Stock Repurchase Program

6 Months Ended

Jun. 03, 2022

Stock Repurchase Program [Abstract]

STOCK REPURCHASE PROGRAM

STOCK REPURCHASE PROGRAM

To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we may repurchase shares in the open market or enter into structured repurchase agreements with third parties. In December 2020, our Board of Directors granted authority to repurchase up to $15 billion in common stock through the end of fiscal 2024.

During our first quarter of fiscal 2022, we entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution whereupon we provided them with a prepayment of $2.4 billion and received an initial delivery of 3.2 million shares of our common stock. Under the terms of the ASR, the total number of shares delivered and average purchase price paid per share will be determined upon settlement based on the Volume Weighted Average Price (“VWAP”) over the term of the ASR, less an agreed upon discount. At settlement, the financial institution may be required to deliver additional shares of our common stock to us or, under certain circumstances, we may be required to make a cash payment or deliver shares of our common stock to the financial institution, with the method of settlement at our election. As of June 3, 2022, a portion of our ASR prepayment was evaluated as an unsettled forward contract indexed to our own stock, classified within stockholders’ equity. Subsequent to June 3, 2022, the ASR was settled which resulted in total repurchases of 5.3 million shares at an average purchase price of $451.55.

During the six months ended June 3, 2022 and June 4, 2021, we also entered into several structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments totaling $1.2 billion and $1.95 billion, respectively. Under the terms of these structured stock repurchase agreements, the financial institutions agreed to deliver shares to us at monthly intervals during the respective contract terms, and the number of shares delivered each month was determined based on the total notional amount of the contracts, the number of trading days in the intervals and the VWAP during the intervals less an agreed upon discount.

During the six months ended June 3, 2022, we repurchased a total of 5.6 million shares, including approximately 2.4 million shares at an average price of $474.52 through structured repurchase agreements entered into during fiscal 2021 and the six months ended June 3, 2022, as well as 3.2 million shares through the ASR described above. During the six months ended June 4, 2021 we repurchased approximately 3.9 million shares at an average price of $478.58 through structured repurchase agreements entered into during fiscal 2020 and the six months ended June 4, 2021.

For the six months ended June 3, 2022, the prepayments were classified as treasury stock, a component of stockholders’ equity on our condensed consolidated balance sheets, at the payment date, though only shares physically delivered to us by June 3, 2022 were excluded from the computation of net income per share. As of June 3, 2022, $400 million of prepayment remained under our outstanding structured stock repurchase agreement.

Subsequent to June 3, 2022, as part of the December 2020 stock repurchase authority, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $1.2 billion. Upon completion of the $1.2 billion stock repurchase agreement, $8.3 billion remains under our December 2020 authority