Document and Entity Information
v2.2.0.25
Document and Entity Information
3 Months Ended
Mar. 31, 2011
May 02, 2011
Document and Entity Information  
Document Type10-Q 
Amendment Flagfalse 
Document Period End DateMar. 31, 2011
Document Fiscal Year Focus2011 
Document Fiscal Period FocusQ1 
Entity Registrant NameO REILLY AUTOMOTIVE INC 
Entity Central Index Key0000898173 
Current Fiscal Year End Date--12-31 
Entity Filer CategoryLarge Accelerated Filer 
Entity Common Stock, Shares Outstanding 137,870,262

Condensed Consolidated Balance Sheets
v2.2.0.25
Condensed Consolidated Balance Sheets (USD $)
In Thousands
Mar. 31, 2011
Dec. 31, 2010
Assets  
Cash and cash equivalents$ 230,048$ 29,721[1]
Accounts receivable, net128,224121,807[1]
Amounts receivable from vendors68,64161,845[1]
Inventory2,001,3142,023,488[1]
Deferred income taxes10,01833,877[1]
Other current assets29,16630,514[1]
Total current assets2,467,4112,301,252[1]
Property and equipment, at cost2,785,0322,705,434[1]
Less: accumulated depreciation and amortization812,612775,339[1]
Net property and equipment1,972,4201,930,095[1]
Notes receivable, less current portion16,37918,047[1]
Goodwill743,895743,975[1]
Other assets, net47,98154,458[1]
Total assets5,248,0865,047,827[1]
Liabilities and shareholders' equity  
Accounts payable977,627895,736[1]
Self-insurance reserves53,85251,192[1]
Accrued payroll45,35152,725[1]
Accrued benefits and withholdings37,50245,542[1]
Income taxes payable30,8704,827[1]
Other current liabilities171,564177,505[1]
Current portion of long-term debt1,2081,431[1]
Total current liabilities1,317,9741,228,958[1]
Long-term debt, less current portion497,641357,273[1]
Deferred income taxes63,08368,736[1]
Other liabilities181,538183,175[1]
Shareholders' equity:  
Common stock, $0.01 par value: Authorized shares - 245,000,000 Issued and outstanding shares - 138,741,655 as of March 31, 2011, and 141,025,544 as of December 31, 20101,3871,410[1]
Additional paid-in capital1,138,2491,141,749[1]
Retained earnings2,048,2142,069,496[1]
Accumulated other comprehensive loss (2,970)[1]
Total shareholders' equity3,187,8503,209,685[1]
Total liabilities and shareholders' equity$ 5,248,086$ 5,047,827[1]
[1]Note: The balance sheet at December 31, 2010, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Condensed Consolidated Balance Sheets (Parenthetical)
v2.2.0.25
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2011
Dec. 31, 2010
Condensed Consolidated Balance Sheets  
Common stock, par value$ 0.01$ 0.01
Common stock, shares authorized245,000,000245,000,000
Common stock, shares issued138,741,655141,025,544
Common stock, shares outstanding138,741,655141,025,544

Condensed Consolidated Statements of Income
v2.2.0.25
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Condensed Consolidated Statements of Income  
Sales$ 1,382,738$ 1,280,067
Cost of goods sold, including warehouse and distribution expenses712,957661,720
Gross profit669,781618,347
Selling, general and administrative expenses473,344449,902
Operating income196,437168,445
Other income (expense):  
Write-off of asset based revolving credit facility debt issuance costs(21,626) 
Termination of interest rate swap agreements(4,237) 
Interest expense(5,237)(10,879)
Interest income542396
Other, net295514
Total other expense(30,263)(9,969)
Income before income taxes166,174158,476
Provision for income taxes63,70061,000
Net income$ 102,474$ 97,476
Earnings per share-basic:  
Earnings per share$ 0.73$ 0.71
Weighted-average common shares outstanding - basic140,579137,583
Earnings per share-assuming dilution:  
Earnings per share$ 0.72$ 0.70
Weighted-average common shares outstanding - assuming dilution142,866139,612

Condensed Consolidated Statements of Cash Flows
v2.2.0.25
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Operating activities:  
Net income$ 102,474$ 97,476
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization on property and equipment38,93438,263
Amortization of intangibles(143)1,672
Amortization of debt issuance costs2652,137
Write-off of asset based revolving credit facility debt issuance costs21,626 
Excess tax benefit from stock options exercised(2,148)(1,775)
Deferred income taxes16,33118,287
Stock option compensation programs4,4453,650
Other share based compensation programs691464
Other3,0581,558
Changes in operating assets and liabilities:  
Accounts receivable(9,503)(17,424)
Inventory22,17510,110
Accounts payable81,907(23,509)
Income taxes payable28,19128,767
Other(14,264)11,155
Net cash provided by operating activities294,113170,646
Investing activities:  
Purchases of property and equipment(94,404)(90,725)
Proceeds from sale of property and equipment252382
Payments received on notes receivable1,6791,272
Other227(1,186)
Net cash used in investing activities(92,246)(90,257)
Financing activities:  
Proceeds from borrowings on asset-based revolving credit facility42,400122,700
Payments on asset-based revolving credit facility(398,400)(208,300)
Proceeds from issuance of long-term debt496,485 
Payment of debt issuance costs(7,385) 
Principal payments on capital leases(409)(2,463)
Repurchases of common stock(145,064) 
Excess tax benefit from stock options exercised2,1481,775
Net proceeds from issuance of common stock8,6858,836
Net cash used in financing activities(1,540)(77,452)
Net increase in cash and cash equivalents200,3272,937
Cash and cash equivalents at beginning of period29,721[1]26,935
Cash and cash equivalents at end of period230,04829,872
Supplemental disclosures of cash flow information:  
Income taxes paid17,68213,171
Interest paid, net of capitalized interest1,6377,276
Senior Notes [Member]
  
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization of discount (premium)74 
Senior Subordinated Notes [Member]
  
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization of discount (premium) $ (185)
[1]Note: The balance sheet at December 31, 2010, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Basis of Presentation
v2.2.0.25
Basis of Presentation
3 Months Ended
Mar. 31, 2011
Basis of Presentation 
Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements of O'Reilly Automotive, Inc. and its subsidiaries (the "Company" or "O'Reilly") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ended December 31, 2011.  Certain prior period amounts have been reclassified to conform to current period presentation.  These reclassifications had no effect on reported totals for assets, liabilities, shareholders' equity, cash flows or net income.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.


Goodwill and Other Intangible Assets
v2.2.0.25
Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2011
Goodwill and Other Intangible Assets 
Goodwill and Other Intangible Assets

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

 

Goodwill is reviewed annually on November 30 for impairment, or more frequently if events or changes in business conditions indicate that impairment may exist.  Goodwill is not amortizable for financial statement purposes. During the three months ended March 31, 2011, the Company recorded a decrease in goodwill of approximately $0.1 million, primarily due to the provision for income taxes relating to exercises of stock options acquired in the July of 2008 CSK Auto Corporation ("CSK") acquisition and adjustments to purchase price allocations related to small acquisitions.  The Company did not record any goodwill impairment during the three months ended March 31, 2011.  For the three months ended March 31, 2011 and 2010, the Company recorded amortization expense of $1.5 million and $2.8 million, respectively, related to amortizable intangible assets, which are included in "Other assets, net" on the accompanying Condensed Consolidated Balance Sheets.  The components of the Company's amortizable and unamortizable intangible assets are described in the table below, as of March 31, 2011, and December 31, 2010 (in thousands):

  Cost   Accumulated Amortization 
  March 31, 2011 December 31, 2010   March 31, 2011 December 31, 2010
Amortizable intangible assets:                  
    Favorable leases $       52,010 $ 52,010   $       19,824 $ 18,329
    Other               609   579                 339   309
Total amortizable intangible assets $       52,619 $ 52,589 $       20,163 $ 18,638
Unamortizable intangible assets:                  
    Goodwill $     743,895 $ 743,975
Total unamortizable intangible assets $     743,895 $ 743,975          

 

The favorable lease assets, included in the table above, were recorded in conjunction with the acquisition of CSK and represent the values of operating leases acquired with favorable terms.  These favorable leases had an estimated weighted-average remaining useful life of approximately 10.3 years as of March 31, 2011.  In addition, the Company has recorded a liability for the values of operating leases with unfavorable terms, acquired in the acquisition of CSK, totaling approximately $49.6 million at March 31, 2011, and December 31, 2010.  These unfavorable leases had an estimated weighted-average remaining useful life of approximately 6.1 years as of March 31, 2011.  During the three months ended March 31, 2011 and 2010, the Company recognized an amortized benefit of $1.7 million and $1.2 million, respectively, related to these unfavorable operating leases.  The carrying amount, net of accumulated amortization, of these unfavorable lease liabilities was $27.8 million and $29.5 million as of March 31, 2011, and December 31, 2010, respectively, and is included in "Other liabilities" on the accompanying Condensed Consolidated Balance Sheets.  The liabilities related to these unfavorable leases are not included as a component of the Company's closed store reserves, which are discussed in Note 4.


