O'Reilly Auto Parts 2005 Annual Report Download - page 47

O’REILLY AUTOMOTIVE 2005 ANNUAL REPORT
45
notes to consolidated financial statements (continued)
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.
Stock Option Plans
The Company has a stock option plan under which incentive stock options or non-qualified stock options may be granted to officers and key employees.
An aggregate of 24,000,000 shares of common stock were reserved for issuance under this plan. The exercise price of options granted shall not be less
than the fair market value of the stock on the date of grant and the options will expire no later than 10 years from the date of grant. Generally, options
granted pursuant to the plan become exercisable no sooner than six months from the date of grant. See Note 1 for a discussion of the 2005 acceleration
of vesting related to our stock option plans. All grants under the plan since its inception have been non-qualified stock option grants. A summary of
outstanding stock options under this plan is as follows:
number
price per shareof shares
Outstanding at December 31, 2002 $ 4.47 - 18.81 6,981,404
Granted 11.51 - 22.41 2,071,500
Exercised 4.47 - 18.81 (2,103,880)
Canceled 4.47 - 19.49 (444,826)
Outstanding at December 31, 2003 $ 5.28 - 22.41 6,504,198
Granted $18.53 - 23.38 1,716,250
Exercised 5.28 - 20.20 (941,954)
Canceled 5.47 - 23.15 (478,228)
Outstanding at December 31, 2004 $ 5.47 - 23.38 6,800,266
Granted 22.18 - 32.08 1,933,500
Exercised 5.47 - 23.38 (1,202,012)
Canceled 6.97 - 32.08 (648,712)
Outstanding at December 31, 2005 $ 6.03 - 32.08 6,883,042
Options to purchase 6,770,042, 3,225,200 and 2,446,818 shares of common stock were exercisable at December 31, 2005, 2004 and 2003, respectively.
The Company also maintains a stock option plan for non-employee directors of the Company under which 1,000,000 shares of common stock were
reserved for issuance. All director stock options are granted at fair market value on the date of grant and expire on the earlier of termination of service
to the Company as a director or seven years. Options granted under this plan become exercisable six months from the date of grant. A summary of
outstanding stock options under this plan is as follows:
number
price per shareof shares
Outstanding at December 31, 2002 $ 6.22 - 14.51 160,000
Granted 14.60 60,000
Outstanding at December 31, 2003 $ 6.22 - 14.60 220,000
Granted 20.84 25,000
Exercised 6.22 - 10.33 (40,000)
Outstanding at December 31, 2004 $10.33 - 20.84 205,000
Granted 23.50 25,000
Exercised 14.51 (40,000)
Outstanding at December 31, 2005 $10.33 - 23.50 190,000
All options under this plan were exercisable at December 31, 2005, 2004 and 2003.
The weighted-average remaining contractual life at December 31, 2005, for all outstanding options under the Company's stock option plans is 7.1 years.
The weighted-average exercise price for all outstanding options under the Company's stock option plans was $17.67, $14.94 and $13.06 at December 31,
2005, 2004 and 2003, respectively.