O'Reilly Auto Parts 2004 Annual Report Download - page 46

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44 O’REILLY AUTOMOTIVE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Rental expense amounted to $39,145,000, $31,865,000 and $29,652,000 for the years ended December 31, 2004, 2003, and 2002, respectively.
2004 rental expense includes an adjustment to correct lease accounting in the amount of $4,367,000 ($900,000 related to 2004). See Note 1 – Leases
for further details.
Other Commitments
The Company had construction commitments, which totaled approximately $32.3 million, at December 31, 2004.
NOTE 6—LEGAL PROCEEDINGS
The Company is involved in various legal proceedings incidental to the conduct of its business. Although the Company cannot ascertain the amount
of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, they will have a material adverse effect on
the consolidated financial position, results of operations or cash flows of the Company.
NOTE 7—EMPLOYEE BENEFIT PLANS
The Company sponsors a contributory profit sharing and savings plan that covers substantially all employees who are 21 years of age with at least six
months of service. A total of 1,600,000 shares of common stock were reserved for issuance under the plan. Employees may contribute up to 100% of their
annual compensation subject to Internal Revenue Code maximum limitations. The Company has agreed to make matching contributions equal to 50% of
the first 2% of each employee's contribution and 25% of the next 4% of each employee's contribution. Additional contributions to the plan may be made
as determined annually by the Board of Directors. After two years of service, Company contributions and earnings thereon vest at the rate of 20% per year.
Company contributions charged to operations amounted to $5,278,000 in 2004, $4,353,000 in 2003 and $3,438,000 in 2002. Company contributions,
in the form of common stock, to the profit sharing and savings plan to match employee contributions during the years ended December 31 were as follows:
Year Market
Cont ribut ed Shares Value
2004 40,684 $1,766,000
2003 42,183 1,478,000
2002 38,354 1,136,000
Profit sharing contributions accrued at December 31, and funded in the next year through the issuance of shares of the Company's common stock
were as follows:
Year Market
Funded Shares Value
2004 78,730 $3,000,000
2003 85,184 2,300,000
2002 77,876 2,200,000
Additionally, the Company has adopted a stock purchase plan under which 1,300,000 shares of common stock were reserved for issuance. Under the
plan, substantially all employees and non-employee directors have the right to purchase shares of the Company's common stock monthly at a price
equal to 85% of the fair market value of the stock, not to exceed 5% of the participants annual salary. Purchases of common stock under the plan
during the years ended December 31 were as follows:
Weight ed
Average Market
Year Shares Fair Value Value
2004 93,877 $41.70 $3,915,000
2003 103,457 32.38 3,350,000
2002 102,662 29.62 3,041,000