O'Reilly Auto Parts 2003 Annual Report Download - page 36

management’s discussion and analysis
of financial condition and results of operations (continued)
page 34
(In thousands, except per share data) fiscal 2003
first second third fourth
quarter quarter quarter quarter
Product sales $339,475 $393,112 $412,182 $367,047
Gross profit 140,946 165,713 175,653 156,023
Operating income 33,341 44,726 48,362 38,846
Net income 19,728 26,924 29,533 23,902
Basic net income per common share 0.37 0.50 0.55 0.44
Net income per common share – assuming dilution 0.37 0.50 0.54 0.43
(In thousands, except per share data) fiscal 2002
first second third fourth
quarter quarter quarter quarter
Product sales $295,489 $343,181 $359,579 $314,241
Gross profit 126,028 144,186 152,196 130,990
Operating income 28,638 37,769 40,723 31,171
Net income 16,642 22,547 24,096 18,707
Basic net income per common share 0.31 0.42 0.45 0.35
Net income per common share – assuming dilution 0.31 0.42 0.45 0.35
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 shareholders of record as of the close of business on May 31, 2002. Each
right initially entitles shareholders to buy a unit representing one one-hundredth of a share of a new series of preferred stock of the
Company for $160 and expires 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 a tender or exchange offer upon consummation of
which such person or group would beneficially own 15% or more of the Company's common stock. If a person or group acquires
beneficial ownership of 15% or more of the Company's common stock, each right (other than rights held by the acquiror) will,
unless the rights are redeemed by the Company, become exercisable upon payment of the exercise price of $160 for common stock
of the Company having a market value of twice the exercise price of the right. A copy of the Stockholder Rights Plan was filed on
May 28, 2002, with the Securities and Exchange Commission, as Exhibit 99.1 to our report on Form 8-K.
new accounting standards
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Under the new rules,
a liability for the costs associated with an exit or disposal activity will be recognized when the liability is incurred as opposed to the
date of an entity’s commitment to an exit plan. The new rules were effective for exit or disposal activities initiated after December 31,
2002. The adoption of the new rules did not have a significant impact on our consolidated financial position or results of operations.
In November 2002, the FASB issued Financial Interpretation 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees.
The interpretation elaborates on the disclosures to be made in interim and annual financial statements of a guarantor about its
obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in issuing such guarantee. Initial recognition and measurement
provisions of the interpretation were applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002. As of
December 31, 2003 and 2002, we did not have any outstanding guarantees other than subsidiary guarantees of parent debt and a
residual value guarantee as disclosed in Notes 5 and 6, respectively, to the consolidated financial statements.