First Data 2007 Annual Report Download - page 135

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The total intrinsic value of stock options exercised during the predecessor periods from January 1, 2007 through September 24, 2007 and for the twelve
months ended December 31, 2006 and 2005 was $86.2 million, $310.4 million and $168.1 million, respectively.
The Company received $187.4 million, $729.8 million and $319.5 million in cash proceeds related to the exercise of stock options and ESPP purchases
during the predecessor periods from January 1, 2007 through September 24, 2007 and the twelve months ended December 31, 2006 and 2005, respectively. In
addition, the Company realized total tax benefits from stock option exercises (and in 2007 the right to receive cash upon the accelerated vesting at the time of
the merger) of $224.8 million, $122.9 million and $51.4 million during the predecessor periods from January 1, 2007 through September 24, 2007 and for the
twelve months ended December 31, 2006 and 2005, respectively, which were recorded as increases to the "Additional paid-in capital" line item of the
Consolidated Balance Sheets.
The adoption of SFAS 123R resulted in reflecting the excess tax benefit from the exercise of stock-based compensation awards in cash flows from
financing activities. For the predecessor periods from January 1, 2007 through September 24, 2007 and the twelve months ended December 31, 2006, the
excess tax benefit from stock-based compensation awards of $219.8 million and $124.2 million, respectively, was reflected as a use of cash in cash flows
provided by operating activities and a source of cash in cash flows used in financing activities in the Consolidated Statements of Cash Flows.
In accordance with of SFAS 123R, the Company calculated its pool of excess tax benefits available to absorb write-offs of deferred tax assets in
subsequent periods. At December 31, 2006, the balance of this pool was approximately $193 million. The pool of excess tax benefits was eliminated due to
the merger.
Upon the exercise of stock options (or the issuance of restricted stock awards as described below), shares of common stock were issued from treasury
stock. The Company maintained a systematic buyback program with its purchasing agent. The Company had set up a graduated scale of shares to be
purchased based on the number of shares currently held in treasury stock.
Restricted Stock Awards and Restricted Stock Units
The Company granted 3.7 million restricted stock awards and restricted stock units in 2007.
During 2006, the Company implemented a new incentive compensation plan for certain employees which provided for the issuance of 1.1 million
restricted stock awards or restricted stock units upon the achievement of certain performance criterion that were met in the third quarter 2006. The fair value
of the awards granted in February 2006 was measured based on the market value of the shares on the date of grant. The vesting of the awards was accelerated
upon closing of the merger as noted above.
In 2005, the Company awarded 550,000 shares of restricted stock to executive officers (460,000 shares were issued in the first quarter 2005 and 90,000
shares were issued in the fourth quarter 2005). The vesting of the stock awards was accelerated upon closing of the merger as noted above. The fair value of
the 2005 grant of $21.2 million was measured based on the market value of the shares on the date of grant. Upon retiring from the Company in 2005,
Mr. Fote's, the former Chief Executive Officer, 2005 stock award was accelerated and all associated unamortized expense was recognized.
A summary of FDC restricted stock award and restricted stock unit activity for the predecessor period from January 1, 2007 through September 24,
2007 is as follows (awards/units in millions):
Awards/Units
Weighted-
Average
Grant-Date
Fair Value
Non-vested at January 1, 2007 1.1 $ 24
Granted 3.7 $ 25
Vested (0.4) $ 27
Cancelled / Forfeited * (4.4) $ 25
Non-vested at September 24, 2007 (a) —
* As noted above, vesting of restricted stock awards and restricted stock units was accelerated upon the closing of the merger and then cancelled with a right
to receive cash.
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