Microsoft 2002 Annual Report Download - page 47

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MSFT 49 / 2002 FORM 10-K
Part II
Item 8
Had compensation cost for the Company’s stock option and employee stock purchase plans been determined as prescribed by SFAS 123, pro forma income
statements for 2000, 2001, and 2002 would have been as follows:
In millions, except per share amounts
Y
ear Ended June 30 2000 2001 2002
Reported Pro Forma Reported Pro Forma Reported Pro Forma
Revenue $ 22,956 $22,956 $25,296 $25,296
$ 28,365 $28,365
Operating expenses:
Cost of revenue 3,002 3,277 3,455 3,775
5,191 5,699
Research and development 3,772 4,814 4,379 6,106
4,307 6,299
Sales and marketing 4,126 4,468 4,885 5,888
5,407 6,252
General and administrative 1,050 1,284 857 1,184
1,550 1,843
Total operating expenses 11,950 13,843 13,576 16,953
16,455 20,093
Operating income 11,006 9,113 11,720 8,343
11,910 8,272
Losses on equity investees and other (57) (57) (159) (159)
(92) (92)
Investment income/(loss) 3,326 3,326 (36) (36)
(305) (305)
Income before income taxes 14,275 12,382 11,525 8,148
11,513 7,875
Provision for income taxes 4,854 4,210 3,804 2,689
3,684 2,520
Income before accounting change 9,421 8,172 7,721 5,459
7,829 5,355
Cumulative effect of accounting change – – (375) (375)
–
–
Net income $ 9,421 $8,172 $7,346 $5,084
$ 7,829 $5,355
Basic earnings per share $ 1.81 $1.57 $1.38 $0.95
$ 1.45 $0.99
Diluted earnings per share $ 1.70 $1.48 $1.32 $0.91
$ 1.41 $0.98
The weighted average Black-Scholes value of options granted under the stock option plans during 2000, 2001, and 2002 was $36.67, $29.31, and
$31.57. Value was estimated using a weighted average expected life of 6.2 years in 2000, 6.4 years in 2001, and 7.0 years in 2002, no dividends, volatility of
.33 in 2000, .39 in 2001, and .39 in 2002, and risk-free interest rates of 6.2%, 5.3%, and 5.4% in 2000, 2001, and 2002.