37 Annual Report 2010 stability of the industry, known technological advances, legisla- tive action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets. Our indefinite-lived intangible assets, mainly intangible assets primarily associated with the Pillsbury , Totino’s , Progresso , Green Giant , Old El Paso , and Ha ¨agen-Dazs brands, are also tested for impairment annually and whenever events or changes in circum- stances indicate that their carrying value may not be recoverable. We performed our fiscal 2010 assessment of our brand intangi- bles as of December 1, 2009. Our estimate of the fair value of the brands was based on a discounted cash flow model using inputs which included: projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the brands; and a discount rate. As of our assessment date, there was no impairment of any of our intangibles as their related fair values were substantially in excess of the carrying values. trading activity in options on our stock, especially those with tenors of greater than 6 months, is insufficient to provide a reliable measure of expected volatility. If all other assumptions are held constant, a one percentage point increase in our fiscal 2010 volatility assumption would increase the grant-date fair value of our fiscal 2010 option awards by 7 percent. Our expected term represents the period of time that options granted are expected to be outstanding based on historical data to estimate option exercise and employee termination within the valuation model. Separate groups of employees have similar historical exercise behavior and therefore were aggregated into a single pool for valuation purposes. The weighted-average expected term for all employee groups is presented in the table below. An increase in the expected term by 1 year, leaving all other assumptions constant, would change the grant date fair value by less than 1 percent. The risk-free interest rate for periods during the expected term of the options is based on the U.S. Treasury zero-coupon yield curve in effect at the time of grant. The estimated fair values of stock options granted and the assumptions used for the Black-Scholes option-pricing model were as follows: As of May 30, 2010, we had $10.3 billion of goodwill and indefinite-lived intangible assets. While we currently believe that the fair value of each intangible exceeds its carrying value and that those intangibles so classified will contribute indefinitely to our cash flows, materially different assumptions regarding future performance of our businesses or a different weighted-average cost of capital could result in significant impairment losses and amortization expense. Stock-based Compensation The valuation of stock options is a significant accounting estimate which requires us to use judg- ments and assumptions that are likely to have a material impact on our financial statements. Annually, we make predictive assumptions regarding future stock price volatility, employee exercise behavior, dividend yield, and the forfeiture rate. We estimate our future stock price volatility using the historical volatility over the expected term of the option, excluding time periods of volatility we believe a marketplace participant would exclude in estimating our stock price volatility. For the fiscal 2010 grants, we have excluded historical volatility for fiscal 2002 and prior, primarily because volatility driven by our acquisition of The Pillsbury Company (Pillsbury) in fiscal 2002 does not reflect what we believe to be expected future volatility. We also have con- sidered, but did not use, implied volatility in our estimate, because To the extent that actual outcomes differ from our assump- tions, we are not required to true up grant-date fair value-based expense to final intrinsic values. However, these differences can impact the classification of cash tax benefits realized upon exer- cise of stock options, as explained in the following two para- graphs. Furthermore, historical data has a significant bearing on our forward-looking assumptions. Significant variances between actual and predicted experience could lead to prospective revi- sions in our assumptions, which could then significantly impact the year-over-year comparability of stock-based compensation expense. 2010 2009 2008 Fiscal Year ........................................................................................... ......................................................................................................................................................................................... Estimated fair values of stock options granted $ 3.20 $ 4.70 $ 5.28 Assumptions: Risk-free interest rate 3.7% 4.4% 5.1% Expected term 8.5 years 8.5 years 8.5 years Expected volatility 18.9% 16.1% 15.6% Dividend yield 3.4% 2.7% 2.7%