Best Buy 2012 Annual Report Download - page 98

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$ in millions, except per share amounts or as otherwise noted
98
Time-Based Share Awards
The fair value of time-based share awards is determined based on the closing market price of our stock on the date of grant. A
summary of the status of our nonvested time-based share awards at March 3, 2012, and changes during fiscal 2012, is as
follows:
Time-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at February 26, 2011 2,171,000 $ 36.60
Granted 2,647,000 25.65
Vested (665,000) 35.01
Forfeited/Canceled (229,000) 33.55
Outstanding at March 3, 2012 3,924,000 $ 29.63
At March 3, 2012, there was $80 of unrecognized compensation expense related to nonvested time-based share awards that we
expect to recognize over a weighted-average period of 2.6 years.
Employee Stock Purchase Plans
In fiscal 2012, 2011 and 2010, we estimated the fair value of stock-based compensation expense associated with our employee
stock purchase plans on the purchase date using the Black-Scholes option-pricing valuation model, with the following
assumptions:
Valuation Assumptions 2012 2011 2010
Risk-free interest rate(1) 0.1% 0.2% 0.3%
Expected dividend yield 2.4% 1.4% 1.5%
Expected stock price volatility(2) 38% 29% 53%
Expected life of employee stock purchase plan options (in months)(3) 666
(1) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of employee stock purchase plan shares.
(2) We consider both the historical volatility of our stock price as well as implied volatilities from exchange-traded options on our stock.
(3) Based on semi-annual purchase period.
In fiscal 2012, 2011 and 2010, 1.4 million, 1.3 million and 1.2 million shares, respectively, were purchased through our
employee stock purchase plans. The weighted-average fair values of shares purchased pursuant to the plans during fiscal 2012,
2011 and 2010, were $6.76, $9.54 and $11.34, respectively. At March 3, 2012, and February 26, 2011, plan participants had
accumulated $11 and $19, respectively, to purchase our common stock pursuant to these plans.
Earnings per Share
We compute our basic earnings per share based on the weighted-average number of common shares outstanding, and our
diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of
additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive
securities include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well as
common shares that would have resulted from the assumed conversion of our convertible debentures. During the fourth quarter
of fiscal 2012, we repurchased and redeemed all of the remaining outstanding convertible debentures (see Note 8, Debt). Since
the potentially dilutive shares related to the convertible debentures are included in the computation, the related interest expense,
net of tax, is added back to net earnings, as the interest would not have been paid if the convertible debentures had been
converted to common stock. Nonvested market-based share awards and nonvested performance-based share awards are
included in the average diluted shares outstanding each period if established market or performance criteria have been met at
the end of the respective periods.