x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Missouri | 000-21318 | 27-4358837 | ||
(State or other jurisdiction | Commission file | (I.R.S. Employer | ||
of incorporation or organization) | number | Identification No.) |
Title of Each Class | Name of Each Exchange on which Registered | |
Common Stock, $0.01 par value | The NASDAQ Stock Market LLC | |
(NASDAQ Global Select Market) |
Large accelerated filer x | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Page | ||
• | new and remanufactured automotive hard parts, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control and water pumps; |
• | maintenance items, such as antifreeze, appearance products, engine additives, filters, fluids, lighting, oil and wiper blades; and |
• | accessories, such as floor mats, seat covers and truck accessories. |
• | battery diagnostic testing; |
• | battery, wiper and bulb replacement; |
• | check engine light code extraction; |
• | custom hydraulic hoses; |
• | drum and rotor resurfacing; |
• | electrical and module testing; |
• | loaner tool program; |
• | machine shops; |
• | professional paint shop mixing and related materials; and |
• | used oil, oil filter and battery recycling. |
• | superior in-store service through highly-motivated, technically-proficient store personnel (“Professional Parts People”); |
• | an extensive selection and availability of products; |
• | many enhanced service programs, including battery and electrical testing, battery, wiper and bulb replacement and check engine light code extractions; |
• | attractive stores in convenient locations; |
• | competitive pricing, supported by a good, better, best product assortment designed to meet all of our customers’ quality and value preferences; and |
• | a robust point-of-sale system integrated with our proprietary electronic catalog, which contains a wide variety of product images, schematics and technical specifications and equips our Team Members with highly effective tools to source products in our extensive supply network. |
(i) | constructing a new facility or renovating an existing one on property we purchase or lease and stocking the new store with fixtures and inventory; |
(ii) | acquiring an independently owned auto parts store, typically by the purchase of substantially all of the inventory and other assets (other than realty) of such store; or |
(iii) | purchasing multi-store chains. |
• | population density; |
• | demographics, including age, ethnicity, life style and per capita income; |
• | market economic strength, retail draw and growth patterns; |
• | number, age and percent of makes and models of registered vehicles; |
• | the number, type and sales potential of existing automotive repair facilities; |
• | the number of auto parts stores and other competitors within a predetermined radius; |
• | physical location, traffic count, size, economics and presentation of the site; |
• | financial review of adjacent existing locations; and |
• | the type and size of store that should be developed. |
December 31, 2017 | 2018 Net, New Stores | December 31, 2018 | |||||||||||||||||||
State | Store Count | % of Total Store Count | Store Change | % of Total Store Change | Store Count | % of Total Store Count | Cumulative % of Total Store Count | ||||||||||||||
Texas | 690 | 13.7 | % | 16 | 8.0 | % | 706 | 13.5 | % | 13.5 | % | ||||||||||
California | 541 | 10.8 | % | 12 | 6.0 | % | 553 | 10.6 | % | 24.1 | % | ||||||||||
Georgia | 196 | 3.9 | % | 9 | 4.5 | % | 205 | 3.9 | % | 28.0 | % | ||||||||||
Illinois | 193 | 3.8 | % | 10 | 5.0 | % | 203 | 3.9 | % | 31.9 | % | ||||||||||
Missouri | 200 | 4.0 | % | 1 | 0.5 | % | 201 | 3.9 | % | 35.8 | % | ||||||||||
Florida | 180 | 3.6 | % | 20 | 10.0 | % | 200 | 3.8 | % | 39.6 | % | ||||||||||
Ohio | 180 | 3.6 | % | 16 | 8.0 | % | 196 | 3.8 | % | 43.4 | % | ||||||||||
Tennessee | 167 | 3.3 | % | 9 | 4.5 | % | 176 | 3.4 | % | 46.8 | % | ||||||||||
North Carolina | 162 | 3.2 | % | 11 | 5.5 | % | 173 | 3.3 | % | 50.1 | % | ||||||||||
Michigan | 162 | 3.2 | % | 6 | 3.0 | % | 168 | 3.2 | % | 53.3 | % | ||||||||||
Washington | 156 | 3.1 | % | — | 0.0 | % | 156 | 3.0 | % | 56.3 | % | ||||||||||
Alabama | 132 | 2.6 | % | 7 | 3.5 | % | 139 | 2.7 | % | 59.0 | % | ||||||||||
Arizona | 137 | 2.7 | % | 2 | 1.0 | % | 139 | 2.7 | % | 61.7 | % | ||||||||||
Indiana | 126 | 2.5 | % | 11 | 5.5 | % | 137 | 2.6 | % | 64.3 | % | ||||||||||
Minnesota | 122 | 2.4 | % | 3 | 1.5 | % | 125 | 2.4 | % | 66.7 | % | ||||||||||
Louisiana | 116 | 2.3 | % | 5 | 2.5 | % | 121 | 2.3 | % | 69.0 | % | ||||||||||
Oklahoma | 121 | 2.4 | % | — | 0.0 | % | 121 | 2.3 | % | 71.3 | % | ||||||||||
Wisconsin | 120 | 2.4 | % | 1 | 0.5 | % | 121 | 2.3 | % | 73.6 | % | ||||||||||
Arkansas | 110 | 2.2 | % | 2 | 1.0 | % | 112 | 2.1 | % | 75.7 | % | ||||||||||
South Carolina | 104 | 2.1 | % | 4 | 2.0 | % | 108 | 2.1 | % | 77.8 | % | ||||||||||
Colorado | 101 | 2.0 | % | 1 | 0.5 | % | 102 | 2.0 | % | 79.8 | % | ||||||||||
Kentucky | 88 | 1.8 | % | 7 | 3.5 | % | 95 | 1.7 | % | 81.5 | % | ||||||||||
Kansas | 84 | 1.7 | % | 1 | 0.5 | % | 85 | 1.6 | % | 83.1 | % | ||||||||||
Mississippi | 75 | 1.5 | % | 3 | 1.5 | % | 78 | 1.5 | % | 84.6 | % | ||||||||||
Virginia | 74 | 1.5 | % | 4 | 2.0 | % | 78 | 1.5 | % | 86.1 | % | ||||||||||
Iowa | 74 | 1.5 | % | 3 | 1.5 | % | 77 | 1.5 | % | 87.6 | % | ||||||||||
Oregon | 69 | 1.4 | % | 1 | 0.5 | % | 70 | 1.3 | % | 88.9 | % | ||||||||||
Utah | 61 | 1.2 | % | 3 | 1.5 | % | 64 | 1.2 | % | 90.1 | % | ||||||||||
New Mexico | 53 | 1.1 | % | 3 | 1.5 | % | 56 | 1.1 | % | 91.2 | % | ||||||||||
Nevada | 55 | 1.1 | % | 1 | 0.5 | % | 56 | 1.1 | % | 92.3 | % | ||||||||||
Nebraska | 43 | 1.0 | % | 2 | 1.0 | % | 45 | 0.9 | % | 93.2 | % | ||||||||||
Idaho | 42 | 0.9 | % | 2 | 1.0 | % | 44 | 0.8 | % | 94.0 | % | ||||||||||
Massachusetts | 32 | 0.6 | % | 7 | 3.5 | % | 39 | 0.7 | % | 94.7 | % | ||||||||||
Maine | 35 | 0.7 | % | — | 0.0 | % | 35 | 0.7 | % | 95.4 | % | ||||||||||
New Hampshire | 35 | 0.7 | % | (3 | ) | (1.5 | )% | 32 | 0.6 | % | 96.0 | % | |||||||||
Montana | 27 | 0.5 | % | 1 | 0.5 | % | 28 | 0.5 | % | 96.5 | % | ||||||||||
Pennsylvania | 17 | 0.3 | % | 7 | 3.5 | % | 24 | 0.5 | % | 97.0 | % | ||||||||||
Vermont | 24 | 0.5 | % | — | 0.0 | % | 24 | 0.5 | % | 97.5 | % | ||||||||||
Wyoming | 21 | 0.4 | % | — | 0.0 | % | 21 | 0.4 | % | 97.9 | % | ||||||||||
Connecticut | 12 | 0.2 | % | 8 | 4.0 | % | 20 | 0.4 | % | 98.3 | % | ||||||||||
South Dakota | 17 | 0.3 | % | 1 | 0.5 | % | 18 | 0.3 | % | 98.6 | % | ||||||||||
Alaska | 15 | 0.3 | % | — | 0.0 | % | 15 | 0.3 | % | 98.9 | % | ||||||||||
North Dakota | 15 | 0.3 | % | — | 0.0 | % | 15 | 0.3 | % | 99.2 | % | ||||||||||
West Virginia | 15 | 0.3 | % | — | 0.0 | % | 15 | 0.3 | % | 99.5 | % | ||||||||||
Hawaii | 12 | 0.2 | % | — | 0.0 | % | 12 | 0.2 | % | 99.7 | % | ||||||||||
Rhode Island | 5 | 0.1 | % | 3 | 1.5 | % | 8 | 0.2 | % | 99.9 | % | ||||||||||
New York | 3 | 0.1 | % | — | 0.0 | % | 3 | 0.1 | % | 100.0 | % | ||||||||||
Total | 5,019 | 100.0 | % | 200 | 100.0 | % | 5,219 | 100.0 | % |
• | continue to enhance our distribution network through the engineering, design, expansion or relocation of new or current DCs; |
• | continue to utilize routing software to continue to enhance logistics efficiencies; |
• | continue to implement labor management software to improve DC productivity and overall operating efficiency; |
• | make proven, return-on-investment based capital enhancements to material handling equipment in DCs, including conveyor systems, picking modules, lift equipment and computer hardware. |
• | broad selection of merchandise at competitive prices; |
• | dedicated Professional Service Specialists in our stores; |
• | multiple, daily deliveries from our stores; |
• | same-day or overnight access to thousands of SKUs through seven days a week store inventory replenishments; |
• | separate service counter and phone line in our stores dedicated exclusively to service professional service provider customers; |
• | trade credit for qualified accounts; |
• | First Call Online, a dedicated proprietary Internet based catalog and ordering system designed specifically to connect professional service provider customers directly to our inventory system; |
• | Mitchell 1 shop management systems; |
• | training and seminars covering topics of interest, such as technical updates, safety and general business management; |
• | access to a comprehensive inventory of products and equipment needed to operate and maintain their shop; and |
• | Certified Auto Repair Center Program, a program that provides professional service provider customers with business tools they can utilize to profitably grow and market their shops. |
• | national retail and wholesale automotive parts chains (such as AutoZone, Inc., Advance Auto Parts, CARQUEST, NAPA and the Pep Boys - Manny, Moe and Jack, Inc.); |
• | regional retail and wholesale automotive parts chains; |
• | wholesalers or jobber stores (some of which are associated with national automotive parts distributors or associations such as NAPA, CARQUEST, Bumper to Bumper and Auto Value); |
• | automobile dealers; and |
• | mass merchandisers and online retailers that carry automotive replacement parts, maintenance items and accessories (such as Wal-Mart Stores, Inc. and Amazon.com, Inc.). |
• | We may not be able to continue to identify suitable acquisition targets or to acquire additional companies at favorable prices or on other favorable terms. |
• | Our management’s attention may be distracted. |
• | We may fail to retain key personnel from acquired businesses. |
• | We may assume unanticipated legal liabilities and other problems. |
• | We may not be able to successfully integrate the operations (accounting and billing functions, for example) of businesses we acquire to realize economic, operational and other benefits. |
• | We may fail, or be unable to, discover liabilities of businesses that we acquire for which we or the subsequent owner or operator may be liable. |
• | make it more difficult to satisfy our financial obligations, including those relating to the senior unsecured notes and our credit facility; |
• | increase our vulnerability to adverse economic and industry conditions; |
• | limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a competitive disadvantage; |
• | require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the funds available for other business purposes, such as working capital, capital expenditures or other cash requirements; |
• | limit our ability to incur additional debt with acceptable terms, if at all; and |
• | expose us to fluctuations in interest rates, including changes that may result from the implementation of new benchmark rates that replace LIBOR. |
Location | Principal Use(s) | Operating Square Footage (1) | Nature of Occupancy | Lease Term Expiration | |||||
Aurora, CO | Distribution Center | 321,242 | Owned | ||||||
Belleville, MI | Distribution Center | 333,262 | Leased | 2/28/2025 | |||||
Billings, MT | Distribution Center | 129,142 | Leased | 1/31/2031 | |||||
Brooklyn Park, MN | Distribution Center | 324,668 | Owned | ||||||
Brownsburg, IN | Distribution Center | 657,603 | Owned | ||||||
Des Moines, IA | Distribution Center | 253,886 | Owned | ||||||
Devens, MA | Distribution Center | 511,261 | Owned | ||||||
Forest Park, GA | Distribution Center | 492,350 | Leased | 10/31/2024 | |||||
Greensboro, NC | Distribution Center | 685,230 | Owned | ||||||
Houston, TX | Distribution Center | 532,615 | Owned | ||||||
Kansas City, MO | Distribution Center | 299,018 | Owned | ||||||
Knoxville, TN | Distribution Center (to be relocated in 2020) | 150,766 | Owned | ||||||
Lakeland, FL | Distribution Center | 569,419 | Owned | ||||||
Lebanon, TN | Distribution Center (to open in 2020) | 410,000 | Owned | ||||||
Lubbock, TX | Distribution Center | 276,896 | Owned | ||||||
Moreno Valley, CA | Distribution Center | 547,478 | Owned | ||||||
Naperville, IL | Distribution Center | 499,471 | Owned | ||||||
Nashville, TN | Distribution Center (to be relocated in 2020) | 315,977 | Leased | 12/31/2023 | |||||
North Little Rock, AR | Distribution Center | 122,969 | Leased | 3/31/2022 | |||||
Oklahoma City, OK | Distribution Center | 320,667 | Owned | ||||||
Phoenix, AZ | Distribution Center | 383,570 | Leased | 6/30/2025 | |||||
Puyallup, WA | Distribution Center | 533,790 | Owned | ||||||
Salt Lake City, UT | Distribution Center | 294,932 | Owned | ||||||
Saraland, AL | Distribution Center | 301,068 | Leased | 12/31/2022 | |||||
Seagoville, TX | Distribution Center | 442,000 | Owned | ||||||
Selma, TX | Distribution Center | 552,703 | Owned | ||||||
Springfield, MO | Distribution Center | 266,306 | Owned | ||||||
Stockton, CA | Distribution Center | 720,836 | Leased | 6/30/2035 | |||||
Twinsburg, OH | Distribution Center (to open in 2019) | 405,000 | Owned | ||||||
Springfield, MO | Bulk Facility | 35,200 | Owned | ||||||
Springfield, MO | Return/Deconsolidation Facility, Corporate Offices | 290,580 | Owned | ||||||
Phoenix, AZ | Corporate Offices | 12,327 | Leased | 11/30/2022 | |||||
Springfield, MO | Corporate Offices | 224,818 | Owned | ||||||
Springfield, MO | Corporate Offices | 46,970 | Leased | 8/31/2024 | |||||
Springfield, MO | Corporate Offices, Training and Technical Center | 22,000 | Owned | ||||||
12,286,020 |
(1) | Includes floor and mezzanine operating square footage, excludes subleased square footage. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (1) | ||||||||||
October 1, 2018, to October 31, 2018 | 277 | $ | 338.34 | 277 | $ | 370,701 | ||||||||
November 1, 2018, to November 30, 2018 | 472 | 339.35 | 472 | 1,210,365 | ||||||||||
December 1, 2018, to December 31, 2018 | 617 | 338.84 | 617 | $ | 1,001,436 | |||||||||
Total as of December 31, 2018 | 1,366 | $ | 338.92 | 1,366 |
(1) | Under the Company’s share repurchase program, as approved by its Board of Directors on January 11, 2011, 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 not to exceed a dollar limit authorized by the Board of Directors. The Company’s Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on February 7, 2018, and November 13, 2018, the Company’s Board of Directors each time approved a resolution to increase the authorization amount under the share repurchase program by an additional $1.0 billion, resulting in a cumulative authorization amount of $11.8 billion. Each additional authorization is effective for a three-year period, beginning on its respective announcement date. The authorization under the share repurchase program that currently has capacity is scheduled to expire on November 13, 2021. No other share repurchase programs existed during the twelve months ended December 31, 2018. |
December 31, | ||||||||||||||||||||||||
Company/Index | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||
O’Reilly Automotive, Inc. | $ | 100 | $ | 150 | $ | 197 | $ | 216 | $ | 187 | $ | 268 | ||||||||||||
S&P 500 Retail Index | 100 | 110 | 137 | 143 | 184 | 208 | ||||||||||||||||||
S&P 500 | $ | 100 | $ | 111 | $ | 111 | $ | 121 | $ | 145 | $ | 136 |
Years ended December 31, | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||
(In thousands, except per share, Team Members, stores and ratio data) | ||||||||||||||||||||
INCOME STATEMENT DATA: | ||||||||||||||||||||
Sales ($) | 9,536,428 | 8,977,726 | 8,593,096 | 7,966,674 | 7,216,081 | 6,649,237 | 6,182,184 | 5,788,816 | 5,397,525 | 4,847,062 | ||||||||||
Cost of goods sold, including warehouse and distribution expenses | 4,496,462 | 4,257,043 | 4,084,085 | 3,804,031 | 3,507,180 | 3,280,236 | 3,084,766 | 2,951,467 | 2,776,533 | 2,520,534 | ||||||||||
Gross profit | 5,039,966 | 4,720,683 | 4,509,011 | 4,162,643 | 3,708,901 | 3,369,001 | 3,097,418 | 2,837,349 | 2,620,992 | 2,326,528 | ||||||||||
Selling, general and administrative expenses | 3,224,782 | 2,995,283 | 2,809,805 | 2,648,622 | 2,438,527 | 2,265,516 | 2,120,025 | 1,973,381 | 1,887,316 | 1,788,909 | ||||||||||
Former CSK officer clawback | — | — | — | — | — | — | — | (2,798 | ) | — | — | |||||||||
Legacy CSK Department of Justice investigation charge | — | — | — | — | — | — | — | — | 20,900 | — | ||||||||||
Operating income | 1,815,184 | 1,725,400 | 1,699,206 | 1,514,021 | 1,270,374 | 1,103,485 | 977,393 | 866,766 | 712,776 | 537,619 | ||||||||||
Write-off of asset-based revolving credit agreement debt issuance costs | — | — | — | — | — | — | — | (21,626 | ) | — | — | |||||||||
Termination of interest rate swap agreements | — | — | — | — | — | — | — | (4,237 | ) | — | — | |||||||||
Gain on settlement of note receivable | — | — | — | — | — | — | — | — | 11,639 | — | ||||||||||
Other income (expense), net | (121,097 | ) | (87,596 | ) | (62,015 | ) | (53,655 | ) | (48,192 | ) | (44,543 | ) | (35,872 | ) | (25,130 | ) | (35,042 | ) | (40,721 | ) |
Total other income (expense) | (121,097 | ) | (87,596 | ) | (62,015 | ) | (53,655 | ) | (48,192 | ) | (44,543 | ) | (35,872 | ) | (50,993 | ) | (23,403 | ) | (40,721 | ) |
Income before income taxes | 1,694,087 | 1,637,804 | 1,637,191 | 1,460,366 | 1,222,182 | 1,058,942 | 941,521 | 815,773 | 689,373 | 496,898 | ||||||||||
Provision for income taxes (a)(b) | 369,600 | 504,000 | 599,500 | 529,150 | 444,000 | 388,650 | 355,775 | 308,100 | 270,000 | 189,400 | ||||||||||
Net income ($) (a)(b) | 1,324,487 | 1,133,804 | 1,037,691 | 931,216 | 778,182 | 670,292 | 585,746 | 507,673 | 419,373 | 307,498 | ||||||||||
Basic earnings per common share: | ||||||||||||||||||||
Earnings per share – basic ($) | 16.27 | 12.82 | 10.87 | 9.32 | 7.46 | 6.14 | 4.83 | 3.77 | 3.02 | 2.26 | ||||||||||
Weighted-average common shares outstanding – basic | 81,406 | 88,426 | 95,447 | 99,965 | 104,262 | 109,244 | 121,182 | 134,667 | 138,654 | 136,230 | ||||||||||
Earnings per common share -assuming dilution: (a)(b) | ||||||||||||||||||||
Earnings per share – assuming dilution ($) | 16.10 | 12.67 | 10.73 | 9.17 | 7.34 | 6.03 | 4.75 | 3.71 | 2.95 | 2.23 | ||||||||||
Weighted-average common shares outstanding – assuming dilution | 82,280 | 89,502 | 96,720 | 101,514 | 106,041 | 111,101 | 123,314 | 136,983 | 141,992 | 137,882 | ||||||||||
SELECTED OPERATING DATA: | ||||||||||||||||||||
Number of Team Members at year end | 78,882 | 75,552 | 74,580 | 71,621 | 67,569 | 61,909 | 53,063 | 49,324 | 46,858 | 44,880 | ||||||||||
Number of stores at year end (c) | 5,219 | 5,019 | 4,829 | 4,571 | 4,366 | 4,166 | 3,976 | 3,740 | 3,570 | 3,421 | ||||||||||
Total store square footage at year end (d) | 38,455 | 36,685 | 35,123 | 33,148 | 31,591 | 30,077 | 28,628 | 26,530 | 25,315 | 24,200 | ||||||||||
Sales per weighted-average store (e)($) | 1,842 | 1,807 | 1,826 | 1,769 | 1,678 | 1,614 | 1,590 | 1,566 | 1,527 | 1,424 | ||||||||||
Sales per weighted-average square foot (d)(f)($) | 251 | 248 | 251 | 244 | 232 | 224 | 224 | 221 | 216 | 202 | ||||||||||
Percentage increase in comparable store sales (g) | 3.8 | % | 1.4 | % | 4.8 | % | 7.5 | % | 6.0 | % | 4.6 | % | 3.5 | % | 4.6 | % | 8.8 | % | 4.8 | % |
Years ended December 31, | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||
(In thousands, except per share, Team Members, stores and ratio data) | ||||||||||||||||||||
SELECT BALANCE SHEET AND CASH FLOW DATA: | ||||||||||||||||||||
Working capital (h)($) | (350,918 | ) | (249,694 | ) | (142,674 | ) | (36,372 | ) | 252,082 | 430,832 | 478,093 | 1,028,330 | 1,029,861 | 900,857 | ||||||
Total assets (h)($) | 7,980,789 | 7,571,885 | 7,404,189 | 6,676,684 | 6,532,083 | 6,057,895 | 5,741,241 | 5,494,174 | 5,031,950 | 4,695,536 | ||||||||||
Inventory turnover (i) | 1.4 | 1.4 | 1.5 | 1.5 | 1.4 | 1.4 | 1.4 | 1.5 | 1.4 | 1.4 | ||||||||||
Accounts payable to inventory (j) | 105.7 | % | 106.0 | % | 105.7 | % | 99.1 | % | 94.6 | % | 86.6 | % | 84.7 | % | 64.4 | % | 44.3 | % | 42.8 | % |
Current portion of long-term debt and short-term debt ($) | — | — | — | — | 25 | 67 | 222 | 662 | 1,431 | 106,708 | ||||||||||
Long-term debt, less current portion (h)($) | 3,417,122 | 2,978,390 | 1,887,019 | 1,390,018 | 1,388,397 | 1,386,828 | 1,087,789 | 790,585 | 357,273 | 684,040 | ||||||||||
Shareholders’ equity ($) (a) | 353,667 | 653,046 | 1,627,136 | 1,961,314 | 2,018,418 | 1,966,321 | 2,108,307 | 2,844,851 | 3,209,685 | 2,685,865 | ||||||||||
Cash provided by operating activities (k) ($) | 1,727,555 | 1,403,687 | 1,510,713 | 1,345,488 | 1,190,430 | 908,026 | 1,251,555 | 1,118,991 | 703,687 | 285,200 | ||||||||||
Capital expenditures ($) | 504,268 | 465,940 | 476,344 | 414,020 | 429,987 | 395,881 | 300,719 | 328,319 | 365,419 | 414,779 | ||||||||||
Free cash flow (k)(l)($) | 1,188,584 | 889,059 | 978,375 | 868,390 | 760,443 | 512,145 | 950,836 | 790,672 | 338,268 | (129,579 | ) |
(a) | During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement. In compliance with the standard, the Company did not restate prior period amounts to conform to current period presentation. The Company recorded a cumulative effect adjustment to opening retained earnings, due to the adoption of the new accounting standard. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information. |
(b) | Following the enactment of the U.S. Tax Cuts and Jobs Act in December of 2017, the Company revalued its deferred income tax liabilities, which resulted in a one-time benefit to the Company’s Consolidated Statement of Income for the year ended December 31, 2018 and 2017. See Note 13 “Income Taxes” to the Consolidated Financial Statements of this annual report on Form 10-K for more information. |
(c) | In 2008, 2012 and 2016, the Company acquired CSK Auto Corporation (“CSK”), materially all assets of VIP Parts, Tires & Service (“VIP”) and Bond Auto Parts (“Bond”), respectively. The 2008 CSK acquisition added 1,342 stores, the 2012 VIP acquisition added 56 stores and the 2016 Bond acquisition added 48 stores to the O’Reilly store count. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett Auto Supply, Inc., including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018. Financial results for these acquired companies have been included in the Company’s consolidated financial statements from the dates of the acquisitions forward. |
(d) | Total square footage includes normal selling, office, stockroom and receiving space. |
(e) | Sales per weighted-average store are weighted to consider the approximate dates of store openings, acquisitions or closures. |
(f) | Sales per weighted-average square foot are weighted to consider the approximate dates of store openings, acquisitions, expansions or closures. |
(g) | Comparable store sales are calculated based on the change in sales of stores open at least one year and excludes sales of specialty machinery, sales to independent parts stores, sales to Team Members, sales from Leap Day during the years ended December 31, 2016 and 2012, and sales during the one to two week period certain CSK branded stores were closed for conversion. Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for stores open at least one year, are included in the comparable store sales calculation. |
(h) | Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of new accounting standards during the fourth quarter ended December 31, 2015. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2015. |
(i) | Inventory turnover is calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator. |
(j) | Accounts payable to inventory is calculated as accounts payable divided by inventory. |
(k) | Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information. |
(l) | Free cash flow is calculated as net cash provided by operating activities less capital expenditures and excess tax benefit from share-based compensation payments for the period. |
• | an overview of the key drivers of the automotive aftermarket industry; |
• | key events and recent developments within our company; |
• | our results of operations for the years ended December 31, 2018, 2017 and 2016; |
• | our liquidity and capital resources; |
