Oracle 2005 Annual Report Download - page 55

Table of Contents
Options granted from June 1, 2003 through May 31, 2006 are summarized as follows:
(Shares
in millions)
Options outstanding at May 31, 2003 455
Options granted(1)
333
Options exercised (196)
Forfeitures (119)
Options outstanding at May 31, 2006 473
Average annualized options granted, net of forfeitures 71
Average annualized stock repurchases 126
Shares outstanding at May 31, 2006 5,232
Weighted-average shares outstanding from June 1, 2003 through May 31, 2006 5,182
Options outstanding as a percent of shares outstanding at May 31, 2006 9.0%
In the money options outstanding (based on our May 31, 2006 stock price) as a percent of shares outstanding at May 31, 2006 6.8%
Average annualized options granted, net of forfeitures and before stock repurchases, as a percent of weighted average shares outstanding from
June 1, 2003 through May 31, 2006 1.4%
Average annualized options granted, net of forfeitures and after stock repurchases, as a percent of average shares outstanding from June 1,
2003 through May 31, 2006 -1.1%
(1) Includes 179 million options assumed in connection with acquisitions.
Generally, we grant stock options to key employees on an annual basis. During fiscal 2006, we made our annual grant of options and other grants to purchase
approximately 67.6 million shares, which were partially offset by forfeitures of options to purchase 58.1 million shares.
New Accounting Pronouncements
Share-Based Payment: On December 16, 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB
Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,
and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement
123. However, Statement 123(R) generally requires share-based payments to employees, including grants of employee stock options and purchases under
employee stock purchase plans, to be recognized in the statement of operations based on their fair values. Pro forma disclosure of fair value recognition is no
longer an alternative.
On April 14, 2005, the Securities and Exchange Commission announced that the Statement 123(R) effective transition date would be extended to annual periods
beginning after June 15, 2005. We adopted the provisions of Statement 123(R) under the modified prospective method in our first quarter of fiscal 2007. Under
the modified prospective method, compensation cost is recognized beginning with the effective date of adoption (a) based on the requirements of Statement
123(R) for all share-based payments granted after the effective date of adoption and (b) based on the requirements of Statement 123 for all awards granted to
employees prior to the effective date of adoption that remain unvested on the date of adoption.
Statement 123(R) also requires a portion of the benefits of tax deductions resulting from the exercise of stock options to be reported as a financing cash flow,
rather than as an operating cash flow. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. Total
cash flow will remain unchanged from what would have been reported under prior accounting rules.
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Source: ORACLE CORP, 10-K, July 21, 2006 Powered by Morningstar® Document Research℠