Red Lobster 2015 Annual Report Download - page 50

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
NOTE 13
STOCKHOLDERS’ EQUITY
SHARE REPURCHASE PROGRAM
Repurchased common stock has historically been reflected as a reduction of
stockholders’ equity. On December 17, 2010, our Board of Directors authorized
an additional share repurchase authorization totaling 25.0 million shares in
addition to the previous authorization of 162.4 million shares. Share repurchase
authorizations and cumulative share repurchases under these authorizations,
are as follows:
(in millions) May 31, 2015
Share repurchase authorizations 187.4
Cumulative shares repurchased 182.0
In July 2014, as part of the previously authorized share repurchase
program, we entered into accelerated share repurchase (ASR) agreements
with Goldman, Sachs & Co. and Wells Fargo Bank, National Association
(Dealers). The ASR program provided for the repurchase of an aggregate of
$500.0 million of our common stock. Under the ASR agreements, we paid an
aggregate of $500.0 million to the Dealers in August 2014 and received an
initial delivery of approximately 8.6 million shares on October 1, 2014. In
December 2014, the ASR program was completed and we received the final
delivery of approximately 1.3 million shares. The total number of shares we
purchased in connection with the ASR transactions was based on a combined
discounted volume-weighted average price (VWAP) of $50.12 per share which
was determined based on the average of the daily VWAP of our common stock
over the duration of the program, less an agreed discount. Upon receipt, the
repurchased shares were retired and restored to authorized but unissued
shares of common stock.
The total shares and related cost of our common stock we repurchased
was as follows:
Fiscal Year
(in millions) 2015 2014 2013
Shares Cost Shares Cost Shares Cost
Repurchases of
common stock 10.0 $502.3 — $0.5 1.0 $52.4
As of May 31, 2015, of the 182.0 million cumulative shares repurchased,
169.3 million shares were retired and restored to authorized but unissued shares
of common stock. We expect that all shares of common stock acquired in the
future will also be restored to authorized but unissued shares of common stock.
STOCKHOLDERS’ RIGHTS PLAN
In connection with the announced REIT transaction, our Board approved a
Rights Agreement dated June 23, 2015, to deter any person from acquiring
ownership of more than 9.8 percent of our common stock during the period
leading up to the REIT transaction. Under the Rights Agreement, each share of
our common stock has associated with it one right to purchase one thousandth
of a share of our Series A Junior Participating Cumulative Preferred Stock at
a purchase price of $156.26 per share, subject to adjustment under certain
circumstances to prevent dilution. The rights are exercisable when, and are
not transferable apart from our common stock until, a person or group has
acquired 9.8 percent or more, or makes a tender offer for 9.8 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 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 June 23, 2016.
The Rights Plan will not prohibit tender or exchange offers for all of the stock
of the Company, as if no rights plan existed.