United States Securities and Exchange Commission Washington, D. C. 20549 form 10-K

In fiscal year 2004, we began granting employees SAs 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 until 2004 when we began granting directors SAs. Nonqualified and incentive stock options were granted to certain officers and employees under our employee stock plans. 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 10 years from the date of grant. Options granted after 2001 vest over four and one-half years and expire 10 years from the date of grant. We granted one million, 10 million, and two million stock options, respectively, in conjunction with business acquisitions during fiscal years 2009, 2008, and 2007.

Employee stock options outstanding were as follows:

Options outstanding as of June 30, 2009 include approximately eight million options that were granted in conjunction with business acquisitions. While these options are included in the options outstanding balance, they are excluded from the weighted average exercise price. These options have an exercise price range of $0.01 to $150.93 and a weighted average exercise price of $9.50.

During fiscal years 2009, 2008, and 2007, the following activity occurred under our plans:

Cash received and income tax benefits from stock option exercises were $88 million and $12 million, respectively, for fiscal year 2009.

In January 2009, we announced and implemented a resource management program to reduce discretionary operating expenses, employee headcount, and capital expenditures. As part of this program, we announced the elimination of up to 5,000 positions in research and development, marketing, sales, finance, legal, human resources, and information technology by June 30, 2010.

During the fiscal year ended June 30, 2009, we recorded charges of $330 million for the expected reduction in employee headcount which was recorded as corporate-level activity. During the year we had a net reduction of approximately 4,400 positions under the resource management program.

The changes in our employee severance liabilities were as follows:

 

(In millions)
Year Ended June 30,		2009
Balance, beginning of period		$	–
Employee severance charges			330
Cash payments			(203	)
Balance, end of period		$	127

NOTE 22    SEGMENT INFORMATION AND GEOGRAPHIC DATA

Segment revenue and operating income (loss) was as follows: