Fluor 2008 Annual Report Download - page 114

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The total intrinsic value, representing the difference between market value on the date of exercise and
the option price, of stock options exercised during 2008, 2007 and 2006 was $20 million, $25 million and
$22 million, respectively. The balance of unamortized stock option expense at December 31, 2008 was
$7 million, which is expected to be recognized over a weighted-average period of 1.4 years. Expense
associated with stock options for the years ended December 31, 2008, 2007 and 2006, which is included in
corporate administrative and general expense in the accompanying Consolidated Statement of Earnings,
totaled $10 million, $8 million, and $5 million, respectively.
The fair value on the grant date and the significant assumptions used in the Black-Scholes option-
pricing model are as follows:
December 31,
2008 2007
Weighted average grant date fair value $ 22 $ 13
Expected life of options (in years) 4.3 4.8
Risk-free interest rate 2.2% 4.4%
Expected volatility 38.0% 27.0%
Expected annual dividend per share $0.50 $0.40
The computation of the expected volatility assumption used in the Black-Scholes calculations is based
on a 50/50 blend of historical and implied volatility.
Information related to options outstanding at December 31, 2008 is summarized below:
Options
Options Outstanding Exercisable
Number
Weighted Average
Remaining
Contractual Life
Weighted
Average
Exercise Number
Weighted Average
Exercise Price
Range of Exercise Prices Outstanding (In Years) Price Exercisable Per Share
$12.75 - $14.80 78,732 1.8 $13.55 78,732 $13.55
$42.11 - $47.24 1,020,202 7.8 $43.85 150,756 $43.56
$68.36 - $80.12 526,308 9.2 $68.42 — —
1,625,242 8.0 $50.34 229,488 $33.27
At December 31, 2008, options outstanding and options exercisable both have an aggregate intrinsic
value of approximately $3 million.
Lease Obligations
Net rental expense amounted to approximately $213 million, $169 million and $162 million in the
years ended December 31, 2008, 2007 and 2006, respectively. The company’s lease obligations relate
primarily to office facilities, equipment used in connection with long-term construction contracts and other
personal property.
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