O'Reilly Auto Parts 2008 Annual Report Download - page 51

O’REILLY AUTOMOTIVE 2008 ANNUAL REPORT PG.49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
acquired locations and the Company expects to nalize the plans within the rst year aer the acquisition date, which may result in adjustments
to the allocation of the acquisition purchase price that may impact other current liabilities and goodwill.
e CSK senior credit facility and term loan facility required repayment upon merger or acquisition and the entire amounts outstanding
under both facilities were repaid by the Company on the July 11, 2008, acquisition date. e excess of the preliminary purchase price over the
estimated fair values of tangible and identiable intangible assets acquired and liabilities assumed was recorded as goodwill. Goodwill is not
amortizable for nancial statement purposes.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
e following pro forma nancial information presents the combined historical results of the combined Company as if the acquisition had
occurred as of the beginning of the respective periods:
Pro Forma Results Pro Forma Results
of Operations for of Operations for
the Year Ended the Year Ended
(In thousands, except per share data) December 31, 2008 December 31, 2007
Sales $ 4,494,475 $ 4,371,979
Net income $ 176,385 $ 176,165
Net income per common share $ 1.32 $ 1.33
Net income per common share-assuming dilution $ 1.31 $ 1.31
Weighted-average common shares outstanding 134,023 132,612
Adjusted weighted-average common shares outstanding – assuming dilution 134,910 134,389
is pro forma information is not intended to represent or be indicative of actual results had the acquisition occurred as of the beginning
of each period, nor is it necessarily indicative of future results and does not reect potential synergies, integration costs, or other such costs
or savings. Certain pro forma adjustments have been made to net income to give eect to: estimated charges to conform CSK’s method of
accounting for inventory to LIFO, adjustments to selling, general and administrative expenses to remove the amortization on eliminated
CSK historical identiable intangible assets and deferred liabilities, expenses to amortize the value of identied intangibles acquired in the
acquisition (primarily trade names, trademarks and leases), rent and depreciation adjustments to reect O’Reilly’s purchase of properties
under its synthetic lease facility, adjustments to interest expense to reect the elimination of preexisting O’Reilly and CSK debt, estimated
interest expense on O’Reilly’s new asset-based credit facility and other minor adjustments. e pro forma information presented above for the
year ended December 31, 2008, includes certain acquisition related charges, net of tax, of $4.4 million, $2.6 million, and $5.7 million for debt
prepayment costs, interim facility commitment fees, and the acceleration of CSK’s stock options and restricted stock as a result of the change in
control, respectively. e pro forma information for the year ended December 31, 2007, has not been adjusted to give eect to these charges.
NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS
During the year ending December 31, 2008, the Company recorded goodwill of approximately $670.5 million in connection with the
acquisition of CSK. See Note 2 “Business Combination”. For the years ended December 31, 2008, December 31, 2007, and December 31, 2006,
the Company recorded amortization expense of $9.2 million, $0.2 million, and $0.2 million, respectively, related to amortizable intangible
assets, which are included in other assets on the accompanying consolidated balance sheets. e components of the Company’s amortizable and
unamortizable intangible assets were as follows on December 31, 2008 and December 31, 2007:
Cost Accumulated Amortization
(In thousands) Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007
Amortizable intangible assets
Favorable leases $ 52,270 $ -- $ 3,690 $ --
Trade names and trademarks 13,000 -- 5,312 --
Other 819 731 547 394
Total amortizable intangible assets $ 66,089 $ 731 $ 9,549 $ 394
Unamortizable intangible assets
Goodwill $ 720,508 $ 50,447
Total unamortizable intangible assets $ 720,508 $ 50,447