• | any contractual obligations, to which we are committed; |
• | any off-balance sheet arrangements we utilize; |
• | our critical accounting estimates; |
• | the inflation and seasonality of our business; |
• | our quarterly results for the years ended December 31, 2018, and 2017; and |
• | recent accounting pronouncements that may affect our Company. |
• | Number of Miles Driven – The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the Department of Transportation, the number of total miles driven in the U.S. increased 0.3%, 1.2% and 2.4% in 2018, 2017 and 2016, respectively, and we expect to continue to see modest improvements in total miles driven in the U.S., supported by an increasing number of registered vehicles on the road, resulting in continued demand for automotive aftermarket products. |
• | Number of U.S. Registered Vehicles, New Light Vehicle Registrations and Average Vehicle Age – The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by The Auto Care Association, the total number of registered vehicles increased 8.5% from 2007 to 2017, bringing the number of light vehicles on the road to 270 million by the end of 2017. For the year ended December 31, 2018, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 17.5 million, contributing to the continued growth in the total number of registered vehicles on the road. In the past decade, vehicle scrappage rates have remained relatively stable, ranging from 4.2% to 5.7% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing 21.9%, from 9.6 years in 2007 to 11.7 years in 2017. We believe this increase in average age can be attributed to better engineered and manufactured vehicles, which can be reliably driven at higher mileages due to better quality power trains and interiors and exteriors, and the consumer’s willingness to invest in maintaining these higher-mileage, better built vehicles. As the average age of vehicles on the road increases, a larger percentage of miles are being driven by vehicles that are outside of a manufacturer warranty. These out-of-warranty, older vehicles generate strong demand for automotive aftermarket products as they go through more routine maintenance cycles, have more frequent mechanical failures and generally require more maintenance than newer vehicles. We believe consumers will continue to invest in these reliable, higher-quality, higher-mileage vehicles and these investments, along with an increasing total light vehicle fleet, will support continued demand for automotive aftermarket products. |
• | Unemployment – Unemployment, underemployment, the threat of future joblessness and the uncertainty surrounding the overall economic health of the U.S. have a negative impact on consumer confidence and the level of consumer discretionary spending. Long-term trends of high unemployment have historically impeded the growth of annual miles driven, as well as decrease consumer discretionary spending, both of which negatively impact demand for products sold in the automotive aftermarket industry. As of December 31, 2017, the U.S. unemployment rate was 4.1%, and as of December 31, 2018, the U.S. unemployment rate decreased to 3.9%. We believe total employment should remain at healthy levels supporting the trend of modest growth in total miles driven in the U.S. and the continued demand for automotive aftermarket products. |
• | Under the Company’s share repurchase program, as approved by our Board of Directors in January of 2011, we may, from time to time, repurchase shares of our 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. Our Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on February 7, 2018, and November 13, 2018, our Board of Directors each time approved a resolution to increase the authorization amount under our share repurchase program by an additional $1.00 billion, resulting in a cumulative authorization amount of $11.75 billion. Each additional authorization is effective for a three-year period, beginning on its respective announcement date. As of February 27, 2019, we had repurchased approximately 73.1 million shares of our common stock at an aggregate cost of $11.02 billion under this program. |
• | On May 17, 2018, we issued $500 million aggregate principal amount of unsecured 4.350% Senior Notes due 2028 (“4.350% Senior Notes due 2028”) at a price to the public of 99.732% of their face value with UMB Bank, N.A. as trustee. Interest on the 4.350% Senior Notes due 2028 is payable on June 1 and December 1 of each year, which began on December 1, 2018, and is computed on the basis of a 360-day year. |
• | After the close of business on December 31, 2018, we completed an asset purchase of Bennett Auto Supply, Inc. (“Bennett”), a privately held automotive parts supplier. The asset purchase included 33 stores that were not included in the Company’s 2018 store count and were not operated by the Company in 2018, and a warehouse located in southern Florida. |
For the Year Ended December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of goods sold, including warehouse and distribution expenses | 47.2 | 47.4 | 47.5 | |||||
Gross profit | 52.8 | 52.6 | 52.5 | |||||
Selling, general and administrative expenses | 33.8 | 33.4 | 32.7 | |||||
Operating income | 19.0 | 19.2 | 19.8 | |||||
Interest expense | (1.3 | ) | (1.0 | ) | (0.8 | ) | ||
Interest income | — | — | 0.1 | |||||
Income before income taxes (1) | 17.8 | 18.2 | 19.1 | |||||
Provision for income taxes | 3.9 | 5.6 | 7.0 | |||||
Net income | 13.9 | % | 12.6 | % | 12.1 | % |
(1) | Each percentage of sales amount is computed independently and may not compute to presented totals. |
Increase in Sales for the Year Ended December 31, 2018, Compared to the Same Period in 2017 | |||
Store sales: | |||
Comparable store sales | $ | 336 | |
Non-comparable store sales: | |||
Sales for stores opened throughout 2017, excluding stores open at least one year that are included in comparable store sales | 101 | ||
Sales for stores opened throughout 2018 | 120 | ||
Decline in sales for stores that have closed | (7 | ) | |
Non-store sales: | |||
Includes sales of machinery and sales to independent parts stores and Team Members | 9 | ||
Total increase in sales | $ | 559 |
Increase in Sales for the Year Ended December 31, 2017, Compared to the Same Period in 2016 | |||
Store sales: | |||
Comparable store sales, including sales from the 48 acquired Bond stores | $ | 182 | |
Non-comparable store sales: | |||
Sales for stores opened throughout 2016, excluding stores open at least one year that are included in comparable store sales | 126 | ||
Sales for stores opened throughout 2017 | 108 | ||
Sales from Leap Day in 2016 | (25 | ) | |
Decline in sales for stores that have closed | (5 | ) | |
Non-store sales: | |||
Includes sales of machinery and sales to independent parts stores and Team Members | (1 | ) | |
Total increase in sales | $ | 385 |
December 31, | Percentage Change | ||||||||||
Liquidity and Related Ratios | 2018 | 2017 | |||||||||
Current assets | $ | 3,543 | $ | 3,398 | 4.3 | % | |||||
Current liabilities | 3,894 | 3,647 | 6.8 | % | |||||||
Working capital (1) | (351 | ) | (250 | ) | (40.4 | )% | |||||
Total debt | 3,417 | 2,978 | 14.7 | % | |||||||
Total equity | $ | 354 | $ | 653 | (45.8 | )% | |||||
Debt to equity (2) | 9.66:1 | 4.56:1 | 111.8 | % |
(1) | Working capital is calculated as current assets less current liabilities. |
(2) | Debt to equity is calculated as total debt divided by total equity. |
For the Year Ended December 31, | ||||||||||||
Liquidity: | 2018 | 2017 | 2016 | |||||||||
Total cash provided by/(used in): | ||||||||||||
Operating activities (1) | $ | 1,727,555 | $ | 1,403,687 | $ | 1,510,713 | ||||||
Investing activities | (534,302 | ) | (464,223 | ) | (529,096 | ) | ||||||
Financing activities (1) | (1,208,286 | ) | (1,039,714 | ) | (951,320 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | $ | (15,033 | ) | $ | (100,250 | ) | $ | 30,297 | ||||
Capital expenditures | $ | 504,268 | $ | 465,940 | $ | 476,344 | ||||||
Free cash flow (2) | 1,188,584 | 889,059 | 978,375 |
(1) | Prior period amount has been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017. |
(2) | Calculated as net cash provided by operating activities, less capital expenditures and excess tax benefit from share-based compensation payments for the period. |
For the Year Ended December 31, | |||||||
2018 | 2017 | ||||||
GAAP net income | $ | 1,324,487 | $ | 1,133,804 | |||
Add: Interest expense | 122,129 | 91,349 | |||||
Rent expense | 317,283 | 298,614 | |||||
Provision for income taxes | 369,600 | 504,000 | |||||
Depreciation expense | 255,866 | 232,674 | |||||
Amortization expense | 3,071 | 1,171 | |||||
Non-cash share-based compensation | 20,176 | 19,401 | |||||
Non-GAAP EBITDAR | $ | 2,412,612 | $ | 2,281,013 | |||
Interest expense | $ | 122,129 | $ | 91,349 | |||
Capitalized interest | 9,092 | 8,548 | |||||
Rent expense | 317,283 | 298,614 | |||||
Total fixed charges | $ | 448,504 | $ | 398,511 | |||
Consolidated fixed charge coverage ratio | 5.38 | 5.72 | |||||
GAAP debt | $ | 3,417,122 | $ | 2,978,390 | |||
Add: Stand-by letters of credit | 35,148 | 36,843 | |||||
Discount on senior notes | 4,294 | 3,721 | |||||
Debt issuance costs | 15,584 | 13,889 | |||||
Five-times rent expense | 1,586,415 | 1,493,070 | |||||
Non-GAAP adjusted debt | $ | 5,058,563 | $ | 4,525,913 | |||
Consolidated leverage ratio | 2.10 | 1.98 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash provided by operating activities (1) | $ | 1,727,555 | $ | 1,403,687 | $ | 1,510,713 | |||||
Less: Capital expenditures | 504,268 | 465,940 | 476,344 | ||||||||
Excess tax benefit from share-based compensation | 34,703 | 48,688 | 55,994 | ||||||||
Free cash flow | $ | 1,188,584 | $ | 889,059 | $ | 978,375 |
(1) | Prior period amount has been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017. |
For the Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Shares repurchased | 6,061 | 9,301 | |||||
Average price per share | $ | 282.80 | $ | 233.57 | |||
Total investment | $ | 1,713,953 | $ | 2,172,437 |
Payments Due By Period | ||||||||||||||||||||
Contractual Obligations | Total | Before 1 Year | Years 1 and 2 | Years 3 and 4 | Years 5 and Over | |||||||||||||||
Long-term debt principal and interest payments (1) | $ | 4,273,542 | $ | 141,414 | $ | 1,077,183 | $ | 1,056,936 | $ | 1,998,009 | ||||||||||
Future minimum lease payments under operating leases (2) | 2,429,044 | 309,743 | 557,091 | 447,607 | 1,114,603 | |||||||||||||||
Self-insurance reserves (3) | 157,538 | 77,012 | 48,864 | 19,255 | 12,407 | |||||||||||||||
Construction commitments | 177,664 | 177,664 | — | — | — | |||||||||||||||
Total contractual cash obligations | $ | 7,037,788 | $ | 705,833 | $ | 1,683,138 | $ | 1,523,798 | $ | 3,125,019 |
(1) | Our Revolving Credit Facility, which has a maximum aggregate commitment of $1.20 billion and matures in April 2022, bears interest (other than swing line loans), at our option, at either the Alternate Base Rate or Adjusted LIBO Rate (both as defined in the Credit Agreement) plus a margin, that will vary from 0.000% to 0.250% in the case of loans bearing interest at the Alternate Base Rate and 0.680% to 1.250% in the case of loans bearing interest at the Adjusted LIBO Rate, in each case based upon the better of the ratings assigned to our debt by Moody’s Investor Service, Inc. and Standard & Poor’s Rating Services, subject to limited exceptions. Swing line loans made under the Revolving Credit Facility bear interest at the Alternate Base Rate plus the applicable margin described above. In addition, we pay a facility fee on the aggregate amount of the commitments in an amount equal to a percentage of such commitments, varying from 0.070% to 0.250% per annum based upon the better of the ratings assigned to our debt by Moody’s Investor Service, Inc. and Standard & Poor’s Rating Services, subject to limited exceptions. Based on our current credit ratings, our margin for Alternate Base Rate loans was 0.000%, our margin for Eurodollar Revolving Loans was 0.900% and our facility fee was 0.100%. As of December 31, 2018, we had outstanding borrowings in the amount of $287 million under our Revolving Credit Facility. |
