Under the Company’s stock option plans, incentive and nonqualified stock options may be granted to officers, employees, directors, and consultants to purchase shares of the Company’s common stock. Options vest over periods of one to five years and generally have terms of up to ten years. The exercise price of the stock options is determined by the Company’s Board of Directors on the date of grant and is at least equal to the fair market value of the stock on the grant date.
Stock option activity is as follows:

(Shares in thousands)	Number of shares	Price per share	Weighted average price per share
Options outstanding at January 31, 1995	7,997	$ 12.56–38.25	21.97
Granted	2,546	35.25–49.25	44.83
Exercised	(1,484)	12.56–30.50	19.19
Canceled	(368)	13.38–49.25	30.78
Options outstanding at January 31, 1996	8,691	13.38–49.25	28.75
Granted	5,271	0.01–42.00	29.99
Exercised	(651)	0.01–38.25	19.66
Canceled	(598)	16.25–49.25	36.98
Options outstanding at January 31, 1997	12,713	13.38–49.25	28.11
Granted	3,411	0.01–48.38	34.62
Assumed via acquisitions	306	0.34–36.40	23.72
Exercised	(2,304)	0.01–49.25	23.15
Canceled	(908)	13.38–49.25	33.22
Options outstanding at January 31, 1998	13,218	$ 1.86–$ 49.25	$ 30.20

Options exercisable at January 31, 1998

5,174

$ 1.86–$ 49.25

$ 28.83

The following table summarizes information about options outstanding and exercisable at January 31, 1998.

These options will expire if not exercised at specific dates ranging from February 1998 to January 2008. Prices for options exercised during the three-year period ended January 31, 1998, range from $0.01 to $49.25. A total of 14.1 million shares of the Company’s common stock have been reserved for future issuance under existing stock option programs.

EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan ("plan") for all employees meeting certain eligibility criteria. Under the plan, eligible employees may purchase shares of the Company’s common stock, at their discretion up to 15 percent of their compensation subject to certain limitations, at not less than 85 percent of fair market value as defined in the plan. A total of 2,600,000 shares have been reserved for issuance under the plan. In fiscal years 1998, 1997, and 1996, shares totaling 490,000, 323,000, and 301,000, respectively, were issued under the plan at average prices of $21.99, $24.56, and $24.01 per share. At January 31, 1998, a total of 301,000 shares were available for future issuance under the plan.

PRO FORMA INFORMATION
The Company has elected to follow APB Opinion No.25, "Accounting for Stock Issued to Employees," in accounting for its employees’ stock options because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, "Accounting for Stock-Based Compensation," requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB No. 25, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized in the Company’s financial statements.
Pro forma information regarding net income and net income per share is required by SFAS No. 123. This information is required to be determined as if the Company had accounted for its employee stock options (including shares issued under the Employee Stock Purchase Plan, collectively called "options") granted subsequent to January 31, 1995, under the fair value method of that statement. The fair value of options granted in 1998, 1997, and 1996 reported below has been estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected volatility of the stock price. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in the opinion of management, the existing models do not necessarily provide a reliable single measure of the fair value of its options. The weighted average estimated fair value of employee stock options granted during fiscal years 1998, 1997, and 1996 was $13.50, $8.34, and $12.76 per share, respectively. The weighted average estimated fair value of shares granted under the Employee Stock Purchase Plan during fiscal years 1998, 1997, and 1996 was $7.17, $8.01, and $7.85, respectively.
For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options’ vesting period. The Company’s pro forma net income (loss) for fiscal years 1998, 1997, and 1996 was $(21,939,000), $15,343,000, and $77,952,000, respectively. Pro forma basic net income (loss) per share was $(0.47), $0.34, and $1.66 in fiscal years 1998, 1997, and 1996, respectively. In fiscal years 1998, 1997, and 1996, pro forma diluted net income (loss) per share was $(0.47), $0.30, and $1.52, respectively.
The effects on pro forma disclosures of applying SFAS No. 123 are not likely to be representative of the effects on pro forma disclosures of future years. Because SFAS No. 123 is applicable only to options granted subsequent to January 31, 1995, the pro forma effect will not be fully reflected until 1999.

PRETAX SAVINGS PLAN
The Company has a pretax savings plan covering nearly all US employees that qualify under Section 401(k) of the Internal Revenue Code. Eligible employees may contribute up to 15 percent of their pretax salary, subject to certain limitations. The Company makes voluntary contributions and matches a portion of employee contributions. Company contributions, which may be terminated at the Company’s discretion, were $4,103,000, $3,068,000, and $2,442,000 in fiscal years 1998, 1997, and 1996, respectively. The Company provides defined-contribution plans in certain foreign countries where required by statute. The Company’s funding policy for foreign defined-contribution plans is consistent with the local requirements in each country. Company contributions to these plans during fiscal year 1998 were $1,376,000. Company contributions to these plans in fiscal years 1997 and 1996 were not significant.

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