CarMax 2004 Annual Report Download - page 44

42 CARMAX 2004
(B) Restricted Stock
The company has issued restricted stock under the provisions
of the CarMax, Inc. 2002 Stock Incentive Plan whereby
management and key employees are granted restricted shares
of common stock. Shares are awarded in the name of the
employee, who has all the rights of a shareholder, subject to
certain restrictions or forfeitures. Restrictions on the awards
generally expire three or four years from the date of grant.
Total restricted stock awards of 228 shares were granted in
fiscal 2004. In fiscal 2003, 25,984 restricted shares were
exchanged in connection with the separation.
At the date of grant, the market value of all shares granted
is recorded as unearned compensation and is a component of
equity. Unearned compensation is expensed over the
restriction periods. The total charge to operations was
$121,500 in fiscal 2004; $77,400 in fiscal 2003; and $99,700
in fiscal 2002. Outstanding shares of restricted common stock
at February 29, 2004, and February 28, 2003, were 25,817
and 27,275, respectively.
(C) Stock Incentive Plans
Under the company’s stock incentive plans, nonqualified stock
options may be granted to management, key employees, and
outside directors to purchase shares of common stock. The
exercise price for nonqualified options is equal to, or greater
than, the market value at the date of grant. Options generally
are exercisable over a period from one to ten years from the
date of grant. The company has authorized 10,100,000 shares
of common stock to be issued as either options, restricted
stock grants, or stock grants. Shares of common stock available
for issuance of options, restricted stock grants, or stock grants
totaled 3,661,200 at February 29, 2004.
The company’s stock option activity is summarized in Table 2.
Table 3 summarizes information about stock options outstanding
as of February 29, 2004.
(D) Employee Stock Purchase Plan
The company has an employee stock purchase plan for all
employees meeting certain eligibility criteria. Under the plan,
eligible employees may, subject to certain limitations, purchase
shares of common stock. For each $1.00 contributed by employees
under the plan, the company matches $0.15. Purchases are limited
to 10% of an employee’s eligible compensation, up to a maximum
of $7,500 per year. The 2002 CarMax, Inc. Employee Stock
Purchase Plan allows employees to purchase up to 1,000,000
shares of common stock. The source of the shares available for
purchase by employees may, at the company’s option, be open
market purchases or newly issued shares.
At February 29, 2004, a total of 741,847 shares remained
available under the plan. Shares purchased on the open market on
behalf of employees were 161,662 during fiscal 2004; 213,931
during fiscal 2003; and 183,902 during fiscal 2002. The average
price per share purchased under the plan was $29.97 in fiscal
2004, $19.43 in fiscal 2003, and $17.13 in fiscal 2002. The
company match totaled $598,600 in fiscal 2004; $520,700 in
fiscal 2003; and $384,800 in fiscal 2002.
(E) 401(k) Plan
The company sponsors a 401(k) plan for all employees meeting
certain eligibility criteria. Under the plan, eligible employees can
contribute up to 40% of their salaries, and the company matches
a portion of those associate contributions. The total expense for
this plan was $1.1 million in fiscal 2004, $1.0 million in fiscal
2003, and $885,000 in fiscal 2002.
TABLE 2
Years Ended February 29 or 28
2004 2003 2002
Weighted Average Weighted Average Weighted Average
(Shares in thousands) Shares Exercise Price Shares Exercise Price Shares Exercise Price
Outstanding at beginning of year 4,345 $10.25 3,631 $ 4.81 4,107 $3.16
Granted 2,154 $14.59 1,134 $26.22 1,659 $4.94
Exercised (693) $ 6.53 (285) $ 5.06 (1,941) $1.32
Cancelled (130) $14.88 (135) $ 9.03 (194) $5.95
Outstanding at end of year 5,676 $12.24 4,345 $10.25 3,631 $4.81
Options exercisable at end of year 1,839 $ 8.02 1,440 $ 6.08 821 $6.85
TABLE 3
Options Outstanding as of February 29, 2004 Options Exercisable as of February 29, 2004
Weighted Average
(Shares in thousands) Number Remaining Weighted Average Number Weighted Average
Range of Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
$ 1.63 646 3.0 $ 1.63 414 $ 1.63
$3.22 to $ 4.89 1,289 4.0 $ 4.82 553 $ 4.78
$ 6.06 to $ 9.19 565 2.1 $ 6.56 565 $ 6.56
$12.94 to $20.00 2,159 8.8 $14.33 59 $14.88
$22.47 to $43.44 1,017 5.1 $27.14 248 $27.71
Total 5,676 5.7 $12.24 1,839 $ 8.02