(2) | The minimum lease payments above do not include certain tax, insurance and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. These expenses historically average approximately 20% of the corresponding lease payments. See Note 6 “Leasing” to the Consolidated Financial Statements for further information on our operating leases. |
(3) | We use various self-insurance mechanisms to provide for potential liabilities from workers’ compensation, vehicle and general liability, and employee health care benefits. The self-insurance reserves above are at the undiscounted obligation amount. The self-insurance reserves liabilities are recorded on our Consolidated Balance Sheets at our estimate of their net present value and do not have scheduled maturities; however, we can estimate the timing of future payments based upon historical patterns. See Note 11 “Commitments” to the Consolidated Financial Statements for further information on our self-insurance reserves. |
Fiscal 2018 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Comparable store sales | 3.4 | % | 4.6 | % | 3.9 | % | 3.3 | % | |||||||
Sales | $ | 2,282,681 | $ | 2,456,073 | $ | 2,482,717 | $ | 2,314,957 | |||||||
Gross profit | 1,201,258 | 1,288,638 | 1,315,755 | 1,234,315 | |||||||||||
Operating income | 422,846 | 479,150 | 485,148 | 428,040 | |||||||||||
Net income | 304,906 | 353,073 | 366,151 | 300,357 | |||||||||||
Earnings per share – basic (1) | $ | 3.65 | $ | 4.32 | $ | 4.54 | $ | 3.76 | |||||||
Earnings per share – assuming dilution (1) | $ | 3.61 | $ | 4.28 | $ | 4.50 | $ | 3.72 |
Fiscal 2017 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Comparable store sales | 0.8 | % | 1.7 | % | 1.8 | % | 1.3 | % | |||||||
Sales | $ | 2,156,259 | $ | 2,290,829 | $ | 2,339,830 | $ | 2,190,808 | |||||||
Gross profit | 1,131,147 | 1,200,062 | 1,230,294 | 1,159,180 | |||||||||||
Operating income | 403,157 | 457,445 | 461,963 | 402,835 | |||||||||||
Net income | 264,934 | 282,821 | 283,734 | 302,315 | |||||||||||
Earnings per share – basic (1) | $ | 2.88 | $ | 3.14 | $ | 3.26 | $ | 3.56 | |||||||
Earnings per share – assuming dilution (1) | $ | 2.83 | $ | 3.10 | $ | 3.22 | $ | 3.52 |
(1) | Earnings per share amounts are computed independently for each quarter and annual period. The quarterly earnings per share amounts may not sum to equal the full-year earnings per share amount. |
Index | |||
Page | |||
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
/s/ | Gregory D. Johnson | /s/ | Thomas McFall | |
Gregory D. Johnson | Thomas McFall | |||
Chief Executive Officer and | Executive Vice President and | |||
Co-President | Chief Financial Officer | |||
February 27, 2019 | February 27, 2019 |
December 31, | |||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 31,315 | $ | 46,348 | |||
Accounts receivable, less allowance for doubtful accounts $13,238 in 2018 and $12,717 in 2017 | 192,026 | 216,251 | |||||
Amounts receivable from suppliers | 78,155 | 76,236 | |||||
Inventory | 3,193,344 | 3,009,800 | |||||
Other current assets | 48,262 | 49,037 | |||||
Total current assets | 3,543,102 | 3,397,672 | |||||
Property and equipment, at cost | 5,645,552 | 5,191,135 | |||||
Less: accumulated depreciation and amortization | 2,058,550 | 1,847,329 | |||||
Net property and equipment | 3,587,002 | 3,343,806 | |||||
Goodwill | 807,260 | 789,058 | |||||
Other assets, net | 43,425 | 41,349 | |||||
Total assets | $ | 7,980,789 | $ | 7,571,885 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,376,403 | $ | 3,190,029 | |||
Self-insurance reserves | 77,012 | 71,695 | |||||
Accrued payroll | 86,520 | 77,147 | |||||
Accrued benefits and withholdings | 89,082 | 69,308 | |||||
Income taxes payable | 11,013 | — | |||||
Other current liabilities | 253,990 | 239,187 | |||||
Total current liabilities | 3,894,020 | 3,647,366 | |||||
Long-term debt | 3,417,122 | 2,978,390 | |||||
Deferred income taxes | 105,566 | 85,406 | |||||
Other liabilities | 210,414 | 207,677 | |||||
Shareholders’ equity: | |||||||
Preferred stock, $0.01 par value: | |||||||
Authorized shares - 5,000,000 | |||||||
Issued and outstanding shares - none | — | — | |||||
Common stock, $0.01 par value: | |||||||
Authorized shares – 245,000,000 | |||||||
Issued and outstanding shares – | |||||||
79,043,919 as of December 31, 2018, and | |||||||
84,302,187 as of December 31, 2017 | 790 | 843 | |||||
Additional paid-in capital | 1,262,063 | 1,265,043 | |||||
Retained deficit | (909,186 | ) | (612,840 | ) | |||
Total shareholders’ equity | 353,667 | 653,046 | |||||
Total liabilities and shareholders’ equity | $ | 7,980,789 | $ | 7,571,885 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Sales | $ | 9,536,428 | $ | 8,977,726 | $ | 8,593,096 | |||||
Cost of goods sold, including warehouse and distribution expenses | 4,496,462 | 4,257,043 | 4,084,085 | ||||||||
Gross profit | 5,039,966 | 4,720,683 | 4,509,011 | ||||||||
Selling, general and administrative expenses | 3,224,782 | 2,995,283 | 2,809,805 | ||||||||
Operating income | 1,815,184 | 1,725,400 | 1,699,206 | ||||||||
Other income (expense): | |||||||||||
Interest expense | (122,129 | ) | (91,349 | ) | (70,931 | ) | |||||
Interest income | 2,521 | 2,347 | 4,224 | ||||||||
Other, net | (1,489 | ) | 1,406 | 4,692 | |||||||
Total other expense | (121,097 | ) | (87,596 | ) | (62,015 | ) | |||||
Income before income taxes | 1,694,087 | 1,637,804 | 1,637,191 | ||||||||
Provision for income taxes | 369,600 | 504,000 | 599,500 | ||||||||
Net income | $ | 1,324,487 | $ | 1,133,804 | $ | 1,037,691 | |||||
Earnings per share-basic: | |||||||||||
Earnings per share | $ | 16.27 | $ | 12.82 | $ | 10.87 | |||||
Weighted-average common shares outstanding – basic | 81,406 | 88,426 | 95,447 | ||||||||
Earnings per share-assuming dilution: | |||||||||||
Earnings per share | $ | 16.10 | $ | 12.67 | $ | 10.73 | |||||
Weighted-average common shares outstanding – assuming dilution | 82,280 | 89,502 | 96,720 |
Common Stock | Additional Paid-In Capital | Retained Earnings (Deficit) | Total | |||||||||||||||
Shares | Par Value | |||||||||||||||||
Balance at December 31, 2015 | 97,737 | $ | 977 | $ | 1,281,497 | $ | 678,840 | $ | 1,961,314 | |||||||||
Net income | — | — | — | 1,037,691 | 1,037,691 | |||||||||||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 56 | 1 | 12,613 | — | 12,614 | |||||||||||||
Net issuance of common stock upon exercise of stock options | 757 | 8 | 47,386 | — | 47,394 | |||||||||||||
Excess tax benefit from share-based compensation | — | — | 55,994 | — | 55,994 | |||||||||||||
Share based compensation | — | — | 17,566 | — | 17,566 | |||||||||||||
Share repurchases, including fees | (5,698 | ) | (57 | ) | (78,349 | ) | (1,427,031 | ) | (1,505,437 | ) | ||||||||
Balance at December 31, 2016 | 92,852 | $ | 929 | $ | 1,336,707 | $ | 289,500 | $ | 1,627,136 | |||||||||
Cumulative effective adjustment from adoption of ASU 2016-09 | — | — | 434 | (266 | ) | 168 | ||||||||||||
Net income | — | — | — | 1,133,804 | 1,133,804 | |||||||||||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 66 | — | 13,466 | — | 13,466 | |||||||||||||
Net issuance of common stock upon exercise of stock options | 685 | 7 | 33,222 | — | 33,229 | |||||||||||||
Share based compensation | — | — | 17,773 | — | 17,773 | |||||||||||||
Share repurchases, including fees | (9,301 | ) | (93 | ) | (136,559 | ) | (2,035,878 | ) | (2,172,530 | ) | ||||||||
Balance at December 31, 2017 | 84,302 | $ | 843 | $ | 1,265,043 | $ | (612,840 | ) | $ | 653,046 | ||||||||
Net income | — | — | — | 1,324,487 | 1,324,487 | |||||||||||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 58 | — | 14,173 | — | 14,173 | |||||||||||||
Net issuance of common stock upon exercise of stock options | 745 | 8 | 57,160 | — | 57,168 | |||||||||||||
Share based compensation | — | — | 18,806 | — | 18,806 | |||||||||||||
Share repurchases, including fees | (6,061 | ) | (61 | ) | (93,119 | ) | (1,620,833 | ) | (1,714,013 | ) | ||||||||
Balance at December 31, 2018 | 79,044 | $ | 790 | $ | 1,262,063 | $ | (909,186 | ) | $ | 353,667 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 1,324,487 | $ | 1,133,804 | $ | 1,037,691 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization of property, equipment and intangibles | 258,937 | 233,845 | 217,866 | ||||||||
Amortization of debt discount and issuance costs | 3,470 | 2,871 | 2,451 | ||||||||
Deferred income taxes | 20,160 | (4,593 | ) | 10,394 | |||||||
Share-based compensation programs | 20,176 | 19,401 | 18,859 | ||||||||
Other | 9,895 | 11,790 | 6,434 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 18,138 | (27,742 | ) | (38,548 | ) | ||||||
Inventory | (163,367 | ) | (231,802 | ) | (119,270 | ) | |||||
Accounts payable | 177,676 | 253,265 | 322,427 | ||||||||
Income taxes payable | 22,903 | 14,220 | 26,880 | ||||||||
Accrued payroll | 9,373 | 5,430 | 12,616 | ||||||||
Accrued benefits and withholdings | 28,022 | 3,042 | (256 | ) | |||||||
Other | (2,315 | ) | (9,844 | ) | 13,169 | ||||||
Net cash provided by operating activities | 1,727,555 | 1,403,687 | 1,510,713 | ||||||||
Investing activities: | |||||||||||
Purchases of property and equipment | (504,268 | ) | (465,940 | ) | (476,344 | ) | |||||
Proceeds from sale of property and equipment | 4,784 | 4,464 | 5,119 | ||||||||
Payments received on notes receivable | — | — | 1,047 | ||||||||
Other | (34,818 | ) | (2,747 | ) | (58,918 | ) | |||||
Net cash used in investing activities | (534,302 | ) | (464,223 | ) | (529,096 | ) | |||||
Financing activities: | |||||||||||
Proceeds from borrowings on revolving credit facility | 2,414,000 | 3,101,000 | — | ||||||||
Payments on revolving credit facility | (2,473,000 | ) | (2,755,000 | ) | — | ||||||
Proceeds from the issuance of long-term debt | 498,660 | 748,800 | 499,160 | ||||||||
Payment of debt issuance costs | (3,923 | ) | (7,590 | ) | (4,125 | ) | |||||
Repurchases of common stock | (1,714,013 | ) | (2,172,530 | ) | (1,505,437 | ) | |||||
Net proceeds from issuance of common stock | 72,146 | 45,762 | 59,634 | ||||||||
Other | (2,156 | ) | (156 | ) | (552 | ) | |||||
Net cash used in financing activities | (1,208,286 | ) | (1,039,714 | ) | (951,320 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (15,033 | ) | (100,250 | ) | 30,297 | ||||||
Cash and cash equivalents at beginning of the year | 46,348 | 146,598 | 116,301 | ||||||||
Cash and cash equivalents at end of the year | $ | 31,315 | $ | 46,348 | $ | 146,598 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Income taxes paid | $ | 311,376 | $ | 496,728 | $ | 569,677 | |||||
Interest paid, net of capitalized interest | 117,938 | 77,766 | 63,648 |
• | Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. |
• | Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
• | Level 3 – Unobservable inputs for the asset or liability. |
December 31, | |||||||
2018 | 2017 | ||||||
Self-insurance reserves (undiscounted) | $ | 157,538 | $ | 147,664 | |||
Self-insurance reserves (discounted) | 146,718 | 137,970 |
Cost of goods sold, including warehouse and distribution expenses | Selling, general and administrative expenses | |
Total cost of merchandise sold, including: | Payroll and benefit costs for store and corporate Team Members | |
Freight expenses associated with acquiring merchandise and with moving merchandise inventories from the Company’s distribution centers to the stores | Occupancy costs of store and corporate facilities | |
Defective merchandise and warranty costs | Depreciation and amortization related to store and corporate assets | |
Supplier allowances and incentives, including: | Vehicle expenses for store delivery services | |
Allowances that are not reimbursements for specific, incremental and identifiable costs | Self-insurance costs | |
