EMC 2009 Annual Report Download - page 86

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The table below presents the net change in amounts capitalized or accrued in 2009 and 2008 for the following items (in thousands):
Increased (decreased)
during the year ended
December 31, 2009
Increased (decreased)
during the year ended
December 31, 2008
Inventory $ 1,254 $ 686
Other assets (capitalized software development costs) 1,435 16,749
Accrued expenses (accrued warranty expenses) (1,835) (4,730)
As of December 31, 2009, the total unrecognized after-tax compensation cost for stock options, restricted stock and restricted stock units was $955.0
million. This non-cash expense will be recognized through 2014 with a weighted average remaining period of 1.3 years.
Fair Value of EMC Information Infrastructure Options
The fair value of each option granted during 2009, 2008 and 2007 was estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions:
For the Year Ended
December 31,
EMC Stock Options 2009 2008 2007
Dividend yield None None None
Expected volatility 35.4% 34.4% 33.8%
Risk-free interest rate 2.4% 2.8% 3.6%
Expected term (in years) 4.5 4.4 4.2
Weighted-average fair value at grant date $ 5.04 $ 4.82 $ 6.29
For the Year Ended
December 31,
EMC Employee Stock Purchase Plan 2009 2008 2007
Dividend yield None None None
Expected volatility 58.1% 40.0% 25.5%
Risk-free interest rate 0.4% 2.6% 5.0%
Expected term (in years) 0.5 0.5 0.5
Weighted-average fair value at grant date $ 3.16 $ 4.32 $ 3.53
Expected volatilities are based on our historical stock prices and implied volatilities from traded options in our stock. We use EMC historical data to
estimate the expected term of options granted within the valuation model. The risk-free interest rate was based on a treasury instrument whose term is
consistent with the expected life of the stock options. The assumptions for 2009 for the EMC Employee Stock Purchase Plan include only the January 1, 2009
grant due to the elimination of the look-back feature as of July 1, 2009.
Fair Value of VMware Options
The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2009, 2008 and 2007 was
estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
For the Year Ended
December 31,
VMware Stock Options 2009 2008 2007
Dividend yield None None None
Expected volatility 36.1% 39.4% 39.2%
Risk-free interest rate 1.9% 2.5% 4.9%
Expected term (in years) 3.7 3.4 3.4
Weighted-average fair value at grant date $ 12.18 $ 17.88 $ 27.88
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