Goodwill and Other Intangible Assets (Policy)
v2.2.0.25
Goodwill and Other Intangible Assets (Policy)
3 Months Ended
Mar. 31, 2011
Goodwill and Other Intangible Assets 
GoodwillGoodwill is reviewed annually on November 30 for impairment, or more frequently if events or changes in business conditions indicate that impairment may exist.  Goodwill is not amortizable for financial statement purposes.

Goodwill and Other Intangible Assets (Tables)
v2.2.0.25
Goodwill and Other Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2011
Goodwill and Other Intangible Assets 
Amortizable and Unamortizable Intangible Assets
  Cost   Accumulated Amortization 
  March 31, 2011 December 31, 2010   March 31, 2011 December 31, 2010
Amortizable intangible assets:                  
    Favorable leases $       52,010 $ 52,010   $       19,824 $ 18,329
    Other               609   579                 339   309
Total amortizable intangible assets $       52,619 $ 52,589 $       20,163 $ 18,638
Unamortizable intangible assets:                  
    Goodwill $     743,895 $ 743,975
Total unamortizable intangible assets $     743,895 $ 743,975          

Goodwill and Other Intangible Assets (Narrative) (Details)
v2.2.0.25
Goodwill and Other Intangible Assets (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Mar. 31, 2011
Favorable Leases [Member]
Mar. 31, 2011
Unfavorable Leases [Member]
Mar. 31, 2010
Unfavorable Leases [Member]
Dec. 31, 2010
Unfavorable Leases [Member]
Increase (decrease) in goodwill due to adjustments in purchase price allocations related to small acquisitions and adjustments to the provision for income taxes relating to the exercise of stock options acquired in the CSK acquisition$ (0.1)     
Goodwill impairment0     
Amortization expense1.52.8    
Weighted-average remaining useful life of favorable leases, in years  10.3   
Liability for the values of unfavorable operating leases   49.6 49.6
Weighted-average remaining useful life of unfavorable leases, in years   6.1  
Amortized benefit related to unfavorable lease liability   1.71.2 
Carrying amount of unfavorable lease liability, net of accumulated amortization   $ 27.8 $ 29.5

Goodwill and Other Intangible Assets (Amortizable and Unamortizable Intangible Assets) (Details)
v2.2.0.25
Goodwill and Other Intangible Assets (Amortizable and Unamortizable Intangible Assets) (Details) (USD $)
In Thousands
Mar. 31, 2011
Dec. 31, 2010
Amortizable intangible assets, cost$ 52,619$ 52,589
Amortizable intangible assets, accumulated amortization20,16318,638
Goodwill743,895743,975[1]
Total unamortizable intangible assets743,895743,975
Other [Member]
  
Amortizable intangible assets, cost609579
Amortizable intangible assets, accumulated amortization339309
Favorable Leases [Member]
  
Amortizable intangible assets, cost52,01052,010
Amortizable intangible assets, accumulated amortization$ 19,824$ 18,329
[1]Note: The balance sheet at December 31, 2010, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Long-Term Debt
v2.2.0.25
Long-Term Debt
3 Months Ended
Mar. 31, 2011
Long-Term Debt 
Long-Term Debt

NOTE 3 – LONG-TERM DEBT

The amounts included in "Long-term debt, less current portion" and "Current portion of long-term debt" on the accompanying Condensed Consolidated Balance Sheets are described in the table below as of March 31, 2011, and December 31, 2010 (in thousands):

  March 31, 2011   December 31, 2010
           
Capital leases $         2,290   $           2,704
4.875% Senior Notes (1)       496,559      - 
Unsecured revolving credit facility                  -                       -  
Tranche A revolving credit facility    -            356,000
Total debt and capital lease obligations       498,849           358,704
Current portion of long-term debt           1,208               1,431
Long-term debt, less current portion $     497,641   $       357,273
           
(1) Net of original issuance discount of $3.4 million          

Asset-based revolving credit facility:

In July of 2008, the Company entered into a credit agreement for a five-year asset-based revolving credit facility (the "ABL Credit Facility"), which was scheduled to mature in July of 2013.  At December 31, 2010, the Company had outstanding borrowings of $356.0 million under the ABL Credit Facility, of which $106.0 million were not covered under an interest rate swap agreement.  All outstanding borrowings under the ABL Credit Facility were repaid, and all related interest rate swap transaction agreements terminated on January 14, 2011, and the ABL Credit Facility was retired concurrent with the issuance of the Company's 4.875% Senior Notes due 2021, as further described below.  In conjunction with the retirement of the Company's ABL Credit Facility, the Company recognized a one-time adjustment for a non-cash charge to write off the balance of debt issuance costs related to the ABL Credit Facility in the amount of $21.6 million and a one-time charge related to the termination of the Company's interest rate swap agreements in the amount of $4.2 million, which are included in "Other income (expense)" on the accompanying Condensed Consolidated Statements of Income for the quarter ended March 31, 2011.

 

4.875% Senior Notes due 2021:

On January 14, 2011, the Company issued $500 million aggregate principal amount of unsecured 4.875% Senior Notes due 2021 ("4.875% Senior Notes") in the public market, of which certain of the Company's subsidiaries are the guarantors ("Subsidiary Guarantors"), and United Missouri Bank, N.A. ("UMB") is trustee. The 4.875% Senior Notes were issued at 99.297% of their face value of $500 million, and mature on January 14, 2021. Interest on the 4.875% Senior Notes accrues at a rate of 4.875% per annum and is payable on January 14 and July 14 of each year beginning on July 14, 2011. Interest is computed on the basis of a 360-day year.

The Company's credit ratings on its 4.875% Senior Notes, as of March 31, 2011, are identified below:

     
Rating Agency 4.875% Senior Notes Outlook
Moody's Investor Services Baa3 Stable
Standard & Poor's Rating Services BBB- Stable

The proceeds from the 4.875% Senior Notes' issuance were used to repay all of the Company's outstanding borrowings under its ABL Credit Facility and to pay fees and expenses related to the offering of the 4.875% Senior Notes, costs associated with terminating the Company's existing interest rate swap agreements, with the remainder used for general corporate purposes.

Prior to October 14, 2020, the 4.875% Senior Notes are redeemable in whole, at any time, or in part, from time to time, at the Company's option upon not less than 30 nor more than 60 days' notice at a redemption price, plus any accrued and unpaid interest to, but not including, the redemption date, equal to the greater of:

  • 100% of the principal amount thereof; or

  • the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined in the indenture governing the 4.875% Senior Notes) plus 25 basis points.