Cash discounts on payments to suppliers | Closed store expenses | |
Costs associated with the Company’s supply chain, including: | Other administrative costs, including: | |
Payroll and benefit costs | Accounting, legal and other professional services | |
Warehouse occupancy costs | Bad debt, banking and credit card fees | |
Transportation costs | Supplies | |
Depreciation | Travel | |
Inventory shrinkage | Advertising costs |
December 31, 2018 | |||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Marketable securities | $ | 25,493 | $ | — | $ | — | $ | 25,493 |
December 31, 2017 | |||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Marketable securities | $ | 25,706 | $ | — | $ | — | $ | 25,706 |
December 31, 2018 | December 31, 2017 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Senior Notes | $ | 3,130,122 | $ | 3,116,046 | $ | 2,632,390 | $ | 2,728,167 |
Original Useful Lives | December 31, 2018 | December 31, 2017 | |||||||
Land | $ | 745,050 | $ | 695,669 | |||||
Buildings and building improvements | 15 – 39 years | 2,147,969 | 1,968,079 | ||||||
Leasehold improvements | 3 – 25 years | 686,058 | 626,714 | ||||||
Furniture, fixtures and equipment | 3 – 20 years | 1,350,808 | 1,250,690 | ||||||
Vehicles | 5 – 10 years | 424,421 | 392,130 | ||||||
Construction in progress | 291,246 | 257,853 | |||||||
Total property and equipment | 5,645,552 | 5,191,135 | |||||||
Less: accumulated depreciation and amortization | 2,058,550 | 1,847,329 | |||||||
Net property and equipment | $ | 3,587,002 | $ | 3,343,806 |
2018 | 2017 | ||||||
Goodwill, balance at January 1, | $ | 789,058 | $ | 785,399 | |||
Change in goodwill | 18,202 | 3,659 | |||||
Goodwill, balance at December 31, | $ | 807,260 | $ | 789,058 |
Cost of Amortizable Intangibles | Accumulated Amortization (Expense) Benefit | Net Amortizable Intangibles | |||||||||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||
Favorable leases | $ | 18,930 | $ | 22,500 | $ | (12,564 | ) | $ | (14,495 | ) | $ | 6,366 | $ | 8,005 | |||||||||
Non-compete agreements | 2,757 | 1,851 | (679 | ) | (464 | ) | 2,078 | 1,387 | |||||||||||||||
Total amortizable intangible assets | $ | 21,687 | $ | 24,351 | $ | (13,243 | ) | $ | (14,959 | ) | $ | 8,444 | $ | 9,392 | |||||||||
Unfavorable leases | $ | 10,180 | $ | 14,470 | $ | 8,486 | $ | 11,853 | $ | 1,694 | $ | 2,617 |
December 31, 2018 | |||||||||||
Amortization Expense | Amortization Benefit | Total Amortization Expense | |||||||||
2019 | $ | (1,483 | ) | $ | 713 | $ | (770 | ) | |||
2020 | (1,306 | ) | 541 | (765 | ) | ||||||
2021 | (1,078 | ) | 389 | (689 | ) | ||||||
2022 | (961 | ) | 51 | (910 | ) | ||||||
2023 | (787 | ) | — | (787 | ) | ||||||
Total | $ | (5,615 | ) | $ | 1,694 | $ | (3,921 | ) |
December 31, | |||||||
2018 | 2017 | ||||||
Revolving Credit Facility, weighted-average variable interest rate of 4.560% | $ | 287,000 | $ | 346,000 | |||
$500 million, 4.875% Senior Notes due 2021(1), effective interest rate of 4.952% | 498,371 | 497,565 | |||||
$300 million, 4.625% Senior Notes due 2021(2), effective interest rate of 4.645% | 299,244 | 298,961 | |||||
$300 million, 3.800% Senior Notes due 2022(3), effective interest rate of 3.845% | 298,574 | 298,214 | |||||
$300 million, 3.850% Senior Notes due 2023(4), effective interest rate of 3.851% | 298,821 | 298,583 | |||||
$500 million, 3.550% Senior Notes due 2026(5), effective interest rate of 3.570% | 496,240 | 495,792 | |||||
$750 million, 3.600% Senior Notes due 2027(6), effective interest rate of 3.619% | 743,868 | 743,275 | |||||
$500 million, 4.350% Senior Notes due 2028(7), effective interest rate of 4.383% | 495,004 | — | |||||
Long-term debt | $ | 3,417,122 | $ | 2,978,390 |
(1) | Net of unamortized discount of $0.7 million and $1.1 million as of December 31, 2018 and 2017, respectively, and debt issuance costs of $0.9 million and $1.4 million as of December 31, 2018 and 2017, respectively. |
(2) | Net of unamortized discount of $0.1 million and $0.2 million as of December 31, 2018 and 2017, respectively, and debt issuance costs of $0.6 million and $0.8 million as of December 31, 2018 and 2017, respectively. |
(3) | Net of unamortized discount of $0.5 million and $0.6 million as of December 31, 2018 and 2017, respectively, and debt issuance costs of $1.0 million and $1.2 million as of December 31, 2018 and 2017, respectively. |
(4) | Net of unamortized discount of less than $0.1 million as of December 31, 2018 and 2017, and debt issuance costs of $1.2 million and $1.4 million as of December 31, 2018 and 2017, respectively. |
(5) | Net of unamortized discount of $0.6 million and $0.7 million as of December 31, 2018 and 2017, respectively, and debt issuance costs of $3.1 million and $3.5 million as of December 31, 2018 and 2017, respectively. |
(6) | Net of unamortized discount of $1.1 million and $1.2 million as of December 31, 2018 and 2017, respectively, and debt issuance costs of $5.1 million and $5.6 million as of December 31, 2018 and 2017, respectively. |
(7) | Net of unamortized discount of $1.3 million as of December 31, 2018, and debt issuance costs of $3.7 million as of December 31, 2018. |
Scheduled Maturities | |||
2019 | $ | — | |
2020 | — | ||
2021 | 800,000 | ||
2022 | 587,000 | ||
2023 | 300,000 | ||
Thereafter | 1,750,000 | ||
Total | $ | 3,437,000 |
December 31, 2018 | |||||||||||
Related Parties | Non-Related Parties | Total | |||||||||
2019 | $ | 4,682 | $ | 305,061 | $ | 309,743 | |||||
2020 | 3,896 | 288,972 | 292,868 | ||||||||
2021 | 3,429 | 260,794 | 264,223 | ||||||||
2022 | 2,671 | 236,485 | 239,156 | ||||||||
2023 | 2,448 | 206,003 | 208,451 | ||||||||
Thereafter | 3,515 | 1,111,088 | 1,114,603 | ||||||||
Total | $ | 20,641 | $ | 2,408,403 | $ | 2,429,044 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Minimum operating lease expense | $ | 305,613 | $ | 289,245 | $ | 273,559 | |||||
Contingent rents | 806 | 1,049 | 892 | ||||||||
Other lease related occupancy costs | 14,449 | 12,478 | 13,241 | ||||||||
Total rent expense | 320,868 | 302,772 | 287,692 | ||||||||
Less: sublease income | 3,585 | 4,158 | 4,439 | ||||||||
Net rent expense | $ | 317,283 | $ | 298,614 | $ | 283,253 |
2018 | 2017 | ||||||
Warranty liabilities, balance at January 1, | $ | 44,398 | $ | 36,623 | |||
Warranty claims | (89,557 | ) | (79,660 | ) | |||
Warranty accruals | 97,379 | 87,435 | |||||
Warranty liabilities, balance at December 31, | $ | 52,220 | $ | 44,398 |
For the Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Shares repurchased | 6,061 | 9,301 | |||||
Average price per share | $ | 282.80 | $ | 233.57 | |||
Total investment | $ | 1,713,953 | $ | 2,172,437 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Sales to do-it-yourself customers | $ | 5,351,035 | $ | 5,113,288 | $ | 4,911,826 | |||||
Sales to professional service provider customers | 4,035,898 | 3,724,220 | 3,540,116 | ||||||||
Other sales and sales adjustments | 149,495 | 140,218 | 141,154 | ||||||||
Total sales | $ | 9,536,428 | $ | 8,977,726 | $ | 8,593,096 |
December 31, 2018 | ||||||
Plans | Total Shares Authorized for Issuance under the Plans | Shares Available for Future Issuance under the Plans | ||||
Employee Incentive Plans | 34,000 | 5,573 | ||||
Director Stock Plan | 1,000 | 263 | ||||
Performance Incentive Plan | 650 | 368 | ||||
Employee Stock Purchase Plans | 4,250 | 594 | ||||
Profit Sharing and Savings Plan | 4,200 | 349 |
Shares (in thousands) | Weighted-Average Exercise Price | Average Remaining Contractual Terms | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding at December 31, 2017 | 2,364 | $ | 137.08 | |||||||||
Granted | 293 | 264.34 | ||||||||||
Exercised | (763 | ) | 80.52 | |||||||||
Forfeited or expired | (34 | ) | 231.53 | |||||||||
Outstanding at December 31, 2018 | 1,860 | $ | 178.57 | 5.9 Years | $ | 308,297 | ||||||
Vested or expected to vest at December 31, 2018 | 1,819 | $ | 176.78 | 5.8 Years | $ | 304,818 | ||||||
Exercisable at December 31, 2018 | 1,174 | $ | 133.24 | 4.4 Years | $ | 247,816 |
• | Risk-free interest rate – The United States Treasury rates in effect at the time the options are granted for the options’ expected life. |
• |
• | Expected life – Represents the period of time that options granted are expected to be outstanding. The Company uses historical experience to estimate the expected life of options granted. |
• | Expected volatility – Measure of the amount, by which the Company’s stock price is expected to fluctuate, based on a historical trend. |
• | Expected dividend yield – The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends. |
December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Risk free interest rate | 2.63 | % | 1.98 | % | 1.44 | % | ||
Expected life | 5.9 Years | 5.4 Years | 5.5 Years | |||||
Expected volatility | 24.0 | % | 22.4 | % | 22.3 | % | ||
Expected dividend yield | — | % | — | % | — | % |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Compensation expense for stock options awarded (in thousands) | $ | 16,521 | $ | 15,561 | $ | 15,404 | |||||
Income tax benefit from compensation expense related to stock options (in thousands) | 4,093 | 5,934 | 5,753 | ||||||||
Total intrinsic value of stock options exercised (in thousands) | 156,327 | 135,533 | 157,115 | ||||||||
Cash received from exercise of stock options (in thousands) | 61,403 | 33,229 | 47,394 | ||||||||
Weighted-average grant-date fair value of options awarded | $ | 76.57 | $ | 62.79 | $ | 63.42 | |||||
Weighted-average remaining contractual life of exercisable options | 4.4 Years | 3.8 Years | 3.9 Years |
Shares | Weighted-Average Grant-Date Fair Value | |||||
Non-vested at December 31, 2017 | 3 | $ | 244.06 | |||
Granted during the period | 2 | 262.38 | ||||
Vested during the period (1) | (1 | ) | 232.30 | |||
Forfeited during the period | — | — | ||||
Non-vested at December 31, 2018 | 4 | $ | 260.42 |
(1) | Includes less than one thousand shares withheld to cover employees’ taxes upon vesting. |
Shares | Weighted-Average Grant-Date Fair Value | |||||
Non-vested at December 31, 2017 | 5 | $ | 250.85 | |||
Granted during the period | 3 | 265.41 | ||||
Vested during the period | (3 | ) | 248.53 | |||
Forfeited during the period | — | — | ||||
Non-vested at December 31, 2018 | 5 | $ | 261.07 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Compensation expense for restricted shares awarded | $ | 1,370 | $ | 1,628 | $ | 1,293 | |||||
Income tax benefit from compensation expense related to restricted shares | $ | 340 | $ | 621 | $ | 483 | |||||
Total fair value of restricted shares at vest date | $ | 1,230 | $ | 1,202 | $ | 2,384 | |||||
Shares awarded under the plans | 5 | 4 | 4 | ||||||||
Weighted-average grant-date fair value of shares awarded under the plans | $ | 263.89 | $ | 253.78 | $ | 264.24 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Compensation expense for shares issued under the ESPP | $ | 2,285 | $ | 2,212 | $ | 2,162 | |||||
Income tax benefit from compensation expense for shares issued under the ESPP | $ | 566 | $ | 844 | $ | 807 | |||||
Shares issued under the ESPP | 53 | 64 | 54 | ||||||||
Weighted-average price of shares issued under the ESPP | $ | 245.26 | $ | 196.72 | $ | 227.12 |
December 31, | |||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Allowance for doubtful accounts | $ | 1,944 | $ | 1,885 | |||
Tax credits | 5,606 | 7,179 | |||||
Other accruals | 105,894 | 97,247 | |||||
Net operating losses | — | 346 | |||||
Other | 14,770 | 14,784 | |||||
Total deferred tax assets | 128,214 | 121,441 | |||||
Deferred tax liabilities: | |||||||
Inventories | 62,846 | 55,965 | |||||
Property and equipment | 140,019 | 122,354 | |||||
Other | 30,915 | 28,528 | |||||
Total deferred tax liabilities | 233,780 | 206,847 | |||||
Net deferred tax liabilities | $ | (105,566 | ) | $ | (85,406 | ) |
For the Year Ended December 31, 2018 | |||||||||||
Current | Deferred | Total | |||||||||
Federal income tax expense | $ | 289,953 | $ | 16,309 | $ | 306,262 | |||||
State income tax expense | 59,487 | 3,851 | 63,338 | ||||||||
