Texas Instruments 2006 Annual Report Download - page 27

TEXAS INSTRUMENTS 2006 ANNUAL REPORT 2525
Shares available for future grant and reserved for issuance are summarized below:
AS OF DECEMBER 31, 2006
Shares
Long-term Incentive
and Director
Compensation Plans
TI Employees 2005
Stock Purchase
Plan
Available for future grant .................................................. 225,115,613 40,137,992
Reserved for issuance ..................................................... 448,711,945 40,759,230
Effect on Cash Flows
The total amount of cash received from exercise of options was $419 million in 2006 and $461 million in 2005. The related net
tax benefit realized from the exercise of those stock options was $146 million in 2006 and $132 million in 2005 (which includes
excess tax benefits realized of $100 million in 2006 and $59 million in 2005 from the adoption date of SFAS 123(R) on July 1,
2005).
Related Policies
We issue awards of stock options generally with graded vesting provisions (e.g., 25 percent per year for four years). In such
cases, we recognize the related compensation cost on a straight-line basis over the minimum service period required for
vesting of the award.
For awards to employees who are retirement eligible or nearing retirement eligibility, we recognize compensation cost on a
straight-line basis over the service period required to be performed by the employee in order to earn the award.
It has been our practice to issue shares of common stock upon exercise of stock options generally from treasury shares and,
on a limited basis, from previously unissued shares.
10. Postretirement Benefit Plans
On December 31, 2006, we adopted the recognition and disclosure provisions of SFAS 158. This Statement requires us to
recognize the funded status (i.e., the difference between the fair value of plan assets, and the benefit obligations) of our
defined benefit pension and other postretirement benefit plans in our December 31, 2006, balance sheet, with a corresponding
adjustment to accumulated other comprehensive income (AOCI), net of tax. The adjustment to AOCI at adoption represents
the net actuarial losses, and prior service costs, all of which were previously netted against the plans’ funded status in our
balance sheet pursuant to the provisions of SFAS No. 87, “Employers’ Accounting for Pensions” and SFAS 106, “Employers’
Accounting for Postretirement Benefits Other Than Pensions.” These amounts will continue to be recognized as a component
of future net periodic benefit cost consistent with our past practice. Further, actuarial gains and losses and prior service
costs that arise in future periods and are not recognized as net periodic benefit cost in the same periods will be recognized as
a component of other comprehensive income. Those amounts will also be recognized as a component of future net periodic
benefit cost consistent with our past practice.
In addition, SFAS 158 requires that companies using a measurement date for their defined benefit pension plans and other
postretirement benefit plans other than their fiscal year end, change to a fiscal-year-end measurement date effective for
years ending after December 15, 2008. We have chosen to adopt the measurement date changes as of the year ended
December 31, 2006. Our non-U.S. plans previously used a September 30 measurement date.
The incremental effects of adopting the provisions of SFAS 158 on our balance sheet at December 31, 2006, are presented
in the following table. The adoption of SFAS 158 had no effect on our consolidated statement of income or our consolidated
statement of comprehensive income for the year ended December 31, 2006, or for any prior period presented, and it will not
effect our operating results in future periods. Had we not been required to adopt SFAS 158 at December 31, 2006, we would