Western Digital 2006 Annual Report Download - page 71

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2004, the pro forma income per share information is estimated using a binomial model. Both the Black-Scholes-Merton
and the binomial option pricing models require the input of highly subjective assumptions such as the expected stock
price volatility and expected employee exercise behavior. The resulting fair value of employee stock options is amortized
on a straight-line basis over the service period of the options.
Stock Options
The following table summarizes activity under the Stock Plans (in millions, except per share amounts):
Number
of Shares
Weighted Average
Exercise Price
Per Share
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic
Value
Options outstanding at June 27, 2003 . . . 25.0 $ 6.89
Granted ........................ 4.4 11.70
Exercised ....................... (3.0) 5.08
Canceled or expired ................ (1.3) 10.94
Options outstanding at July 2, 2004 . . . . 25.1 7.75
Granted ........................ 4.4 10.05
Exercised ....................... (9.2) 5.26
Canceled or expired ................ (0.8) 9.07
Options outstanding at July 1, 2005 . . . . 19.5 9.39
Granted ........................ 1.2 17.22
Exercised ....................... (7.6) 8.36
Canceled or expired ................ (0.7) 11.79
Options outstanding at June 30, 2006 . . . 12.4 $10.65 6.10 $123.6
Exercisable at June 30, 2006 .......... 7.4 $ 9.67 4.83 $ 83.9
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and
the quoted price of the Company’s common stock for those awards that have an exercise price currently below the quoted
price. As of June 30, 2006, the Company had options outstanding to purchase an aggregate of 11.3 million shares with an
exercise price below the quoted price of the Company’s stock resulting in an aggregate intrinsic value of $123.6 million.
During the years ended June 30, 2006 and July 1, 2005, the aggregate intrinsic value of options exercised under the
Company’s stock option plans was $84.1 million and $62.2 million, respectively, determined as of the date of exercise.
65
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)