Net income tax expense | $ | 349,440 | $ | 20,160 | $ | 369,600 |
For the Year Ended December 31, 2017 | |||||||||||
Current | Deferred | Total | |||||||||
Federal income tax expense (benefit) | $ | 467,577 | $ | (13,053 | ) | $ | 454,524 | ||||
State income tax expense | 41,183 | 8,293 | 49,476 | ||||||||
Net income tax expense (benefit) | $ | 508,760 | $ | (4,760 | ) | $ | 504,000 |
For the Year Ended December 31, 2016 | |||||||||||
Current | Deferred | Total | |||||||||
Federal income tax expense | $ | 540,090 | $ | 7,558 | $ | 547,648 | |||||
State income tax expense | 49,016 | 2,836 | 51,852 | ||||||||
Net income tax expense | $ | 589,106 | $ | 10,394 | $ | 599,500 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Federal income taxes at statutory rate | $ | 355,758 | $ | 573,231 | $ | 573,020 | |||||
State income taxes, net of federal tax benefit | 56,345 | 39,062 | 35,285 | ||||||||
Excess tax benefit from share-based compensation | (34,703 | ) | (48,688 | ) | — | ||||||
Revaluation of deferred tax liability | (1,262 | ) | (53,240 | ) | — | ||||||
Other items, net | (6,538 | ) | (6,365 | ) | (8,805 | ) | |||||
Total provision for income taxes | $ | 369,600 | $ | 504,000 | $ | 599,500 |
2018 | 2017 | 2016 | |||||||||
Unrealized tax benefit, balance at January 1, | $ | 35,388 | $ | 34,798 | $ | 36,928 | |||||
Additions based on tax positions related to the current year | 3,550 | 6,299 | 6,116 | ||||||||
Additions based on tax positions related to prior years | 4,255 | — | — | ||||||||
Payments related to items settled with taxing authorities | (2,792 | ) | — | (195 | ) | ||||||
Reductions due to the lapse of statute of limitations and settlements | (6,635 | ) | (5,709 | ) | (8,051 | ) | |||||
Unrealized tax benefit, balance at December 31, | $ | 33,766 | $ | 35,388 | $ | 34,798 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Numerator (basic and diluted): | |||||||||||
Net income | $ | 1,324,487 | $ | 1,133,804 | $ | 1,037,691 | |||||
Denominator: | |||||||||||
Weighted-average common shares outstanding – basic | 81,406 | 88,426 | 95,447 | ||||||||
Effect of stock options (1) | 874 | 1,076 | 1,273 | ||||||||
Weighted-average common shares outstanding – assuming dilution | 82,280 | 89,502 | 96,720 | ||||||||
Earnings per share: | |||||||||||
Earnings per share-basic | $ | 16.27 | $ | 12.82 | $ | 10.87 | |||||
Earnings per share-assuming dilution | $ | 16.10 | $ | 12.67 | $ | 10.73 | |||||
Antidilutive potential common shares not included in the calculation of diluted earnings per share: | |||||||||||
Stock options (1) | 567 | 715 | 332 | ||||||||
Weighted-average exercise price per share of antidilutive stock options (1) | $ | 268.55 | $ | 252.16 | $ | 265.77 |
(1) | See Note 10 for further information concerning the terms of the Company’s share-based compensation plans. |
Fiscal 2018 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Sales | $ | 2,282,681 | $ | 2,456,073 | $ | 2,482,717 | $ | 2,314,957 | |||||||
Gross profit | 1,201,258 | 1,288,638 | 1,315,755 | 1,234,315 | |||||||||||
Operating income | 422,846 | 479,150 | 485,148 | 428,040 | |||||||||||
Net income | 304,906 | 353,073 | 366,151 | 300,357 | |||||||||||
Earnings per share – basic (1) | $ | 3.65 | $ | 4.32 | $ | 4.54 | $ | 3.76 | |||||||
Earnings per share – assuming dilution (1) | $ | 3.61 | $ | 4.28 | $ | 4.50 | $ | 3.72 |
Fiscal 2017 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Sales | $ | 2,156,259 | $ | 2,290,829 | $ | 2,339,830 | $ | 2,190,808 | |||||||
Gross profit | 1,131,147 | 1,200,062 | 1,230,294 | 1,159,180 | |||||||||||
Operating income | 403,157 | 457,445 | 461,963 | 402,835 | |||||||||||
Net income | 264,934 | 282,821 | 283,734 | 302,315 | |||||||||||
Earnings per share – basic (1) | $ | 2.88 | $ | 3.14 | $ | 3.26 | $ | 3.56 | |||||||
Earnings per share – assuming dilution (1) | $ | 2.83 | $ | 3.10 | $ | 3.22 | $ | 3.52 |
(1) | Earnings per share amounts are computed independently for each quarter and annual period. The quarterly earnings per share amounts may not sum to equal the full-year earnings per share amount. |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
(a) | The following documents are filed as part of this Annual Report on Form 10-K: |
1. | Financial Statements - O’Reilly Automotive, Inc. and Subsidiaries |
2. | Financial Statement Schedules - O’Reilly Automotive, Inc. and Subsidiaries |
3. | Exhibits |
Exhibit No. | Description |
4.1 | Form of Stock Certificate for Common Stock, filed as Exhibit 4.1 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
Exhibit No. | Description |
10.1 (a) | Form of Employment Agreement between the Registrant and David E. O’Reilly, filed as Exhibit 10.1 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.2 | Lease between the Registrant and O’Reilly Investment Company, filed as Exhibit 10.2 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.3 | Lease between the Registrant and O’Reilly Real Estate Company, filed as Exhibit 10.3 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.4 (a) | O’Reilly Automotive, Inc. 1993 Stock Option Plan, filed as Exhibit 10.8 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.5 (a) | O’Reilly Automotive, Inc. Stock Purchase Plan, filed as Exhibit 10.9 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.6 (a) | O’Reilly Automotive, Inc. Director Stock Option Plan, filed as Exhibit 10.10 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference. |
10.7 (a) | O’Reilly Automotive, Inc. Profit Sharing and Savings Plan, filed as Exhibit 4.1 to the Registration Statement of the Registrant on Form S-8, File No. 33-73892, is incorporated herein by this reference. |
Exhibit No. | Description |
Exhibit No. | Description |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
101.DEF | XBRL Taxonomy Extension Definition Linkbase |
101.LAB | XBRL Taxonomy Extension Label Linkbase |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
(a) | Management contract or compensatory plan or arrangement. |
* | Furnished (and not filed) herewith pursuant to Item 601 (b)(32)(ii) of Regulation S-K. |
Description | Balance at Beginning of Period | Additions - Charged to Costs and Expenses | Additions - Charged to Other Accounts - Describe | Deductions - Describe | Balance at End of Period | ||||||||||||||||
Allowance for doubtful accounts: | |||||||||||||||||||||
For the year ended December 31, 2018 | $ | 12,717 | $ | 9,475 | $ | — | $ | 8,954 | (1) | $ | 13,238 | ||||||||||
For the year ended December 31, 2017 | 12,040 | 8,598 | — | 7,921 | (1) | 12,717 | |||||||||||||||
For the year ended December 31, 2016 | $ | 9,637 | $ | 9,587 | $ | — | $ | 7,184 | (1) | $ | 12,040 |
(1) | Uncollectable accounts written off. |
O’REILLY AUTOMOTIVE, INC. | |||
(Registrant) | |||
Date: | February 27, 2019 | ||
By: | /s/ | Gregory D. Johnson | |
Gregory D. Johnson | |||
Chief Executive Officer and | |||
Co-President |
Date: | February 27, 2019 | |||||
/s/ | David O’Reilly | /s/ | Larry O’Reilly | |||
David O’Reilly | Larry O’Reilly | |||||
Director and Chairman of the Board | Director and Vice Chairman of the Board | |||||
/s/ | Rosalie O’Reilly Wooten | /s/ | Greg Henslee | |||
Rosalie O’Reilly Wooten | Greg Henslee | |||||
Director | Executive Vice Chairman of the Board | |||||
/s/ | Jay D. Burchfield | /s/ | Thomas T. Hendrickson | |||
Jay D. Burchfield | Thomas T. Hendrickson | |||||
Director | Director | |||||
/s/ | John R. Murphy | /s/ | Dana M. Perlman | |||
John R. Murphy | Dana M. Perlman | |||||
Director | Director | |||||
/s/ | Ronald Rashkow | |||||
Ronald Rashkow | ||||||
Director | ||||||
/s/ | Gregory D. Johnson | /s/ | Thomas McFall | |||
Gregory D. Johnson | Thomas McFall | |||||
Chief Executive Officer and | Executive Vice President and | |||||
Co-President | Chief Financial Officer | |||||
(Principal Executive Officer) | (Principal Financial and Accounting Officer) |
Subsidiary | State of Incorporation |
O’Reilly Automotive Stores, Inc. | Missouri |
Ozark Automotive Distributors, Inc. | Missouri |
Ozark Services, Inc. | Missouri |
Ozark Purchasing, LLC | Missouri |
O’Reilly Auto Enterprises, LLC | Delaware |
(1) | Registration Statement (Form S-8 No. 033-91022), Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (Form S-8 No. 033-91022) and Post-Effective Amendment No. 2 to Registration Statement on Form S-8 (Form S-8 No. 033-91022) pertaining to the O’Reilly Automotive, Inc. Performance Incentive Plan; |
(2) | Registration Statement (Form S-8 No. 333-63467) and Post-Effective Amendment No. 1 (Form S-8 No. 333-63467) pertaining to the O’Reilly Automotive, Inc. Director Stock Option Plan and the O’Reilly Automotive, Inc. 1993 Stock Option Plan; |
(3) | Registration Statements (Form S-8 No. 333-59568 and 333-136958) and Post-Effective Amendment No. 1 (Form S-8 No. 333-59568 and 333-136958) pertaining to the O’Reilly Automotive, Inc. Profit Sharing and Savings Plan; |
(4) | Registration Statement (Form S-8 No. 333-111976) and Post-Effective Amendment No. 1 (Form S-8 No. 333-111976) pertaining to the O’Reilly Automotive, Inc. 2003 Employee Stock Option Plan, O’Reilly Automotive, Inc. 2003 Director Stock Option Plan, O’Reilly Automotive, Inc. 1993 Employee Stock Option Plan, and the O’Reilly Automotive, Inc. Stock Purchase Plan; |
(5) | Post-Effective Amendment No. 1 to Registration Statement on Form S-8 to Form S-4 (Form S-8 No. 333-151578) and Post-Effective Amendment No. 2 (Form S-8 No. 333-151578) pertaining to the CSK Auto Corporation 2004 Stock and Incentive Plan, CSK Auto Corporation 1999 Employee Stock Option Plan, CSK Auto Corporation 1996 Executive Stock Option Plan, CSK Auto Corporation 1996 Associate Stock Option Plan and CSK Auto Corporation Nonqualified Stock Option Agreement with Lawrence N. Mondry; |
(6) | Registration Statement (Form S-8 No. 333-157862) and Post-Effective Amendment No. 1 (Form S-8 No. 333-157862) pertaining to the O’Reilly Automotive, Inc. Stock Purchase Plan; |
(7) | Registration Statement (Form S-8 No. 333-159351) and Post-Effective Amendment No. 1 (Form S-8 No. 333-159351) pertaining to the O’Reilly Automotive, Inc. 2009 Stock Purchase Plan and to the O’Reilly Automotive, Inc. 2009 Incentive Plan; |
(8) | Registration Statement (Form S-8 No. 333-181364) pertaining to the O’Reilly Automotive, Inc. 2012 Incentive Award Plan and Post-Effective Amendment No. 1 (Form S-8 No. 333-181364) pertaining to the O’Reilly Automotive, Inc. 2012 Incentive Award Plan and to the O’Reilly Automotive, Inc. 2017 Incentive Award Plan; and |
(9) | Registration Statement (Form S-3ASR No. 333-209788) pertaining to the offer from time to time of debt securities; |
1. | I have reviewed this report on Form 10-K of O’Reilly Automotive, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: February 27, 2019 | /s/ | Gregory D. Johnson |
Gregory D. Johnson | ||
Chief Executive Officer and Co-President (Principal Executive Officer) |
1. | I have reviewed this report on Form 10-K of O’Reilly Automotive, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: February 27, 2019 | /s/ | Thomas McFall |
Thomas McFall | ||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ | Gregory D. Johnson |
Gregory D. Johnson | |
Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ | Thomas McFall |
Thomas McFall | |
Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 18, 2019 |
Jun. 30, 2018 |
|
Document and Entity Information | |||
Document type | 10-K | ||
Amendment flag | false | ||
Document period end date | Dec. 31, 2018 | ||
Document fiscal year focus | 2018 | ||
Current fiscal year end date | --12-31 | ||
Document fiscal period focus | FY | ||
Entity registrant name | O REILLY AUTOMOTIVE INC | ||
Trading symbol | orly | ||
Entity central index key | 0000898173 | ||
Entity well-known seasoned issuer | Yes | ||
Entity voluntary filers | No | ||
Entity shell company | false | ||
Entity current reporting status | Yes | ||
Entity filer category | Large Accelerated Filer | ||
Entity small business | false | ||
