Microsoft 2007 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2007 Microsoft annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 69

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69

PAGE 54
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
additional awards to participants based on individual performance. One-quarter of the shares of stock subject to
each award will vest following the end of the performance period, and an additional one-quarter of the shares will
vest over each of the following three years.
We measure the fair value of SAs and SPSAs based upon the market price of the underlying common stock as
of the date of grant, reduced by the present value of estimated future dividends. SAs and SPSAs are amortized
over their applicable vesting period (generally three to five years) using the straight-line method. The fair value of
each award grant is estimated on the date of grant using the following assumptions:
(In millions) 2007 2006 2005
Dividend per share (quarterly amounts) $0.09 - $0.10 $0.08 - $0.09 $0.08
Interest rates range 4.3% - 5.3% 3.2% - 5.3% 1.3% - 4.3%
During fiscal year 2007, the following activity occurred under our existing plans:
Shares
(in millions)
Weighted
Average
Grant-Date
Fair Value
Stock awards:
Nonvested balance at June 30, 2006 98 $24.25
Granted 57 25.15
Vested (24) 24.15
Forfeited (7) 24.44
Nonvested balance at June 30, 2007 124 $24.67
Shared performance stock awards:
Nonvested balance at June 30, 2006 37 $23.57
Granted 11 25.18
Vested (13) 23.74
Forfeited (2) 23.92
Nonvested balance at June 30, 2007 33 $24.11
As of June 30, 2007, there were $2.22 billion and $392 million of total unrecognized compensation costs related
to SAs and SPSAs, respectively. These costs are expected to be recognized over a weighted average period of
3.4 years and 2.1 years, respectively.
SPSAs granted in fiscal year 2007 include adjustments for estimated performance against performance targets.
During the 12 months ended June 30, 2006 and June 30, 2005, the following activity occurred under our plans:
(In millions, except fair values) Fiscal
Y
ear
2006 Fiscal
Y
ear
2005
Stock awards granted 47 41
Weighted average grant-date fair value $24.70 $24.03
Shared performance stock awards granted 3 4
Weighted average grant-date fair value $24.80 $24.35
Stock Options. In fiscal year 2004, we began granting employees stock awards rather than stock options as
part of our equity compensation plans. Since then, stock options issued to employees have been issued primarily
in conjunction with business acquisitions. Nonqualified stock options were granted to our directors under our non-
employee director stock plan. Nonqualified and incentive stock options were granted to our officers and
employees under our employee stock plans. Options granted between 1995 and 2001 generally vest over four
and