Walmart 2006 Annual Report Download - page 44

Notes to Consolidated Financial Statements
WAL-MART
42
A summary of the stock option award activity for fi scal 2006 is presented below:
Weighted-Average Weighted-Average Aggregate
Options Shares Exercise Price Remaining Life in Years Intrinsic Value
Outstanding at January 31, 2005 68,115,000 $ 46.79
Granted 4,281,000 50.74
Exercised (4,208,000) 23.26
Forfeited or expired (8,645,000) 51.92
Outstanding at January 31, 2006 59,543,000 $48.02 6.5 $163,326,000
Exercisable at January 31, 2006 32,904,000 $45.20 5.3 $162,240,000
The weighted-average grant-date fair value of options granted during the fi scal years ended January 31, 2006, 2005 and 2004, was
$12.29, $11.92 and $14.89, respectively. The total intrinsic value of options exercised during the years ended January 31, 2006, 2005
and 2004, was $108.3 million, $221.6 million and $231.0 million, respectively.
Under the Plan, the Company grants various types of awards of restricted (non-vested) stock to certain associates. These grants include
awards for shares that vest based on the passage of time, performance criteria, or both. Vesting periods vary. The restricted stock awards
may be settled in stock, or deferred as stock or cash, based upon the associate’s election. Consequently, these awards are classifi ed as lia-
bilities in the accompanying balance sheets unless the associate has elected for the award to be settled or deferred in stock. The fair value
of the restricted stock liabilities is remeasured each reporting period. The total liability for restricted stock awards at January 31, 2006,
was $61.1 million.
A summary of the Company’s restricted (non-vested) stock award activity for fi scal 2006 is presented below:
Weighted-Average
Non-Vested Stock Awards Shares Grant-Date Fair Value
Restricted Stock Awards at January 31, 2005 3,423,000 $ 46.63
Granted 2,955,000 $ 44.81
Vested (383,000) $ 44.78
Forfeited (551,000) $ 45.02
Restricted Stock Awards at January 31, 2006 5,444,000 $46.08
As of January 31, 2006, there was $157.9 million of total unrecog-
nized compensation cost related to restricted stock granted under
the Plan, which is expected to be recognized over a weighted-
average period of 5.9 years. The total fair value of shares vested
during the fi scal years ended January 31, 2006, 2005, and 2004,
was $19.9 million, $33.9 million and $8.0 million, respectively.
During fi scal 2005, the Company began issuing performance share
awards under the Plan, the vesting of which is tied to the achieve-
ment of performance criteria. These awards accrue to the associate
based on the extent to which revenue growth and return on invest-
ment goals are attained or exceeded over a one- to three-year period.
Based on the extent to which the targets are achieved, vested shares
may range from 0% to 150% of the original award amount. Because
the performance shares may be settled in stock or cash, the perfor-
mance shares are accounted for as liabilities in the accompanying
balance sheets. Outstanding performance shares, the related liabil-
ity and unrecognized compensation cost as of January 31, 2006
and 2005, were not signifi cant.
The Company’s United Kingdom subsidiary, ASDA, also offers
two other stock option plans to its associates. The fi rst plan, The
ASDA Colleague Share Ownership Plan 1999 (“CSOP”), grants
options to certain associates. Options granted under the CSOP
Plan generally expire six years from the date of grant, with half
vesting on the third anniversary of the grant and the other half on
the sixth anniversary of the date of grant. Shares in the money at the
vesting date are exercised while shares out of the money at the vest-
ing date expire. The second plan, The ASDA Sharesave Plan 2000
(“Sharesave”), grants options to certain associates at 80% of mar-
ket value on the date of grant. Sharesave options become exercis-
able after either a three-year or fi ve-year period and generally lapse
six months after becoming exercisable. Outstanding options under
these plans as well as the related aggregate intrinsic value as of
January 31, 2006, were not signifi cant.
8 LITIGATION
The Company is involved in a number of legal proceedings. In
accordance with Statement of Financial Accounting Standards
No. 5, “Accounting for Contingencies,” the Company has made
accruals with respect to these matters, where appropriate, which
are refl ected in the Company’s consolidated fi nancial statements.
The Company may enter into discussions regarding settlement
of these matters, and may enter into settlement agreements, if
it believes settlement is in the best interests of the Company’s
shareholders. The matters, or groups of related matters, discussed
below, if decided adversely to or settled by the Company, indi-
vidually or in the aggregate, may result in liability material to the
Company’s fi nancial condition or results of operations.