Dell 2010 Annual Report Download - page 107

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes stock option activity for the Stock Plans during Fiscal 2009:
Weighted-
Weighted- Average
Number Average Remaining Aggregate
of Exercise Contractual Intrinsic
Options Price Term Value
(in millions) (per share) (in years) (in millions)
Options outstanding — February 1, 2008 264 $ 32.30
Granted 13 19.71
Exercised (4) 19.08
Forfeited (4) 23.97
Cancelled/expired (39) 33.14
Options outstanding — January 30, 2009 230 $ 31.85
Vested and expected to vest (net of estimated forfeitures) — January 30, 2009(a)(b) 230 $ 31.86 3.9 $ -
Exercisable — January 30, 2009(a)(b) 230 $ 31.86 3.9 $ -
(a) For options vested and expected to vest and options exercisable, the aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the
difference between Dell's closing stock price on January 30, 2009, and the exercise price multiplied by the number of in-the-money options) that would have been
received by the option holders had the holders exercised their options on January 30, 2009. The intrinsic value changes based on changes in the fair market value of
Dell's common stock.
(b) No options were in-the-money at January 30, 2009
Other information pertaining to stock options for the Stock Plans is as follows:
Fiscal Year Ended
January 28, January 29, January 30,
2011 2010 2009
(in millions, except per option data)
Weighted-average grant date fair value of stock options
granted per option $ 5.01 $ 3.71 $ 5.87
Total fair value of options vested(a) $ 13 $ - $ 187
Total intrinsic value of options exercised(b) $ 7 $ - $ 15
(a) Includes the $104 million of charges for accelerated options in Fiscal 2009.
(b) The total intrinsic value of options exercised represents the total pre-tax intrinsic value (the difference between the stock price at exercise and the exercise price
multiplied by the number of options exercised) that was received by the option holders who exercised their options during the fiscal year.
At January 28, 2011, January 29, 2010, and January 30, 2009, there was $65 million, $28 million, and $1 million of total unrecognized
stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.0 years,
2.2 years, and 2.3 years, respectively.
Valuation of Stock Options
Dell uses the Black-Scholes option pricing model to estimate the fair value of stock options at grant date. The estimated fair values
incorporate various assumptions, including volatility, expected term, and risk-free interest rates. Expected volatility is based on a blend of
implied and historical volatility of Dell's common stock over the most recent period commensurate with the estimated expected term of
Dell's stock options. Dell uses this blend of implied and historical volatility, as well as other economic data, because management
believes such volatility is more representative of prospective trends. The expected term of an award is based on historical experience and
on
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