O'Reilly Auto Parts 2012 Annual Report Download - page 43

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33
investigation was included in “Operating income” on our Consolidated Statements of Income for the year ended December 31, 2010.
The results discussed in the paragraph below are adjusted for these nonrecurring items and are reconciled to the most directly
comparable GAAP measure in the subsequent table.
Adjusted operating income for the year ended December 31, 2011, increased 18% to $864 million (or 14.9% of sales) from $734
million (or 13.6% of sales) for the same period one year ago. Adjusted net income for the year ended December 31, 2011, increased
21% to $522 million (or 9.0% of sales) from $433 million (or 8.0% of sales) for the same period in the prior year. Adjusted diluted
earnings per common share for the year ended December 31, 2011, increased 25% to $3.81 from $3.05 for the same period in the prior
year.
For the Year Ended December 31,
2011 2010
Amount % of Sales Amount % of Sales
GAAP Operating income $ 866,766 15.0 % $ 712,776 13.2 %
Former CSK officer clawback (2,798) (0.1) % - - %
Legacy CSK DOJ investigation charge - - % 20,900 0.4 %
N
on-GAAP adjusted operating income $ 863,968 14.9 % $ 733,676 13.6 %
GAAP net income $ 507,673 8.8 % $ 419,373 7.8 %
Write-off of asset-
b
ased revolving credit facility debt issuance costs, net
of tax 13,458 0.2 %
- - %
Termination of interest rate swap agreements, net of tax 2,637 - % - - %
Former CSK officer clawback, net of tax (1,741) - % - - %
Legacy CSK DOJ investigation charge - - % 20,900 0.4 %
Gain on settlement of note receivable, net of tax - - % (7,215) (0.2)%
N
on-GAAP adjusted net income $ 522,027 9.0 % $ 433,058 8.0 %
GAAP diluted earnings per common share $ 3.71 $ 2.95
Write-off of asset-
b
ased revolving credit facility debt issuance costs, net
of tax 0.09
-
Termination of interest rate swap agreements, net of tax 0.02 -
Former CSK DOJ officer clawback, net of tax (0.01) -
Legacy CSK DOJ investigation charge - 0.15
Gain on settlement of note receivable, net of tax - (0.05)
N
on-GAAP adjusted diluted earnings per common share $ 3.81 $ 3.05
Weighted-average common shares outstanding - assuming dilution 136,983 141,992
The financial information presented in the paragraph and table above is not derived in accordance with United States generally
accepted accounting principles (“GAAP”). We do not, nor do we suggest investors should, consider such non-GAAP financial
measures in isolation from, or as a substitute for, GAAP financial information. We believe that the presentation of financial results
and estimates excluding the impact of the non-cash charge to write off the balance of debt issuance costs, the charge related to the
termination of interest rate swap contracts, the former CSK officer clawback, the charges for the legacy CSK DOJ investigation and
the nonrecurring, non-operating gain related to the settlement of a note receivable acquired in the acquisition of CSK, provide
meaningful supplemental information to both management and investors, which is indicative of our core operations. We exclude these
items in judging our performance and believe this non-GAAP information is useful to investors as well. Material limitations of these
non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for such limitations by presenting,
in the table above, the accompanying reconciliation to the most directly comparable GAAP measures.
LIQUIDITY AND CAPITAL RESOURCES
Our long-term business strategy requires capital to open new stores, fund strategic acquisitions, expand distribution infrastructure,
operate and maintain existing stores and may include the opportunistic repurchase of shares of our common stock through our Board-
approved share repurchase program. The primary sources of our liquidity are funds generated from operations and borrowed under
our Revolving Credit Facility. Decreased demand for our products or changes in customer buying patterns could negatively impact
our ability to generate funds from operations. Additionally, decreased demand or changes in buying patterns could impact our ability
to meet the debt covenants of our credit agreement and, therefore, negatively impact the funds available under our Revolving Credit
Facility. We believe that cash expected to be provided by operating activities and availability under our Revolving Credit Facility will
be sufficient to fund both our short-term and long-term capital and liquidity needs for the foreseeable future. However, there can be
no assurance that we will continue to generate cash flows at or above recent levels.