Big Lots 2008 Annual Report Download - page 125

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57
BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
A reconciliation of the number of weighted-average common shares outstanding used in the basic and diluted
earnings per share computations is as follows:
2008 2007 2006
(In thousands)
Weighted-average common shares outstanding:
Basic........................................................ 81,111 101,393 110,336
Dilutive effect of stock options and restricted common shares . . . . . . . . . . . 965 1,149 1,594
Diluted ...................................................... 82,076 102,542 111,930
Share Repurchase Programs
On February 22, 2006, we announced that our Board of Directors authorized the repurchase of up to $150.0
million of our common shares. In accordance with this repurchase program, in 2006 we purchased 9.4 million
common shares having an aggregate cost of $150.0 million with an average price per share of $15.90. In June
2006, as part of this share repurchase program, we paid $14.7 million to enter into a structured share repurchase
transaction which settled in cash on its maturity date in September 2006. The initial cash disbursement and
subsequent receipt of cash were recorded in additional paid-in capital on our consolidated balance sheet. Because
the market price of our common shares was above $15.34 on the maturity date, we received $15.3 million on the
maturity date, representing our original investment of $14.7 million and a $0.6 million return on our investment.
On March 9, 2007, we announced that our Board of Directors authorized the $600.0 million March 2007 Repurchase
Program. On November 30, 2007, we announced that our Board of Directors authorized the $150.0 million November
2007 Repurchase Program commencing with the completion of the March 2007 Repurchase Program, which we
completed on December 3, 2007. As part of the March 2007 Repurchase Program, we received 2.8 million of our
outstanding common shares during the first quarter of 2007, representing the minimum number of shares purchased
under a $100.0 million guaranteed share repurchase transaction (“GSR”). Upon receipt, the 2.8 million shares were
removed from our basic and diluted weighted-average common shares outstanding. The GSR included a forward
contract indexed to the average market price of our common shares that subjected the GSR to a future share
settlement based on the average share price between the contractually specified price inception date of the GSR and
the final settlement date. The forward contract effectively placed a collar around the minimum and maximum number
of our common shares that we purchased under the GSR. We were not required to make any additional payments to
the counterparty under the GSR. In the fourth quarter of 2007, we received 0.4 million additional common shares
from the counterparty in settlement of the GSR. In addition to the GSR, we repurchased approximately 26.8 million
of our outstanding common shares in 2007 in open market transactions at an aggregate cost of $612.5 million under
the March 2007 Repurchase Program and the November 2007 Repurchase Program.
In the first quarter of 2008, we acquired 2.2 million of our outstanding common shares for $37.5 million, which
completed the November 2007 Repurchase Program.
Common shares acquired through these repurchase programs are held in treasury, at cost and are available to
meet obligations under equity compensation plans and for general corporate purposes.
Note 7 — Share-Based Plans
In May 2005, our shareholders approved the Big Lots 2005 Long-Term Incentive Plan (“2005 Incentive Plan”).
The 2005 Incentive Plan replaced the Big Lots, Inc. 1996 Performance Incentive Plan (“1996 Incentive Plan”).
Beginning January 1, 2006, employee equity awards have been issued under the 2005 Incentive Plan. In May
2008, our shareholders approved an amendment to the 2005 Incentive Plan that, among other things, increased
the number of common shares that we can award under the plan and permitted our non-employee directors to be
eligible to participate in the plan.
Note 6 — Shareholders’ Equity (Continued)