Red Lobster 2003 Annual Report Download - page 41

2003 ANNUAL REPORT 39
NOTE 9
Stockholders’ Equity
Treasury Stock
Our Board of Directors has authorized us to repurchase up to
115.4 million shares of our common stock. In fiscal 2003, 2002,
and 2001, we purchased treasury stock totaling $213,311,
$208,578, and $176,511, respectively. As of May 25, 2003,
a total of 98.5 million shares have been repurchased under
the authorization. The repurchased common stock is reflected
as a reduction of stockholders’ equity.
Stock Purchase/Loan Program
We have share ownership guidelines for our officers. To assist them
in meeting these guidelines, we implemented the 1998 Stock
Purchase/Option Award Loan Program (Loan Program) in
conjunction with our Stock Option and Long-Term Incentive
Plan of 1995. The Loan Program provided loans to our officers
and awarded two options for every new share purchased, up to
a maximum total share value equal to a designated percentage
of the officer’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 us until the loan is repaid. The interest rate for
loans under the Loan Program is fixed and is equal to the applica-
ble federal rate for mid-term loans with semi-annual compound-
ing 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. Effective
July 30, 2002, and in compliance with the Sarbanes-Oxley Act
of 2002, we no longer issue new loans to our executive-level
officers under the Loan Program. We account for outstanding
officer notes receivable as a reduction of stockholders’ equity.
Stockholders’ Rights Plan
Under our amended Rights Agreement, each share of our common
stock has associated with it two-thirds of a right to purchase one-
hundredth of a share of our 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 our common stock reflects an
adjustment resulting from our three-for-two stock split in May 2002.
The rights are exercisable when, and are not transferable apart
from our common stock until, a person or group has acquired
20 percent or more, or makes a tender offer for 20 percent or more,
of our common stock. If the specified percentage of our common
stock is then acquired, each right will entitle the holder (other than
the acquiring company) to receive, upon exercise, common stock
of either us or the acquiring company having a value equal to two
times the exercise price of the right. The rights are redeemable by
our Board of Directors under certain circumstances and expire on
May 24, 2005.
Stock Split
On March 21, 2002, our Board of Directors declared a three-for-
two split of our common stock. The stock split was accomplished
through a 50 percent stock dividend, which was distributed on
May 1, 2002 to stockholders of record as of the close of business
on April 10, 2002. In connection with the stock split, the num-
ber of common shares reserved for issuance or subject to issuance
under our stock option, stock grant, and other plans was propor-
tionately increased. The total number of common and preferred
shares authorized for issuance under our Articles of Incorporation
remained the same. All applicable references to number of shares
and per share amounts of common stock in these financial state-
ments and notes have been adjusted to reflect the stock split.
Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income
(loss) are as follows:
May 25, May 26,
2003 2002
Foreign currency translation adjustment $(10,354) $(12,933)
Unrealized gains on derivatives 382 380
Minimum pension liability adjustment (517) (288)
Total accumulated other
comprehensive income (loss) $(10,489) $(12,841)
Reclassification adjustments associated with pre-tax net
derivative income (losses) realized in net earnings for fiscal 2003,
2002, and 2001 amounted to $994, ($262), and $0, respectively.
Financial Review 2003
Notes to Consolidated Financial Statements