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FORM 10-K
31
Net income:
As a result of the impacts discussed above, net income for the year ended December 31, 2012, increased to $586 million (or 9.5% of
sales), from $508 million (or 8.8% of sales) for the same period one year ago, representing an increase of 15%.
Earnings per share:
Our diluted earnings per common share for the year ended December 31, 2012, increased 28% to $4.75 on 123 million shares from $3.71
on 137 million shares for the same period one year ago.
Adjustments for nonrecurring and non-operating events:
Our results for the year ended December 31, 2011, included nonrecurring income related to a settlement between the SEC and a former
CSK officer that resulted in the reimbursement to O’Reilly, as successor issuer to CSK for SEC purposes, of $3 million ($2 million, net
of tax) of incentive-based compensation and stock sale profits previously received by the officer. This “clawback” amount was included
in “Operating income” on our Consolidated Statements of Income for the year ended December 31, 2011. Our results for the year ended
December 31, 2011, also included one-time charges associated with the new financing transactions we completed on January 14, 2011.
The one-time charges included a non-cash charge to write off the balance of debt issuance costs related to our previous ABL Credit
Facility in the amount of $22 million ($13 million, net of tax) and a charge related to the termination of our interest rate swap agreements
in the amount of $4 million ($3 million, net of tax). The charges related to our new financing transactions were included in “Other income
(expense)” on our Consolidated Statements of Income for the year ended December 31, 2011. 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, 2012, increased 13% to $977 million (or 15.8% of sales) from $864 million
(or 14.9% of sales) for the same period one year ago. Adjusted net income for the year ended December 31, 2012 increased 12% to $586
million (or 9.5% of sales) from $522 million (or 9.0% of sales) for the same period one year ago. Adjusted diluted earnings per common
share for the year ended December 31, 2012, increased 25% to $4.75 from $3.81 for the same period one year ago.
For the Year Ended December 31,
2012 2011
Amount % of Sales Amount % of Sales
GAAP Operating income $ 977,393 15.8% $ 866,766 15.0 %
Former CSK officer clawback ——%
(2,798)(0.1)%
Non-GAAP adjusted operating income $ 977,393 15.8% $ 863,968 14.9 %
GAAP net income $ 585,746 9.5% $ 507,673 8.8 %
Write-off of asset-based 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)—%
Non-GAAP adjusted net income $ 585,746 9.5% $ 522,027 9.0 %
GAAP diluted earnings per common share 4.75 $ 3.71
Write-off of asset-based 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)
Non-GAAP adjusted diluted earnings per common share $ 4.75 $ 3.81
Weighted-average common shares outstanding - assuming dilution 123,314 136,983
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, and the former CSK officer clawback, 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