Pottery Barn 2006 Annual Report Download - page 68

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Stock-based awards of 4,181,000, 320,000 and 196,000 in fiscal 2006, fiscal 2005 and fiscal 2004, respectively,
were not included in the computation of diluted earnings per share, as their inclusion would be anti-dilutive.
Note H: Common Stock
Authorized preferred stock consists of 7,500,000 shares at $0.01 par value of which none was outstanding during
fiscal 2006 or fiscal 2005. Authorized common stock consists of 253,125,000 shares at $0.01 par value. Common
stock outstanding at the end of fiscal 2006 and fiscal 2005 was 109,868,000 and 114,779,000 shares,
respectively. Our Board of Directors is authorized to issue equity awards for up to the total number of shares
authorized and remaining available for grant under our 2001 Amended and Restated Long-Term Incentive Plan.
During fiscal 2006, we repurchased and retired a total of 5,824,500 shares of common stock under all programs
previously authorized at a weighted average cost of $31.85 per share and an aggregate cost of approximately
$185,508,000. As of fiscal year-end, the remaining authorized number of shares eligible for repurchase was
1,195,500.
In March 2007, our Board of Directors authorized a stock repurchase program to acquire up to an additional
5,000,000 shares of our common stock through open market and privately negotiated transactions, at times and in
such amounts as management deems appropriate. The timing and actual number of shares repurchased will
depend on a variety of factors including price, corporate and regulatory requirements, capital availability and
other market conditions. The stock repurchase program does not have an expiration date and may be limited or
terminated at any time without prior notice.
In March 2006, our Board of Directors authorized the initiation of a quarterly cash dividend. During fiscal 2006,
total cash dividends declared were approximately $45,507,000, or $0.40 per common share, of which
$34,435,000 was paid during the year and $11,072,000 was paid in February 2007 to shareholders of record as of
the close of business on January 26, 2007.
In March 2007, our Board of Directors authorized an increase in our quarterly cash dividend of $0.015 to $0.115
per common share payable on May 24, 2007 to shareholders of record as of the close of business on April 27,
2007. The aggregate quarterly dividend is estimated at approximately $12,600,000 based on the current number
of outstanding shares. The indicated annual cash dividend, subject to capital availability, is $0.46 per common
share or approximately $50,500,000 in fiscal 2007. Our quarterly cash dividend could be reduced or discontinued
at any time.
Note I. Stock-Based Compensation
Prior to May 2006, our 1993 Stock Option Plan, as amended (the “1993 Plan”), provided for grants of incentive
and nonqualified stock options up to an aggregate of 17,000,000 shares to key employees and Board members of
the company or any parent or subsidiary. Annual grants were limited to stock options to purchase 200,000 shares
on a per person basis under this plan. All stock option grants made under the 1993 Plan have a maximum term of
ten years, except incentive stock options issued to shareholders with greater than 10% of the voting power of all
of our stock, which have a maximum term of five years. The exercise price of these stock options is not less than
100% of the closing price of our stock on the date prior to the grant date or not less than 110% of such closing
price for an incentive stock option granted to a 10% shareholder. Stock options granted to employees generally
vest over five years. Stock options granted to non-employee Board members generally vest in one year.
Prior to May 2006, our 2000 Nonqualified Stock Option Plan, as amended (the “2000 Plan”), provided for grants
of nonqualified stock options up to an aggregate of 3,000,000 shares to employees who were not officers or
Board members. Annual grants were not limited on a per person basis under this plan. All nonqualified stock
option grants under the 2000 Plan have a maximum term of ten years with an exercise price equal to the closing
price of our stock on the date prior to the grant date. Stock granted to employees generally vest over five years.
Prior to May 2006, our Amended and Restated 2001 Long-Term Incentive Plan (the “2001 Plan”) provided for
grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively,
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