Lowe's 2014 Annual Report Download - page 62

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At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares. Under the
terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial
institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to
either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of
shares the Company would be required to deliver.
The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-
weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares
under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average
common shares outstanding for basic and diluted earnings per share.
These ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. The par value
of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in
excess of par value and retained earnings. The forward stock purchase contract was considered indexed to the Company’s own
stock and was classified as an equity instrument.
During the year ended January 30, 2015, the Company also repurchased shares of its common stock through the open market
totaling 48.5 million shares for a cost of $2.6 billion.
The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the
statutory withholding tax liability resulting from the vesting of restricted stock awards.
Shares repurchased for 2014 and 2013 were as follows:
2014 2013
(In millions) Shares Cost1 Shares Cost1
Share repurchase program 73.8
$ 3,880
86.6
$ 3,732
Shares withheld from employees 0.9
47
1.0
38
Total share repurchases 74.7
$ 3,927
87.6
$ 3,770
1 Reductions of $3.6 billion and $3.4 billion were recorded to retained earnings, after capital in excess of par value was
depleted, for 2014 and 2013, respectively.
NOTE 9: Accounting for Share-Based Payment
Overview of Share-Based Payment Plans
The Company has a number of active and inactive equity incentive plans (the Incentive Plans) under which the Company has
been authorized to grant share-based awards to key employees and non-employee directors. The Company also has an
employee stock purchase plan (the ESPP) that allows employees to purchase Company shares at a discount through payroll
deductions. All of these plans contain a nondiscretionary anti-dilution provision that is designed to equalize the value of an
award as a result of any stock dividend, stock split, recapitalization, or any other similar equity restructuring.
A total of 199.0 million shares have been previously authorized for grant to key employees and non-employee directors under
all of the Company's Incentive Plans, but only 80.0 million of those shares were authorized for grants of share-based awards
under the Company's currently active Incentive Plans. In addition, a total of 70.0 million shares have been previously
authorized for purchases by employees participating in the ESPP.
At January 30, 2015, there were 37.2 million shares remaining available for grants under the currently active Incentive Plans
and 25.5 million shares remaining available for purchases under the ESPP.
52
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