O'Reilly Auto Parts 2010 Annual Report Download - page 85

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NOTE 15—SHAREHOLDER RIGHTS PLAN
On May 7, 2002, and as amended on December 29, 2010, the Board of Directors adopted a shareholder rights plan (“Rights
Agreement”) whereby one right was distributed for each share of common stock, par value $0.01 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 acquirer) 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 SEC, as
Exhibit 4.2 to the Company’s report on Form 8-K.
NOTE 16—QUARTERLY RESULTS (Unaudited)
The following table sets forth certain quarterly unaudited operating data for the fiscal years ended December 31, 2010, and 2009. The
unaudited quarterly information includes all adjustments which the Company considers necessary for a fair presentation of the
information shown.
The unaudited operating data presented below should be read in conjunction with the Company’s consolidated financial statements
and related notes, and the other financial information included therein.
Fiscal 2010
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands, except per share data)
Sales $ 1,280,067 $ 1,381,241 $ 1,425,887 $ 1,310,330
Gross profit 618,347 672,633 693,415 636,597
Operating income 168,445 181,164 199,031 164,136
Gain on settlement of note receivable - - - 11,639
Net income 97,476 99,595 116,542 105,760
Earnings per share – basic 0.71 0.72 0.84 0.76
Earnings per share – assuming dilution 0.70 0.71 0.82 0.74
Fiscal 2009
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In thousands, except per share data)
Sales $ 1,163,749 $ 1,251,377 $ 1,258,239 $ 1,173,697
Gross profit 542,670 603,769 610,555 569,534
Operating income 113,336 149,675 149,196 125,412
Net income 62,835 85,515 87,225 71,923
Earnings per share – basic 0.47 0.63 0.64 0.52
Earnings per share – assuming dilution 0.46 0.62 0.63 0.52
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, our management, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of the
end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be
disclosed by us (including our consolidated subsidiaries) in reports filed under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and
communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROLS
There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2010,
that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process
designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“GAAP”)
and includes those policies and procedures that:
•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets;
•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and members of our board of directors; and
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control—Integrated Framework.
Based on our assessment, management concluded that, as of December 31, 2010, our internal control over financial reporting is
effective based on those criteria.
Ernst & Young LLP, our independent registered public accounting firm, has audited management’s assessment of the effectiveness of
our internal control over financial reporting as of December 31, 2010, as stated in their report, which is included in Item 8.
Item 9B. Other Information
Not Applicable.
FORM 10-K