Quest Diagnostics 2006 Annual Report Download - page 114

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Transactions under the stock option plans for 2006, 2005 and 2004 were as follows:
Shares
(in
thousands)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
Shares
(in
thousands)
Weighted
Average
Exercise
Price
Shares
(in
thousands)
Weighted
Average
Exercise
Price
2006 2005 2004
Options outstanding, beginning of
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,048 $34.33 16,752 $29.49 20,480 $22.43
Options granted . . . . . . . . . . . . . . . . . . . . 2,501 52.57 2,777 49.66 4,428 40.85
Options exercised . . . . . . . . . . . . . . . . . . (3,835) 27.40 (3,990) 25.87 (7,042) 16.06
Options forfeited and canceled . . . . . . (465) 45.90 (491) 24.48 (1,114) 29.65
Options outstanding, end of year . . . . 13,249 $39.44 5.8 $180 15,048 $34.33 16,752 $29.49
Exercisable, end of year . . . . . . . . . . . . 8,154 $33.50 5.6 $159 8,660 $28.81 8,516 $23.95
Vested and expected to vest at
December 31, 2006 . . . . . . . . . . . . . . 13,006 $39.21 5.8 $180
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference
between the Company’s closing common stock price on the last trading day of 2006 and the exercise price,
multiplied by the number of in-the-money options) that would have been received by the option holders had all
option holders exercised their options on December 31, 2006. This amount changes, based on the fair market
value of the Company’s common stock. Total intrinsic value of options exercised in 2006 and 2005 was $106
million and $98 million, respectively.
As of December 31, 2006, there was $19 million of unrecognized stock-based compensation cost related to
stock options which is expected to be recognized over a weighted average period of 1.7 years.
The following relates to options outstanding at December 31, 2006:
Range of
Exercise Price
Shares
(in thousands)
Weighted Average
Remaining
Contractual Life
(in years)
Weighted
Average
Exercise Price
Shares
(in thousands)
Weighted
Average
Exercise Price
Options Outstanding Options Exercisable
$ 3.97 - $ 4.44 ...... 44 1.2 $ 4.06 44 $ 4.06
$ 6.46 - $ 9.58 ...... 394 2.7 6.91 394 6.91
$15.03 - $22.38 ...... 214 3.4 15.30 214 15.30
$23.27 - $34.79 ...... 3,129 5.4 26.91 3,129 26.91
$35.01 - $52.50 ...... 8,773 6.2 44.97 4,204 41.33
$52.62 - $61.68 ...... 695 5.7 54.16 169 53.27
The following summarizes the activity relative to incentive stock awards, including restricted stock awards
and performance share units, for 2006, 2005 and 2004:
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
Shares
(in thousands)
Shares
(in thousands)
2006 2005 2004
Incentive shares outstanding, beginning of year . . 107 $49.71 - 576
Incentive shares granted ........................ 1,020 52.32 113 -
Incentive shares vested . ........................ (39) 50.26 (1) (538)
Incentive shares forfeited and canceled .......... (56) 51.92 (5) (38)
Adjustment to estimate of performance share
units to be earned ............................ (582) 51.94 - -
Incentive shares outstanding, end of year . . ...... 450 $52.41 107 -
F-27
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)