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Table of Contents
Note 9 — Stock Plans (Continued)
The following table summarizes the activity of restricted stock awards under the Company’ s Plans (no restricted stock awards were
granted prior to fiscal year 2004):
Weighted Average
Number Grant Date
of Shares Fair Value
(shares in millions)
Outstanding at March 31, 2003
—
$
—
Restricted stock granted 0.6 26.86
Restricted stock vested or cancelled
—
—
Outstanding at March 31, 2004 0.6 $ 26.86
Restricted stock granted 0.7 26.18
Restricted stock vested or cancelled (0.5) 26.96
Outstanding at March 31, 2005 0.8 $26.19
The total intrinsic value of options exercised and restricted awards vested in fiscal years 2005, 2004, and 2003 was $40 million,
$25 million, and $1 million, respectively.
In connection with the Company’ s acquisition of Netegrity in fiscal year 2005, options to purchase Netegrity common stock were
converted into options to purchase approximately 1.4 million shares of the Company’ s stock. The weighted average fair value of the
options on the date of acquisition was $20.19. The fair value of each option grant was estimated on the date of acquisition using the
Black-Scholes option pricing model with input assumptions similar to those used for the Company’ s stock options granted during the
same period. Refer to Note 2, “Acquisitions, Divestitures, and Restructuring,” of the Consolidated Financial Statements for additional
information concerning the acquisition of Netegrity.
During the third quarter of fiscal year 2005, the Company modified certain terms of an executive employee option agreement covering
235,000 shares. The modification provided for acceleration of vesting and extension of the exercise period upon termination in
accordance with specific terms outlined in the employment agreement. The modification terms resulted in a recalculation of the fair
value, which will be amortized over the expected life of the modified award. The fair values at the date of grant and the date of
modification were $14.55 and $17.37, respectively. The fair values were estimated using the Black-Scholes option pricing model.
During the fourth quarter of fiscal year 2005, the Company modified certain terms of an executive employee option agreement covering
370,000 shares. The modification provided for acceleration of vesting and extension of the exercise period upon termination in
accordance with specific terms outlined in the employment agreement. The modification terms resulted in a recalculation of the fair
value, which will be amortized over the expected life of the modified award. The fair values at the date of grant and the date of
modification were $13.19 and $13.66, respectively. The fair values were estimated using the Black-Scholes option pricing model.
The Company maintains the Year 2000 Employee Stock Purchase Plan (the Purchase Plan) for all eligible employees. Consistent with
the provisions of SFAS No. 123, the Year 2000 Employee Stock Purchase Plan under SFAS No. 123(R) is considered compensatory.
Under the terms of the Purchase Plan, employees may elect to withhold between 1% and 25% of their base pay through regular payroll
deductions, subject to Internal Revenue Code limitations. Shares of the Company’ s common stock may be purchased at six-month
intervals at 85% of the lower of the FMV on the first or last day of each six-month period. During fiscal years 2005, 2004, and 2003,
employees purchased 0.9 million, 1.3 million, and 1.3 million shares, respectively, at average prices of $23.38, $14.63, and $12.40 per
share, respectively. As of March 31, 2005, 25.1 million shares were reserved for future issuance.
The weighted average fair value of the Year 2000 Employee Stock Purchase Plan (the Purchase Plan) shares for offering periods
commencing in fiscal years 2005, 2004, and 2003 was $6.52, $7.28, and $4.94, respectively. The fair value is estimated on the first date
of the offering period using the Black-Scholes option pricing model. The weighted average assumptions that were used for the Purchase
Plan shares in the respective periods are as follows:
92