Entity emerging growth company | false | ||
Entity common stock, shares outstanding | 78,375,610 | ||
Entity public float | $ 16,890,003,772 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 13,238 | $ 12,717 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 79,043,919 | 84,302,187 |
Common stock, shares outstanding | 79,043,919 | 84,302,187 |
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Statement [Abstract] | |||
Sales | $ 9,536,428 | $ 8,977,726 | $ 8,593,096 |
Cost of goods sold, including warehouse and distribution expenses | 4,496,462 | 4,257,043 | 4,084,085 |
Gross profit | 5,039,966 | 4,720,683 | 4,509,011 |
Selling, general and administrative expenses | 3,224,782 | 2,995,283 | 2,809,805 |
Operating income | 1,815,184 | 1,725,400 | 1,699,206 |
Other income (expense): | |||
Interest expense | (122,129) | (91,349) | (70,931) |
Interest income | 2,521 | 2,347 | 4,224 |
Other, net | (1,489) | 1,406 | 4,692 |
Total other expense | (121,097) | (87,596) | (62,015) |
Income before income taxes | 1,694,087 | 1,637,804 | 1,637,191 |
Provision for income taxes | 369,600 | 504,000 | 599,500 |
Net income | $ 1,324,487 | $ 1,133,804 | $ 1,037,691 |
Earnings per share-basic: | |||
Earnings per share - basic | $ 16.27 | $ 12.82 | $ 10.87 |
Weighted-average common shares outstanding - basic | 81,406 | 88,426 | 95,447 |
Earnings per share-assuming dilution: | |||
Earnings per share - assuming dilution | $ 16.10 | $ 12.67 | $ 10.73 |
Weighted-average common shares outstanding - assuming dilution | 82,280 | 89,502 | 96,720 |
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Policy Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of significant accounting policies | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of business: O’Reilly Automotive, Inc. and its subsidiaries, collectively, “O’Reilly” or the “Company,” is a specialty retailer and supplier of automotive aftermarket parts. The Company’s stores carry an extensive product line, including new and remanufactured automotive hard parts, maintenance items and various automotive accessories. As of December 31, 2018, the Company owned and operated 5,219 stores in 47 states, servicing both do-it-yourself (“DIY”) and the professional service provider customers. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett Auto Supply, Inc. and its affiliates, including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018. The Company’s robust distribution system provides stores with same-day or overnight access to an extensive inventory of hard-to-find items not typically stocked in the stores of other auto parts retailers. Segment reporting: The Company is managed and operated by a single management team reporting to the chief operating decision maker. O’Reilly stores have similar characteristics, including the nature of the products and services, the type and class of customers and the methods used to distribute products and provide service to its customers and, as a whole, make up a single operating segment. The Company does not prepare discrete financial information with respect to product lines, types of customers or geographic locations and as such has one reportable segment. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. Use of estimates: The preparation of the consolidated financial statements, in conformity with United States generally accepted accounting principles (“GAAP”), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Cash equivalents: Cash equivalents include investments with maturities of 90 days or less on the date of purchase. Accounts receivable: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable. Amounts due to the Company from its Team Members are included in “Accounts receivable” on the accompanying Consolidated Balance Sheets. These amounts consist primarily of purchases of merchandise on Team Member accounts. Accounts receivable due from Team Members was approximately $1.1 million and $0.9 million as of December 31, 2018 and 2017, respectively. The Company grants credit to certain customers who meet the Company’s pre-established credit requirements. Concentrations of credit risk with respect to these receivables are limited because the Company’s customer base consists of a large number of small customers, spreading the credit risk across a broad base. The Company also controls this credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures. Generally, the Company does not require security when credit is granted to customers. Credit losses are provided for in the Company’s consolidated financial statements and have consistently been within management’s expectations. Amounts receivable from suppliers: The Company receives concessions from its suppliers through a variety of programs and arrangements, including allowances for new stores and warranties, volume purchase rebates and co-operative advertising. Co-operative advertising allowances that are incremental to the Company’s advertising program, specific to a product or event and identifiable for accounting purposes are reported as a reduction of advertising expense in the period in which the advertising occurred. All other supplier concessions are recognized as a reduction to the cost of sales. Amounts receivable from suppliers also include amounts due to the Company for changeover merchandise and product returns. The Company regularly reviews supplier receivables for collectability and assesses the need for a reserve for uncollectable amounts based on an evaluation of the Company’s suppliers’ financial positions and corresponding abilities to meet financial obligations. Management does not believe there is a reasonable likelihood that the Company will be unable to collect the amounts receivable from suppliers and the Company did not record a reserve for uncollectable amounts from suppliers in the consolidated financial statements as of December 31, 2018 or 2017. Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories and tools, is stated at the lower of cost or market. Inventory also includes capitalized costs related to procurement, warehousing and distribution centers (“DC”s). Cost has been determined using the last-in, first-out (“LIFO”) method, which more accurately matches costs with related revenues. Over time, as the Company’s merchandise inventory purchases have increased, the Company negotiated improved acquisition costs from its suppliers and the corresponding price deflation exhausted the Company’s LIFO reserve balance. The Company’s policy is to not write up the value of its inventory in excess of its replacement cost, and accordingly, the Company’s merchandise inventory has been effectively recorded at replacement cost since December 31, 2013. The replacement cost of inventory was $3.20 billion and $3.01 billion as of December 31, 2018 and 2017, respectively. LIFO costs exceeded replacement costs by $107.3 million and $157.3 million at December 31, 2018 and 2017, respectively. Fair value of financial instruments: 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:
See Note 2 for further information concerning the Company’s financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis. Property and equipment: Property and equipment are carried at cost. Depreciation is calculated using the straight-line method, generally over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the estimated economic life of the assets. The lease term includes renewal options determined by management at lease inception, for which failure to execute renewal options would result in a substantial economic penalty to the Company. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is recognized in the Company’s Consolidated Statements of Income. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. See Note 3 for further information concerning the Company’s property and equipment. Goodwill and other intangibles: The accompanying Consolidated Balance Sheets at December 31, 2018 and 2017, include goodwill and other intangible assets recorded as the result of acquisitions. The Company reviews goodwill for impairment annually during the fourth quarter, or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. During 2018 and 2017, the goodwill impairment test included a quantitative assessment, which compared the fair value of the reporting unit to its carrying amount, including goodwill. The Company operates as a single reporting unit, and the Company determined that its fair value exceeded its carrying value, including goodwill, as of December 31, 2018 and 2017; as such, no goodwill impairment adjustment was required as of December 31, 2018 and 2017. Finite-lived intangibles are carried at cost and amortization is calculated using the straight-line method, generally over the estimated useful lives of the intangibles. See Note 4 for further information concerning the Company’s goodwill and other intangibles. Impairment of long-lived assets: The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset (asset group) with the carrying amounts of the asset. If the undiscounted expected future cash flows are less than the carrying value of the assets, the Company measures the amount of impairment loss as the amount, by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not historically recorded any material impairment charges to its long-lived assets. The Company recorded a charge of $11.4 million related to its long-lived assets during the year ended December 31, 2018, primarily due to the disposal of a software project that was no longer expected to provide a long-term benefit. Valuation of investments: The Company has an unsecured obligation to pay, in the future, the value of deferred compensation and a Company match relating to employee participation in the Company’s nonqualified deferred compensation plan (the “Deferred Compensation Plan”). The future obligation is adjusted to reflect the performance, whether positive or negative, of selected investment measurement options, chosen by each participant. The Company invests in various marketable securities with the intention of selling these securities to fulfill its future obligations under the Deferred Compensation Plan. The investments in this plan were stated at fair value based on quoted market prices, were accounted for as trading securities and were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. See Note 2 for further information concerning the fair value measurements of the Company’s marketable securities. See Note 10 for further information concerning the Company’s benefit plans. Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure. The Company estimates its self-insurance liabilities by considering a number of factors, including historical claims experience and trend-lines, projected medical and legal inflation, growth patterns and exposure forecasts. Certain of these liabilities were recorded at an estimate of their net present value, using a credit-adjusted discount rate. The following table identifies the components of the Company’s self-insurance reserves as of December 31, 2018 and 2017 (in thousands):
