-----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, P7HBNZwWLB7nSXaPaRed3e9C+7cHnlmQYKpaolQYoMSlUE05ow212xcCD4WNfSWl n+Gu4WULTcX5/NlYe3pXXg== /in/edgar/work/20000814/0000898173-00-000039/0000898173-00-000039.txt : 20000921 0000898173-00-000039.hdr.sgml : 20000921 ACCESSION NUMBER: 0000898173-00-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: O REILLY AUTOMOTIVE INC CENTRAL INDEX KEY: 0000898173 STANDARD INDUSTRIAL CLASSIFICATION: [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: 698609 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 0001.txt 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 June 30, 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 - 51,192,179 shares outstanding as of June 30, 2000 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES FORM 10-Q Quarter Ended June 30, 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 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
June 30, December 31, 2000 1999 -------- ------------ (Unaudited (Note) (In thousands, except share data) Assets Current Assets: Cash $ 10,985 $ 9,791 Short-term investments 500 500 Accounts receivable, net 32,589 26,462 Amounts receivable from vendors 20,588 25,984 Inventory 328,143 293,924 Refundable income taxes 592 2,333 Deferred income taxes 1,052 1,776 Other current assets 3,902 3,583 ----------- ------------ Total current assets 398,351 364,353 Property and equipment 334,397 292,806 Accumulated depreciation 66,482 56,289 ----------- ------------ 267,915 236,517 Other assets 10,722 9,572 ----------- ------------ Total assets $ 676,988 $ 610,442 =========== ============ Liabilities and shareholders' equity Current liabilities: Note payable to bank $ 5,000 $ 5,000 Income taxes payable 4,549 -- Accounts payable 67,126 64,885 Other current liabilities 31,211 30,759 Current portion of long-term debt 14,358 14,358 ----------- ------------ Total current liabilities 122,244 115,002 Long-term debt, less current portion 118,236 90,704 Deferred income taxes 2,095 1,215 Other liabilities 488 477 Shareholders' equity: Commons stock, $.01 par value: Authorized shares-90,000,000 Issued and outstanding shares- 51,192,179 shares at June 30, 2000 and 50,799,353 at December 31, 1999 512 508 Additional paid-in capital 226,585 221,628 Retained earnings 206,828 180,908 ----------- ------------ Total shareholders' equity 433,925 403,044 Total liabilities and shareholders' equity $ 676,988 $ 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 Six Months Ended June 30, June 30, ------------------ ---------------- 2000 1999 2000 1999 ---- ---- ---- ---- (In thousands, except per share data) Product sales $ 266,359 $ 196,107 $ 422,117 $ 362,511 Cost of goods sold, including warehouse and distribution expenses 129,098 114,284 240,150 209,731 Operating, selling, general and administrative expenses 72,468 62,193 137,764 116,909 ----------- ----------- ---------- ----------- 201,566 176,477 377,914 326,640 ----------- ----------- ---------- ----------- Operating income 24,793 19,630 44,203 35,871 Other expense, net (1,634) (557) (2,454) (2,853) ----------- ----------- ---------- ----------- Income before income taxes 23,159 19,073 41,749 33,018 Provision for income taxes 8,800 7,304 15,829 12,646 ----------- ----------- ---------- ----------- Net income $ 14,359 $ 11,769 $ 25,920 $ 20,372 =========== ========== ========== ========== Basic income per share data: Net income per common share $ 0.28 $ 0.23 $ 0.51 $ 0.44 =========== ========== ========== ========== Weighted average common shares outstanding 51,111 50,424 50,983 46,594 =========== ========== ========== ========== Income per common share-assuming dilution Net income per common share-assuming dilution $ 0.28 $ 0.23 $ 0.50 $ 0.43 =========== ========== ========== ========== Adjusted weighted average common shares outstanding 51,548 51,084 51,405 47,418 =========== ========== ========== ==========
See notes to condensed consolidated financial statements. O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ------------------------- 2000 1999 ---- ---- (In thousands) Net cash provided by operating activities $ 14,415 $ 16,689 ---------- ---------- Investing activities: Purchases of property and equipment (43,057) (32,377) Proceeds from sale of property and equipment 545 6,659 Payments received on notes receivable 275 887 Advances made on notes receivable -- (70) ---------- ---------- Net cash used in investing activities (42,236) (24,901) ---------- ---------- Financing activities: Borrowings on notes payable to banks 7,130 2,240 Payments on notes payable to banks (7,130) (5,000) Proceeds from issuance of long-term debt 276,528 68,058 Payments on long-term debt (249,353) (185,984) Net proceeds from secondary offering -- 124,944 Proceeds from issuance of common stock 1,839 6,340 ---------- ---------- Net cash provided by financing activities 29,015 10,598 ---------- ---------- Net increase in cash 1,194 2,386 Cash at beginning of period 9,791 1,728 ---------- ---------- Cash at end of period $ 10,985 $ 4,114 ========== ==========