On or after October 14, 2020, the 4.875% Senior Notes are redeemable, in whole, at any time, or in part, from time to time, at the Company's option upon not less than 30 nor more than 60 days' notice at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date. In addition, if at any time the Company undergoes a Change of Control Triggering Event (as defined in the indenture governing the 4.875% Senior Notes), holders of the 4.875% Senior Notes may require the Company to repurchase all or a portion of their 4.875% Senior Notes at a price equal to 101% of the principal amount of the 4.875% Senior Notes being repurchased, plus accrued and unpaid interest, if any, to but not including the repurchase date. The principal amount of the 4.875% Senior Notes as of March 31, 2011, was $500 million and the net carrying amount of the 4.875% Senior Notes was $496.6 million. As of March 31, 2011, the unamortized discount on the 4.875% Senior Notes was $3.4 million.

The 4.875% Senior Notes are guaranteed by certain of the Company's subsidiaries on a senior unsecured basis. The guarantees are full and unconditional and joint and several. Each of the Subsidiary Guarantors is wholly-owned, directly or indirectly, by the Company and the Company has no independent assets or operations other than those of its subsidiaries. The only direct or indirect subsidiaries of the Company that are not Subsidiary Guarantors are minor subsidiaries. Neither the Company, nor any of its Subsidiary Guarantors, has any material or significant restrictions on the Company's ability to obtain funds from its subsidiaries by dividend or loan or to transfer assets from such subsidiaries, except as provided by applicable law. The 4.875% Senior Notes are subject to certain customary, positive and negative covenants, with which the Company complied as of March 31, 2011.

Unsecured revolving credit facility:
On January 14, 2011, the Company entered into a new credit agreement for a five-year $750 million unsecured revolving credit facility (the "Revolver") arranged by Bank of America, N.A. ("BA") and Barclays Capital, which matures in January of 2016.  The Revolver includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings.  As described in the credit agreement, the Company may, from time to time, increase the facility to a maximum of $950 million.

Borrowings under the Revolver (other than swing line loans) bear interest, at the Company's option, at either the Base Rate or Eurodollar Rate (both as defined in the agreement) plus a margin that varies from 1.325% to 2.50% in the case of loans bearing interest at the Eurodollar Rate and 0.325% to 1.50% in the case of loans bearing interest at the Base Rate, in each case based upon the better of the ratings assigned to the Company's debt by Moody's Investor Service, Inc. ("Moody's") and Standard & Poor's Rating Services ("S&P"). Swing line loans made under the Revolver bear interest at the Base Rate plus the applicable margin described above. In addition, the Company pays a facility fee on the aggregate amount of the commitments in an amount equal to a percentage of such commitments, varying from 0.175% to 0.50% based upon the better of the ratings assigned to the Company's debt by Moody's and S&P. As of March 31, 2011, the Company had no outstanding borrowings under the Revolver.

The Revolver contains certain debt covenants, which include limitations on total outstanding borrowings, a minimum fixed charge coverage ratio of 2.0 times from the closing through December 31, 2012; 2.25 times through December 31, 2014; 2.5 times through maturity; and a maximum adjusted consolidated leverage ratio of 3.0 times through maturity. The consolidated leverage ratio includes a calculation of adjusted earnings before interest, taxes, depreciation, amortization, rent and stock option compensation expense to adjusted debt. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, six-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on any covenant contained within the Revolver, certain actions may be taken, including, but not limited to, possible termination of credit extensions, immediate payment of outstanding principal amount plus accrued interest and litigation from lenders. As of March 31, 2011, the Company remained in compliance with all covenants related to the borrowing arrangements.


Long-Term Debt (Tables)
v2.2.0.25
Long-Term Debt (Tables)
3 Months Ended
Mar. 31, 2011
Outstanding Long-Term Debt and Capital Lease Obligations
  March 31, 2011   December 31, 2010
           
Capital leases $         2,290   $           2,704
4.875% Senior Notes (1)       496,559      - 
Unsecured revolving credit facility                  -                       -  
Tranche A revolving credit facility    -            356,000
Total debt and capital lease obligations       498,849           358,704
Current portion of long-term debt           1,208               1,431
Long-term debt, less current portion $     497,641   $       357,273
           
(1) Net of original issuance discount of $3.4 million          
Senior Notes [Member]
 
Debt Credit Ratings
     
Rating Agency 4.875% Senior Notes Outlook
Moody's Investor Services Baa3 Stable
Standard & Poor's Rating Services BBB- Stable

Long-Term Debt (Asset-Based Revolving Credit Facility) (Details)
v2.2.0.25
Long-Term Debt (Asset-Based Revolving Credit Facility) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended0 Months Ended1 Months Ended3 Months Ended12 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Jan. 14, 2011
Secured Debt [Member]
Line of Credit Facility [Member]
Jul. 31, 2008
Secured Debt [Member]
Line of Credit Facility [Member]
Mar. 31, 2011
Secured Debt [Member]
Line of Credit Facility [Member]
Dec. 31, 2010
Secured Debt [Member]
Line of Credit Facility [Member]
Credit agreement inception date   July of 2008  
Number of years in credit facility term   5  
Expiration date of revolving credit facility  January 14, 2011July of 2013  
Secured Debt     $ 356,000
Secured debt not covered under interest rate swap agreements     106,000
Debt issuance cost write off charge21,626   21,600 
Interest rate swap agreements termination charge$ 4,237   $ 4,200 

Long-Term Debt (Senior Notes Due 2021) (Details)
v2.2.0.25
Long-Term Debt (Senior Notes Due 2021) (Details) (Senior Notes [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Jan. 14, 2011
Mar. 31, 2011
Debt instrument offering dateJanuary 14, 2011 
Senior notes, net carrying amount $ 496.6
Interest rate of notes4.875% 
Percentage of face value of debt instrument pricing99.297% 
Maturity date of 4.875% Senior NotesJan. 14, 2021
Number of days in annual interest calculation period360 
Debt instrument call feature

Prior to October 14, 2020, the 4.875% Senior Notes are redeemable in whole, at any time, or in part, from time to time, at the Company's option upon not less than 30 nor more than 60 days' notice at a redemption price, plus any accrued and unpaid interest to, but not including, the redemption date, equal to the greater of:

  • 100% of the principal amount thereof; or

  • the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined in the indenture governing the 4.875% Senior Notes) plus 25 basis points.

 
Debt instrument minimum number of days callable30 
Debt instrument maximum number of days callable60 
Percentage principal amount of debt that can be redeemed by the company100.00% 
Basis points added to treasury yield to determine redemption price of debt25 
Percent of debt instrument principal amount redeemable upon change in control101.00% 
Face amount of senior notes500500
Senior notes, unamortized discount $ 3.4

Long-Term Debt (Unsecured Revolving Credit Facility) (Details)
v2.2.0.25
Long-Term Debt (Unsecured Revolving Credit Facility) (Details) (Unsecured Debt [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Jan. 14, 2011
Mar. 31, 2011
Line of Credit Facility [Member]
  
Credit agreement inception dateJanuary 14, 2011 
Number of years in credit facility term5 
Maximum aggregate increase to credit facility$ 950 
Expiration date of revolving credit facilityJanuary of 2016 
Outstanding borrowings under credit facility 0
Covenant description for debt instrumentThe Revolver contains certain debt covenants, which include limitations on total outstanding borrowings, a minimum fixed charge coverage ratio of 2.0 times from the closing through December 31, 2012; 2.25 times through December 31, 2014; 2.5 times through maturity; and a maximum adjusted consolidated leverage ratio of 3.0 times through maturity. The consolidated leverage ratio includes a calculation of adjusted earnings before interest, taxes, depreciation, amortization, rent and stock option compensation expense to adjusted debt. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, six-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on any covenant contained within the Revolver, certain actions may be taken, including, but not limited to, possible termination of credit extensions, immediate payment of outstanding principal amount plus accrued interest and litigation from lenders.  
Line of Credit Facility [Member] | Letter of Credit [Member]
  
Line of credit facility sublimit200 
Line of Credit Facility [Member] | Swing Line Revolver [Member]
  
Line of credit facility sublimit75 
Line of Credit Facility [Member] | Euro Dollar Rate [Member]
  
