Notes to Consolidated Financial Statements
  

Note M - Employee Benefits

Stock Option Plans

The Company has stock option plans (the "Plans") that provide for the granting of both qualified and non-qualified options to employees and directors. Options are generally granted at the average market price of the Company's common stock on the date of grant and are exercisable beginning one year from the date of grant and expire up to ten years from the date of grant. Stock options transactions under the Plans were as follows.

 
Year ended February 28 (29), 
 
2001 
2000 
1999 
Number of Shares: 
  Outstanding options at beginning of year 
14,059,515 
11,497,044 
11,151,799 
    Options granted 
2,631,140 
3,643,111 
1,648,647 
    Options exercised 
(2,797,939)
(602,021)
(1,239,662)
    Options expired or cancelled 
(460,069)
(478,619)
(63,740)
  Outstanding options at end of year 
13,432,647 
14,059,515 
11,497,044 
Weighted Average Exercise Price: 
  Outstanding options at beginning of year 
$ 
27.44 
$ 
24.81 
$ 
20.57 
    Options granted 
26.60 
35.27 
46.71 
    Options exercised 
22.06 
13.45 
15.90 
    Options expired or canceled 
33.05 
37.64 
25.11 
  Outstanding options at end of year 
$ 
28.24 
$ 
27.44 
$ 
24.81 
Options exercisable at end of year 
7,457,090 
8,299,892 
6,514,039 
Options available for future grant 
5,919,027 
2,673,480 
5,840,713 
       

  Status of the outstanding stock options under the Plans as of February 28, 2001 was as follows:

 
Outstanding Options 
Exercisable Options 
Exercise Price Range  Weighted
Average
Remaining
Contractual Life 
Number 
Weighted
Average
Exercise
Price
Number 
Weighted
Average
Exercise
Price
$  2.80 - $15.90 
2.2 years 
636,459 
$ 
14.66 
636,459 
$ 14.66 
$15.91 - $21.20 
3.2 
1,556,501 
17.45 
1,556,501 
17.46 
$21.21 - $26.50 
4.7 
5,205,745 
23.56 
3,048,653 
23.04 
$26.51 - $31.80 
5.3 
2,478,545 
27.52 
814,019 
27.08 
$31.81 - $42.40 
3.5 
2,134,194 
40.07 
651,032 
40.94 
$42.41 - $53.00
7.0 
1,421,203 
46.75 
750,426 
46.75 
$  2.80 - $53.00 
4.6 years 
13,432,647 
$ 
28.24 
7,457,090 
$ 25.55 

  Had the estimated fair value of the options granted during the period been included in compensation expense, the Company's net earnings and earnings per share would have been as follows:

 
Year ended February 28 (29), 
(Dollar amounts in thousands, except per share data) 
2001 
2000 
1999 
Net Earnings 
  As reported 
$ 
374,153 
$ 
410,243 
$ 
385,401 
  Pro forma 
$ 
346,026 
$ 
379,632 
$ 
366,118 
Basic Earnings Per Share 
  As reported 
$ 
3.26 
$ 
3.63 
$ 
3.46 
  Pro forma 
$ 
3.01 
$ 
3.36 
$ 
3.29 
Diluted Earnings Per Share 
  As reported 
$ 
3.14 
$ 
3.52 
$ 
3.29 
  Pro forma 
$ 
2.91 
$ 
3.25 
$ 
3.13 
 

  The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model that has been modified to consider cash dividends to be paid. The following weighted-average assumptions were used for grants in Fiscal 2001, 2000 and 1999, respectively: dividend yield of 1.57%, 1.29% and 0.72%; expected volatility of 38%, 34% and 40%; risk-free interest rates of 6.4%, 6.0% and 5.5% and expected lives of five years for options granted in all three years. The average fair value of options granted during Fiscal 2001, 2000 and 1999 was $10.69, $13.66 and $19.20, respectively.

Pension Plan

The Company has a defined benefit pension plan (the "Plan") covering substantially all of its employees. The Company's policy is to contribute the amount actuarially determined to be necessary to pay the benefits under the Plan, and in no event to pay less than the amount necessary to meet the minimum funding standards of ERISA.

  The following table sets forth the Plan's funded status and amounts recognized in the Company's financial statements.

     
 
Year ended February 28 (29), 
(Dollar amounts in thousands) 
2001 
2000 
Change in benefit obligation 
  Benefit obligation at beginning of year 
$ 
32,593 
$ 
29.777 
  Service cost 
6,284 
5,535 
  Interest cost 
2,615 
2,204 
  Transfer of plan assets 
- 
(453)
  Actuarial loss (gain) 
386 
(41)
  Benefits paid 
(367)
(401)
  Change in discount rate 
4,690 
(4,028)
  Benefit obligation at end of year 
$ 
46,201 
$ 
32,593 
Change in plan assets 
  Fair value of plan assets at beginning of year 
$ 
30,877 
$ 
22,775 
  Actual return on plan assets 
(4,189)
3,110 
  Employer contribution 
8,318 
5,846 
  Transfer of plan assets 
- 
(453)
  Benefits paid 
(368)
(401)
  Fair value of plan assets at end of year 
$ 
34,638 
$ 
30,877 
Funded status at end of year 
$ 
(11,562)
$ 
(1,716)
Unrecognized net actuarial loss (gain) 
7,146 
(4,977)
Unrecognized prior service cost 
824 
924 
Unrecognized transaction asset 
(71)
(142)
Net amount recognized 
$ 
(3,663)
$ 
(5,911)
 

  The following table sets forth the components of net periodic benefit cost for 2001 and 2000.

     
 
Year ended February 28 (29), 
(Dollar amounts in thousands) 
2001 
2000 
Service cost 
$ 
6,284 
$ 
5,535 
Interest cost 
2,615 
2,204 
Expected return on plan assets 
(2,768)
(2,051)
Amortization of prior service cost 
99 
99 
Amortization of unrecognized transition asset 
(71)
(70)
Recognized net actuarial gain 
(89)
- 
  Net periodic benefit cost 
$ 
6,070 
$ 
5,717 

  The weighted-average assumptions used in calculating the amounts above were: 

 
Year ended February 28 (29), 
 
2001 
2000 
Discount rate 
7.50% 
8.00% 
Expected return on plan assets 
8.00% 
8.00% 
Rate of compensation increase 
4.00% 
4.00% 

  Pension expense for the years ended February 28 (29), 2001, 2000 and 1999 was $6.1 million, $5.7 million and $4.9 million, respectively. The Company makes contributions to the Plan in amounts that are deductible in accordance with federal income tax regulations.

Defined Contribution Plan

The Company has a defined contribution plan covering all full-time employees of the Company who have at least one year of service and are age 21 or older. Participants may contribute up to 16% of pre-tax annual compensation, as defined in the plan agreement. Participants may also contribute, at the discretion of the plan administrator, amounts representing distributions from other qualified defined benefit or contribution plans. The Company makes a discretionary matching contribution equal to 50% of the participant contributions up to a maximum of 6% of the participants' base compensation, as defined in the plan agreement. The defined contribution plan is subject to the provisions of ERISA.