-----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, S87DueuC+NRy2R4KXoBH1+T1nwLTAZaAjr6VeGSe+5I7CYBc91p2731KTHlbPG1w 1ZrVPBbKZf71NbnEOmVRKQ== /in/edgar/work/0000898173-00-000049/0000898173-00-000049.txt : 20001114 0000898173-00-000049.hdr.sgml : 20001114 ACCESSION NUMBER: 0000898173-00-000049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 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: 758549 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. 3RD QTR 10Q 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 September 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 - 51,391,188 shares outstanding as of September 30, 2000 Page - 1 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES FORM 10-Q Quarter Ended September 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 Page - 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2000 1999 --------------------- --------------------- (Unaudited) (Note) (In thousands, except share data) Assets Current Assets: Cash $ 12,269 $ 9,791 Short-term investments 500 500 Accounts receivable, net 36,190 26,462 Amounts receivable from vendors 27,550 25,984 Inventory 347,922 293,924 Refundable income taxes 592 2,333 Deferred income taxes 642 1,776 Other current assets 3,496 3,583 --------------- ---------------- Total current assets 429,161 364,353 Property and equipment, at cost 354,862 292,806 Accumulated depreciation and amortization 72,240 56,289 --------------- ---------------- 282,622 236,517 Other assets 10,224 9,572 --------------- ---------------- Total assets $ 722,007 $ 610,442 =============== ================ Liabilities and shareholders' equity Current liabilities: Note payable to bank $ 5,000 $ 5,000 Income taxes payable 3,267 -- Accounts payable 72,471 64,885 Accrued payroll 8,847 6,278 Accrued benefits and withholdings 10,486 10,382 Other current liabilities 14,926 14,099 Current portion of long-term debt 14,177 14,358 --------------- ---------------- Total current liabilities 129,174 115,002 Long-term debt, less current portion 136,983 90,704 Deferred income taxes 3,222 1,214 Other liabilities 448 478 Shareholders' equity: Common stock, $.01 par value: Authorized shares-90,000,000 Issued and outstanding shares-51,391,188 shares at September 30, 2000 and 50,799,353 at December 31, 1999 514 508 Additional paid-in capital 228,266 221,628 Retained earnings 223,400 180,908 --------------- ---------------- Total shareholders' equity 452,180 403,044 --------------- ---------------- Total liabilities and shareholders' equity $ 722,007 $ 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. Page - 3 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, --------------------------- -------------------------- 2000 1999 2000 1999 -------------- ------------ ------------- ------------ (In thousands, except per share data) Product sales $ 251,413 $ 208,401 $ 673,530 $ 570,912 Cost of goods sold, including warehouse and distribution expenses 145,550 120,400 385,700 330,130 Operating, selling, general and administrative expenses 77,058 65,770 214,822 182,679 ------------ ----------- ------------ ----------- 222,608 186,170 600,522 512,809 ------------ ----------- ------------ ----------- Operating income 28,805 22,231 73,008 58,103 Other expense, net (2,076) (564) (4,530) (3,417) ------------ ----------- ------------ ----------- Income before income taxes 26,729 21,667 68,478 54,686 Provision for income taxes 10,157 8,255 25,986 20,901 ------------ ----------- ------------ ----------- Net income $ 16,572 $ 13,412 $ 42,492 $ 33,785 ============ =========== ============ =========== Basic income per share data: Net income per common share $ 0.32 $ 0.26 $ 0.83 $ 0.70 ============ =========== ============ =========== Weighted average common shares outstanding 51,301 50,692 51,085 47,974 ============ =========== ============ =========== Income per common share-assuming dilution: Net income per common share-assuming dilution $ 0.32 $ 0.26 $ 0.82 $ 0.69 Adjusted weighted average common shares outstanding 51,856 51,178 51,551 48,686 ============ =========== ============ ===========
See notes to condensed consolidated financial statements. Page - 4 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, ---------------------------------------------- 2000 1999 --------------------- ------------------ (In thousands) Net cash provided by operating activities $ 17,379 $ 33,483 ------------------- ---------------- Investing activities: Purchases of property and equipment (64,529) (54,138) Proceeds from sale of property and equipment 1,066 6,775 Payments received on notes receivable 442 1,061 Advances made on notes receivable -- (70) Other (750) -- ------------------- ---------------- Net cash used in investing activities (63,771) (46,372) ------------------- ---------------- Financing activities: Borrowings on notes payable to banks 7,130 5,000 Payments on notes payable to banks (7,130) (5,000) Proceeds from issuance of long-term debt 377,488 84,013 Payments on long-term debt (331,747) (201,976) Net proceeds from secondary offering -- 124,890 Net proceeds from issuance of common stock 3,129 6,963 ------------------- ---------------- Net cash provided by financing activities 48,870 13,890 ------------------- ---------------- Net increase in cash 2,478 1,001 Cash at beginning of period 9,791 1,728 ------------------- ---------------- Cash at end of period $ 12,269 $ 2,729 =================== ================
