Family Dollar 2003 Annual Report Download - page 34

At August 30, 2003, August 31, 2002 and September 1, 2001, options for 1.0 million, 1.5 million and 1.5 million shares were exercisable, respectively. The following table
summarizes information about stock options outstanding at August 30, 2003 (In thousands, except per share amounts):
Options Outstanding Options Exercisable
Number Weighted Average Number
Range of Outstanding Remaining Weighted Average Exercisable Weighted Average
Exercise Prices at 8/30/03 Contractual Life Exercise Price at 8/30/03 Exercise Price
$14.75 to $24.24 1,797 1.60 years $18.27 928 $18.44
24.25 to 28.24 1,332 3.06 24.43 33 25.04
28.25 to 39.00 1,872 4.12 29.16 5 28.76
$14.75 to $39.00 5,001 2.94 years $23.99 966 $18.72
At August 30, 2003, August 31, 2002 and September 1, 2001, shares available for granting of stock options under the Company’s stock option plan were 7.2 million, 2.9 million
and 4.2 million shares, respectively.
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8. Employee Stock Option Plan:
The Company’s non-qualified stock option plan provides for the granting of options to
key employees to purchase shares of common stock at prices not less than fair market
value on the date of the grant. Options are exercisable to the extent of 40% after the
second anniversary of the grant, an additional 30% annually on a cumulative basis,
and expire five years from the date of the grant.
If the provisions of SFAS No. 123 expensing had been applied, the Company’s net
income and net income per common share would have been impacted as summarized
in the discussion of the Company’s stock option accounting policy in Note 1.
The average fair value of options granted during fiscal 2003, 2002 and 2001 is $9.14,
$8.61 and $6.37 per share, 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 assumptions:
August 30, August 31, September 1,
2003 2002 2001
Expected dividend yield 0.89% 1.03% 1.26%
Expected stock price volatility 41.54% 44.31% 41.43%
Weighted average risk-free interest rate 2.74% 3.99% 5.96%
Expected life of options (years) 3.5 3.5 3.5
These assumptions are evaluated and revised, as necessary, to reflect market conditions
and experience.
The summary of the status of the Company’s stock-based compensation plan as of
August 30, 2003, August 31, 2002 and September 1, 2001, and changes during the
years then ended were as follows (In thousands, except per share amounts):
Options Range of Option Weighted Average
Outstanding Prices Per Share Exercise Price
Balance, August 27, 2000 4,169 $ 3.83 to $24.75 $12.76
Granted 1,344 17.50 to 30.25 18.41
Exercised (902) 3.83 to 24.25 7.13
Cancelled (225) 4.08 to 24.50 16.90
Balance, September 1, 2001 4,386 $ 5.58 to $30.25 $15.44
Granted 1,475 24.25 to 35.50 25.02
Exercised (1,292) 5.58 to 24.75 10.02
Cancelled (158) 11.38 to 34.75 20.42
Balance, August 31, 2002 4,411 $11.38 to $35.50 $20.05
Granted 1,793 24.75 to 39.00 28.99
Exercised (1,079) 11.38 to 27.75 16.11
Cancelled (124) 15.00 to 37.50 24.95
Balance, August 30, 2003 5,001 $14.75 to $39.00 $23.99
Family Dollar Stores, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Ye ars Ended August 30, 2003, August 31, 2002 and September 1, 2001