Dell 2009 Annual Report Download - page 96

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other information pertaining to restricted stock that vested during each fiscal year is as follows:
Fiscal Year Ended
January 29, January 30, February 1,
2010 2009 2008
(in millions, except per option data)
Total estimated grant date fair value of restricted stock awards vested $ 297 $ 252 $ 103
Total estimated vest date fair value of restricted stock awards vested $ 134 $ 197 $ 87
At January 29, 2010, January 30, 2009, and February 1, 2008, there was $393 million, $507 million, and $600 million, respectively, of
unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards. These awards
are expected to be recognized over a weighted-average period of approximately 1.8, 2.0, and 1.9 years, respectively.
Stock-based Compensation Expense
Stock-based compensation expense was allocated as follows:
Fiscal Year Ended
January 29, January 30, February 1,
2010 2009 2008
(in millions)
Stock-based compensation expense:
Cost of net revenue $ 47 $ 62 $ 62
Operating expenses 265 356 374
Stock-based compensation expense before taxes 312 418 436
Income tax benefit (91) (131) (127)
Stock-based compensation expense, net of income taxes $ 221 $ 287 $ 309
Stock-based compensation in the table above includes $104 million of expense for accelerated options and a reduction of $1 million for
the release of the accrual for expired stock options in Fiscal 2009 and $107 million of cash expense in Fiscal 2008 for expired stock
options, as previously discussed.
Valuation Information
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 the terms and conditions of the stock awards granted to employees. The dividend yield of zero is based on the fact that Dell has never
paid cash dividends and has no present intention to pay cash dividends.
92