Dell 2003 Annual Report Download - page 47

Table of Contents
Series A Junior Participating Preferred Stock — In conjunction with the distribution of Preferred Share Purchase Rights (see below), Dell's Board of
Directors designated 200,000 shares of preferred stock as Series A Junior Participating Preferred Stock ("Junior Preferred Stock") and reserved such shares for
issuance upon exercise of the Preferred Share Purchase Rights. At January 30, 2004 and January 31, 2003, no shares of Junior Preferred Stock were issued or
outstanding.
Common Stock
Authorized Shares — As of January 30, 2004, Dell is authorized to issue seven billion shares of common stock, par value $.01 per share.
Share Repurchase Program — Dell has a share repurchase program that authorizes the purchase of up to 1.25 billion shares of common stock to manage the
dilution resulting from shares issued under Dell's employee stock plans. As of the end of fiscal 2004, Dell had cumulatively repurchased 1.1 billion shares for
an aggregate cost of approximately $14 billion. During fiscal 2004, Dell repurchased 63 million shares of common stock for an aggregate cost of $2.0 billion.
Dell historically utilized equity instrument contracts to facilitate its repurchase of common stock; however, all remaining put and call contracts were settled in
full during the fourth quarter of fiscal 2003.
Preferred Share Purchase Rights
In December 1995, Dell distributed a dividend of one Preferred Share Repurchase Right (a "Right") for each outstanding share of common stock, and since
that distribution, shares of common stock have been issued with accompanying Rights. Each Right entitles the holder to purchase shares of Junior Preferred
Stock at specified prices and rates. The Rights become exercisable when a person or group acquires 15% or more of Dell's outstanding common stock. When
it becomes exercisable, a Right will entitle the holder (other than the acquiring person or group) to purchase, at the Right's then current exercise price, the
number of shares of common stock having a market value of twice the exercise price of the Right. The Rights also contain provisions relating to mergers or
other business combinations.
In certain circumstances, the Board of Directors may, at its option, exchange Rights (other than Rights held by the acquiring person or group) for shares of
common stock or shares of Junior Preferred Stock at specified exchange rates. In addition, Dell will be entitled to redeem the Rights at $.001 per Right at any
time before a person or group has acquired 15% or more of Dell's outstanding common stock. The Rights expire on November 29, 2005. The Board of
Directors may amend the terms of the Rights to lower the 15% acquisition threshold to not less than the greater of (a) any percentage greater than the largest
percentage of common stock known by Dell to be owned by any person (other than Michael S. Dell) or (b) 10%.
Neither the ownership nor the further acquisition of common stock by Michael S. Dell will cause the Rights to become exercisable or nonredeemable or will
trigger the other features of the Rights.
NOTE 5 — Benefit Plans
Stock Option Plans — Dell has the following four stock option plans (collectively referred to as the "Option Plans") under which options were outstanding as
of January 30, 2004:
• The Dell Computer Corporation 1989 Stock Option Plan (the "1989 Option Plan")
• The Dell Computer Corporation Incentive Plan (the "1994 Incentive Plan") 44