See notes to condensed consolidated financial statements O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 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 and six months ended June 30, 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 June 30, 1999, and the three and six 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 second quarter of 2000 increased by $30.3 million, or 15.4%, over product sales for the second quarter of 1999. Product sales for the first six months of 2000 increased by $59.6 million, or 16.4% over product sales for the first six months of 1999. The increase is due to the opening of 55 net, new stores during the first two quarters of 2000 compared to 24 net, new stores opened in the first two quarters of 1999. Additionally, comparable store product sales for stores open at least one year increased 3.1% and 4.0% for the second quarter and first half of 2000. At June 30, 2000, we operated 626 stores compared to 515 stores at June 30, 1999. Gross profit increased 18.9% from $81.8 million (or 41.7% of product sales) in the second quarter of 1999 to $97.3 million (or 43.0% of product sales) in the second quarter of 2000. Gross profit for the first six months increased 19.1% from $152.8 million (or 42.1% of product sales) in 1999 to $182.0 million or (43.1% of product sales) in 2000. The increase in gross profit margin was primarily attributable to continued improvement in our product acquisition programs. Operating, selling, general and administrative expenses ("OSG&A expenses") increased $10.3 million from $62.2 million (or 31.7% of product sales) in the second quarter of 1999 to $72.5 million (or 32.0% of product sales) in the second quarter of 2000. OSG&A expenses increased $20.9 million from $116.9 million (32.2% of product sales) in the first six months of 1999 to $137.8 million (or 32.6% of product sales) in the first six months of 2000. The dollar amount 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 increased by $1.1 million in the second quarter of 2000 compared to the second quarter of 1999 and decreased by $400,000 for the first six months of 2000 compared to the first six months of 1999. The increase in other expense for the second quarter of 2000 is primarily due to increased interest expense as a result of additional borrowings under our revolving credit facility and higher interest rates. Our estimated provision for income taxes decreased from 38.3% of income before income taxes in the second quarter and the first six months of 1999 to 38.0% and 37.9%, respectively in the same periods 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 $11.8 million or 6.0% of product sales in the second quarter of 1999 to $14.4 million or 6.3% of product sales in the second quarter of 2000 and from $20.4 million or 5.6% of products sales in the first six months of 1999 to $25.9 million or 6.1% of product sales in the first six months of 2000. Liquidity and Capital Resources Net cash of $14.4 million was provided by operating activities for the first six months of 2000 as compared to $16.7 million of cash provided by operating activities for the first six months of 1999. This decrease was principally the result of smaller increases in accounts payable and other current liabilities, net of increases in accounts receivable. These changes were due to the timing of payments. Net cash used in investing activities has increased to $42.2 million in 2000 from $24.9 million in 1999 primarily due to increased purchases of property and equipment to support the Company's current level of store growth. Cash provided by financing activities has increased to $29.0 million in the first six months of 2000 from $10.6 million in the first six months of 1999. The increase was primarily due to increased net borrowings under the Company's credit facilities during the first six months of 2000. Aside from the 55 net, new stores opened in the first six months of 2000, we plan to open an additional 45 net new stores during 2000. The funds required for such planned expansions will be provided by operating activities, short-term investments and existing and available bank credit facilities. Management believes that the cash expected to be generated from operating activities, existing bank credit facilities, trade credit and available real estate financing opportunities 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. 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 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 on 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. In August 2000, we announced the formation of Internet Autoparts, Inc. ("IAP"), a new Internet company that will provide a Web-based catalog program and sell automotive aftermarket parts. IAP is primarily owned by General Parts, Inc., O'Reilly and Middle Atlantic Warehouse Distributor, Inc.; by CCI/Triad, a provider of technology solutions in our industry; and by Hicks, Muse, Tate & Furst Incorporated, a private investment firm. IAP's primary focus is to create a business-to-business internet service from the professional installer to local auto parts stores and warehouses. 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 the Company during the quarter ended June 30, 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. August 14, 2000 /s/ David E. O'Reilly - ------------------- ------------------------------------------------ Date David E. O'Reilly, Chief Executive Officer August 14, 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 0002.txt FDS -- O'REILLY AUTOMOTIVE, INC.
5 This schedule contains summary financial information (in thousands, except per share data) extracted from the Condensed Consolidated Balance Sheets at June 30, 2000 (unaudited) and June 30, 1999 (restated) and the Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2000 (unaudited) and June 30, 1999 (restated) and is qualified in its entirety by reference to such financial statements. 0000898173 O'REILLY AUTOMOTIVE, INC. 1000 U.S. DOLLARS 6-MOS 6-MOS DEC-31-2000 DEC-31-1999 JAN-1-2000 JAN-1-1999 JUN-30-2000 JUN-30-1999 1 1 10,985 4,114 500 500 33,291 52,569 702 682 328,143 285,431 398,351 351,531 334,397 239,014 66,482 47,035 676,988 557,321 122,244 129,613 0 0 0 0 0 0 512 253 433,413 375,110 676,988 557,321 422,117 362,511 422,920 362,718 240,150 209,731 137,764 116,909 0 0 870 565 3,405 3,545 41,749 33,018 15,829 12,646 25,920 20,372 0 0 0 0 0 0 25,920 20,372 0.51 0.44 0.50 0.43
EX-99.1 3 0003.txt 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 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-----