HP 2006 Annual Report Download - page 95
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 2: Stock-Based Compensation (Continued)
Nonvested restricted stock awards as of October 31, 2006 and changes during fiscal 2006 were as
follows:
Weighted-
Average Grant
Shares Date Fair Value
In thousands
Nonvested at October 31, 2005 ............................... 8,869 $21
Granted ................................................ 1,525 $32
Vested ................................................. (2,521) $21
Forfeited ............................................... (1,508) $21
Nonvested at October 31, 2006 ............................... 6,365 $24
As of October 31, 2006, there was $90 million of unrecognized stock-based compensation expense
related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted-
average period of 1.46 years.
In fiscal 2006, HP recorded $58 million of stock-based compensation expense, net of taxes, relating
to options assumed through acquisitions and restricted stock awards. HP recorded $144 million and
$33 million of stock-based compensation expense, net of taxes, relating to options assumed through
acquisitions and restricted stock awards in fiscal years 2005 and 2004, respectively.
In fiscal 2006, HP allocated stock-based compensation expense related to the ESPP and the
principal option plans under SFAS 123R as follows:
In millions
Cost of sales .................................................. $144
Research and development ........................................ 70
Selling, general and administrative .................................. 322
Stock-based compensation expense before income taxes ................... 536
Income tax benefit .............................................. (160)
Total stock-based compensation expense after income taxes ................ $376
In addition, as part of its fiscal 2005 restructuring plans, HP accelerated the vesting on options
held by terminated employees and included a one-year post-termination exercise period on the options.
This modification resulted in compensation expense of $107 million that HP included in the
restructuring charges. In fiscal 2006, an adjustment of $14 million was recorded as a reduction to the
$107 million restructuring charges to reflect actual stock-based compensation expense related to
employees who left the company.
Stock-based compensation expense recognized under incentive compensation plans was
approximately $522 million in fiscal 2006 (including the $14 million credit in restructuring charges
referred to above), $211 million in fiscal 2005 (including the $107 million in restructuring charges
referred to above), and $48 million in fiscal 2004.
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