Lowe's 2004 Annual Report Download - page 41

Lowe’s 2004 Annual Report Page 39
program had a remaining authorized balance of $1 billion for future
common stock repurchases. During 2004, the Company repurchased
18.4 million shares at a total cost of $1 billion under the December
2003 share repurchase authorization, leaving no amounts remaining
under this prior authorization.
The Company granted restricted stock awards of 346,000 shares
with a per share weighted-average fair value of $56.75 in 2004. The
Company granted restricted stock awards of 550,000 shares with a per
share weighted-average fair value of $39.30 in 2003. These grants nor-
mally vest over three years. No restricted stock awards were granted in
2002, with no related expense recorded in 2002. Related expenses
(charged to compensation expense) for 2004 and 2003 were $12 mil-
lion and $5 million, respectively.
The Company has three stock incentive plans, referred to as the
“2001”, “1997” and “1994” Incentive Plans, under which incentive and
non-qualified stock options may be granted to key employees. No
awards may be granted after 2011 under the 2001 plan, after 2007
under the 1997 plan and after 2004 under the 1994 plan. Stock options
generally have terms of seven years, normally vest evenly over three
years, and are assigned an exercise price of not less than the fair mar-
ket value on the date of grant. Related expenses (charged to compen-
sation expense) for 2004 and 2003 were $39 million and $33 million,
respectively. At January 28, 2005, there were 17,375,000 and 473,000
shares available for grants under the 2001 and 1997 plans, respective-
ly, and no shares available for grants under the 1994 plan.
Stock option information related to the 2001, 1997 and 1994
Incentive Plans is summarized as follows:
Key Employee Stock Option Plans
Shares Weighted-Average
(In Thousands) Exercise Price Per Share
Outstanding at February 1, 2002 19,141 $28.77
Granted 5,537 43.65
Canceled or Expired (1,085) 34.28
Exercised (2,942) 22.20
Outstanding at January 31, 2003 20,651 $33.37
Granted 4,318 40.39
Canceled or Expired (1,129) 39.66
Exercised (3,745) 26.20
Outstanding at January 30, 2004 20,095 $35.68
Granted 2,959 56.11
Canceled or Expired (759) 44.88
Exercised (3,077) 30.18
Outstanding at January 28, 2005 19,218 $39.56
Exercisable at January 28, 2005 8,795 $30.93
Exercisable at January 30, 2004 7,525 $27.58
Exercisable at January 31, 2003 7,770 $23.75
Outstanding Exercisable
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Weighted- Weighted- Weighted-
Range of Average Average Average
Exercise Options Remaining Exercise Options Exercise
Prices (In Thousands) Term Price (In Thousands) Price
$ 5.18 - $ 7.52 48 0.8 $ 5.85 48 $ 5.85
8.70 - 12.60 14 2.3 10.79 14 10.79
13.19 - 19.44 173 2.6 14.95 173 14.95
21.34 - 31.16 5,508 2.4 25.41 5,505 25.41
35.12 - 52.06 10,958 4.4 43.31 3,055 42.27
$53.57 - $ 58.93 2,517 6.1 56.67 – –
Totals 19,218 4.0 $ 39.56 8,795 $ 30.93
The Company maintains the Lowe’s Companies, Inc. Directors’
Stock Option Plan for its non-employee directors. During the term of
the Plan, each non-employee Director is awarded 4,000 options on the
date of the first board meeting after each annual meeting of the
Company’s shareholders (the award date). The maximum number of
shares available for grant under the Plan is 500,000, subject to adjust-
ment. No awards may be granted under the Plan after the award date
in 2008. The options vest evenly over three years, expire after seven
years and are assigned a price equal to the fair market value of the
Company’s common stock on the date of grant.
Stock option information related to the Directors’ Stock Option
Plan is summarized as follows:
Directors’ Stock Option Plans
Shares Weighted-Average
(In Thousands) Exercise Price Per Share
Outstanding at February 1, 2002 100 $28.92
Granted 40 47.16
Exercised (4) 25.85
Outstanding at January 31, 2003 136 $34.38
Granted 36 42.26
Exercised (25) 28.74
Canceled or Expired (12) 43.03
Outstanding at January 30, 2004 135 $36.77
Granted 40 53.57
Exercised (10) 27.62
Canceled or Expired (8) 42.83
Outstanding at January 28, 2005 157 $41.28
Exercisable at January 28, 2005 89 $34.96
Exercisable at January 30, 2004 71 $31.28
Exercisable at January 31, 2003 59 $27.06
Outstanding Exercisable
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––
Weighted- Weighted- Weighted-
Range of Average Average Average
Exercise Options Remaining Exercise Options Exercise
Prices (In Thousands) Term Price (In Thousands) Price
$22.88 - $ 25.84 32 1.8 $ 24.36 32 $ 24.36
$35.91 - $ 53.57 125 5.0 45.60 57 40.87
Totals 157 4.3 $ 41.28 89 $ 34.96
The Company maintains a qualified Employee Stock Purchase Plan
that allows eligible employees to participate in the purchase of desig-
nated shares of the Company’s common stock. Ten million shares were
authorized for this plan with 3,322,437 remaining available at January
28, 2005. For offering periods prior to December 1, 2004, the purchase
price of the stock under the plan was equal to 85% of the lower of the
closing price at the beginning or the end of each semi-annual stock
purchase period. However, beginning with the December 1, 2004, offer-
ing period, the plan’s provisions were modified to provide that the pur-
chase price would be equal to 85% of the closing price on the date of
purchase. The Company issued 1,331,294, 1,441,518, and 1,341,241
shares of common stock pursuant to this plan during 2004, 2003 and
2002, respectively. As discussed in Note 1, effective February 1, 2003, the
Company adopted the fair-value recognition provisions of SFAS No.
123 for all employee awards granted or modified after January 31, 2003.
As a result, during 2004 and 2003, the Company recognized compen-
sation expense totaling $19 million and $13 million, respectively, relat-
ing to stock issued under the Employee Stock Purchase Plan during
that period, which is included in the $70 million and $51 million in