HP 2005 Annual Report Download - page 112

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 13: Stockholders’ Equity (Continued)
Option activity was as follows for the following fiscal years ended October 31:
2005 2004 2003
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Shares in thousands
Outstanding at beginning of year ............ 549,868 $30 499,858 $31 459,334 $32
Granted .............................. 63,635 22 71,894 22 71,426 16
Assumed through acquisitions ............... 558 1 2,507 14 — —
Exercised ............................. (46,628) 17 (12,869) 13 (14,873) 10
Forfeited or cancelled .................... (36,200) 35 (11,522) 30 (16,029) 33
Outstanding at end of year ................. 531,233 30 549,868 30 499,858 31
Exercisable at end of year ................. 386,303 $33 377,438 $33 326,829 $34
Information about options outstanding was as follows at October 31, 2005:
Options Outstanding Options Exercisable
Weighted-
Average
Remaining Weighted- Weighted-
Contractual Average Average
Shares Life in Exercise Shares Exercise
Range of Exercise Prices Outstanding Years Price Exercisable Price
Shares in thousands
$0-$9.99 ............................ 1,159 6.6 $ 4 557 $ 7
$10-$19.99 .......................... 98,531 5.1 $16 66,995 $16
$20-$29.99 .......................... 246,791 5.4 $23 133,999 $25
$30-$39.99 .......................... 76,046 3.7 $35 76,046 $35
$40-$49.99 .......................... 61,656 3.5 $46 61,656 $46
$50-$59.99 .......................... 30,695 3.5 $57 30,695 $57
$60 and over ........................ 16,355 3.2 $71 16,355 $71
531,233 4.7 $30 386,303 $33
Under the principal option plans, HP granted certain employees cash, restricted stock awards, or
both. Restricted stock awards include grants of restricted stock and restricted stock units. Cash and
restricted stock awards are independent of option grants and are generally subject to forfeiture if
employment terminates prior to the release of restrictions, generally one to three years from the date
of grant. During that period, ownership of the shares cannot be transferred. Restricted stock has the
same cash dividend and voting rights as other common stock and is considered to be currently issued
and outstanding. Restricted stock units have dividend equivalent rights equal to the cash dividend paid
on restricted stock. Restricted stock units do not have the voting rights of common stock and are not
considered issued and outstanding. HP expenses the cost of the restricted stock awards, determined to
be the fair market value of the shares at the date of grant, ratably over the period the restrictions
lapse. In fiscal 2005, HP granted 6,773,000 shares of restricted stock with a weighted-average grant date
fair value of $21. HP had 7,099,000 shares of restricted stock outstanding at October 31, 2005,
108