E-Z-GO 2009 Annual Report Download - page 83

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Notes to the Consolidated Financial Statements
74
The weighted-average assumptions used in our Black-Scholes option-pricing model for awards issued during the respective periods are
as follows:
2009 2008 2007
Dividend yield 1% 2% 2%
Expected volatility 50% 30% 30%
Risk-free interest rate 2% 3% 5%
Expected term (in years) 5.0 5.1 5.5
The following table summarizes information related to stock option activity for the respective periods:
(In millions) 2009 2008 2007
Intrinsic value of options exercised $ — $ 28 $ 85
Cash received from option exercises — 40 103
Actual tax benefit realized for tax deductions from option exercises — 10 27
Our income taxes payable for federal and state purposes have been reduced by the tax benefits we receive from employee stock options. The
income tax benefits we receive for certain stock options are calculated as the difference between the fair market value of the stock issued at the
time of exercise and the option price, tax effected. The tax impact of the tax deduction in excess of the related deferred taxes is presented in the
Consolidated Statements of Cash Flows as financing activities.
Stock option activity under the Plan is summarized as follows:
2009 2008 2007
Weighted- Weighted- Weighted-
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
(Shares in thousands)
Options Price Options Price Options Price
Outstanding at beginning of year 9,021 $ 38.51 9,024 $ 35.37 10,840 $ 31.88
Granted 859 6.50 1,692 53.46 1,860 45.87
Exercised (10) 19.45 (1,147) 34.26 (3,410) 29.93
Canceled, expired or forfeited (1,325) 36.16 (548) 41.86 (266) 36.26
Outstanding at end of year 8,545 $ 35.67 9,021 $ 38.51 9,024 $ 35.37
Exercisable at end of year 6,177 $ 35.82 5,774 $ 32.45 5,395 $ 29.63
At January 2, 2010, our outstanding options had an aggregate intrinsic value of $10 million and a weighted-average remaining contractual life of
six years. Our exercisable options had no significant aggregate intrinsic value and a weighted-average remaining contractual life of five years at
January 2, 2010.
Restricted Stock Units
For restricted stock units paid in stock that were issued prior to 2008, the fair value is based on the trading price of our common stock on the grant
date, less required adjustments to reflect the fair value of the awards as dividends are not paid or accrued on these units until the restricted stock
units vest. For restricted stock units issued in 2009 and 2008, cash dividends are paid on a quarterly basis prior to vesting. The fair value of the
units paid in stock is based solely on the trading price of our common stock on the grant date. The weighted-average grant date fair value of
restricted stock units paid in stock that were granted in 2008 and 2007 was approximately $53 and $45 per share, respectively. No restricted stock
units paid in stock were granted in 2009.