WeightWatchers 2008 Annual Report Download - page 83

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Stock Option Awards
Pursuant to the option components of the Stock Plans, the Company’s Board of Directors authorized the
Company to enter into agreements under which certain employees received stock options. The options are
exercisable based on the terms outlined in the agreements. The options vest over a period of three to five years
and the expiration terms range from five to ten years. Options outstanding at January 3, 2009 have an exercise
price between $2.13 and $56.21 per share.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing
model with the weighted average assumptions noted in the following table. Expected volatility is based on the
historical volatility of the Company’s stock with certain time periods excluded due to historical events which are
not expected to recur. Since the Company’s option exercise history is limited, it has estimated the expected term
of option grants to be the midpoint between the vesting period and the contractual term of each award, as is
permitted under Staff Accounting Bulletin No. 107 and Staff Accounting Bulletin No. 110, both entitled “Share-
Based Payment.” The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant
which most closely corresponds to the expected term of the option. The dividend yield is based on our historic
average dividend yield.
January 3,
2009
December 29,
2007
December 30,
2006
Dividend yield .......................................... 1.5% 1.5% 1.4%
Volatility .............................................. 26.8% 26.5% 27.1%
Risk-free interest rate .................................... 2.0% – 3.9% 3.5% – 4.9% 4.3% – 5.2%
Expected term (years) .................................... 6.5 7.0 7.4
A summary of option activity under the Stock Plans for the year ended January 3, 2009 is presented below:
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Yrs.)
Aggregate
Intrinsic
Value
Outstanding at December 29, 2007 ............................ 2,225 $42.69
Granted ............................................. 641 $43.76
Exercised ............................................ (255) $31.63
Canceled ............................................ (344) $46.14
Outstanding at January 3, 2009 ............................... 2,267 $43.71 6.7 $1,821
Exercisable at January 3, 2009 ............................... 940 $40.83 4.2 $1,821
The weighted-average grant-date fair value of options granted was $12.08, $15.41 and $15.40 for the years
ended January 3, 2009, December 29, 2007 and December 30, 2006, respectively. The total intrinsic value of
options exercised was $3,026, $28,876 and $17,864 for the years ended January 3, 2009, December 29, 2007 and
December 30, 2006, respectively.
Cash received from options exercised during the years ended January 3, 2009, December 29, 2007 and
December 30, 2006 was $8,075, $18,563 and $5,779, respectively. The tax benefits realized from options
exercised and RSUs vested totaled $1,504, $11,919 and $7,777 for the years ended January 3, 2009,
December 29, 2007 and December 30, 2006, respectively.
F-18