O'Reilly Auto Parts 2005 Annual Report Download - page 46

O’REILLY AUTOMOTIVE 2005 ANNUAL REPORT
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notes to consolidated financial statements (continued)
note 8 – legal proceedings
The Company is involved in various legal proceedings incidental to the ordinary 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, these matters will have a material
adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
note 9 – 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 3,200,000 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 $6,606,000 in 2005, $5,278,000 in 2004 and $4,353,000 in 2003.
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
contributed sharesvalue
2005 71,125 $1,928,000
2004 81,368 1,766,000
2003 84,366 1,478,000
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 sharesvalue
2005 139,336 $3,500,000
2004 157,460 3,000,000
2003 170,368 2,300,000
Additionally, the Company has adopted a stock purchase plan under which 2,600,000 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:
weighted
average market
year shares fair value value
2005 161,903 $27.57 $4,464,000
2004 187,754 20.85 3,915,000
2003 206,914 16.19 3,350,000
The Company has in effect a performance incentive plan for the Company's senior management under which 800,000 shares of stock were reserved
for issuance. Shares awarded under the plan vest equally over a three-year period and are held in escrow until such vesting has occurred. Shares are
forfeited when an employee ceases employment. Shares, net of forfeitures, issued under the plan during the years ended December 31 were as follows:
year market
funded sharesvalue
2005 14,986 $381,000
2004 15,834 302,000
2003 21,060 248,000
note 10 – shareholders’ equity
Shareholder Rights Plan
On May 17, 2002, the Board of Directors adopted a Shareholder Rights Plan. One Right was distributed for each share of common stock, par value
$.01 per share, of the Company held by stockholders of record as of the close of business on May 31, 2002. The Rights initially entitle stockholders to
buy a unit representing one one-hundredth of a share of a new series of preferred stock of the Company for $160 and expire on May 30, 2012. The Rights
generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company's common stock or commences