Best Buy 2008 Annual Report Download - page 89

Download and view the complete annual report

Please find page 89 of the 2008 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

$ in millions, except per share amounts or as otherwise noted
Stock Options
Stock option activity was as follows in fiscal 2008:
Weighted-
Weighted- Average
Average Remaining
Stock Exercise Price Contractual Aggregate
Options per Share Term (in years) Intrinsic Value
Outstanding at March 3, 2007 28,433,000 $35.81
Granted 5,579,000 47.84
Exercised (4,228,000) 22.04
Forfeited/Canceled (996,000) 48.49
Outstanding at March 1, 2008 28,788,000 $39.73 6.35 $186
Exercisable at March 1, 2008 17,675,000 $34.00 4.80 $180
The weighted-average grant-date fair value of stock to stock options that is expected to be recognized over a
options granted during fiscal 2008, 2007 and 2006 was weighted-average period of 2.1 years.
$15.98, $22.32 and $18.54, respectively, per share. The Net cash proceeds from the exercise of stock options were
aggregate intrinsic value of our stock options (the amount $94, $168 and $257 in fiscal 2008, 2007 and 2006,
by which the market price of the stock on the date of respectively.
exercise exceeded the exercise price of the option)
The actual income tax benefit realized from stock option
exercised during fiscal 2008, 2007 and 2006, was $110,
exercises was $25, $55 and $53, in fiscal 2008, 2007
$160 and $197, respectively. At March 1, 2008, there
and 2006, respectively.
was $147 of unrecognized compensation expense related
The fair value of each stock option was estimated on the date of grant using a lattice model with the following
assumptions:
Valuation Assumptions(1) 2008 2007 2006
Risk-free interest rate(2) 4.0% - 4.5% 4.8% - 5.2% 4.3% - 4.6%
Expected dividend yield 1.1% 0.8% 0.8%
Expected stock price volatility(3) 33% 40% 40%
Expected life of stock options (in years)(4) 5.9 5.9 6.1
(1) Forfeitures are estimated using historical experience and projected employee turnover.
(2) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options.
(3) We use an outside valuation advisor to assist us in projecting expected stock price volatility. We consider both the historical volatility
of our stock price as well as implied volatilities from exchange-traded options on our stock.
(4) We estimate the expected life of stock options based upon historical experience.
81