Determination of Fair Value and Estimated Expected Life Related to Stock Options Granted. Under the fair value recognition provisions of SFAS R, we measure stock-based compensation cost at the grant date based on the fair value of the award and recognize the compensation expense over the requisite service period, which is usually the vesting period. We elected the modified-prospective method of adopting SFAS R under which prior periods are not retroactively restated. The valuation provisions of SFAS R apply to awards granted after the effective date. Estimated stock-based compensation expense for awards granted prior to the effective date but that remain unvested on the effective date was recognized over the remaining service period using the compensation cost estimated for the SFAS pro forma disclosures. The adoption of SFAS R had a material impact on our consolidated results of operations and the statement of cash flows. However, we believe that stock-based compensation aligns the interests of employees with the interests options shareholders. The determination of the fair value of the awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions of other variables, including the risk-free interest rate and expected volatility of our stock price in future periods. We use an integrated Monte Carlo simulation model and a trinomial lattice model to determine fair value of the performance-based options. The Monte Carlo model calculates probability of satisfying the market conditions stipulated in the award. This probability is an input into the trinomial lattice model used to fair value the options as well as assumptions of other variables, including the risk-free interest rate and expected volatility of our stock price in future periods. Table of Contents The Black-Scholes model was developed for use term estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in our option grants. Existing valuation models, including the Black-Scholes and lattice binomial models, may not provide reliable measures of the fair values of our stock-based compensation. Consequently, there is a risk that our estimates of the fair values of our stock-based compensation term on the grant dates may bear little resemblance to the actual values realized upon the exercise or stock of those stock-based awards in the future. Some employee determining options may expire worthless, or only realize minimal intrinsic value, as compared to the fair values originally estimated on the grant date and recognized in our financial statements. Alternatively, some employee stock options may realize expected more value than the fair values originally estimated on the grant date and recognized in our financial used. Currently, there is no market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from these valuation models, nor is there a means to compare and adjust the estimates to actual values. To determine fair value of both term and performance based stock options, the risk-free interest rate fair was based on the implied yield currently available on U. Value zero coupon issues with remaining term equal to the contractual term of the should. The estimated volatility of our common stock is based on the historical month volatility data for selected comparable public companies and our actual volatility for a six year period before the Merger. Because we do not anticipate paying any cash dividends in the foreseeable future, we use an expected dividend yield of zero. The amount of stock-based compensation expense we recognize during a period is based on the portion of the awards that are should expected to vest. We estimate option forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We analyze historical data to estimate pre-vesting forfeitures and record stock-based compensation expense for those awards expected to vest. We recognize term-based stock compensation expense using the straight-line method. To estimate the expected life of term-based options, we have used the simplified method allowed by Staff Accounting Bulletin No. To determine fair value, we analyzed historical employee exercise and termination data to estimate the expected life assumption. We believed that historical data represented the best estimate of the expected life of a new employee option. We also stratified our employee population based upon distinctive exercise behavior patterns. The risk-free interest rate used was based on the implied yield available on U. Treasury zero coupon issues. The estimated volatility of our common stock was based on historical daily volatility levels of our common shares. We believed the historical data represented the best estimate of the volatility. Because we did not anticipate paying any cash dividends, we used an expected dividend yield of zero. The amount of stock-based compensation expense we recognized during a period was based on the portion of the awards that were ultimately expected to vest. We estimated options forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from those estimates. We analyzed historical data to estimate pre-vesting expected and recorded stock-based compensation expense for those awards expected to vest. Determination of fair value and estimated expected life related to stock options granted. Estimated stock-based determining expense for awards granted estimates to the effective date but that remain unvested on the effective date determining be recognized over the remaining service period using the compensation cost estimated for the SFAS pro forma disclosures. However, we believe that stock-based compensation aligns the interests of managers and non-employee directors with the interests of shareholders. We do not currently expect to significantly change our various stock-based compensation programs. The determination of the fair value of the awards on the date of grant using the Black-Scholes model options affected by our stock price as well as assumptions of other variables, including stock employee stock option exercise behaviors, the risk-free interest rate and expected volatility of our stock fair in future periods. We analyze historical employee exercise and termination data to estimate the expected life assumption. We believe that historical data currently represents the best estimate of the expected life of a new employee option. We also stratify our employee population based upon distinctive exercise behavior patterns. The risk-free interest rate we use is based on the implied yield currently available on Should. The estimated volatility of our common stock is based on historical daily volatility levels of our common shares. We believe that historical data currently represents the best estimate of the volatility. Because we do not anticipate paying any cash dividends in the foreseeable future. If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods or if we adopt a different valuation model, the future periods may differ estimates from what we have recorded in used current period and could materially affect our net earnings and net earnings per share. The Black-Scholes model was developed estimates use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics not present in our option grants. From the makers of. These excerpts taken from the CEN K filed Mar 31, If factors change and we employ different assumptions for estimating stock-based compensation expense in future periods or if we expected a different valuation model, the future periods may differ significantly from what we have recorded in the current period and could materially affect our net earnings. Successor To determine fair value of both term and stock based stock options, the risk-free value rate used was based on the implied yield currently available on U. Predecessor To determine fair value, we analyzed historical employee exercise and termination data to estimate the expected life assumption. This excerpt taken from the CEN K filed Feb 28, Because we do not anticipate paying any cash dividends in the foreseeable future, 52 we use an expected dividend yield of zero. EXCERPTS ON THIS PAGE: RELATED TOPICS for CEN: Predecessor Determination Liability Pensions Other Postretirement Benefits Tax Matters VIEW MORE. Track your investments automatically. Use of this site is subject to express Terms of ServicePrivacy Policyand Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its used. 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