Line of credit minimum interest rate1.325% 
Line of credit maximum interest rate2.50% 
Line of Credit Facility [Member] | Base Rate [Member]
  
Line of credit minimum interest rate0.325% 
Line of credit maximum interest rate1.50% 
Line of Credit Facility [Member]
  
Maximum borrowing capacity under credit facility$ 750 
Line of Credit Facility [Member] | Through December 2012 [Member]
  
Minimum debt instrument consolidated fixed charge coverage ratio covenant2.0 
Line of Credit Facility [Member] | Through December 2014 [Member]
  
Minimum debt instrument consolidated fixed charge coverage ratio covenant2.25 
Line of Credit Facility [Member] | Through Maturity [Member]
  
Minimum debt instrument consolidated fixed charge coverage ratio covenant2.5 
Maximum debt instrument consolidated leverage ratio covenant3.0 
Facility Commitment Fee [Member]
  
Line of credit minimum interest rate0.175% 
Line of credit maximum interest rate0.50% 

Long-Term Debt (Outstanding Long-Term Debt) (Details)
v2.2.0.25
Long-Term Debt (Outstanding Long-Term Debt) (Details) (USD $)
In Thousands
Mar. 31, 2011
Dec. 31, 2010
Capital leases$ 2,290$ 2,704
Unsecured revolving credit facility  
Total debt and capital lease obligations498,849358,704
Current portion of long-term debt1,2081,431[1]
Long-term debt, less current portion497,641357,273[1]
Tranche A Credit Facility [Member]
  
Tranche A revolving credit facility 356,000
Senior Notes [Member]
  
4.875% Senior Notes$ 496,559[2] [2]
[1]Note: The balance sheet at December 31, 2010, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
[2]Net of original issuance discount of $3.4 million

Long-Term Debt (Debt Credit Ratings) (Details)
v2.2.0.25
Long-Term Debt (Debt Credit Ratings) (Details) (Senior Notes [Member])
3 Months Ended
Mar. 31, 2011
Moody's, Baa3 Rating [Member]
 
Credit ratingsBaa3
OutlookStable
Standard & Poor's, BBB- Rating [Member]
 
Credit ratingsBBB-
OutlookStable

Exit Activities
v2.2.0.25
Exit Activities
3 Months Ended
Mar. 31, 2011
Exit Activities 
Exit Activities

NOTE 4 – EXIT ACTIVITIES

 

The Company maintains reserves for closed stores and other properties that are no longer utilized in current operations as well as reserves for employee separation liabilities.  Employee separation liabilities represent costs for anticipated payments, including payments required under various pre-existing employment arrangements with acquired CSK employees, which existed at the time of the acquisition, relating to the planned involuntary termination of employees performing overlapping or duplicative functions.  The Company is expected to conclude the restructuring activities related to these employee separation liabilities in the second quarter of 2011.

 

The Company accrues for closed property operating lease liabilities using a credit-adjusted discount rate to calculate the present value of the remaining non-cancelable lease payments, contractual occupancy costs and lease termination fees after the closing date, net of estimated sublease income.  The closed property lease liabilities are expected to be paid over the remaining lease terms, which currently extend through April 30, 2023.  The Company estimates sublease income and future cash flows based on the Company's experience and knowledge of the market in which the closed property is located, the Company's previous efforts to dispose of similar assets and existing economic conditions.  Adjustments to closed property reserves are made to reflect changes in estimated sublease income or actual contracted exit costs, which vary from original estimates.  Adjustments are made for material changes in estimates in the period in which the changes become known.

 

The following table identifies the closure reserves for stores, administrative office and distribution facilities, and reserves for employee separation costs at March 31, 2011, and December 31, 2010 (in thousands):

  Store Closure Liabilities   Administrative Office and Distribution Facilities Closure Liabilities   Employee Separation Liabilities 
Balance at December 31, 2010: $               13,971   $                                   5,608   $                1,156
Additions and accretion                      181                                            89                          -  
Payments                 (1,316)                                         (694)                      (801)
Revisions to estimates                        35                                            49                          -  
Balance at March 31, 2011: $             12,871   $                                  5,052   $                  355

The revisions to estimates in closure reserves for stores and administrative office and distribution facilities included changes in the estimates of sublease agreements, changes in assumptions of various store and office closure activities, and changes in assumed leasing arrangements since the acquisition of CSK.  The cumulative amount incurred in closure reserves for stores from the inception of the exit activity through March 31, 2011, was $23.7 million.  The cumulative amount incurred in administrative office and distribution facilities from the inception of the exit activity through March 31, 2011, was $9.5 million.  The balance of both these reserves is included in "Other current liabilities" and "Other liabilities" on the accompanying Condensed Consolidated Balance Sheets based upon the dates when the reserves are expected to be settled.  The cumulative amount incurred in employee separation liabilities from the inception of the exit activity through March 31, 2011, was $30.2 million, the balance of which is included in "Accrued payroll" on the accompanying Condensed Consolidated Balance Sheets.

Exit Activities (Policy)
v2.2.0.25
Exit Activities (Policy)
3 Months Ended
Mar. 31, 2011
Exit Activities 
Exit ActivitiesThe Company maintains reserves for closed stores and other properties that are no longer utilized in current operations as well as reserves for employee separation liabilities.  Employee separation liabilities represent costs for anticipated payments, including payments required under various pre-existing employment arrangements with acquired CSK employees, which existed at the time of the acquisition, relating to the planned involuntary termination of employees performing overlapping or duplicative functions.

Exit Activities (Tables)
v2.2.0.25
Exit Activities (Tables)
3 Months Ended
Mar. 31, 2011
Exit Activities 
Summary of Closure Reserves for Stores, Administrative Office and Distribution Facilities and Reserves for Employee Separation Costs
  Store Closure Liabilities   Administrative Office and Distribution Facilities Closure Liabilities   Employee Separation Liabilities 
Balance at December 31, 2010: $               13,971   $                                   5,608   $                1,156
Additions and accretion                      181                                            89                          -  
Payments                 (1,316)                                         (694)                      (801)
Revisions to estimates                        35                                            49                          -  
Balance at March 31, 2011: $             12,871   $                                  5,052   $                  355

Exit Activities (Narrative) (Details)
v2.2.0.25
Exit Activities (Narrative) (Details) (USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Store Closure Liabilities [Member]
 
Restructuring and related activities, completion dateApr. 30, 2023
Cumulative amount incurred for exit activities$ 23.7
Administrative Office and Distribution Facilities Closure Liabilities [Member]
 
Cumulative amount incurred for exit activities9.5
Employee Separation Liabilities [Member]
 
Cumulative amount incurred for exit activities$ 30.2

Exit Activities (Summary of Closure Reserves for Stores, Administrative Office and Distribution Facilities and Reserves for Employee Separation Costs) (Details)
v2.2.0.25
Exit Activities (Summary of Closure Reserves for Stores, Administrative Office and Distribution Facilities and Reserves for Employee Separation Costs) (Details) (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Store Closure Liabilities [Member]
 
Balance at December 31, 2010:$ 13,971
Additions and accretion181
Payments(1,316)
Revisions to estimates35
Balance at March 31, 2011:12,871
Administrative Office and Distribution Facilities Closure Liabilities [Member]
 
Balance at December 31, 2010:5,608
Additions and accretion89
Payments(694)
Revisions to estimates49
Balance at March 31, 2011:5,052
Employee Separation Liabilities [Member]
 
Balance at December 31, 2010:1,156
Additions and accretion 
Payments(801)
Revisions to estimates 
Balance at March 31, 2011:$ 355

Derivative Instruments and Hedging Activities
v2.2.0.25
Derivative Instruments and Hedging Activities
3 Months Ended
Mar. 31, 2011
Derivative Instruments and Hedging Activities 
Derivative Instruments and Hedging Activities

NOTE 5 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

 

Interest rate risk management:

As discussed in Note 3, the Company entered into various interest rate swap transaction agreements with various counterparties to mitigate cash flow risk associated with floating interest rates on outstanding borrowings under its ABL Credit Facility.  The swap transactions were designated as cash flow hedges with interest payments designed to offset the interest payments for borrowings under the ABL Credit Facility that corresponded with the notional amounts of the swaps.  The fair values of the Company's outstanding hedges were recorded as a liability in the accompanying Condensed Consolidated Balance Sheets at December 31, 2010.  The effective portion of the change in fair value of the Company's cash flow hedges was recorded as a component of "Accumulated other comprehensive loss" and any ineffectiveness was recognized in earnings in the period of ineffectiveness.  All of the interest rate swap transaction agreements were terminated at the Company's request on January 14, 2011, concurrent with the retirement of the ABL Credit Facility and the issuance of its 4.875% Senior Notes, as described in Note 3.  As a result of this termination, the Company's interest rate swap hedges were terminated and the Company recognized a charge of $4.2 million, which was included as a component of "Other income (expense)" on the accompanying Condensed Consolidated Statements of Income for the quarter ended March 31, 2011.  As of March 31, 2011, the Company did not hold any instruments that qualified as cash flow hedge derivatives.

