Best Buy 2013 Annual Report Download - page 97

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97
Time-Based Share Awards
The fair value of time-based share awards is determined based on the closing market price of our stock on the date of grant.
This value is reduced by the present value of expected dividends during vesting when the employee is not entitled to dividends.
A summary of the status of our nonvested time-based share awards at February 2, 2013, and changes during fiscal 2013 (11-
month), is as follows:
Time-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at March 3, 2012 3,924,000 $ 29.62
Granted 6,759,000 17.67
Vested (1,890,000) 24.97
Forfeited/Canceled (1,042,000) 24.30
Outstanding at February 2, 2013 7,751,000 $ 21.05
At February 2, 2013, there was $108 million of unrecognized compensation expense related to nonvested time-based share
awards that we expect to recognize over a weighted-average period of 2.3 years.
Employee Stock Purchase Plans
In fiscal 2013 (11-month), 2012 and 2011, we estimated the fair value of stock-based compensation expense associated with
our employee stock purchase plans on the purchase date using the Black-Scholes option-pricing valuation model, with the
following assumptions:
11-Month 12-Month
Valuation Assumptions 2013 2012 2011
Risk-free interest rate(1) 0.1% 0.1% 0.2%
Expected dividend yield 2.9% 2.4% 1.4%
Expected stock price volatility(2) 41% 38% 29%
Expected life of employee stock purchase plan options (in months)(3) 6 6 6
(1) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of employee stock purchase plan shares.
(2) We consider both the historical volatility of our stock price as well as implied volatilities from exchange-traded options on our stock.
(3) Based on semi-annual purchase period.
In fiscal 2013 (11-month), 2012 and 2011, 1.0 million, 1.4 million and 1.3 million shares, respectively, were purchased through
our employee stock purchase plans. The weighted-average fair values of shares purchased pursuant to the plans during fiscal
2013 (11-month), 2012 and 2011, were $5.44, $6.76 and $9.54, respectively. At February 2, 2013, and March 3, 2012, plan
participants had accumulated $4 million and $11 million, respectively, to purchase our common stock pursuant to these plans.
Earnings per Share
We compute our basic earnings per share based on the weighted-average number of common shares outstanding, and our
diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of
additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive
securities include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well
as common shares that would have resulted from the assumed conversion of our convertible debentures. During the fourth
quarter of fiscal 2012, we repurchased and redeemed all of the remaining outstanding convertible debentures (see Note 8,
Debt). Since the potentially dilutive shares related to the convertible debentures are included in the computation, the related
interest expense, net of tax, is added back to net earnings, as the interest would not have been paid if the convertible debentures
had been converted to common stock. Nonvested market-based share awards and nonvested performance-based share awards
are included in the average diluted shares outstanding each period if established market or performance criteria have been met
at the end of the respective periods.
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