Dick's Sporting Goods 2008 Annual Report Download - page 66

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The fair value of stock-based awards to employees is estimated on the date of grant using the Black Scholes valuation with the
following weighted average assumptions:
Employee Stock Options Employee Stock Purchase Plan
Black–Scholes Valuation Assumptions 1 2008 2007 2006 2008 2007 2006
Expected life (years) 2 5.51 5.29 5.29 0.5 0.5 0.5
Expected volatility 3 35.89%–41.80 % 36.08%–37.39 % 37%–39 % 53.93%–88.03 % 25.66%–39.19 % 24%–32 %
Weighted average volatility 36.34 % 36.96 % 38.79 % 67.26 % 34.29 % 28.44 %
Risk-free interest rate 4 2.01%–3.51 % 3.39%–4.94 % 4.44%–4.97 % 0.28%–2.13 % 3.32%–5.02 % 5.09%–5.31 %
Expected dividend yield — — — — — —
Weighted average grant
date fair values $ 10.26 $ 11.45 $ 8.34 $ 3.75 $ 6.87 $ 5.12
1 This table excludes valuation assumptions related to the assumption of outstanding Golf Galaxy options by Dick’s in conjunction with the acquisition of Golf Galaxy
on February 13, 2007.
2 The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration
to the contractual terms, vesting schedules and expectations of future employee behavior.
3 Expected volatility is based on the historical volatility of the Company’s common stock.
4 The risk-free interest rate is based on the implied yield available on U.S. Treasury constant maturity interest rates whose term is consistent with the expected life
of the stock options.
The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to refl ect market
conditions and experience.
The stock option activity from January 28, 2006, through January 31, 2009 is presented in the following table:
Weighted
Weighted Average Aggregate
Shares Average Remaining Intrinsic
Subject to Exercise Price Contractual Value
Options per Share Life (Years) (in thousands)
Outstanding, January 28, 2006 23,278,774 $ 7.66 8.72 $ 249,432
Granted 2,756,916 19.61
Exercised (5,371,716) 4.30
Forfeited / Expired (1,031,146) 14.86
Outstanding, February 3, 2007 19,632,828 $ 9.88 6.64 $ 324,610
Granted 5,324,866 25.86
Exercised (4,769,933) 6.34
Forfeited / Expired (911,316) 20.62
Outstanding, February 2, 2008 19,276,445 $ 14.66 6.35 $ 352,494
Granted 795,455 26.96
Exercised (686,905) 10.56
Forfeited / Expired (761,560) 23.23
Outstanding, January 31, 2009 18,623,435 $ 14.99 5.43 $ 37,135
Exercisable, January 31, 2009 14,047,827 $ 11.62 4.71 $ 37,125
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT
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