The table below represents the effects the Company's derivative financial instruments had on its Condensed Consolidated Balance Sheets as of March 31, 2011, and December 31, 2010 (in thousands):

                             
  Fair Value of Derivative, Recorded as Payable to Counterparties in "Other current liabilities"   Fair Value of Derivative, Tax Effect     Amount of Loss Recognized in Accumulated Other Comprehensive Loss on Derivative, net of tax
Derivatives Designated as Hedging Instruments   March 31, 2011   December 31, 2010     March 31, 2011   December 31, 2010     March 31, 2011   December 31, 2010
                             
Interest rate swap contracts $                     -   $ 4,845   $                     -   $ 1,875   $                     -   $ 2,970


 

The table below represents the effects the Company's derivative financial instruments had on its Condensed Consolidated Statements of Income as of March 31, 2011 and 2010 (in thousands):


              
  Location and Amount of Loss Recognized in Income on Derivative
 
Derivatives Designated as Hedging Instruments   Three months ended Three months ended
March 31, 2011 March 31, 2010
               
Interest rate swap contracts   Other income (expense) $              (4,237) Other income (expense) $                      -  
               

Derivative Instruments and Hedging Activities (Policy)
v2.2.0.25
Derivative Instruments and Hedging Activities (Policy)
3 Months Ended
Mar. 31, 2011
Derivative Instruments and Hedging Activities 
Derivative Instruments And Hedging ActivitiesThe swap transactions were designated as cash flow hedges with interest payments designed to offset the interest payments for borrowings under the ABL Credit Facility that corresponded with the notional amounts of the swaps.

Derivative Instruments and Hedging Activities (Tables)
v2.2.0.25
Derivative Instruments and Hedging Activities (Tables)
3 Months Ended
Mar. 31, 2011
Derivative Instruments and Hedging Activities 
Effect of Derivative Financial Instruments on Condensed Consolidated Financial Statements
                             
  Fair Value of Derivative, Recorded as Payable to Counterparties in "Other current liabilities"   Fair Value of Derivative, Tax Effect     Amount of Loss Recognized in Accumulated Other Comprehensive Loss on Derivative, net of tax
Derivatives Designated as Hedging Instruments   March 31, 2011   December 31, 2010     March 31, 2011   December 31, 2010     March 31, 2011   December 31, 2010
                             
Interest rate swap contracts $                     -   $ 4,845   $                     -   $ 1,875   $                     -   $ 2,970
Location and Amount of Loss Recognized in Income on Derivative

              
  Location and Amount of Loss Recognized in Income on Derivative
 
Derivatives Designated as Hedging Instruments   Three months ended Three months ended
March 31, 2011 March 31, 2010
               
Interest rate swap contracts   Other income (expense) $              (4,237) Other income (expense) $                      -  
               

Derivative Instruments and Hedging Activities (Narrative) (Details)
v2.2.0.25
Derivative Instruments and Hedging Activities (Narrative) (Details) (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Mar. 31, 2011
Interest Rate Swap Contracts [Member]
Mar. 31, 2010
Interest Rate Swap Contracts [Member]
Cash flow hedge loss reclassified to other income (expense) $ (4,237) 
Notional amount of derivative instruments held$ 0  

Derivative Instruments and Hedging Activities (Effect of Company Derivative Financial Instruments on Condensed Consolidated Financial Statements) (Details)
v2.2.0.25
Derivative Instruments and Hedging Activities (Effect of Company Derivative Financial Instruments on Condensed Consolidated Financial Statements) (Details) (Interest Rate Swap Contracts [Member], USD $)
In Thousands
Mar. 31, 2011
Dec. 31, 2010
Fair Value of Derivative, Recorded as Payable to Counterparties in "Other current liabilities" $ 4,845
Fair Value of Derivative, Tax Effect 1,875
Amount of Loss Recognized in Accumulated Other Comprehensive Loss on Derivative, net of tax $ 2,970

Derivative Instruments and Hedging Activities (Location and Amount of Loss Recognized in Income on Derivative) (Details)
v2.2.0.25
Derivative Instruments and Hedging Activities (Location and Amount of Loss Recognized in Income on Derivative) (Details) (Interest Rate Swap Contracts [Member], USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Cash flow hedge loss reclassified to other income (expense)$ (4,237) 

Fair Value Measurements
v2.2.0.25
Fair Value Measurements
3 Months Ended
Mar. 31, 2011
Fair Value Measurements 
Fair Value Measurements

NOTE 6 – FAIR VALUE MEASUREMENTS

 

The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).  The Company uses the income and market approaches to determine the fair value of its assets and liabilities.

  The three levels of the fair value hierarchy are set forth below:

 

  • Level 1 – Observable inputs that reflect quoted prices in active markets.
  • Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable.
  • Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions.

 

4.875% Senior Notes:

The carrying amount of the Company's 4.875% Senior Notes is included in "Long-term debt, less current portion" on the accompanying Condensed Consolidated Balance Sheets. The estimated fair value of the Company's 4.875% Senior Notes as of March 31, 2011, which is determined by reference to quoted market prices (Level 1), is included in the table below (in thousands):

 

                 
March 31, 2011
    Quoted Prices in Active Markets for Identical Instruments   Significant Other Observable Inputs   Significant Unobservable Inputs   Total
    (Level 1)   (Level 2)   (Level 3)    
4.875% Senior Notes $                        493,450 $                                  -   $                                  -   $       493,450

Interest rate swap contracts:
The fair value of the Company's outstanding interest rate swap contracts, as discussed in Note 3 and Note 5, was included in "Other current liabilities" on the accompanying Condensed Consolidated Balance Sheets as of December 31, 2010.  The fair value of the interest rate swap contracts was based on the discounted net present value of the swaps using third party quotes (Level 2).  Changes in fair market value were recorded in "Accumulated other comprehensive loss" on the accompanying Condensed Consolidated Balance Sheets, and changes resulting from the termination of the interest rate swap contracts were recorded in "Other income (expense)" on the accompanying Condensed Consolidated Statements of Income.  All of the interest rate swap transaction agreements that existed as of December 31, 2010, were terminated at the Company's request on January 14, 2011, concurrent with the retirement of the ABL Credit Facility and the issuance of its 4.875% Senior Notes, as discussed in Note 3.  The fair value of the Company's interest rate swap agreements as of December 31, 2010, is included in the table below (in thousands):

                 
December 31, 2010
    Quoted Prices in Active Markets for Identical Instruments   Significant Other Observable Inputs   Significant Unobservable Inputs   Total
    (Level 1)   (Level 2)   (Level 3)    
Derivative contracts $                                  -   $                           (4,845) $                                  -   $         (4,845)

Asset-based revolving credit facility:

The Company determined that the estimated fair value of its ABL Credit Facility, as discussed in Note 3, approximated the carrying amount of $356.0 million at December 31, 2010, which is included in "Long-term debt, less current portion" on the accompanying Condensed Consolidated Balance Sheets.  These valuations were determined by consulting investment bankers, the Company's observations of the value tendered by counterparties moving into and out of the facility and an analysis of the changes in credit spreads for comparable companies in the industry (Level 2).  All outstanding borrowings under the ABL Credit Facility were repaid on January 14, 2011, and the facility was retired concurrent with the issuance of the Company's 4.875% Senior Notes as discussed in Note 3.


