A » Topics » Pro forma Information for Periods Prior to the Adoption of SFAS No. 123 (R)

This excerpt taken from the A 10-K filed Dec 21, 2007.

Pro forma Information for Periods Prior to the Adoption of SFAS No. 123 (R)

        Prior to the adoption of SFAS No. 123 (R), Agilent provided the disclosures required under SFAS No. 123, as amended by SFAS No. 148, "Accounting for Stock-Based Compensation — Transition and Disclosures." No employee share-based compensation expense was reflected in our results from continuing operations in 2005 for employee stock option awards as all options were granted with an exercise price equal to the market value of the underlying common stock on the date of grant. Our ESPP was deemed non-compensatory under the provisions of APB No. 25. Compensation expense for the non-vested performance shares granted under the LTPP was recognized based on the grant date fair value for the respective grants. Forfeitures of awards were recognized as they occurred.

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        The pro forma information for share-based compensation in 2005 was as follows:

 
  Year Ended
October 31, 2005

 
 
  (in millions, except per share data)

 
Net income — as reported   $ 327  
APB No. 25 compensation recognized in net income, as reported     16  
SFAS No. 123 based compensation     (228 )
Tax benefit     12  
   
 
Net income — pro forma   $ 127  
   
 
Net income per share:        
  As reported:        
    Basic   $ 0.66  
    Diluted   $ 0.65  
  Pro forma:        
    Basic   $ 0.26  
    Diluted   $ 0.25  

        We recorded APB No. 25 compensation expense in continuing operations of $8 million in 2005. The APB No. 25 compensation expense in 2005 primarily related to our LTPP. In August 2005 our Board of Directors approved a modification to the terms of the options held by employees of our semiconductor products business to effect the acceleration of vesting for all unvested options held by employees of that business, effective as of the date of the sale of the semiconductor products business to Avago. In connection with this modification, we recorded $8 million of compensation expense in discontinued operations. The pro forma results in 2005 include approximately $32 million of pro forma compensation expense relating to our Option Exchange Program. The weighted average grant date fair value of options, as determined under SFAS No. 123, granted in 2005 was $7.80 per share.

        Due to the valuation allowance provided on our net deferred tax assets as described in Note 7, "Provision (Benefit) for Income Taxes from Continuing Operations", we did not record any tax benefits attributable to pro forma share-based compensation expenses for employees in the U.S. and certain other foreign jurisdictions in 2005. The 2005 tax impact presented above was computed for both the APB No. 25 and SFAS No. 123 share-based compensation expense.

This excerpt taken from the A 10-K filed Dec 22, 2006.

Pro forma Information for Periods Prior to the Adoption of SFAS No. 123 (R)

        Prior to the adoption of SFAS No. 123 (R), Agilent provided the disclosures required under SFAS No. 123, as amended by SFAS No. 148, "Accounting for Stock-Based Compensation — Transition and Disclosures." No employee share-based compensation expense was reflected in our results from continuing operations in 2005 and 2004 for employee stock option awards as all options were granted with an exercise price equal to the market value of the underlying common stock on the date of grant. Our ESPP was deemed non-compensatory under the provisions of APB No. 25. Compensation expense for the non-vested performance shares granted under the LTPP was recognized based on the grant date fair value for the respective grants. Forfeitures of awards were recognized as they occurred. We recorded APB No. 25 compensation expense in continuing operations of $8 million in 2005 and $7 million in 2004. The APB No. 25 compensation expense in 2005 and 2004 primarily related to our LTPP. In August 2005 our Board of Directors approved a modification to the terms of the options held by employees of our semiconductor products business to effect the acceleration of vesting for all unvested options held by employees of that business, effective as of the date of the sale of the semiconductor products business to Avago. In connection with this modification, we recorded $8 million of compensation expense in discontinued operations.

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        The pro forma information for share-based compensation in 2005 and 2004 was as follows:

 
  Years Ended October 31,
 
 
  2005
  2004
 
 
  (in millions, except per share data)

 
Net income — as reported   $ 327   $ 369  
APB No. 25 compensation recognized in net income, as reported     16     7  
SFAS No. 123 based compensation     (228 )   (256 )
Tax benefit     12     17  
   
 
 
Net income — pro forma   $ 127   $ 137  
   
 
 
Net income per share:              
  As reported:              
    Basic   $ 0.66   $ 0.76  
    Diluted   $ 0.65   $ 0.75  
  Pro forma:              
    Basic   $ 0.26   $ 0.28  
    Diluted   $ 0.25   $ 0.28  

        The pro forma results in 2005 and 2004 include approximately $32 million and $70 million of pro forma compensation expense relating to our Option Exchange Program, respectively. The remainder of the expense for those periods related to awards granted over the previous four years.

        Due to the valuation allowance provided on our net deferred tax assets as described in Note 8, "Provision (Benefit) for Income Taxes from Continuing Operations", we did not record any tax benefits attributable to pro forma share-based compensation expenses for employees in the U.S. and certain other foreign jurisdictions in 2005 and 2004. The tax impact presented above was computed for both the APB No. 25 and SFAS No. 123 share-based compensation expense.

EXCERPTS ON THIS PAGE:

10-K
Dec 21, 2007
10-K
Dec 22, 2006
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