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Note 5—Stock Options (Continued)
In fiscal 2005, 2004 and 2003 the Company recognized stock compensation costs of $67,937, $36,508 and
$12,069, respectively. The effects of applying SFAS No. 123 were substantially less in fiscal 2003 than the effects
on net income and earnings per share in both fiscal 2005 and 2004 and expected in future periods because this was
the initial year of adoption. Fiscal 2005 and 2004 reflects compensation expense from options granted in that year,
as well as continuing recognition of expense associated with options issued in prior years as they vest. Shares
granted in fiscal 2005, 2004 and 2003 totaled 10,573,953, 7,780,924 and 8,479,550 shares, respectively, with the
majority of these shares being granted in the middle of the fiscal third quarter for each fiscal year.
Total stock compensation costs on a pre-tax basis that would have been recorded had SFAS No. 123 been
adopted as of its initial effective date would have totaled $98,765, $92,679 and $112,863 in fiscal 2005, 2004 and
2003, respectively.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions used for grants in 2005, 2004 and 2003:
2005 2004 2003
Risk free interest rate ........................... 4.28% 3.38% 3.30%
Expected life ................................. 6.6years 6.2 years 6.0 years
Expected volatility ............................. 38% 44% 46%
Expected dividend yield ......................... 1.11% 1.04% 0%
Stock option transactions relating to the aggregate of the 1993 and 2002 plans are summarized below
(shares in thousands):
2005 2004 2003
Shares Price(1) Shares Price(1) Shares Price(1)
Outstanding at beginning of fiscal year ...... 50,534 $33.45 48,790 $31.93 42,961 $31.49
Granted(2) ............................. 10,574 44.07 7,781 37.19 8,480 30.47
Exercised .............................. (9,138) 30.44 (5,153) 24.23 (2,154) 16.13
Cancelled .............................. (685) 36.44 (884) 36.27 (497) 37.14
Outstanding at end of fiscal year ............ 51,285 $36.14 50,534 $33.45 48,790 $31.93
(1) Weighted-average exercise price/grant price.
(2) The weighted-average fair value based on the Black-Scholes model of options granted during fiscal 2005,
2004 and 2003, were $18.01, $16.01 and $14.84, respectively.
The following table summarizes information regarding stock options outstanding at August 28, 2005
(number of options in thousands):
Options Outstanding Options Exercisable
Range of Prices Number
Remaining
Contractual
Life(1) Price(1) Number Price(1)
$7.63–$34.28 ............................... 18,376 5.30 $27.93 11,592 $25.83
$36.00–$43.00 .............................. 21,551 6.17 38.78 13,405 39.39
$43.79–$52.50 .............................. 11,358 9.12 44.39 990 47.67
51,285 6.51 $36.14 25,987 $33.66
(1) Weighted-average.
At August 29, 2004 and August 31, 2003, there were 27,513 and 25,147 options exercisable at weighted
average exercise prices of $31.84 and $29.02, respectively.
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