Apple 2005 Annual Report Download - page 91

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9—Stock-Based Compensation (Continued)
The assumptions used for each of the last three fiscal years and the resulting estimate of weighted-average fair value per share of options
granted during those years are as follows:
For purposes of the pro forma disclosures provided pursuant to SFAS No. 123, the expected volatility assumptions used by the Company are
based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life
of the Company’s stock options and other relevant factors including implied volatility in market traded options on the Company’s common
stock and the impact of unusual fluctuations not reasonably expected to recur on the historical volatility of the Company’s common stock. The
Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to
employees.
Note 10—Commitments and Contingencies
Lease Commitments
The Company leases various equipment and facilities, including retail space, under noncancelable operating lease arrangements. The Company
does not currently utilize any other off-balance-sheet financing arrangements. The major facility leases are for terms of 5 to 15 years and
generally provide renewal options for terms of 3 to 5 additional years. Leases for retail space are for terms of 5 to 20 years, the majority of
which are for 10 years, and often contain multi-year renewal options. As of September 24, 2005, the Company’s total future minimum lease
payments under noncancelable operating leases were $865 million, of which $606 million related to leases for retail space.
89
2005
2004
2003
Expected life of stock options
3.5
-
3.6 years
3.5 years
3.5
-
4 years
Expected life of stock purchases
6 months
6 months
6 months
Interest rate
—
stock options
3.13%
-
3.88
%
2.33%
-
3.15
%
2.14%
-
2.45
%
Interest rate
—
stock purchases
1.67%
-
3.30
%
0.96%
-
1.67
%
1.10%
-
1.77
%
Volatility
—
stock options
39%
-
40
%
40
%
40%
-
63
%
Volatility
—
stock purchases
32%
-
48
%
32%
-
44
%
35%
-
44
%
Dividend yields
—
—
—
Weighted-
average fair value of options granted during the
year
$
14.41
$
3.69
$
3.32
Weighted-average fair value of stock purchases
during the year
$
7.55
$
2.78
$
2.12