Sonic 2004 Annual Report Download - page 34

12. Stockholders’ Equity
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, stockholders 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.
On April 30, 2004, the Company’s board of directors authorized a three-for-two stock
split in the form of a stock dividend. A total of 24,845,132 shares of common stock were
issued on May 21,2004 in connection with the split,and an aggregate amount equal to the
par value of the common stock issued of $248 was reclassified from paid-in capital to
common stock.
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
759,375 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 4,050,000 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 675,000 shares of the Company’s common stock to the
Company’s independent directors. At August 31, 2004, 1,082,857 shares were available for
grant under the 2001 Employee Plan and 425,250 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 Compensation 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:
2 004 2003 2002
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding—
beginning of year 5,949,084 $ 9.93 6,274,796 $ 8.22 6,628,365 $ 6.66
Granted 743,135 21.39 878,552 17.57 808,280 18.23
Exercised (846,746) 6.63 (1,054,362) 5.39 (909,962) 5.30
Forfeited (70,151) 17.82 (149,902) 14.99 (251,887) 9.97
Outstanding—
end of year 5,775,322 $11.79 5,949,084 $ 9.93 6,274,796 $ 8.22
Exercisable at
end of year 4,271,690 $ 9.08 4,292,694 $ 7.36 4,480,329 $ 5.90
Weighted average fair
value of options granted
during the year $ 10.34 $ 8.30 $ 8.63
A summary of the Company’s options was as follows as of August 31, 2004:
Options Outstanding Options Exercisable
Weighted
Number Average Weighted Number Weighted
Outstanding Remaining Average Exercisable Average
as of Contractual Exercise as of Exercise
Range of Exercise Prices 8/31/2004 Life (Yrs.) Price 8/31/2004 Price
$ 2.99 to $ 3.80 1,029,702 1.93 $ 3.59 1,029,702 $ 3.59
$ 4.35 to $ 8.56 1,218,623 4.43 $ 7.06 1,218,623 $ 7.06
$ 8.59 to $ 11.04 1,192,394 5.86 $ 10.05 1,192,394 $ 10.05
$ 13.64 to $ 18.13 1,156,961 8.22 $ 16.82 531,859 $ 16.29
$ 19.54 to $ 21.33 1,079,939 8.81 $ 20.55 299,112 $ 19.54
$ 21.41 to $ 22.33 97,703 9.50 $ 22.16 – –
$ 2.99 to $ 22.33 5,775,322 5.94 $ 11.79 4,271,690 $ 9.08
Notes to Consolidated Financial Statements
August 31, 2004, 2003 and 2002 (In thousands, except share data)
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