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FINANCIALS
44
interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The model incorporates exer-
cise and post-vesting forfeiture assumptions based on an analysis of historical data. The expected life of the 2006 and
2005 grants is derived from the output of the lattice model. The weighted-average fair values of the individual options
granted during 2006 and 2005 were $15.61 and $16.06, respectively, determined using the following assumptions:
2006 2005
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0% 2.0%
Weighted-average volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0% 27.8%
Range of volatilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8%–27.0% 27.6%–30.7%
Risk-free interest rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6%–4.8% 2.5%–4.5%
Weighted-average expected life. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 years 7 years
Stock option activity during 2007 is summarized below:
Shares of Weighted-Average
Common Stock Weighted-Average Remaining
Attributable to Options Exercise Contractual Term Aggregate
(in thousands) Price of Options (in years) Intrinsic Value
Outstanding at January 1, 2007 . . . . . . . . . . . . . . . . 88,810 $69.38
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (283) 53.83
Forfeited or expired. . . . . . . . . . . . . . . . . . . . . . . . . . (7,378) 67.85
Outstanding at December 31, 2007 . . . . . . . . . . . . . 81,149 69.57 4.15 $8.4
Exercisable at December 31, 2007. . . . . . . . . . . . . . 72,100 71.15 3.73 8.4
A summary of the status of nonvested options as of December 31, 2007, and changes during the year then
ended, is presented below:
Weighted-Average
Shares Grant Date
(in thousands) Fair Value
Nonvested at January 1, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,172 $22.32
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,668) 26.03
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (455) 19.08
Nonvested at December 31, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,049 16.47
The intrinsic value of options exercised during 2007, 2006, and 2005 amounted to $1.5 million, $40.8 mil-
lion, and $131.9 million, respectively. The total grant date fair value of options vested during 2007, 2006, and 2005
amounted to $381.8 million, $249.1 million, and $265.5 million, respectively. We received cash of $15.2 million,
$66.2 million, and $105.9 million from exercises of stock options during 2007, 2006, and 2005, respectively, and
recognized related tax benefi ts of $0.4 million, $11.3 million, and $36.8 million during those same years.
As of December 31, 2007, the total remaining unrecognized compensation cost related to nonvested stock op-
tions amounted to $23.8 million, which will be amortized over the weighted-average remaining requisite service
period of 12 months.
Note 8: Other Assets and Other Liabilities
Our other receivables include income tax receivable, insurance recoverables, interest receivable, and a variety of
other items. The increase in other receivables is primarily attributable to an increase in income tax receivable.
Our sundry assets include our capitalized computer software, estimated insurance recoveries from our prod-
uct litigation (Note 13), deferred tax assets (Note 11), and a variety of other items. The decrease in sundry assets is
primarily attributable to a decrease in product liability recoverables and a decrease in deferred tax assets.
Our other current liabilities include product litigation, other taxes, and a variety of other items. The decrease
in other current liabilities is caused primarily by a decrease in product litigation liabilities.
Our other noncurrent liabilities include product litigation, deferred income from our collaboration and out-
licensing arrangements, and a variety of other items. The decrease in other noncurrent liabilities is primarily
attributable to a decrease in product litigation liabilities.