1.73 $1.60 $1.32 Pro forma .......................................... $1.61 $1.49 $1.24 34 THE CHILDREN’S PLACE RETAIL STORES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)