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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
77
Weighted-average assumptions used to estimate the fair value of employee stock options were as follows:
Years Ended March 31,
2014 2013 2012
Expected stock price volatility 22% 27% 27%
Expected dividend yield 0.7% 0.9% 1.0%
Risk-free interest rate 0.7% 0.8% 2.1%
Expected life (in years) 4 5 5
The following is a summary of stock options outstanding at March 31, 2014:
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
$ 35.53 – $ 69.00 3 2 $ 55.70 2 $ 53.76
69.01 – 169.44 3 5 96.35 1 84.81
6 3
The following table summarizes stock option activity during 2014:
(In millions, except per share data) Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value (2)
Outstanding, March 31, 2013 7 $ 65.79 4 $ 260
Granted 1 120.79
Exercised (2) 56.74
Outstanding, March 31, 2014 6 $ 78.07 4 $ 473
Vested and expected to vest (1) 5 $ 77.27 4 $ 472
Vested and exercisable, March 31, 2014 3 61.07 3 281
(1) The number of options expected to vest takes into account an estimate of expected forfeitures.
(2) The intrinsic value is calculated as the difference between the period-end market price of the Company’s common stock and the exercise price of “in-the-
money” options.
The following table provides data related to stock option activity:
Years Ended March 31,
(In millions, except per share data) 2014 2013 2012
Weighted-average grant date fair value per stock option $ 21.45 $ 19.63 $ 20.32
Aggregate intrinsic value on exercise $ 144 $ 107 $ 108
Cash received upon exercise $ 111 $ 106 $ 113
Tax benefits realized related to exercise $ 55 $ 41 $ 40
Total fair value of stock options vested $ 24 $ 24 $ 23
Total compensation cost, net of estimated forfeitures, related to unvested
stock options not yet recognized, pre-tax $ 29 $ 37 $ 40
Weighted-average period in years over which stock option compensation cost
is expected to be recognized 1 1 1