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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
69
Weighted-average assumptions used to estimate the fair value of employee stock options were as follows:
Years Ended March 31,
2010 2009 2008
Expected stock price volatility 33% 27% 24%
Expected dividend yield 0.7% 0.6% 0.4%
Risk-free interest rate 2% 3% 5%
Expected life (in years) 5 5 5
The following is a summary of options outstanding at March 31, 2010:
Options Outstanding Options Exercisable
Range of Exercise
Prices
Number of
Options
Outstanding At
Year End
(In millions)
Weighted-
Average
Remaining
Contractual Life
(Years)
Weighted-
Average
Exercise
Price
Number of
Options
Exercisable at
Year End
(In millions)
Weighted-
Average
Exercise Price
$ 27.35 - $ 41.02 11 3 $ 35.68 8 $ 34.53
$ 41.03 - $ 54.70 3 3 45.95 3 45.87
$ 54.71 - $ 68.37 2 5 59.55 1 60.32
16 3 41.26 12 38.85
The following table summarizes stock option activity during 2010, 2009 and 2008:
(In millions, except per share data and
years) Shares
Weighted-
Average Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value (2)
Outstanding, March 31, 2007 36 $ 46.32 4 $ 601
Granted 1 62.12
Exercised (9) 36.43
Cancelled and forfeited (2) 69.35
Outstanding, March 31, 2008 26 48.59 3 298
Granted 1 57.81
Exercised (1) 33.49
Cancelled and forfeited (7) 78.35
Outstanding, March 31, 2009 19 39.28 3 33
Granted 2 40.59
Exercised (5) 33.34
Outstanding, March 31, 2010 16 41.26 3 394
Vested and expected to vest (1) 16 40.67 3 393
Exercisable, March 31, 2010 12 38.85 2 325
(1) The number of options expected to vest takes into account an estimate of expected forfeitures.
(2) The aggregate intrinsic value is calculated as the difference between the period-end market price of the Company’s common
stock and the option exercise price, times the number of “in-the-money” option shares.