HR Block 2005 Annual Report Download - page 130

stock option grants and ESPP options during the following We have 401(k) defined contribution plans covering all full-time
periods: employees following the completion of an eligibility period. Our
contributions to these plans are discretionary and totaled
Year ended April 30, 2005 2004 2003 $33.4 million, $28.9 million and $20.7 million for fiscal years 2005,
Stock option grants – management: 2004 and 2003, respectively.
Risk-free interest rate 3.86% 2.64% 3.82%
Expected life 5 years 5 years 5 years
Expected volatility 32.07% 31.13% 29.30%
Dividend yield 1.84% 1.63% 1.59%
Weighted average fair value $ 5.87 $ 5.01 $ 5.12
Stock option grants – seasonal:
Risk-free interest rate 2.60% 1.21% 2.82%
Expected life 2 years 2 years 2 years
Expected volatility 27.65% 31.97% 28.71%
Dividend yield 1.85% 1.66% 1.39%
Weighted average fair value $ 3.29 $ 3.03 $ 2.96
ESPP options:
Risk-free interest rate 2.17% .97% 1.45%
Expected life 6 months 6 months 6 months
Expected volatility 21.18% 38.14% 44.38%
Dividend yield 1.82% 1.55% 1.60%
Weighted average fair value $ 3.84 $ 4.98 $ 4.51
NOTE 14: SHAREHOLDER RIGHTS PLAN
On July 25, 1998, the rights under a shareholder rights plan, value, at a price of $53.75, subject to adjustment. The registered
adopted by our Board of Directors on March 25, 1998, became holder of each Right then also has the right (the ‘‘Subscription
effective. The 1998 plan was adopted to deter coercive or unfair Right’’) to purchase for the exercise price of the Right, in lieu of
takeover tactics and to prevent a potential acquirer from gaining shares of Participating Preferred Stock, a number of shares of our
control of the Company without offering a fair price to all of our Common Stock having a market value equal to twice the exercise
stockholders. Under the 1998 plan, a dividend of one right (a price of the Right. Following an Unapproved Stock Acquisition, if
‘‘Right’’) per share was declared and paid on each share of our we are involved in a merger, or 50% or more of our assets or
Common Stock outstanding on July 25, 1998. Rights automatically earning power are sold, the registered holder of each Right has
attach to shares issued after such date. the right (the ‘‘Merger Right’’) to purchase for the exercise price
Under the 1998 plan, a Right becomes exercisable when a of the Right a number of shares of the common stock of the
person or group of persons acquires beneficial ownership of 15% surviving or purchasing company having a market value equal to
or more of the outstanding shares of our Common Stock without twice the exercise price of the Right.
the prior written approval of our Board of Directors (an After an Unapproved Stock Acquisition, but before any person
‘‘Unapproved Stock Acquisition’’), and at the close of business on or group of persons acquires 50% or more of the outstanding
the tenth business day following the commencement of, or the shares of our Common Stock, the Board of Directors may
public announcement of an intent to commence, a tender offer exchange all or part of the then outstanding and exercisable
that would result in an Unapproved Stock Acquisition. We may, Rights for Common Stock at an exchange ratio of one share of
prior to any Unapproved Stock Acquisition, amend the plan to Common Stock per Right (the ‘‘Exchange’’). Upon any such
lower such 15% threshold to not less than the greater of (1) any Exchange, the right of any holder to exercise a Right terminates.
percentage greater than the largest percentage of beneficial Upon the occurrence of any of the events giving rise to the
ownership by any person or group of persons then known by the exercisability of the Subscription Right or the Merger Right or the
Company, and (2) 10% (in which case the acquisition of such ability of the Board of Directors to effect the Exchange, the
lower percentage of beneficial ownership then constitutes an Rights held by the acquiring person or group under the new plan
Unapproved Stock Acquisition and the Rights become will become void as they relate to the Subscription Right, the
exercisable). When exercisable, the registered holder of each Merger Right or the Exchange.
Right may purchase from the Company one four-hundredth of a We may redeem the Rights at a price of $.0003125 per Right at
share of a class of our Participating Preferred Stock, without par any time prior to the earlier of (1) an Unapproved Stock
H&R BLOCK 2005 Form 10K
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