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PACCAR Inc and Subsidiaries
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007 (currencies in millions)
The following tables summarize information about options outstanding at December 31, 2009:
remaining average
number contractual exercise
range of exercise prices of shares life in years price*
Exercisable:
$ 8.25-10.20 464,600 1.1 $ 10.16
12.54-13.96 958,300 2.6 13.28
25.31 437,800 4.0 25.31
32.11-32.23 1,340,700 5.6 32.17
3,201,400 3.8 22.39
Not Exercisable:
44.56 624,400 7.1 44.56
45.74 601,700 8.1 45.74
30.81 1,140,200 9.1 30.81
2,366,300 8.3 38.23
5,567,700 5.7 $ 29.12
*Weighted Average
The fair value of restricted stock awards was determined based on the stock price at the award date. Certain
restricted stock awards granted in 2008 and 2007 contain conditions tied to the Company’s performance over a five
year period. Compensation expense for awards with performance conditions is recorded only when it is probable
that the requirements will be achieved. Compensation expense related to restricted stock awards with only service
conditions is recognized over the requisite service period.
Realized tax benefits for 2009 of $7.1 and 2008 of $3.7 related to the excess of deductible amounts over compensation
costs recognized have been classified as a financing cash flow. Stock based compensation expense was $9.5, $10.2 and
$12.3 in 2009, 2008 and 2007 respectively. As of December 31, 2009, there was $7.7 of unrecognized compensation
cost related to unvested stock options, which is expected to be recognized over a remaining weighted-average
vesting period of 1.7 years. Unrecognized compensation cost at December 31, 2009, related to unvested restricted
stock awards of $1.0 is expected to be recognized over a remaining weighted-average vesting period of 2.2 years.
The estimated fair value of stock options granted during 2009, 2008 and 2007 was $8.47, $8.58 and $10.10 per share.
These amounts were determined using the Black-Scholes-Merton option-pricing model, which values options based
on the stock price at the grant date and the following assumptions:
2009 2008 2007
Risk-free interest rate 2.00% 2.86% 4.80%
Expected volatility 39% 29% 30%
Expected dividend yield 3.0% 4.0% 4.0%
Expected term 5 years 5 years 5 years