See notes to condensed consolidated financial statements. Page - 5 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 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 nine months ended September 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 September 30, 1999, and the three and nine months then ended has been restated to reflect the retroactive effect of the two-for-one stock split effected on November 30, 1999. Page - 6 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 third quarter of 2000 increased by $43.0 million, or 20.6%, over product sales for the third quarter of 1999. Product sales for the first nine months of 2000 increased by $102.6 million, or 18.0% over product sales for the first nine months of 1999. These increases are primarily due to the opening of 24 and 79 net, new stores during the third quarter and first nine months of 2000, respectively. Additionally, comparable store product sales for stores open at least one year increased 6.22% and 4.80% for the third quarter and first nine months of 2000, respectively. At September 30, 2000, a total of 650 stores were in operation compared to 541 stores at September 30, 1999. Gross profit increased 20.3% to $105.9 million (or 42.1% of product sales) in the third quarter of 2000 compared to $88.0 million (or 42.2% of product sales) in the third quarter of 1999. Gross profit for the first nine months of 2000 increased 19.5% to $287.8 million (or 42.7% of product sales) compared to $240.8 million (or 42.2% of product sales) in 1999. These increases in gross profit dollars are primarily due to the opening of new stores and the related increase in product sales. Operating, selling, general and administrative expenses ("OSG&A expenses") for the third quarter of 2000 increased 17.1% to $77.1 million (or 30.6% of product sales) compared to $65.8 million (or 31.6% of product sales) in the third quarter of 1999. OSG&A expenses for the first nine months of 2000 increased 17.6% to $214.8 million (or 31.9% of product sales) compared to $182.7 million (or 32.0% of product sales) in the first nine months of 1999. The dollar amount increase in OSG&A expenses for both the three and nine months ended September 30, 2000, is primarily due to the addition of team members and resources to support the increased level of our operations. The decrease in OSG&A as a percent of product sales for the third quarter is primarily due to the company improving its operating efficiency through expense control. Other expense, net increased $1.5 or 268.1% and $1.1 million or 32.6% for the three and nine month periods ended September 30, 2000, respectively. The increase in other expense for the three and nine month periods ended September 30, 2000, is primarily due to increased interest expense as a result of additional borrowings under our long-term credit facility. Estimated provision for income taxes increased $1.9 million and $5.1 million for the three and nine month periods ended September 30, 2000, respectively, consistent with the overall growth in the Company's earnings. The estimated provision for income taxes resulted in an effective income tax rate of 38.0% and 37.9% for the three and nine month periods ended September 30, 2000, respectively compared to 38.1% and 38.2% for the same periods in 1999. Net income increased $3.2 million or 23.6% and $8.7 million or 25.8% for the three and nine month periods ended September 30, 2000, respectively. As a percent of product sales net income increased to 6.6% and 6.3% for the three and nine months ended September 30, 2000, respectively compared to 6.4% and 5.9% for the same periods in 1999. Growth in net income for both the three and nine month periods ended September 30, 2000, is primarily due to the increases in product sales and other factors noted above. Liquidity and Capital Resources Net cash of $17.4 million was provided by operating activities for the first nine months of 2000 as compared to $33.5 million of cash provided by operating activities for the first nine months of 1999. This decrease was primarily due to increased accounts receivable and increased inventory. The increases in accounts receivable and inventory are the result of the addition of new stores and increased sales levels in existing stores. Inventory installed at the new distribution center in Dallas, TX (opening in the fourth quarter 2000) also contributed to the increase in inventory. Net cash used in investing activities for the first nine months ended September 30, 2000, increased from $46.4 million in 1999 to $63.8 million in 2000. The increase is primarily due to the addition of new stores and a distribution center in Dallas, Texas. Page - 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONT.) Cash provided by financing activities for the first nine months ended September 30, 