Note 5 - Capital Stock and Transactions With Related Parties

12 Months Ended

Apr. 29, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

5.

       

CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES

The Company paid a special cash dividend on common stock of

$69.9

million (

$1.50

per share) on

January 27, 2017.

On

May 5, 2017,

the Company declared a special cash dividend of

$1.50

per share to shareholders of record on

June 5, 2017

.

The cash dividend of

$69.9

million will be paid on or before

August 4, 2017

.

On

January 25, 2013,

the Company sold

400,000

shares of Special Series D Preferred Stock, par value

$1

per share (“Series D Preferred”) for an aggregate purchase price of

$20

million. Series D Preferred had a liquidation preference of

$50

per share and accrued dividends on this amount at an annual rate of

3%

through

April 30, 2014

and, thereafter, at an annual rate equal to

370

basis points above the

3

- Month LIBOR rate. Dividends were cumulative and payable quarterly. There were

no

accrued dividends at

April 29, 2017

and at

April 30, 2016.

The Series D Preferred was nonvoting and redeemable at the option of the Company beginning

May 1, 2014

at

$50

per share. In addition, the Company has

150,000

shares of Series C Preferred Stock, par value

$1

per share, which are held as treasury stock and, therefore, such shares have

no

liquidation value.

On

May 2, 2014,

the Company redeemed

160,000

shares of Series D Preferred, representing

40%

of the amount outstanding, for an aggregate price of

$8

million plus accrued dividends. In connection therewith, the Company accreted and charged to retained earnings

$118,000

of original issuance costs, which was deducted from income available to common shareholders for earnings per share calculation. In conjunction with the partial redemption, the annual dividend rate on the outstanding Series D Preferred was reduced to

2.5%

for the

twelve

month period beginning

May 1, 2014.

In evaluating the impact of the rate change, the Company determined that the related fair value change was immaterial and that

no

adjustment was required.

On

August 1, 2014,

the Company redeemed

120,000

shares of Series D Preferred, representing

50%

of the amount outstanding, for an aggregate price of

$6

million plus accrued dividends. In connection therewith, the Company accreted and charged to retained earnings

$89,000

of original issuance costs, which was deducted from income available to common shareholders for earnings per share calculation.

On

May 1, 2015,

the Company and the holders of the Series D Preferred agreed to extend the

2.5%

annual dividend rate on the outstanding Series D Preferred through

April 30, 2016.

In evaluating the impact of the rate change, the Company determined that the related fair value change was immaterial and that

no

adjustment was required.

On

April 29, 2016,

the Company redeemed the final remaining

120,000

shares of Series D Preferred for an aggregate price of

$6

million plus accrued dividends. In connection therewith, the Company accreted and charged to retained earnings

$89,000

of original issuance costs, which was deducted from income available to common shareholders for earnings per share calculation.

The Company is authorized under its stock buyback program to repurchase

1.6

million shares of Common Stock. As of

April 29, 2017,

502,060

shares were purchased under the program and

1,097,940

shares were available for purchase.

No

shares of Common Stock have been repurchased during the last

three

fiscal years.

The Company is a party to a management agreement with Corporate Management Advisors, Inc. (“CMA”), a corporation owned by our Chairman and Chief Executive Officer. This agreement was originated in

1991

for the efficient use of management of

two

public companies at the time. In

1994,

one

of those public entities, through a merger,

no

longer was managed in this manner. Under the terms of the agreement, CMA provides, subject to the direction and supervision of the Board of Directors of the Company, (i) senior corporate functions (including supervision of the Company’s financial, legal, executive recruitment, internal audit and management information systems departments) as well as the services of a Chief Executive Officer and Chief Financial Officer, and (ii) services in connection with acquisitions, dispositions and financings by the Company, including identifying and profiling acquisition candidates, negotiating and structuring potential transactions and arranging financing for any such transaction. CMA, through its personnel, also provides, to the extent possible, the stimulus and creativity to develop an innovative and dynamic persona for the Company, its products and corporate image. In order to fulfill its obligations under the management agreement, CMA employs numerous individuals, whom, acting as a unit, provide management, administrative and creative functions for the Company. The management agreement provides that the Company will pay CMA an annual base fee equal to

one

percent of the consolidated net sales of the Company, and further provides that the Compensation and Stock Option Committee and the Board of Directors

may

from time to time award additional incentive compensation to CMA. The Board of Directors on numerous occasions contemplated incentive compensation and, while shareholder value has increased over

$4.5

billion (or

10,000%

) since the inception of this agreement,

no

incentive compensation has been paid. We incurred management fees to CMA of

$8.3

million for Fiscal

2017,

$7.0

million for Fiscal

2016

and

$6.5

million for Fiscal

2015.

Included in accounts payable were amounts due CMA of

$2.1

million at

April 29, 2017

and

$1.8

million at

April 30, 2016.