Southwest Airlines 2008 Annual Report Download - page 87

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The fair value of each option grant is estimated on the date of grant using a modified Black-Scholes option
pricing model. The following table provides the ranges of assumptions and weighted-average assumptions used
for grants made under the fixed option plans for the current and prior years, as well as the range of fair values
and weighted-average fair value of options granted for 2008, 2007, and 2006:
2008 2007 2006
Wtd-average risk-free interest rate ..................... 4.2% 3.7% 4.6%
Range of risk-free interest rates ........................ 0.9% - 5.13% 0.5% - 5.37% 4.26% - 5.24%
Wtd-average expected life of option (years) .............. 5.1 4.9 5.0
Range of expected life of options (years) ................ 1.0 - 6.0 0.5 - 8.0 1.5 - 8.0
Wtd-average expected stock volatility .................. 25% 26% 26%
Range of expected stock volatilities .................... 24% - 36% 24% - 27% 25% - 27%
Wtd-average expected dividend yield ................... 0.11% 0.09% 0.07%
Range of expected dividend yields ..................... 0.10% - 0.20% 0.07% - 0.12% 0.06% - 0.10%
Wtd-average stock option fair value .................... $ 3.59 $ 4.28 $ 5.47
Range of stock option fair values ...................... $ 1.69 - $4.04 $ 0.67 -$6.33 $ 2.48 - $6.99
Aggregated information regarding the Company’s fixed stock option plans is summarized below:
Collective bargaining plans
Options
(000)
Wtd. average
exercise price
Wtd. average
remaining
contractual
term
Aggregate intrinsic
value (millions)
Outstanding December 31, 2005 .................. 105,244 $ 11.65
Granted .................................... 1,025 16.64
Exercised .................................. (24,632) 7.91
Surrendered ................................ (1,427) 14.25
Outstanding December 31, 2006 .................. 80,210 $ 12.83
Granted .................................... 751 14.89
Exercised .................................. (14,145) 7.17
Surrendered ................................ (3,440) 16.11
Outstanding December 31, 2007 .................. 63,376 $ 13.93
Granted .................................... 505 12.71
Exercised .................................. (5,933) 13.06
Surrendered ................................ (2,536) 16.45
Outstanding December 31, 2008 .................. 55,412 $ 13.90 3.0 $—
Vested or expected to vest at December 31, 2008 ..... 55,348 $ 13.90 3.0 $—
Exercisable at December 31, 2008 ................. 54,950 $ 13.90 3.0 $—
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