O'Reilly Auto Parts 2007 Annual Report Download - page 43

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41
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 com-
mon 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, 2007 2006 2005
Numerator (basic and diluted):
Net income $ 193,988 $ 178,085 $ 164,266
Denominator:
Denominator for basic income per common share–
weighted-average shares 114,667 113,253 111,613
Effect of stock options (Note 9) 1,413 1,866 1,772
Denominator for diluted income per common share-
adjusted weighted-average shares and assumed conversion 116,080 115,119 113,385
Basic net income per common share $1.69 $ 1.57 $ 1.47
Net income per common share-assuming dilution $1.67 $ 1.55 $ 1.45
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) 2007 2006
Deferred tax assets:
Current:
Allowance for doubtful accounts $ 1,202 $ 958
Unrecognized loss on short term investments 4,133 --
Other accruals 14,440 19,251
Noncurrent:
Other accruals 17,800 2,967
Total deferred tax assets 37,575 23,176
Deferred tax liabilities:
Current:
Inventories 26,010 25,988
Noncurrent:
Property and equipment 40,431 37,517
Other 4,610 3,621
Total deferred tax liabilities 71,051 67,126
Net deferred tax liabilities $ (33,476) $ (43,950)
Notes to Consolidated Financial Statements (continued)