Microsoft 2002 Annual Report Download - page 45

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MSFT 47 / 2002 FORM 10-K
Part II
Item 8
NOTE 14 OTHER COMPREHENSIVE INCOME
In millions
Y
ear Ended June 30 2000 2001 2002
Cumulative effect of accounting change, net of tax effect of $(37) $ –
$ (75) $
–
Net gains/(losses) on derivative instruments:
Unrealized gains, net of tax effect of $246 in 2001 and $30 in 2002 –
499 55
Reclassification adjustment for (gains)/losses included in net income, net of tax effect
of $67 in 2001 and $(79) in 2002 –
135 (146)
Net gains/(losses) on derivative instruments –
634 (91)
Net unrealized investment gains/(losses):
Unrealized holding gains/(losses), net of tax effect of $248 in 2000, $(351) in 2001,
and $(955) in 2002 531
(1,200) (1,774)
Reclassification adjustment for (gains)/losses included in net income, net of tax effect
of $(420) in 2000, $(128) in 2001, and $958 in 2002 (814)
(260) 1,779
Net unrealized investment gains/(losses) (283)
(1,460) 5
Translation adjustments and other 23
(39) 82
Other comprehensive income/(loss) $ (260)
$ (940) $(4)
The components of accumulated other comprehensive income were:
In millions
June 30 2001 2002
Net gains on derivative instruments $177 $86
Net unrealized investment gains 598 603
Translation adjustments and other (188) (106)
Accumulated other comprehensive income $587 $583
NOTE 15 EMPLOYEE STOCK AND SAVINGS PLANS
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan for all eligible employees. Under the plan, shares of the Company’s common stock may be purchased
at six-month intervals at 85% of the lower of the fair market value on the first or the last day of each six-month period. Employees may purchase shares
having a value not exceeding 15% of their gross compensation during an offering period. During 2000, 2001, and 2002, employees purchased 2.5 million, 5.7
million, and 5.4 million shares at average prices of $72.38, $36.87, and $50.52 per share. At June 30, 2002, 56.8 million shares were reserved for future
issuance.
SAVINGS PLAN
The Company has a savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 25% of
their pretax salary, but not more than statutory limits. The Company contributes fifty cents for each dollar a participant contributes, with a maximum
contribution of 3% of a participant’s earnings. Matching contributions were $47 million, $63 million, and $77 million in 2000, 2001, and 2002.
STOCK OPTION PLANS
The Company has stock option plans for directors, officers, and employees, which provide for nonqualified and incentive stock options. Options granted prior
to 1995 generally vest over four and one-half years and expire 10 years from the date of grant. Options granted between 1995 and 2001 generally vest over
four and one-half years and expire seven years from the date of grant, while certain options vest either over four and one-half years or over seven and one-
half years and expire after 10 years. Options granted during 2002 vest over four and one-half years and expire 10 years from the date of grant. At June 30,
2002, options for 371 million shares were vested and 543 million shares were available for future grants under the plans.