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UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 16 STOCK-BASED COMPENSATION (Continued)
retirement have 90 days (or one year if they satisfy certain requirements) within which to exercise their
vested stock options. The exercise price of options equals the market value of U.S. Cellular Common
Shares on the date of grant.
U.S. Cellular estimated the fair value of stock options granted during 2011, 2010, and 2009 using the
Black-Scholes valuation model and the assumptions shown in the table below.
2011 2010 2009
Expected life ...................... 4.3 years 0.9 - 8.0 years 3.9 years
Expected volatility ................... 43.4% - 44.8% 26.9% - 43.9% 40.3% - 44.2%
Dividend yield ..................... 0% 0% 0%
Risk-free interest rate ................ 0.7% - 2.0% 0.4% - 3.1% 1.2% - 2.2%
Estimated annual forfeiture rate ......... 0.0% - 7.8% 0.0% - 8.4% 6.9%
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, 2011, 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, 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
(1,151,000 exercisable) ................ $54.64
Granted ......................... 595,000 51.70 $19.42
Exercised ........................ (173,000) 37.50 $2,099,000
Forfeited ......................... (72,000) 45.97
Expired .......................... (175,000) 57.05
Outstanding at December 31, 2011 ....... 2,437,000 50.10 $4,423,000 6.9
(1,321,000 exercisable) ................ 53.68 $2,361,000 5.5
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, 2011.
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