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The Company’s Board of Directors has approved
a stock repurchase program that authorizes the Company to
repurchase up to 96.9 million shares of the Company’s
common stock. In fiscal 2002, 2001, and 2000, the Company
purchased treasury stock totaling $208,578, $176,511, and
$202,105, respectively. As of May 26, 2002, a total of 86.3
million shares have been purchased under the program. The
Company’s stock repurchase program is used by the Company
to offset the dilutive effect of stock option exercises and
to increase shareholder value. The repurchased common stock
is reflected as a reduction of stockholders’ equity.
As a part of its stock repurchase program,
the Company issues equity put options from time to time that
entitle the holder to sell shares of the Company’s common
stock to the Company, at a specified price, if the holder
exercises the option. In fiscal 2000, the Company issued put
options for 2,625,000 shares for $1,814 in premiums. At May
28, 2000, put options for 375,000 shares were outstanding.
No put options were issued in fiscal 2002 or 2001 or outstanding
at May 26, 2002, or May 27, 2001.
The Company has share ownership guidelines for its
executive management. To assist management in meeting these
guidelines, the Company implemented the 1998 Stock Purchase/
Loan Program (1998 Program) under its Stock Option and Long-Term
Incentive Plan of 1995. The 1998 Program provides loans to
executives and awards two options for every new share purchased,
up to a maximum total share value equal to a designated percentage
of the executive’s base compensation. Loans are full
recourse and interest bearing, with a maximum principal amount
of 75 percent of the value of the stock purchased. The stock
purchased is held on deposit with the Company until the loan
is repaid. The interest rate for loans under the 1998 Program
is fixed and is equal to the applicable federal rate for mid-term
loans with semi-annual compounding for the month in which
the loan originates. Interest is payable on a weekly basis.
Loan principal is payable in installments with 25 percent,
25 percent, and 50 percent of the total loan due at the end
of the fifth, sixth, and seventh years of the loan. The Company
accounts for outstanding officer notes receivable as a reduction
of stockholders’ equity.
Under the Company’s Rights Agreement, as amended,
each share of the Company’s common stock has associated
with it two-thirds of a right to purchase one-hundredth of
a share of the Company’s Series A Participating Cumulative
Preferred Stock at a purchase price of $62.50, subject to
adjustment under certain circumstances to prevent dilution.
The number of rights associated with each share of the Company’s
common stock reflects an adjustment resulting from the Company’s
three-for-two stock split in May 2002. The rights are exercisable
when, and are not transferable apart from the Company’s
common stock until, a person or group has acquired 20 percent
or more, or makes a tender offer for 20 percent or more, of
the Company’s common stock. If the specified percentage
of the Company’s common stock is then acquired, each
right will entitle the holder (other than the acquiring company)
to receive, upon exercise, common stock of either the Company
or the acquiring company having a value equal to two times
the exercise price of the right. The rights are redeemable
by the Company’s Board of Directors under certain circumstances
and expire on May 24, 2005.
On March 21, 2002, the Company’s Board of Directors
declared a three-for-two stock split of the Company’s
common stock. The stock split was effected in the form of
a 50 percent stock dividend which was distributed to stockholders
on May 1, 2002, for all stockholders of record as of the close
of business on April 10, 2002. In connection with the stock
split, the number of common shares reserved for issuance or
subject to issuance under the Company’s stock option,
stock grant, and other plans was proportionately increased.
The total number of common and preferred shares authorized
for issuance under the Company’s Articles of Incorporation
remained the same. All applicable references to number of
shares and per share amounts of common stock have been adjusted
to reflect the stock split.
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