2000, increased from $13.9 million in 1999 to $48.9 million in 2000. The increase is primarily related to the issuance of long-term debt under the Company's credit facility. In September 2000, the Company solicited bids from unaffiliated parties on a proposed $50.0 million sale/leaseback whereby the Company would sell and subsequently lease back approximately 90 of its current properties. The sale/leaseback is expected to close in the fourth quarter of 2000. Additionally, the Company has planned to execute a $50.0 million synthetic lease facility during the first half of 2001. The net proceeds from the sale/leaseback will be used to pay down existing borrowings under the Company's credit facility. The synthetic lease facility will be used to fund a portion the Company's continued growth. For the first nine months of 2000, 79 net, new stores were opened. The Company plans to open an additional 21 stores during the fourth quarter of 2000 and 120 new stores in 2001. Additionally, two new distribution centers will be operational during the fourth quarter of 2000. The funds required for such planned expansions will be provided by operating activities, short-term investments, existing bank credit facilities and the sale/leaseback and synthetic lease transactions noted above. Management believes it has adequate internal and external resources available to finance its ongoing operating requirements, including capital expenditures and business development. These resources include but are not limited to cash expected to be generated from operating activities, existing bank credit facilities, trade credit and the sale/leaseback and synthetic lease transactions noted above. 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 This Management's Discussion and Analysis of Financial Condition and Results of Operations includes, and future filings by the Company on Form 10-K and Form 8-K and future oral and written statements by the Company and its management may include, certain forward-looking statements. These statements discuss, among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees and the weather. Actual results may differ materially from anticipated results described in these forward-looking statements. Certain risks are discussed in Exhibit 99.1 hereto and in the Risk Factors sections of the Company's annual report on Form 10-K for the year ended December 31, 1999. Page - 8 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 April 2000, the Company announced the signing of a definitive agreement to purchase certain assets of KarPro Auto Parts ("KarPro") for approximately $14.0 million in cash. The transaction, which closed on October 2, 2000, will add nine net, new stores and a distribution center in Arkansas. Under the terms of the agreement, the Company purchased inventory, furniture and fixtures and certain other assets. The Company did not assume any liabilities of KarPro. In August 2000, the Company 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. On October 24, 2000, the Company announced the signing of a definitive agreement to purchase certain assets of Rankin Automotive Group, Inc. (Nasdaq: RAVE) for approximately $1.3 million in cash. The transaction, which is expected to close November 30, 2000, will add four new stores located in southeast Louisiana. The Company will not assume any liabilities of Rankin. 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 September 30, 2000. Page - 9 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. November 13, 2000 /s/ David E. O'Reilly - -------------------- ----------------------------------------------- Date David E. O'Reilly, Chief Executive Officer November 13, 2000 /s/ James R. Batten - -------------------- ----------------------------------------------- Date James R. Batten, Vice-President of Finance and Chief Financial Officer Page - 10 EXHIBIT INDEX Number Description Page - ------ ----------- ---- 27.1 Financial Data Schedule 12 99.1 Certain Risk Factors, filed herewith. 13 Page - 11 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 Sheet at September 30, 2000, (unaudited) and September 30, 1999, (restated) and the Condensed Consolidated Statement of Income for the Nine Months Ended September 30, 2000, (unaudited) and September 30, 1999, (restated) and is qualified in its entirety by reference to such financial statements. 0000898173 O'REILLY AUTOMOTIVE, INC. 1000 U.S. DOLLARS 9-MOS 9-MOS DEC-31-2000 DEC-31-1999 JAN-1-2000 JAN-1-1999 SEP-30-2000 SEP-30-1999 1 1 $12,269 $2,729 500 500 63,740 55,205 224 439 347,922 288,823 429,161 350,302 354,862 260,550 72,240 51,257 722,007 581,346 129,174 140,573 0 0 0 0 0 0 514 507 451,666 389,456 722,007 581,346 673,530 570,912 674,709 572,313 385,700 330,130 214,822 182,679 4,530 3,417 804 1,277 5,581 4,322 68,478 54,686 25,986 20,901 42,492 33,785 0 0 0 0 0 0 42,492 33,785 0.83 0.70 0.82 0.69
EX-99 3 0003.txt CERTAIN RISK FACTORS O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES 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 or retain 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. Page - 13 -----END PRIVACY-ENHANCED MESSAGE-----