Fair Value Measurements (Policy)
v2.2.0.25
Fair Value Measurements (Policy)
3 Months Ended
Mar. 31, 2011
Fair Value Measurements 
Fair Value of Financial Instruments, Policy

The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).  The Company uses the income and market approaches to determine the fair value of its assets and liabilities.


Fair Value Measurements (Tables)
v2.2.0.25
Fair Value Measurements (Tables)
3 Months Ended12 Months Ended
Mar. 31, 2011
Dec. 31, 2010
Fair Value Measurements  
Valuation techniques for Senior Notes
                 
March 31, 2011
    Quoted Prices in Active Markets for Identical Instruments   Significant Other Observable Inputs   Significant Unobservable Inputs   Total
    (Level 1)   (Level 2)   (Level 3)    
4.875% Senior Notes $                        493,450 $                                  -   $                                  -   $       493,450
 
Valuation techniques for assets and liabilities 
                 
December 31, 2010
    Quoted Prices in Active Markets for Identical Instruments   Significant Other Observable Inputs   Significant Unobservable Inputs   Total
    (Level 1)   (Level 2)   (Level 3)    
Derivative contracts $                                  -   $                           (4,845) $                                  -   $         (4,845)

Fair Value Measurements (Narrative) (Details)
v2.2.0.25
Fair Value Measurements (Narrative) (Details) (Line of Credit Facility [Member], Secured Debt [Member], USD $)
In Millions
Dec. 31, 2010
Fair value of ABL credit facility$ 356.0

Fair Value Measurements (Fair Value of Company's 4.875% Senior Notes) (Details)
v2.2.0.25
Fair Value Measurements (Fair Value of Company's 4.875% Senior Notes) (Details) (Senior Notes [Member], USD $)
In Thousands
Mar. 31, 2011
4.875% Senior Notes$ 493,450
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
4.875% Senior Notes493,450
Significant Other Observable Inputs (Level 2) [Member]
 
4.875% Senior Notes 
Significant Unobservable Inputs (Level 3) [Member]
 
4.875% Senior Notes 

Fair Value Measurements (Fair Value of Company's Interest Rate Swap Contracts) (Details)
v2.2.0.25
Fair Value Measurements (Fair Value of Company's Interest Rate Swap Contracts) (Details) (USD $)
In Thousands
Dec. 31, 2010
Derivative contracts$ (4,845)
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
Derivative contracts 
Significant Other Observable Inputs (Level 2) [Member]
 
Derivative contracts(4,845)
Significant Unobservable Inputs (Level 3) [Member]
 
Derivative contracts 

Shareholders' Equity
v2.2.0.25
Shareholders' Equity
3 Months Ended
Mar. 31, 2011
Shareholders' Equity 
Shareholders' Equity

NOTE 7 – SHAREHOLDERS' EQUITY

 

Accumulated other comprehensive loss:

Unrealized losses, net of tax, from interest rate swap agreements that qualified as cash flow hedges were included in "Accumulated other comprehensive loss" on the accompanying Condensed Consolidated Balance Sheets at December 31, 2010.  As discussed in Notes 3 and 5, all interest rate swap agreements were terminated on January 14, 2011.  The adjustment to "Accumulated other comprehensive loss" for the three months ended March 31, 2011, totaled $4.8 million with a corresponding tax asset of $1.8 million resulting in a net of tax effect of $3.0 million.  Changes in "Accumulated other comprehensive loss" for the three months ended March 31, 2011, consisted of the following (in thousands):

       
    Changes in Unrealized Losses on Cash Flow Hedges
Balance at December 31, 2010:   $ (2,970)
Period change     2,970
Balance at March 31, 2011:   $                     -  

 

Comprehensive income for the three months ended March 31, 2011 and 2010, was $105.4 million and $98.4 million, respectively. 

 

 

Share repurchase program:

In January of 2011, the Company's Board of Directors approved a $500 million share repurchase program.  Under the program, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall market conditions, for a three-year period.  The Company and its Board of Directors may increase or otherwise modify, renew, suspend or terminate the repurchase program at any time, without prior notice. 

 

The Company repurchased 2.6 million shares of its common stock under its publicly announced repurchase program during the three months ended March 31, 2011, at an average price per share of $55.54, for a total investment of $145.0 million.  As of March 31, 2011, the Company had $355.0 million remaining under its repurchase program.  From April 1, 2011, through and including May 9, 2011, the Company repurchased 1.1 million shares of its common stock at an average price of $56.84, for a total investment of $62.9 million.


Shareholders' Equity (Tables)
v2.2.0.25
Shareholders' Equity (Tables)
3 Months Ended
Mar. 31, 2011
Shareholders' Equity 
Accumulated Other Comprehensive Income Loss
       
    Changes in Unrealized Losses on Cash Flow Hedges
Balance at December 31, 2010:   $ (2,970)
Period change     2,970
Balance at March 31, 2011:   $                     -  

Shareholders' Equity (Accumulated Other Comprehensive Loss) (Narrative) (Details)
v2.2.0.25
Shareholders' Equity (Accumulated Other Comprehensive Loss) (Narrative) (Details) (USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Shareholders' Equity  
Unrealized loss from interest rate swaps (cash flow hedges) - before tax$ 4.8 
Unrealized loss from interest rate swaps (cash flow hedges) - tax asset1.8 
Unrealized loss from interest rate swaps (cash flow hedges) - net of tax3.0 
Comprehensive income$ 105.4$ 98.4

Shareholders' Equity (Accumulated Other Comprehensive Income Loss) (Details)
v2.2.0.25
Shareholders' Equity (Accumulated Other Comprehensive Income Loss) (Details) (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Shareholders' Equity 
Beginning balance$ (2,970)[1]
Period change2,970
Ending balance 
[1]Note: The balance sheet at December 31, 2010, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Shareholders' Equity (Share Repurchase Program) (Narrative) (Details)
v2.2.0.25
Shareholders' Equity (Share Repurchase Program) (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
0 Months Ended3 Months Ended
May 09, 2011
Jan. 11, 2011
Mar. 31, 2011
Shareholders' Equity   
Share repurchase program approved $ 500 
Market purchase period, years  3
Common stock repurchased, shares1.1 2.6
Common stock repurchased, value62.9 145.0
Common stock repurchased, average price per share$ 56.84 $ 55.54
Remaining balance of repurchase program  $ 355.0

Share-Based Employee Compensation Plans And Other Benefit Plans
v2.2.0.25
Share-Based Employee Compensation Plans And Other Benefit Plans
3 Months Ended
Mar. 31, 2011
Share-Based Employee Compensation Plans And Other Benefit Plans 
Share-Based Employee Compensation Plans And Other Benefit Plans

 

NOTE 8 – SHARE-BASED EMPLOYEE COMPENSATION PLANS AND OTHER BENEFIT PLANS

 

The Company recognizes share-based compensation expense based on the fair value of the grants, awards or shares at the time of the grant, award or issuance.  Share-based payments include stock option awards issued under the Company's employee stock option plan, director stock option plan, restricted stock awarded under the Company's employee incentive plan and director plan, stock issued through the Company's employee stock purchase plan and stock awarded to employees through other benefit programs. 

