Sears 2006 Annual Report Download - page 86

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Given the Company’s limited history, the expected volatility factors were determined based on average
volatilities calculated in relation to similar entities, including historical Kmart and Sears.
millions 2005 2004
Aggregate fair value of options granted based on weighted average fair value
at date of grant ................................................ 11 6
Aggregate intrinsic value of options exercised ......................... 145 N/A
The Company has granted restricted stock awards to certain associates. These restricted stock awards
typically vest in full three years from the date of grant, provided the grantee remains employed by the Company
as of the vesting date. The fair value of these awards is equal to the market price of the Company’s common
stock on the date of grant. The Company does not currently have a program that provides for restricted stock
awards on an annual basis. Changes in restricted stock awards for fiscal 2006, fiscal 2005, and fiscal 2004 were
as follows:
2006 2005 2004
(Shares in thousands) Shares
Weighted-
Average
Fair Value
on Date
of Grant Shares
Weighted-
Average
Fair Value
on Date
of Grant Shares
Weighted-
Average
Fair Value
on Date
of Grant
Beginning of year balance ...................... 242 $112.48 147 $ 48.66 111 $26.90
Converted from Sears to Sears Holdings ........... — — 250 124.83 — —
Granted .................................... 209 149.11 83 124.83 83 66.39
Vested ..................................... (132) 119.05 (141) 90.84 (47) 28.31
Forfeited .................................... (46) 136.37 (97) 94.93 — —
End of year balance ....................... 273 $133.79 242 $112.48 147 $48.66
millions 2006 2005 2004
Aggregate fair value of shares converted to Sears Holdings from Sears based
on weighted average fair value at date of Merger ..................... $— $32 $—
Aggregate fair value of shares granted based on weighted average fair value at
date of grant .................................................. 31 11 6
Aggregate fair value of shares vesting during period ..................... 20 18 1
Aggregate fair value of shares forfeited during period .................... 7 13 —
Common Share Repurchase Program
During fiscal 2006, the Company repurchased approximately 6 million of its common shares pursuant to its
common share repurchase program at a total cost of approximately $806 million, or an average price of $132.94
per share. As of February 3, 2007, the Company had approximately $604 million of remaining authorization
under this program. The program has no stated expiration date.
Other Transactions
As discussed in Note 7, on January 31, 2005, ESL affiliates converted outstanding Notes and six month
accrued interest into an aggregate of 6.3 million shares of Kmart common stock. During fiscal 2005, ESL
affiliates and other investors exercised options to purchase approximately 6.7 million shares of Holdings
common stock for approximately $86 million.
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