-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ODrakqac5elPPZl+QQyBoTX4kuZuO3CxiyGKHtkYQcY4YcJPnzw1DuIvQjoXXC1r CdAO9FzAF44312jR/I8S0A== 0000898173-00-000034.txt : 20000516 0000898173-00-000034.hdr.sgml : 20000516 ACCESSION NUMBER: 0000898173-00-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: O REILLY AUTOMOTIVE INC CENTRAL INDEX KEY: 0000898173 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 440618012 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21318 FILM NUMBER: 635386 BUSINESS ADDRESS: STREET 1: 233 S PATTERSON CITY: SPRINGFIELD STATE: MO ZIP: 65802 BUSINESS PHONE: 4178622674 MAIL ADDRESS: STREET 1: 233 SOUTH PATTERSON CITY: SPRINGFIELD STATE: MO ZIP: 65802 10-Q 1 O'REILLY AUTOMOTIVE, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ____________________ Commission file number 0-21318 O'REILLY AUTOMOTIVE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Missouri 44-0618012 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 233 South Patterson Springfield, Missouri 65802 - -------------------------------------------------------------------------------- (Address of principal executive offices, Zip code) (417) 862-6708 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Common stock, $0.01 par value - 50,995,972 shares outstanding as of March 31, 2000 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES FORM 10-Q Quarter Ended March 31, 2000 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 7 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 9 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9 ITEM 5 - OTHER INFORMATION 9 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 9 SIGNATURE PAGE 10 EXHIBIT INDEX 11 PART I Financial Information ITEM 1. Financial Statements O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2000 1999 ------------ ------------ (Unaudited) (Note) (In thousands) Assets Current assets: Cash $ 9,432 $ 9,791 Short-term investments 500 500 Accounts receivable, net 28,678 26,462 Amounts receivable from vendors 21,796 28,304 Inventory 307,947 293,924 Refundable income taxes -- 2,333 Deferred income taxes 1,433 1,776 Other current assets 2,019 1,263 ------------ ------------ Total current assets 371,805 364,353 Property and equipment 313,855 292,806 Accumulated depreciation 61,256 56,289 ------------ ------------ 252,599 236,517 Other assets 9,131 9,572 ------------ ------------ Total assets $ 633,535 $ 610,442 Liabilities and shareholders' equity Current liabilities: Note payable to bank $ 5,000 $ 5,000 Income taxes payable 4,052 -- Accounts payable 61,651 64,885 Other current liabilities 28,703 30,759 Current portion of long-tem debt 14,523 14,358 ------------ ------------ Total current liabilities 113,929 115,002 Long-term debt, less current portion 100,303 90,704 Deferred income taxes 1,546 1,215 Other liabilities 483 477 Shareholders' equity: Commons stock, $.01 par value: Authorized shares-90,000,000 Issued and outstanding shares- 50,995,972 shares at March 31, 2000 and 50,799,353 at December 31, 1999 510 508 Additional paid-in capital 224,289 221,628 Retained earnings 192,475 180,908 ------------ ------------ Total shareholders' equity 417,274 403,044 ------------ ------------ Total liabilities and shareholders' equity $ 633,535 $ 610,442 ============ ============
NOTE: The balance sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements. O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, ------------------------------------ 2000 1999 (In thousands, except per share data) Product sales $ 195,758 $ 166,404 Cost of goods sold, including warehouse and distribution expenses 111,046 95,447 Operating, selling, general and administrative expenses 65,226 54,716 ---------- ---------- 176,272 150,163 ---------- ---------- Operating income 19,486 16,241 Other expense, net (890) (2,296) ---------- ---------- Income before income taxes 18,596 13,945 Provision for income taxes 7,029 5,342 ---------- ---------- Net income $ 11,567 $ 8,603 ========== ========== Basic income per share data: Net income per common share $ 0.23 $ 0.20 ========== ========== Weighted average common shares outstanding 50,828 42,720 ========== ========== Income per common share-assuming dilution: Net income per common share-assuming dilution $ 0.23 $ 0.20 ========== ========== Adjusted weighted average common shares outstanding 51,236 43,846 ========== ==========
See notes to condensed consolidated financial statements. O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended ----------------------------- March 31, March 31, 2000 1999 --------- --------- (In thousands) Net cash provided by operating activities $ 11,518 $ 18,324 Investing activities: Purchases of property and equipment (21,988) (15,348) Proceeds from sale of property and equipment 389 6,069 Payments received on notes receivable 164 767 Advances made on notes receivable -- (70) ---------- ---------- Net cash used in investing activities (21,435) (8,582) Financing activities: Borrowings on notes payable to banks 7,130 -- Payments on notes payable to banks (7,130) (5,000) Proceeds from issuance of long-term debt 127,289 44,868 Payments on long-term debt (117,882) (160,085) Net proceeds from secondary offering -- 106,780 Proceeds from issuance of common stock 151 5,197 ---------- ---------- Net cash provided by (used in) financing activities 9,558 (8,240) ---------- ---------- Net increase (decrease) in cash (359) 1,502 Cash at beginning of period 9,791 1,728 ---------- ---------- Cash at end of period $ 9,432 $ 3,230 ========== ==========
