US Cellular 2010 Annual Report Download - page 73

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UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15 STOCK-BASED COMPENSATION (Continued)
U.S. Cellular estimated the fair value of stock options granted during 2010, 2009, and 2008 using the
Black-Scholes valuation model and the assumptions shown in the table below.
2010 2009 2008
Expected life ...................... 0.9 - 8.0 Years 3.9 Years 3.7 Years
Expected volatility ................... 26.9% - 43.9% 40.3% - 44.2% 28.1% - 40.3%
Dividend yield ..................... 0% 0% 0%
Risk-free interest rate ................ 0.4% - 3.1% 1.2% - 2.2% 1.2% - 3.5%
Estimated annual forfeiture rate ......... 0.0% - 8.4% 6.9% 11.3%
The fair value of options is recognized as compensation cost using an accelerated attribution method
over the requisite service periods of the awards, which is generally the vesting period.
A summary of U.S. Cellular stock options outstanding (total and portion exercisable) and changes during
the three years ended December 31, 2010, is presented in the table below:
Weighted
Average
Weighted Weighted Remaining
Average Average Aggregate Contractual
Number of Exercise Grant Date Intrinsic Life
Options Price Fair Value Value (in years)
Outstanding at December 31, 2007 ...... 1,399,000 $51.65
(544,000 exercisable) ................ 38.21
Granted ........................ 685,000 56.99 $14.08
Exercised ....................... (415,000) 37.90 $ 7,487,000
Forfeited ........................ (38,000) 61.40
Expired ......................... (5,000) 63.56
Outstanding at December 31, 2008 ...... 1,626,000 $57.15
(624,000 exercisable) ................ 51.56
Granted ........................ 748,000 34.21 $11.75
Exercised ....................... (181,000) 34.01 $ 821,000
Forfeited ........................ (130,000) 47.98
Expired ......................... (34,000) 56.84
Outstanding at December 31, 2009 ...... 2,029,000 $51.37
(1,046,000 exercisable) ............... 54.40
Granted ........................ 831,000 41.98 $13.75
Exercised ....................... (317,000) 38.60 $ 1,555,000
Forfeited ........................ (88,000) 44.28
Expired ......................... (193,000) 61.50
Outstanding at December 31, 2010 ...... 2,262,000 $49.12 $13,421,000 6.8
(1,151,000 exercisable) ............... $54.64 $ 3,782,000 5.1
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference
between U.S. Cellular’s closing stock price and the exercise price multiplied by the number of
in-the-money options) that was received by the option holders upon exercise or that would have been
received by option holders had all options been exercised on December 31, 2010.
Long-Term Incentive Plan—Restricted Stock Units—U.S. Cellular grants restricted stock unit awards,
which generally vest after three years, to key employees.
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