Stockholders' Equity

3 Months Ended

Apr. 01, 2014

Stockholders' Equity

Stockholders' Equity

5. Stockholders’ Equity

During the first quarter of fiscal 2014, our Board of Directors approved a cash dividend of $0.14 per share which was paid on March 11, 2014 to stockholders of record as of the close of business on February 26, 2014.  Future decisions to pay, increase or decrease dividends continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other such factors that the Board considers relevant.

In July 2013, our Board increased the authorization to repurchase our common stock by 7.5 million shares to 48.5 million shares.  Under this and all previous authorizations, we have cumulatively repurchased 40.9 million shares at a total cost of $1,114.5 million through April 1, 2014, including 2.1 million shares of our common stock at a cost of $99.0 million during the first quarter of fiscal 2014.  Repurchased common stock is reflected as a reduction of stockholders’ equity.  Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.  On October 21, 2013, our Board approved the adoption of a prearranged share repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Act”), effective from January 2, 2014 through July 1, 2014.

On February 27, 2014, we entered into an agreement with a financial institution to repurchase $75 million of our common stock under a collared accelerated stock repurchase (“ASR”) program.  The number of common shares to be repurchased under the ASR program generally will be based on the volume weighted average share price of our common stock.  The minimum number of shares to be repurchased, 1.4 million, was delivered during March 2014.  The maximum number of shares that can be received under the program is 1.7 million and will be determined based on the market price of our common stock from March 4, 2014 through the term of the program.  We will receive additional shares, if any, no later than September 4, 2014.

The timing and number of shares repurchased pursuant to the share repurchase authorization are subject to a number of factors, including legal constraints and financial covenants under our Facility that limit share repurchases based on a defined ratio.  See Note 3 for further discussion of our long-term debt.  Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us.  Purchases in the open market are made in compliance with Rule 10b-18 of the Act.  We make the determination to repurchase shares based on several factors, including an evaluation of current and future capital needs associated with new restaurant development, current and forecasted cash flows, including dividend payments, a review of our capital structure and cost of capital, our share price and current market conditions.  Our objectives with regard to share repurchases are to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth.