Computer Associates 2005 Annual Report Download - page 141

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Table of Contents
Note 9 — Stock Plans (Continued)
Number Weighted Average
of Shares Exercise Price
(shares in millions)
Options exercisable at:
March 31, 2003 26.9 $ 31.19
March 31, 2004 26.0 30.88
March 31, 2005 25.5 29.81
The following table summarizes share option information as of March 31, 2005:
Options Outstanding Options Exercisable
Weighte
d
Weighte
d
Average Weighted Average
Range of Aggregate
Remaini
ng Average Aggregate
Remaini
ng Weighted
Exercise Intrinsic
Contract
ual Exercise Intrinsic
Contract
ual Average
Prices Shares Value Life Price Shares Value Life Exercise Price
(shares and aggregate intrinsic value in millions)
$ 3.62—
$20.00 5.4 $ 66.0 6.3 years $14.76 3.7 $43.4 5.6 years $ 15.29
$20.01—
$30.00 19.3 27.8 5.8 years 25.91 13.5 24.2 5.0 years 25.52
$30.01—
$40.00 4.5 0 3.7 years 34.94 3.9 0 2.7 years 35.66
$40.01—
$50.00 2.0 0 2.9 years 47.12 2.0 0 2.9 years 47.12
$50.01—
$74.69 2.4 0 4.3 years 52.10 2.4 0 4.3 years 52.10
33.6 $ 93.8 $ 28.50 25.5 $ 67.6 $ 29.81
The Company estimates the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of SFAS
No. 123(R), Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 107, and the Company’ s prior period pro forma
disclosures of net earnings, including stock-based compensation (determined under a fair value method as prescribed by SFAS No. 123).
Key input assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term,
volatility of the Company’ s stock, the risk-free rate, and the Company’ s dividend yield. The Company believes that the valuation
technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the
Company’ s stock options granted in the fiscal years ended March 31, 2005, 2004, and 2003. Estimates of fair value are not intended to
predict actual future events or the value ultimately realized by employees who receive equity awards.
The weighted average fair value at date of grant for options granted in fiscal years 2005, 2004, and 2003 was $15.44, $14.60, and $8.23,
respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The
weighted average assumptions that were used for option grants in the respective periods are as follows:
Year Ended March 31,
2005 2004 2003
Dividend yield .28% .30% .56%
Expected volatility factor(1) .65 .67 .67
Risk-free interest rate(2) 3.6% 3.0% 3.2%
Expected life (in years)(3) 4.5 4.5 6.0
(1) Expected volatility
is measured using
historical daily
p
rice changes of the
Company’ s stock
over the respective
term of the option.
(2) The risk-free rate
for periods within