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XYRATEX LTDNOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(U.S. dollars and amounts in thousands, except per share data, unless otherwise stated)10. Ordinary Shares and Stock Option plans (Continued)options was estimated at grant date using the ‘‘minimum value’’ method with the following weightedaverageassumptions:Year EndedNovember 30,2004 2003Risk-free interest rate ................................ 4.10% 4.11%Dividend yield ...................................... 0.00% 0.00%Expected option life .................................. 4 years 4 yearsFor options granted after the IPO the fair value of the options was estimated at grant date usingthe following weighted average assumptions:Year EndedNovember 30,2005 2004Risk-free interest rate ................................ 3.75% 2.50%Dividend yield ...................................... 0.00% 0.00%Volatility .......................................... 80% 80%Expected option life .................................. 4 years 4 yearsFor purposes of pro forma disclosures, compensation expense relating to the estimated fair valueof options and other awards has been recorded in current income when the related transferabilityrestrictions lapsed to the extent vested on IPO or in connection with the private equity investment in2003.The weighted-average fair values and weighted-average exercise prices per share at the date ofgrant for stock options granted during the years ended November 30, 2005, 2004 and 2003 were asfollows:Year Ended November 30,2005 2004 2003Weighted-average fair value of options granted with exercise prices greaterthan or equal to the market value of the shares at the date of grant ...... $ 8.61 — —Weighted-average exercise price of options granted with exercise pricesgreater than or equal to the market value of the shares at the date of grant $14.44 $14.23 —Weighted-average fair value of options granted with exercise prices less thanthe market value of the shares at the date of grant .................. — $ 2.78 $2.45Weighted-average exercise price of options granted with exercise prices lessthan the market value of the shares at the date of grant .............. — $ 0.59 $4.53Weighted-average fair value of class C ordinary shares issued prior to theprivate equity investment ..................................... — — $3.61Weighted-average fair value of class C ordinary share rights grantedsubsequent to the private equity investment ....................... — $ 5.00 $0.86Weighted-average fair value of class A preferred ordinary share rights granted — $ 4.91 $4.70F-33