 

Stock options:

The Company's stock-based incentive plans provide for the granting of stock options for the purchase of common stock of the Company to directors and certain key employees of the Company.  Options are granted at an exercise price that is equal to the closing market price of the Company's common stock on the date of the grant.  Director options granted under the plan expire after seven years and are fully vested after six months.  Employee options granted under the plan expire after ten years and typically vest 25% a year, over four years.  The Company records compensation expense for the grant date fair value of option awards evenly over the vesting period under the straight-line method.  The following table summarizes the stock option activity during the first three months of 2011:

         
  Shares   Weighted-Average Exercise Price

Outstanding at December 31, 2010

           8,394,854   $                  30.37

Granted

              531,740                      57.66

Exercised

            (250,122)                      27.65

Forfeited

            (163,345)                      38.82

Outstanding at March 31, 2011

           8,513,127                      32.05

Exercisable at March 31, 2011

           4,437,316   $                  26.25

 

The Company recognized stock option compensation expense of approximately $4.4 million and $3.6 million for the three months ended March 31, 2011 and 2010, respectively, and recognized a corresponding income tax benefit of approximately $1.7 million and $1.4 million, respectively.

 

The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option pricing model.  The Black-Scholes model requires the use of assumptions, including expected volatility, expected life, the risk free rate and the expected dividend yield.  Expected volatility is based upon the historical volatility of the Company's stock.  Expected life represents the period of time that options granted are expected to be outstanding.  The Company uses historical data and experience to estimate the expected life of options granted.  The risk free interest rates for periods within the contractual life of the options are based on the United States Treasury rates in effect at the time the options are granted for the options' expected life.

 

The weighted-average assumptions, identified in the table below, were used for grants issued for the three months ended March 31, 2011 and 2010:

           
  Three Months Ended
March 31,
  2011   2010

Risk free interest rate

 1.72 %   2.11 %

Expected life

 4.1  Years   3.6  Years

Expected volatility

 33.5 %   33.9 %

Expected dividend yield

             -   %               -   %

 

 

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2011, was $16.84 compared to $12.22 for the three months ended March 31, 2010.  The remaining unrecognized compensation expense related to unvested awards at March 31, 2011, was $38.3 million, and the weighted-average period of time over which this cost will be recognized is 3.0 years.

 

Other employee benefit plans:

The Company sponsors other share-based employee benefit plans including an employee stock purchase plan which permits all eligible employees to purchase shares of the Company's common stock at 85% of the fair market value and a performance incentive plan under which the Company's senior management is awarded shares of restricted stock that vest equally over a three-year period. Compensation expense recognized under these plans is measured based on the market price of the Company's common stock on the date of award and is recorded over the vesting period.  During the three months ended March 31, 2011, the Company recorded approximately $0.7 million of compensation expense for benefits provided under these plans and a corresponding income tax benefit of approximately $0.3 million.  During the three months ended March 31, 2010, the Company recorded approximately $0.5 million of compensation expense for benefits provided under these plans and recognized a corresponding income tax benefit of approximately $0.2 million.

 


Share-Based Employee Compensation Plans And Other Benefit Plans (Policies)
v2.2.0.25
Share-Based Employee Compensation Plans And Other Benefit Plans (Policies)
3 Months Ended
Mar. 31, 2011
Share-Based Employee Compensation Plans And Other Benefit Plans 
Share-Based Compensation Plans

The Company recognizes share-based compensation expense based on the fair value of the grants, awards or shares at the time of the grant, award or issuance.  Share-based payments include stock option awards issued under the Company's employee stock option plan, director stock option plan, restricted stock awarded under the Company's employee incentive plan and director plan, stock issued through the Company's employee stock purchase plan and stock awarded to employees through other benefit programs. 


Share-Based Employee Compensation Plans And Other Benefit Plans (Tables)
v2.2.0.25
Share-Based Employee Compensation Plans And Other Benefit Plans (Tables)
3 Months Ended
Mar. 31, 2011
Share-Based Employee Compensation Plans And Other Benefit Plans 
Summary of Stock Options
         
  Shares   Weighted-Average Exercise Price

Outstanding at December 31, 2010

           8,394,854   $                  30.37

Granted

              531,740                      57.66

Exercised

            (250,122)                      27.65

Forfeited

            (163,345)                      38.82

Outstanding at March 31, 2011

           8,513,127                      32.05

Exercisable at March 31, 2011

           4,437,316   $                  26.25
Black-Scholes Option Pricing Model, Table
           
  Three Months Ended
March 31,
  2011   2010

Risk free interest rate

 1.72 %   2.11 %

Expected life

 4.1  Years   3.6  Years

Expected volatility

 33.5 %   33.9 %

Expected dividend yield

             -   %               -   %

Share-Based Employee Compensation Plans and Other Benefit Plans (Narrative) (Details)
v2.2.0.25
Share-Based Employee Compensation Plans and Other Benefit Plans (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Employee Stock Option [Member]
  
Share-based compensation arrangement by share-based payment award, expiration datingten years 
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Periodfour years 
Share-based compensation arrangement by share-based payment award, typical vesting rate per year25.00% 
Director Stock Option [Member]
  
Share-based compensation arrangement by share-based payment award, expiration datingseven years 
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Periodsix months 
Stock Option [Member]
  
Vesting of optionsThe Company's stock-based incentive plans provide for the granting of stock options for the purchase of common stock of the Company to directors and certain key employees of the Company.  Options are granted at an exercise price that is equal to the closing market price of the Company's common stock on the date of the grant.  Director options granted under the plan expire after seven years and are fully vested after six months.  
Compensation costs for employee benefit plans$ 4.4$ 3.6
Compensation costs for employee benefit plans - income tax benefit1.71.4
Weighted-average grant date fair value of options granted$ 16.84$ 12.22
Remaining unrecognized compensation cost38.3 
Weighted-average period for cost recognition, years3 
Other Employee Benefit Plans [Member]
  
Compensation costs for employee benefit plans0.70.5
Compensation costs for employee benefit plans - income tax benefit$ 0.3$ 0.2
Employee Stock Purchase Plan Stock Purchase Percentage85.00% 
Other employee benefit plan descriptionsThe Company sponsors other share-based employee benefit plans including an employee stock purchase plan which permits all eligible employees to purchase shares of the Company's common stock at 85% of the fair market value and a performance incentive plan under which the Company's senior management is awarded shares of restricted stock that vest equally over a three-year period. 

Share-Based Employee Compensation Plans and Other Benefit Plans (Summary Of Stock Options) (Details)
v2.2.0.25
Share-Based Employee Compensation Plans and Other Benefit Plans (Summary Of Stock Options) (Details) (USD $)
3 Months Ended
Mar. 31, 2011
Share-Based Employee Compensation Plans And Other Benefit Plans 
Outstanding at December 31, 2010, shares8,394,854
Outstanding at December 31, 2010, weighted-average exercise price$ 30.37
Granted, shares531,740
Granted, weighted-average exercise price$ 57.66
Exercised, shares(250,122)
Exercised, weighted average exercise price$ 27.65
Forfeited, shares(163,345)
Forfeited, weighted-average exercise price$ 38.82
Outstanding at March 31, 2011, shares8,513,127
Outstanding at March 31, 2011, weighted average exercise price$ 32.05
Exercisable at March 31, 2011, shares4,437,316
Exercisable at March 31, 2011, weighted average exercise price$ 26.25

Share-Based Employee Compensation Plans and Other Benefit Plans (Black-Scholes Option Pricing Model, Table) (Details)
v2.2.0.25
Share-Based Employee Compensation Plans and Other Benefit Plans (Black-Scholes Option Pricing Model, Table) (Details) (Stock Option [Member])
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Risk-free interest rate1.72%2.11%
Expected life, years4.13.6
Expected volatility33.50%33.90%
Expected dividend yield  

Earnings Per Share
v2.2.0.25
Earnings Per Share
3 Months Ended
Mar. 31, 2011
Earnings Per Share 
Earnings Per Share
 

NOTE 9 – EARNINGS PER SHARE

 

The table below summarizes the computation of basic and diluted earnings per share for the three months ended March 31, 2011 and 2010 (in thousands, except per share data):

           
  Three Months Ended,
March 31,
  2011   2010

Numerator (basic and diluted):

          

     Net income

 $          102,474   $ 97,476
           
Denominator:          

