Sonic 2003 Annual Report Download - page 44

p.42
Notes to Consolidated Financial Statements
August 31, 2003, 2002 and 2001 (In thousands, except share data)
On January 17, 2002, the company’s board of directors authorized a three-for-two stock split in the form of a stock
dividend. A total of 16,051,750 shares of common stock were issued on February 8, 2002 in connection with the split,
and an aggregate amount equal to the par value of the common stock issued of $161 was reclassified from paid-in capital
to common stock. In addition, shareholders approved an increase in common stock authorized from 40,000,000 to
100,000,000 shares. The stated par value of each share was not changed from $.01.
All references in the accompanying consolidated financial statements to weighted average numbers of shares
outstanding, per share amounts and Stock Purchase Plan and Stock Options share data have been adjusted to reflect the
stock splits on a retroactive basis.
Stock Purchase Plan
The company has an employee stock purchase plan for all full-time regular employees. Employees are eligible to
purchase shares of common stock each year through a payroll deduction not in excess of the lesser of 10% of
compensation or $25. The aggregate amount of stock that employees may purchase under this plan is limited to 506,250
shares. The purchase price will be between 85% and 100% of the stock’s fair market value and will be determined by the
company’s board of directors.
Stock Options
In January 2001 the stockholders of the company adopted the 2001 Sonic Corp. Stock Option Plan (the “2001
Employee Plan”) and the 2001 Sonic Corp. Directors’ Stock Option Plan (the “2001 Directors’ Plan”). (The 2001
Employee Plan and the 2001 Directors’ Plan are referred to collectively as the “2001 Plans.”) The 2001 Plans were
adopted to replace the 1991 Sonic Corp. Stock Option Plan and the 1991 Sonic Corp. Directors’ Stock Option Plan
(collectively, the “1991 Plans”), because the 1991 Plans were expiring after ten years as required by the Internal Revenue
Code. Options previously granted under the 1991 Plans continue to be outstanding after the adoption of the 2001 Plans
and are exercisable in accordance with the original terms of the applicable 1991 Plan.
Under the 2001 Employee Plan, the company is authorized to grant options to purchase up to 2,700,000 shares of
the company’s common stock to employees of the company and its subsidiaries. Under the 2001 Directors’ Plan, the
company is authorized to grant options to purchase up to 450,000 shares of the company’s common stock to the
company’s outside directors. At August 31, 2003, 1,139,023 shares were available for grant under the 2001 Employee
Plan and 315,000 shares were available for grant under the 2001 Director’s Plan. The exercise price of the options to be
granted is equal to the fair market value of the company’s common stock on the date of grant. Unless otherwise provided
by the company’s Stock Plan Committee, options under both plans become exercisable ratably over a three-year period or
immediately upon change in control of the company, as defined by the plans. All options expire at the earlier of 30 days
after termination of employment or ten years after the date of grant.
A summary of the company’s stock option activity (adjusted for the stock splits), and related information was as
follows for the years ended August 31:
2003 2002 2001
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding—beginning of year 4,183,197 $ 12.33 4,418,910 $ 10.00 4,666,239 $ 8.24
Granted 585,701 26.36 538,853 27.35 825,720 17.13
Exercised (702,908) 8.08 (606,641) 7.95 (883,769) 6.60
Forfeited (99,934) 22.48 (167,925) 14.95 (189,280) 13.62
Outstanding—end of year 3,966,056 $ 14.90 4,183,197 $ 12.33 4,418,910 $ 10.00
Exercisable at end of year 2,861,796 $ 11.04 2,986,886 $ 8.85 2,917,661 $ 7.41
Weighted average fair value of
options granted during the year $ 12.45 $ 12.94 $ 8.45