See notes to condensed consolidated financial statements. O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 2000 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of O'Reilly Automotive, Inc. and Subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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, 1999. 2. Restatement All share and per share information included in the financial statements as of March 31, 1999, and the three months then ended has been restated to reflect the retroactive effect of the two-for-one stock split effected on November 30, 1999. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Unless otherwise indicated, "we," "us," "our" and similar terms, as well as references to the "Company" or "O'Reilly" refer to O'Reilly Automotive, Inc. and its subsidiaries. Results of Operations Product sales for the first quarter of 2000 increased by $29.4 million, or 17.6%, over product sales for the first quarter of 1999. This increase was due to the opening of 30 net, new O'Reilly stores during the last quarter of 1999 and the opening of 23 net, new stores during the first quarter of 2000, in addition to a 5.0% increase in comparable store product sales. At March 31, 2000, we operated 594 stores compared to 500 stores at March 31, 1999. Gross profit increased 19.4% from $71.0 million (or 42.6% of product sales) in the first quarter of 1999 to $84.7 million (or 43.3% of product sales) in the first quarter of 2000. The increase in gross profit margin was attributable to a favorable product mix resulting primarily from the warm weather in January and our increased buying power resulting from the increased volume of purchases. Operating, selling, general and administrative expenses ("OSG&A expenses") increased $10.5 million from $54.7 million (or 32.9% of product sales) in the first quarter of 1999 to $65.2 million (or 33.3% of product sales) in the first quarter of 2000. The increase in OSG&A expenses resulted from the addition of team members and resources in order to support the increased level of our operations. Other expense decreased by $1.4 million in the first quarter of 2000 compared to the first quarter of 1999. The overall decrease in other expense in the first quarter of 2000 is due to a substantial reduction in debt at the end of first quarter of 1999 with the proceeds from the secondary offering, thereby reducing interest expense in 2000 in comparison with 1999. Our estimated provision for income taxes decreased from 38.3% of income before income taxes in the first three months of 1999 to 37.8% in the same period in 2000. The decrease in the effective income tax rate was primarily due to changes in the mix of taxable income among the states in which we operate. Principally, as a result of the foregoing, net income increased from $8.6 million or 5.2% of product sales in the first quarter of 1999 to $11.6 million or 5.9% of product sales in the first quarter of 2000. Liquidity and Capital Resources Net cash provided by operating activities decreased from $18.3 million for the first three months in 1999 to $11.5 million for the first three months of 2000. This decrease was principally the result of an increase in inventory and decreases in accounts payable and accrued expenses, net of a decrease in receivables. The increase in inventory was primarily attributable to new store growth. The decreases in accounts payable, accrued expenses and receivables were due to the timing of payments. Net cash used in investing activities has increased from $8.6 million in 1999 to $21.4 million in 2000 primarily due to the increased purchases of property and equipment for the 23 net new stores opened in first quarter 2000 versus the 9 net new stores opened in the same period in 1999. Cash used in financing activities was $8.2 million in the first three months of 1999. Cash provided by financing activities was $9.6 million in the first three months of 2000. As discussed above, during the first three months of 1999, we substantially reduced our credit facility with the proceeds from the secondary offering and the issuance of common stock. The increase in cash provided by financing activities in the first three months of 2000 was primarily due to the proceeds from issuance of our long-term debt, partially offset by the scheduled principal payments on debt. Aside from the 23 net, new stores opened in the first three months of 2000, we plan to open an additional 77 net new stores in 2000. The funds required for such planned expansions are expected to be provided by operating activities, short-term investments and the existing and available bank credit facilities. Management believes that the cash expected to be generated from operating activities, existing cash and short-term investments, existing bank credit facilities and trade credit will be sufficient to fund our short and long-term capital and liquidity needs for the foreseeable future. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONT.) Inflation and Seasonality We have been successful, in many cases, in reducing the effects of merchandise cost increases principally by taking advantage of vendor incentive programs, economies of scale resulting from increased volume of purchases and selective forward buying. As a result, we do not believe our operations have been materially affected by inflation. Our business is seasonal to some extent primarily as a result of the impact of weather conditions on store sales. Store sales and profits have historically been higher in the second and third quarters (April through September) of each year than in the first and fourth quarters. Year 2000 Issue In prior years, we discussed the nature and progress of our plans to become Year 2000 ready. In late 1999, we completed our remediation and testing of systems. As a result of those planning and implementation efforts, we experienced no significant disruptions in mission critical information technology and non-information technology systems and believe those systems successfully responded to the Year 2000 date change. The total cost of the project was approximately $217,000 during 1999 in connection with remediating our systems. Of the total cost, approximately $38,000 represented the purchase of replacements or upgrades of software and hardware, which were capitalized. The remaining portion of the project cost was expensed as incurred during 1999. We are not aware of any material problems resulting from Year 2000 issues, either with our products, our internal systems, or the products and services of third parties. We will continue to monitor our mission critical computer applications and those of our suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. Forward-Looking Statements Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to competitive pressures, demand for our products, the market for auto parts, the economy in general, inflation, consumer debt levels and the weather. Actual results may materially differ from anticipated results described in these forward-looking statements. Certain risks are discussed in Exhibit 99.1 hereto. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk through derivative financial instruments and other financial instruments is not material. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) Our Annual Meeting of the Shareholders was held on May 5, 2000. Of the 50,816,921 shares entitled to vote at such meeting, 46,917,790 shares were present at the meeting in person or by proxy. (b) The two individuals listed below were elected as Class I Directors, and with respect to each such Director, the number of shares voted for, against and abstain were as follows:
Number of Shares Voted ---------------------- Name of Nominee For Against Abstain --------------- ---------- ------- ------- Charles H. O'Reilly, Sr. 46,220,145 0 697,645 Charles H. O'Reilly, Jr. 46,262,811 0 654,979
The individuals listed below are Directors whose term of office continued after the meeting: David E. O'Reilly Lawrence P. O'Reilly Rosalie O'Reilly Wooten Jay D. Burchfield Joe C. Greene Item 5. Other information In January 2000, we announced we had entered into a definitive agreement to purchase the assets of Gateway Auto Supply ("Gateway") which closed April 2000. Under the terms of the agreement, we purchased the inventory, fixtures and certain other assets for approximately $5 million in cash. Additionally, we did not assume any liabilities of Gateway. In April 2000, we announced we had entered into a definitive agreement to purchase the assets of KarPro Auto Parts ("KarPro") which is expected to close September 30, 2000. Under the terms of the agreement, we will purchase the inventory, fixtures and certain other assets for approximately $14 million in cash. Additionally, we will not assume any liabilities of KarPro. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: See Exhibit Index on page 11 hereof. (b) No reports on Form 8-K were filed by us during the quarter ended March 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. O'REILLY AUTOMOTIVE, INC. May 15, 2000 /s/ David E. O'Reilly - ----------------- ------------------------------------------------------ Date David E. O'Reilly, Chief Executive Officer May 15, 2000 /s/ James R. Batten - ----------------- ------------------------------------------------------ Date James R. Batten, Vice-President of Finance and Chief Financial Officer EXHIBIT INDEX Number Description Page - ------ ------------- ------- 27.1 Financial Data Schedule 12 99.1 Certain Risk Factors, filed herewith. 13 EX-27 2 FDS -- O'REILLY AUTOMOTIVE, INC.