     Denominator for basic earnings per share–                           …….weighted-average shares

            140,579     137,583

     Effect of stock options (see Note 8)

                 2,287     1,817

     Effect of exchangeable notes 

    -      212

     Denominator for diluted earnings per share--                       ……..adjusted weighted-average shares and assumed conversion

            142,866     139,612
           

Earnings per share-basic

 $ 0.73   $ 0.71
           

Earnings per share-assuming dilution

 $ 0.72   $ 0.70

 

 

For the three months ended March 31, 2011 and 2010, the computation of diluted earnings per share did not include certain common stock equivalents.  These common stock equivalents represent underlying stock options not included in the computation of diluted earnings per share, because the inclusion of such equivalents would have been antidilutive.  The table below identifies the antidilutive stock options for the three months ended March 31, 2011 and 2010 (in thousands):

     
  Three Months Ended,
 March 31, 
  2011 2010

Antidilutive stock options

                 1,377                   1,456

Weighted-average exercise price

  $            54.43  $               37.72

 

The exchangeable notes were retired in December of 2010, and therefore had no dilutive effect on 2011 results.  Incremental net shares for the exchange feature of the exchangeable notes were included in the diluted earnings per share calculation for the three months ended March 31, 2010.


Earnings Per Share (Tables)
v2.2.0.25
Earnings Per Share (Tables)
3 Months Ended
Mar. 31, 2011
Earnings Per Share 
Computation of basic and diluted earnings per share
           
  Three Months Ended,
March 31,
  2011   2010

Numerator (basic and diluted):

          

     Net income

 $          102,474   $ 97,476
           
Denominator:          

     Denominator for basic earnings per share–                           …….weighted-average shares

            140,579     137,583

     Effect of stock options (see Note 8)

                 2,287     1,817

     Effect of exchangeable notes 

    -      212

     Denominator for diluted earnings per share--                       ……..adjusted weighted-average shares and assumed conversion

            142,866     139,612
           

Earnings per share-basic

 $ 0.73   $ 0.71
           

Earnings per share-assuming dilution

 $ 0.72   $ 0.70
Antidilutive Stock Option Summary
     
  Three Months Ended,
 March 31, 
  2011 2010

Antidilutive stock options

                 1,377                   1,456

Weighted-average exercise price

  $            54.43  $               37.72

Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details)
v2.2.0.25
Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) (USD $)
In Thousands, except Per Share data
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Numerator (basic and diluted):  
Net income$ 102,474$ 97,476
Denominator:  
Denominator for basic earnings per share - weighted-average shares140,579137,583
Effect of stock options (see Note 8)2,2871,817
Effect of exchangeable notes 212
Denominator for diluted earnings per common share- adjusted weighted-average shares and assumed conversion142,866139,612
Earnings per share - basic$ 0.73$ 0.71
Earnings per share-assuming dilution$ 0.72$ 0.70

Earnings Per Share (Summary of Antidilutive Stock Options) (Details)
v2.2.0.25
Earnings Per Share (Summary of Antidilutive Stock Options) (Details) (USD $)
In Thousands, except Per Share data
3 Months Ended
Mar. 31, 2011
Mar. 31, 2010
Earnings Per Share  
Antidilutive stock options1,3771,456
Weighted-average exercise price$ 54.43$ 37.72

Legal Matters
v2.2.0.25
Legal Matters
3 Months Ended
Mar. 31, 2011
Legal Matters 
Legal Matters

NOTE 10 – LEGAL MATTERS

 

O'Reilly Litigation:

O'Reilly is currently involved in litigation incidental to the ordinary conduct of the Company's business.  Although the Company cannot ascertain the amount of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, these matters, taking into account applicable insurance and reserves, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period.  In addition, O'Reilly is involved in resolving the governmental investigations that were being conducted against CSK and CSK's former officers prior to its acquisition by O'Reilly, as described below.

 

CSK Pre-Acquisition Matters – Governmental Investigations and Actions:

As previously reported, the pre-acquisition Securities and Exchange Commission ("SEC") investigation of CSK, which commenced in 2006, was settled in May of 2009 by administrative order without fines, disgorgement or other financial remedies.  The Department of Justice ("DOJ")'s criminal investigation into these same matters as previously disclosed is near a conclusion and is described more fully below.  In addition, the previously reported SEC complaint against three former employees of CSK for alleged conduct related to CSK's historical accounting practices remains ongoing.  The action filed by the SEC on July 22, 2009, against Maynard L. Jenkins, the former Chief Executive Officer of CSK seeking reimbursement from Mr. Jenkins of certain bonuses and stock sale profits pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, as previously reported, also continues.  However, on March 24, 2011, the parties filed a Stipulation announcing a tentative settlement agreement had been reached, subject to approval by the SEC's Commissioners.  At the request of the parties, and by Order dated March 25, 2011, the matter has been stayed pending final approval of the parties' tentative settlement.  The previously reported DOJ criminal prosecution of Don Watson, the former Chief Financial Officer of CSK, remains ongoing with trial set to commence on or about June 7, 2011.

 

With respect to the ongoing DOJ investigation into CSK's pre-acquisition accounting practices as referenced above, as previously disclosed, O'Reilly and the DOJ  agreed in principle, subject to final documentation, to resolve the DOJ investigation of CSK's legacy pre-acquisition accounting practices.  The Company and the DOJ continue work to complete the final documentation necessary for the execution of the Non-Prosecution Agreement previously referenced and payment of the one-time monetary penalty of $20.9 million, also previously reported.  The Company's total reserve related to the DOJ investigation of CSK was $21.3 million as of March 31, 2011, which relates to the amount of the monetary penalty and associated legal costs.

 

Notwithstanding the agreement in principle with the DOJ, several of CSK's former directors or officers and current or former employees have been or may be interviewed or deposed as part of criminal, administrative and civil investigations and lawsuits.  As described above, certain former employees of CSK are the subject of civil and criminal litigation commenced by the government.  Under Delaware law, the charter documents of the CSK entities and certain indemnification agreements, CSK has certain obligations to indemnify these persons and, as a result, O'Reilly is currently incurring legal fees on behalf of these persons in relation to pending matters.  Some of these indemnification obligations and other related costs may not be covered by CSK's insurance policies.

 

As a result of the CSK acquisition, O'Reilly expects to continue to incur ongoing legal fees related to the indemnity obligations related to the litigation that has commenced by the DOJ and SEC of CSK's former employees.  O'Reilly has a remaining reserve, with respect to such indemnification obligations, of $16.8 million at March 31, 2011, which was primarily recorded as an assumed liability in the Company's allocation of the purchase price of CSK.

 

The foregoing governmental investigations and indemnification matters are subject to many uncertainties, and, given their complexity and scope, their final outcome cannot be predicted at this time.  It is possible that in a particular quarter or annual period the Company's results of operations and cash flows could be materially affected by an ultimate unfavorable resolution of such matters, depending, in part, upon the results of operations or cash flows for such period.  However, at this time, management believes that the ultimate outcome of all of such regulatory proceedings and other matters that are pending, after consideration of applicable reserves and potentially available insurance coverage benefits not contemplated in recorded reserves, should not have a material adverse effect on the Company's consolidated financial condition, results of operations and cash flows.


Legal Matters (Details)
v2.2.0.25
Legal Matters (Details) (USD $)
In Millions
3 Months Ended
Mar. 31, 2011
Legal Matters 
Legacy CSK DOJ investigation charge$ 20.9
Legacy CSK DOJ investigation reserve21.3
Legacy CSK DOJ indemnity litigation reserve$ 16.8

Recent Accounting Pronouncements
v2.2.0.25
Recent Accounting Pronouncements
3 Months Ended
Mar. 31, 2011
Recent Accounting Pronouncements 
Recent Accounting Pronouncements

NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS

 

No recent accounting pronouncements or changes in accounting pronouncements have occurred since those discussed in our Annual Report on Form 10-K for the year ended December 31, 2010, that are of material significance, or have potential material significance, to the Company.