O'Reilly Auto Parts 2006 Annual Report Download - page 41

o’reilly automotive 2006 annual report
page 39
notes to consolidated financial statements (continued)
note 10 – shareholder rights plan
On May 7, 2002, the Board of Directors adopted a shareholder rights plan whereby one right was distributed for each share of common stock, par
value $.01 per share, of the Company held by stockholders of record (the “Rights”) 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 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 an amount of common stock of the Company having a market value of twice the exercise price of the Right. A copy of the Rights Agreement
was filed on June 3, 2002, with the Securities and Exchange Commission, as Exhibit 4.2 to the Company’s report on Form 8-K.
note 11 – income per common share
The following table sets forth the computation of basic and diluted income per common share:
(In thousands, except per share data)
years ended december 31, 2006 2005 2004
Numerator (basic and diluted):
Net income $178,085 $164,266 $139,566
Denominator:
Denominator for basic income per common share-
weighted-average shares 113,253 111,613 110,020
Effect of stock options (Note 9) 1,866 1,772 1,403
Denominator for diluted income per common share-
adjusted weighted-average shares and assumed conversion 115,119 113,385 111,423
Basic net income per common share $ 1.57 $ 1.47 $ 1.27
Net income per common share-assuming dilution $ 1.55 $ 1.45 $ 1.25
note 12 – income taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows at December 31:
(In thousands) 2006 2005
Deferred tax assets:
Current:
Allowance for doubtful accounts $ 958 $ 1,050
Other accruals 19,251 17,601
Noncurrent:
Other accruals 2,967 2,404
Total deferred tax assets 23,176 21,055
Deferred tax liabilities:
Current:
Inventories 25,988 21,102
Noncurrent:
Property and equipment 37,517 42,255
Other 3,621 2,665
Total deferred tax liabilities 67,126 66,022
Net deferred tax liabilities $(43,950) $(44,967)