Microsoft 2003 Annual Report Download - page 45

Part II, Item 8
MSFT 2003 FORM 10-K
32 /
Note 15—Other Comprehensive Income
(In millions)
Year Ended June 30 2001 2002 2003
Cumulative effect of accounting change, net of tax effect of $(37) $ (75) $
–
$
–
Net gains/(losses) on derivative instruments:
Unrealized gains/(losses), net of tax effect of $246 in 2001, $30 in 2002, and $(69) in 2003 499 55 (129)
Reclassification adjustment for (gains)/losses included in net income, net of tax effect of $67 in 2001, $(79) in
2002, and $15 in 2003 135 (146) 27
Net gains/(losses) on derivative instruments 634 (91) (102)
Net unrealized investment gains/(losses):
Unrealized holding gains/(losses), net of tax effect of $(351) in 2001, $(955) in 2002, and $610 in 2003 (1,200) (1,774) 1,132
Reclassification adjustment for (gains)/losses included in net income, net of tax effect of $(128) in 2001, $958 in
2002, and $60 in 2003 (260) 1,779 111
Net unrealized investment gains/(losses) (1,460) 5 1,243
Translation adjustments and other (39) 82 116
Other comprehensive income/(loss) $ (940) $ (4) $ 1,257
The components of accumulated other comprehensive income were:
(In millions)
June 30 2002 2003
Net gains/(losses) on derivative instruments $ 86 $ (16)
Net unrealized investment gains 603 1,846
Translation adjustments and other (106) 10
Accumulated other comprehensive income $ 583 $ 1,840
Note 16—Employee Stock and Savings Plans
Employee Stock Purchase Plan
We have an employee stock purchase plan for all eligible employees. Under the plan, shares of our common stock may be purchased at six-month intervals at
85% of the lower of the fair market value on the first or the last day of each six-month period. Employees may purchase shares having a value not exceeding 15%
of their gross compensation during an offering period. During 2001, 2002, and 2003 employees purchased 11.4 million, 10.8 million shares and 15.2 million shares
at average prices of $18.43, $25.26, and $22.56 per share. At June 30, 2003, 192.2 million shares were reserved for future issuance.
Savings Plan
We have a savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 25% of their pretax
salary, but not more than statutory limits. We contribute fifty cents for each dollar a participant contributes, with a maximum contribution of 3% of a participant’s
earnings. Matching contributions were $63 million, $77 million, and $88 million in 2001, 2002, and 2003.
Stock Option and Stock Plans
We have a stock option plan for directors and a stock plan for officers, and employees, which provide for nonqualified and incentive stock options and in the case
of the stock plan, stock awards. Options granted prior to 1995 generally vest over four and one-half years and expire ten years from the date of grant. Options
granted between 1995 and 2001 generally vest over four and one-half years and expire seven years from the date of grant, while certain options vest either over
four and one-half years or over seven and one-half years and expire ten years from the date of grant. Options granted during and after 2002 vest over four and
one-half years and expire ten years from the date of grant. We have issued stock awards under the plan for officers and employees whereby employees earn
actual shares of stock. In fiscal 2003, the company granted 4 million stock awards, which vest over five years.
At June 30, 2003, stock options for 774 million shares were vested and 866 million shares were available for future grants under the plans.