O'Reilly Auto Parts 2011 Annual Report Download - page 74

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64
NOTE 9—SHAREHOLDERS’ EQUITY
Preferred stock:
The Company is authorized to issue 5.0 million shares of preferred stock at $0.01 par value per share. No preferred stock was issued
or outstanding as of December 31, 2011 or 2010.
Common Stock:
The Company is authorized to issue 245.0 million shares of common stock at $0.01 par value per share. The Company had common
stock issued and outstanding of 127.2 million and 141.0 million as of December 31, 2011 and 2010, respectively.
Share repurchase program:
On January 11, 2011, the Company’s Board of Directors approved a $500 million share repurchase program. Under the program, the
Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a
broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall
market conditions, for a three-year period. The Company’s Board of Directors approved resolutions to increase the authorization
under the share repurchase program by an additional $500 million on August 5, 2011, and an additional $500 million on November
16, 2011, raising the cumulative authorization under the share repurchase program to $1.5 billion. Each additional $500 million
authorization is effective for a three-year period, expiring on August 5, 2014, and November 16, 2014, respectively. The Company
and its Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time,
without prior notice.
The Company repurchased 15.9 million shares of its common stock under its publicly announced share repurchase program during the
year ended December 31, 2011, at an average price per share of $61.49, for a total investment of $976.6 million. As of December 31,
2011, the Company had $523.7 million remaining under its share repurchase program. From January 1, 2012, through and including
February 28, 2012, the Company repurchased 0.6 million shares of its common stock at an average price of $83.39, for a total
investment of $48.4 million.
Accumulated other comprehensive loss:
Unrealized losses, net of tax, from interest rate swap contracts that qualified as cash flow hedges were included in ―Accumulated other
comprehensive loss‖ on the accompanying Consolidated Balance Sheets as of December 31, 2010, as discussed in Notes 5 and 7.
The following table identifies the changes in ―Accumulated other comprehensive loss‖ on the accompanying Consolidated Balance
Sheets for the years ended December 31, 2011, 2010 and 2009 (in thousands):
Accumulated Other
Comprehensive Loss
Balance at December 31, 2008 $ (11,513)
Unrealized losses on cash flow hedges, net of tax 3,551
Balance at December 31, 2009 (7,962)
Unrealized losses on cash flow hedges, net of tax 4,992
Balance at December 31, 2010 (2,970)
Reclassification adjustment for unrealized losses on cash
flow hedges, net of tax, included in net income
2,970
Balance at December 31, 2011 $ -
Comprehensive income is computed as net earnings plus certain other items that are recorded directly to shareholders’ equity during
the period. The Company’s comprehensive income for the years ended December 31, 2011, 2010 and 2009, included net earnings, as
well as changes in unrealized losses on cash flow hedges. Comprehensive income for the years ended December 31, 2011, 2010 and
2009, was $510.6 million, $424.4 million and $311.0 million, respectively.
NOTE 10—SHARE-BASED EMPLOYEE COMPENSATION PLANS AND OTHER COMPENSATION AND BENEFIT
PLANS
The Company recognizes share-based compensation expense based on the fair value of the grants, awards or shares at the time of the
grant, award or issuance. Share-based compensation includes stock option awards issued under the Company’s employee incentive
plans and director stock plan, restricted stock awarded under the Company’s employee incentive plans, performance incentive plan
and director stock plan, stock issued through the Company’s employee stock purchase plan and stock awarded to employees through
other benefit programs.
FORM 10-K