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheets at March 31, 2000 (unaudited) and March 31, 1999 (restated) and the Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2000 (unaudited) and March 31, 1999 (restated) and is qualified in its entirety by reference to such financial statements. 0000898173 O'REILLY AUTOMOTIVE, INC. 1000 U.S. DOLLARS 3-MOS 3-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 MAR-31-2000 MAR-31-1999 1 1 $9,432 $3,230 500 500 29,585 50,245 907 894 307,947 260,778 371,805 321,847 313,855 223,520 61,256 42,821 633,535 513,542 113,929 114,705 0 0 0 0 0 0 510 247 416,764 342,181 633,535 513,542 195,758 166,404 196,424 166,830 111,046 95,447 65,226 54,716 0 0 437 501 1,556 2,722 18,596 13,945 7,029 5,342 11,567 8,603 0 0 0 0 0 0 11,567 8,603 0.23 0.20 0.23 0.20
EX-99.1 3 CERTAIN RISK FACTORS O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES Exhibit 99.1 - Certain Risk Factors The following factors could affect our actual results, including revenues, expenses and net income, and could cause them to differ from any forward-looking statements made by or on behalf of us. Competition We compete with a large number of retail and wholesale automotive aftermarket product suppliers. The distribution of automotive aftermarket products is a highly competitive industry, particularly in the more densely populated market areas served by us. Competitors include national and regional automotive parts chains, independently owned parts stores (some of which are associated with national auto parts distributors or associations), automobile dealerships, mass or general merchandise, discount and convenience chains that carry automotive products, independent warehouse distributors and parts stores and national warehouse distributors and associations. Some of our competitors are larger and have greater financial resources than us. No Assurance of Future Growth We believe that our ability to open additional stores at an accelerated rate will be a significant factor in achieving our growth objectives for the future. Our ability to accomplish this growth is dependent, in part, on matters beyond our control, such as weather conditions, zoning and other issues related to new store site development, the availability of qualified management personnel and general business and economic conditions. No assurance can be given that our current growth rate can be maintained. Dependence Upon Key and Other Personnel Dependence Upon Key and Other Personnel The success of our company has been largely dependent on the efforts of certain key personnel, including David E. O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly, Jr., Rosalie O'Reilly Wooten, Ted F. Wise, and Greg Henslee. The loss of the services of one or more of these individuals could have a material adverse effect on the business and results of operations. Additionally, in order to successfully implement and manage our growth strategy, we will be dependent upon our ability to continue to attract and retain qualified personnel. There can be no assurance that we will be able to continue to attract such personnel. Concentration of Ownership by Management Our executive officers and directors as a group beneficially own a substantial percentage of the outstanding shares of our common stock. These officers and directors have the ability to exercise effective voting control of the company, including the election of all of our directors, and to effectively determine the vote on any matter being voted on by our shareholders, including any merger, sale of assets or other change in control of the company. -----END PRIVACY-ENHANCED MESSAGE-----