CarMax 2014 Annual Report Download - page 72

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68
STOCK OPTION ACTIVITY
Weighted
Average
Weighted Remaining Aggregate
Number of Average Contractual Intrinsic
(Shares and intrinsic value in thousands) Shares Exercise Price Life (Years) Value
Outstanding as of February 28, 2013 10,771 $ 23.00
Options granted 1,605 42.77
Options exercised (2,337) 19.32
Options forfeited or expired (21) 27.58
Outstanding as of February 28, 2014 10,018 $ 27.02 3.7 $ 214,476
Exercisable as of February 28, 2014 5,883 $ 21.06 2.6 $ 161,051
We granted nonqualified options to purchase 1,605,149 shares of common stock in fiscal 2014, 2,252,124 shares in
fiscal 2013 and 1,993,498 shares in fiscal 2012. The total cash received as a result of stock option exercises was
$45.1 million in fiscal 2014, $71.7 million in fiscal 2013 and $25.3 million in fiscal 2012. We settle stock option
exercises with authorized but unissued shares of our common stock. The total intrinsic value of options exercised
was $62.5 million for fiscal 2014, $68.0 million for fiscal 2013 and $23.9 million for fiscal 2012. We realized
related tax benefits of $25.1 million in fiscal 2014, $27.2 million for fiscal 2013 and $9.5 million for fiscal 2012.
OUTSTANDING STOCK OPTIONS
As of February 28, 2014
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
(Shares in thousands) Number of Contractual Exercise Number of Exercise
Range of Exercise Prices Shares Life (Years) Price Shares Price
$11.43 1,512 2.1 $ 11.43 1,512 $ 11.43
$ 13.19 - $19.82 1,550 1.0 $ 15.66 1,550 $ 15.66
$19.98 - $25.39 1,580 3.1 $ 25.19 1,222 $ 25.13
$ 25.67 - $32.05 2,118 5.0 $ 31.62 654 $ 31.45
$32.69 - $49.25 3,258 5.1 $ 37.56 945 $ 32.84
Total 10,018 3.7 $ 27.02 5,883 $ 21.06
For stock options, the fair value of each award is estimated as of the date of grant using a binomial valuation model.
In computing the value of the option, the binomial model considers characteristics of fair-value option pricing that
are not available for consideration under a closed-form valuation model (for example, the Black-Scholes model),
such as the contractual term of the option, the probability that the option will be exercised prior to the end of its
contractual life and the probability of termination or retirement of the option holder. For this reason, we believe that
the binomial model provides a fair value that is more representative of actual experience and future expected
experience than the value calculated using a closed-form model. Estimates of fair value are not intended to predict
actual future events or the value ultimately realized by the recipients of share-based awards.
The weighted average fair value per share at the date of grant for options granted was $15.59 in fiscal 2014, $12.67
in fiscal 2013 and $13.80 in fiscal 2012. The unrecognized compensation costs related to nonvested options totaled
$32.6 million as of February 28, 2014. These costs are expected to be recognized on a straight-line basis over a
weighted average period of 2.0 years.