O'Reilly Auto Parts 2002 Annual Report Download - page 47

Download and view the complete annual report

Please find page 47 of the 2002 O'Reilly Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 56

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56

2002 Annual Report 45
NOTE 10— STOCK OPTION PLANS (continued)
is 7.058 years. The weighted-average exercise price for all outstanding options under the Company’s stock option plans
was $22.78, $20.63 and $16.12 at December 31, 2002, 2001 and 2000, respectively.
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options,
which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility. Because the Company’s stock options have
characteristics significantly different from those of traded options and because changes in the subjective input assump-
tions can materially affect the fair value estimate, in management’s opinion, the existing model does not necessarily
provide a reliable single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the
options’ vesting period. The Company’s pro forma information for the years ended December 31, is as follows:
(In thous ands , e xce pt pe r s hare data)
2002 2001 2000
Net income as reported $81,992 $66,352 $51,708
Stock-based compensation expense
as reported $— $—$—
Stock-based compensation expense
under fair value method $7,217 $5,406 $ 3,531
Pro forma net income $74,775 $60,946 $48,177
Pro forma basic net income per share $1.41 $1.17 $ 0.94
Pro forma net income per share –
assuming dilution $1.39 $1.15 $ 0.93
NOTE 11— INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted income per common share:
(In thous ands , e xce pt pe r s hare data)
YEARS ENDED DECEMBER 31, 2002 2001 2000
Numerator (basic and diluted):
Net income $81,992 $66,352 $51,708
Denominator:
Denominator for basic income per common share –
weighted-average shares 53,114 52,121 51,168
Effect of stock options (Note 10) 578 665 560
Denominator for diluted income per common share –
adjusted weighted-average shares and assumed conversion 53,692 52,786 51,728
Basic net income per common share $1.54 $1.27 $ 1.01
Net income per common share – assuming dilution $1.53 $1.26 $ 1.00
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)