Metro PCS 2011 Annual Report Download - page 129

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2011, 2010 and 2009
F-23
2011 2010 2009
Expected dividends —% —% —%
Expected volatility 49.88% 54.74% 50.01%
Risk-free interest rate 2.06% 2.24% 1.99%
Expected lives in years 5.00 5.00 5.00
Weighted-average fair value of options:
Granted at fair value $ 6.49 $ 3.23 $ 6.43
Weighted-average exercise price of options:
Granted at fair value $ 14.37 $ 6.62 $ 14.23
The Black-Scholes model requires the use of subjective assumptions including expectations of future dividends and stock
price volatility. Expected volatility is calculated based on an analysis of historic and implied volatility measures for a set of peer
companies. The average expected life is based on the contractual term of the option and expected employee exercise and post-
vesting employment termination behavior. Such assumptions are only used for making the required fair value estimate and
should not be considered as indicators of future dividend policy or stock price appreciation. Because changes in the subjective
assumptions can materially affect the fair value estimate, and because employee stock options have characteristics significantly
different from those of traded options, the use of the Black-Scholes option pricing model may not provide a reliable estimate of
the fair value of employee stock options.
A summary of the status of stock options granted under the Company's Equity Plans as of December 31, 2011, and
changes during the period then ended, is presented in the table below:
2011
Shares
Weighted
Average
Exercise
Price
Outstanding, beginning of year 31,642,532 $ 13.52
Granted 4,186,204 $ 14.37
Exercised (6,370,790) $ 9.27
Forfeited (712,384) $ 15.21
Outstanding, end of year 28,745,562 $ 14.54
Options vested or expected to vest at year-end 28,260,376 $ 14.58
Options exercisable at year-end 21,385,013 $ 15.25
Options vested or expected to vest under the Equity Plans as of December 31, 2011 have a total aggregate intrinsic value
of approximately $14.8 million and a weighted average remaining contractual life of 6.16 years. Options exercisable under the
Equity Plans as of December 31, 2011 have a total aggregate intrinsic value of approximately $11.0 million and a weighted
average remaining contractual life of 5.43 years.
The intrinsic value of options exercised during the year ended December 31, 2011 was approximately $42.7 million and
total proceeds were approximately $59.1 million. During the year ended December 31, 2010, the intrinsic value of options
exercised was approximately $12.9 million and total proceeds were approximately $10.1 million. During the year ended
December 31, 2009, the intrinsic value of options exercised was approximately $15.0 million and total proceeds were
approximately $8.6 million.
The weighted average grant-date fair value of the stock option grants for the years ended December 31, 2011, 2010 and
2009 was $6.49, $3.23 and $6.43, respectively. The total fair value of stock options that vested during the year ended December
31, 2011, 2010 and 2009 was $26.7 million, $41.7 million, and $47.1 million, respectively.
As of December 31, 2011, there was approximately $32.7 million of unrecognized stock option compensation cost related
to unvested share-based compensation arrangements, which is expected to be recognized over a weighted average period of
approximately 2.49 years.