EMC 2007 Annual Report Download - page 100
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EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
date of grant with acceleration for achieving specified performance criteria. For awards with performance conditions, management evaluates the criteria in
each grant to determine the probability that the performance condition will be achieved.
Stock-Based Compensation Expense
The following table summarizes the components of total stock-based compensation expense included in our consolidated income statement in 2007 and
in 2006 (in thousands):
Year Ended December 31, 2007
Stock Options
Restricted
Stock
Total Stock-Based
Compensation
Cost of product sales $ 22,886 $ 9,543 $ 32,429
Cost of services 20,493 4,303 24,796
Research and development 69,649 38,393 108,042
Selling, general and administrative 126,246 75,891 202,137
Restructuring charges 897 1,731 2,628
Stock-based compensation expense before income taxes 240,171 129,861 370,032
Income tax benefit 53,292 34,378 87,670
Total stock-based compensation, net of tax $ 186,879 $ 95,483 $ 282,362
Year Ended December 31, 2006
Stock Options
Restricted
Stock
Total Stock-Based
Compensation
Cost of product sales $ 35,005 $ 6,517 $ 41,522
Cost of services 21,598 3,168 24,766
Research and development 61,582 45,899 107,481
Selling, general and administrative 146,950 77,968 224,918
Restructuring charges 3,801 6,919 10,720
Stock-based compensation expense before income taxes 268,936 140,471 409,407
Income tax benefit 50,559 41,565 92,124
Total stock-based compensation, net of tax $ 218,377 $ 98,906 $ 317,283
Stock option expense includes $36.7 million and $30.4 million of expense associated with our employee stock purchase plans for 2007 and 2006,
respectively. The restructuring charges represent FAS No. 123R expense associated with our 2007 and 2006 restructuring programs. See Note D for more
information.
In connection with the adoption of FAS No. 123R, we recorded a credit to the income statement to reflect the impact of a cumulative effect adjustment
for the application of an estimated forfeiture rate on our previously recognized expense on unvested restricted stock and restricted stock units. The
components of the adjustment were as follows (in thousands):
Year Ended
December 31, 2006
Estimated forfeitures on previously recognized restricted stock expense $ (354)
Income taxes 107
Cumulative effect of a change in accounting principle, net of tax $ (247)
93