Computer Associates International Inc.

Intel reports the following information on its stock options incentive programs in its December 31, 2001 financial statement footnotes.

The company's stock option plans are accounted for under the intrinsic value recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. As the exercise price of all options granted under these plans was equal to the market price of the underlying common stock on the grant date, no stock-based employee compensation cost, other than acquisition-related compensation, is recognized in net income. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to employee stock benefits, including shares issued under the stock option plans and under the company's Stock Participation Plan, collectively called "options."

(In Millions) | 2002 | 2001 | 2000 |

Net income, as reported                 | $ 3,117   |      $ 1,291   | $ 10,535      |

Less: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax                                                                                          |      1,170     | 1,037        | 836 |

Pro-forma net income                    |      $ 1,947   | $   254   | $  9,699      |

Record the adjustments to the financial statements required to show an

expense for stock options under the fair value method for 2001 and 2002.

Intel reports that its marginal tax rate is 35%.

Answer the above questions (working as a team) and post your answers to the conference area of your study group with the words "Session 4 HW - Final" in the topic title by 11:59 PM ET the last day of the session. Only list the names of members who cooperated in contributing to team responses.