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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (67206)	3/5/2005 6:12:28 PM
From: rkral	Read Replies (1) \| Respond to of 77400

mindmeld, re "don't think the expense would be as linear as you think. " If option grants were halted, I agree that option expense should decline quite linearly. It's a detail I didn't wish to raise, and that's why I said "that's the per quarter average* of all after-tax hits over a 16 quarter period*" in my prior post. Your $6 billion total is definitely high. A table on page 60 of the 2004 annual report tells us the number of vested options ... which we know must be expensed. From this table we can calculate the number and weighted-average exercise price of non-vested options ... which may or may not be exercised. Let's assume none of them are. We can then construct a table that looks like ... <--OUTSTANDING--> <-- VESTED --> <----- NON-VESTED ------> Weighted- Weighted- Weighted- Exercise Average Average Average Price Range Number Exercise Number Exercise Number Exercise Total $ 0.01 - 9.75 210 $7.13 159 $6.57 51 $8.88 $453 9.76 - 13.04 156 12.52 97 12.28 59 12.91 762 13.05 - 16.15 180 15.61 89 15.68 91 15.54 1,414 16.16 - 18.57 96 18.19 51 18.21 45 18.17 818 18.58 - 19.59 144 19.56 5 19.19 139 19.57 2,721 19.60 - 26.42 185 22.95 109 24.37 76 20.91 1,589 26.43 - 50.38 184 43.30 145 42.46 39 46.42 1,811 50.39 - 64.38 160 55.12 140 55.09 20 55.33 1,107 64.39 - 72.56 35 67.28 28 69.17 7 59.72 418 Total 1350 $25.34 823 $28.09 527 $21.05 $11,092 So the total exercise value of 527 million non-vested options was $11.1 billion ... at the most. The expensed value is the "fair value" of the options, which for CSCO, has historically been 40% of the exercise price. Thus, the estimated maximum of options yet to be expensed at fiscal 2004 year end was $4.4 billion. It will likely be somewhat less at fiscal 2005 end. Ron