The current portion of the Company’s discounted self-insurance reserves totaled $77.0 million and $71.7 million as of December 31, 2018 and 2017, respectively, which was included in “Self-insurance reserves” on the accompanying Consolidate Balance Sheets as of December 31, 2018 and 2017. The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. Warranties: The Company offers warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company, in lieu of warranty obligations and estimated warranty expense, are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. See Note 7 for further information concerning the Company’s aggregate product warranty liabilities. Litigation accruals: O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company accrues for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably estimate the probable loss. The Company accrues for an estimate of material legal costs to be incurred in pending litigation matters. 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 accruals, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period. Share repurchases: In January of 2011, the Company’s Board of Directors approved a 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. All shares repurchased under the share repurchase program are retired and recorded under the par value method on the accompanying Consolidated Balance Sheets. See Note 8 for further information concerning the Company’s share repurchase program. Revenue recognition: The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for transferring goods to the customer. Generally, the Company’s performance obligations are satisfied when the customer takes possession of the merchandise, which normally occurs immediately at the point of sale or through same day delivery of the merchandise. All sales are recorded net of estimated returns allowances, discounts and taxes. The company does not recognize revenue related to product warranties, as these are considered assurance warranty obligations. See the new recent accounting pronouncements section for information regarding the adoption implementation of Accounting Standard Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” Over-the-counter retail sales to do-it-yourself (“DIY”) customers are recorded when the customer takes possession of the merchandise. Internet retail sales, included in sales to DIY customers, are recorded when the merchandise is shipped or when the customer picks up the merchandise at a store. Sales to professional service provider customers, also referred to as “commercial sales,” are recorded upon same-day delivery of the merchandise to the customer, generally at the customer’s place of business. Other sales and sales adjustments primarily includes sales to Team Members, wholesale sales to other retailers (“jobber sales”), equipment sales, discounts, rebates, deferred revenue adjustments relating to the Company’s retail loyalty program and adjustments to estimated sales returns allowances. Sales to Team Members are recorded when the Team Member takes possession of the merchandise. Jobber sales are recorded upon shipment of the merchandise from a regional distribution center with same-day delivery to the jobber customer’s location. The Company maintains a retail loyalty program named O’Reilly O’Rewards, which represents a performance obligation. The Company records a deferred revenue liability, based on a breakage adjusted, estimated redemption rate, and a corresponding reduction in revenue in periods when loyalty points are earned by members. The Company recognizes revenue and a corresponding reduction to the deferred revenue liability in periods when loyalty program issued coupons are redeemed by members, generally within a period of three months from issuance, or when unredeemed points expire, generally within 12 months after the date they were earned, which satisfies the Company’s performance obligation. See Note 9 for further information concerning the Company’s revenue. Cost of goods sold and selling, general and administrative expenses: The following table illustrates the primary costs classified in each major expense category:
Operating leases: The Company recognizes rent expense on a straight-line basis over the lease terms of its stores, DCs and corporate offices. Generally, the lease term for stores and corporate offices is the base lease term and the lease term for DCs includes the base lease term plus certain renewal option periods, for which renewal is reasonably assured and failure to exercise the renewal option would result in a significant economic penalty. The Company’s policy is to amortize leasehold improvements associated with the Company’s operating leases over the lesser of the lease term or the estimated economic life of those assets. See Note 6 for further information concerning the Company’s operating leases. Advertising expenses: Advertising expense consists primarily of expenses related to the Company’s integrated marketing program, which includes radio, in-store, digital and social media promotions, as well as sports and event sponsorships and direct mail and newspaper promotional distribution. The Company expenses advertising costs as incurred. The Company also participates in cooperative advertising arrangements with certain of its suppliers. Advertising expense, net of cooperative advertising allowances from suppliers that were incremental to the advertising program, specific to the product or event and identifiable for accounting purposes, total $81.4 million, $83.7 million and $83.0 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. Share-based compensation and benefit plans: The Company sponsors employee share-based benefit plans and employee and director share-based compensation plans. The Company recognizes compensation expense over the requisite service period for its share-based plans based on the fair value of the awards on the date of the grant, award or issuance. Share-based plans include stock option awards issued under the Company’s employee incentive plans and director stock plan, stock issued through the Company’s employee stock purchase plan and restricted stock awarded to employees and directors through other compensation plans. See Note 10 for further information concerning the Company’s share-based compensation and plans. Pre-opening expenses: Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income as incurred. Costs associated with the opening of new distribution centers, which consist primarily of payroll and occupancy costs, are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income as incurred. Interest expense: The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on its long-term borrowings. Total interest costs capitalized for the years ended December 31, 2018, 2017 and 2016, were $9.1 million, $8.5 million and $7.9 million, respectively, which were included in “Interest expense” on the accompanying Consolidated Statements of Income. In conjunction with the issuance or amendment of long-term debt instruments, the Company incurs various costs, including debt registration fees, accounting and legal fees and underwriter and book runner fees. Debt issuance costs related to the Company’s long-term unsecured senior notes are recorded as a reduction of the principal amount of the corresponding unsecured senior notes. Debt issuance costs related to the Company’s unsecured revolving credit facility are recorded as an asset. These debt issuance costs have been deferred and are being amortized over the term of the corresponding debt instrument and the amortization expense is included in “Interest expense” on the accompanying Consolidated Statements of Income. Deferred debt issuance costs totaled $17.1 million and $15.9 million, net of accumulated amortization, as of December 31, 2018 and 2017, respectively, of which $1.5 million and $2.0 million were included in “Other assets, net” as of December 31, 2018 and 2017, respectively, with the remainder included in “Long-term debt” on the accompanying Consolidated Balance Sheets. The Company issued its long-term unsecured senior notes at a discount. The original issuance discounts on the senior notes are recorded as a reduction of the principal amount of the corresponding senior notes and are accreted over the term of the applicable senior note, with the accretion expense included in “Interest expense” on the accompanying Consolidated Statements of Income. Original issuance discounts, net of accretion, totaled $4.3 million and $3.7 million as of December 31, 2018 and 2017, respectively. See Note 5 for further information concerning debt issuance costs and original issuance discounts associated with the Company’s issuances of long-term debt instruments. Income taxes: The Company accounts for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the GAAP basis and tax basis of assets and liabilities using enacted tax rules and rates currently scheduled to be in effect for the year in which the differences are expected to reverse. Tax carry forwards are also recognized in deferred tax assets and liabilities under this method. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date. The Company would record a valuation allowance against deferred tax assets to the extent it is more likely than not the amount will not be realized, based upon evidence available at the time of the determination and any change in the valuation allowance is recorded in the period of a change in such determination. The Company did not establish a valuation allowance for deferred tax assets as of December 31, 2018 and 2017, as it was considered more likely than not that deferred tax assets were realizable through a combination of future taxable income, the realization of deferred tax liabilities and tax planning strategies. The Company invests in certain tax credit funds that promote renewable energy. These investments generate a return primarily through the realization of federal tax credits and other tax benefits. The Company accounts for its renewable energy investments using the deferral method. Under this method, realized investment tax credits are recognized as a reduction of the renewable energy investments. The Company regularly reviews its potential tax liabilities for tax years subject to audit. The amount of such liabilities is based on various factors, such as differing interpretations of tax regulations by the responsible tax authority, experience with previous tax audits and applicable tax law rulings. In management’s opinion, adequate provisions for income taxes have been made for all years presented. The estimates of the Company’s potential tax liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company’s various tax positions and actual results could differ from estimates. See Note 13 for further information concerning the Company’s income taxes. Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the fiscal period. Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the common stock equivalents associated with the potential impact of dilutive stock options. Certain common stock equivalents that could potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been antidilutive. Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds the market price of the common shares. See Note 14 for further information concerning the Company’s common stock equivalents. New accounting pronouncements: In May of 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” now codified in the Accounting Standards Codification (“Topic 606”). Under Topic 606, an entity is required to follow a five-step process to determine the amount of revenue to recognize when promised goods or services are transferred to customers. Topic 606 offers specific accounting guidance for costs to obtain or fulfill a contract with a customer. In addition, an entity is required to disclose sufficient information to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted this guidance using the modified retrospective transition method with its first quarter ended March 31, 2018. Results of the year ended December 31, 2018, were presented under Topic 606, while amounts in prior periods were not adjusted and continue to be reported under the accounting standard in effect for the prior periods. The adoption of Topic 606 did not have a material impact on the Company’s business process, internal controls, systems, consolidated financial condition, results of operations or cash flows; as such, a cumulative effective adjustment was not recorded to opening retained earnings. In February of 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In July of 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvement” (“ASU 2018-11”), to provide an additional, optional transition method for adopting ASU 2016-02, which allows for an entity to choose to apply the new lease standard at adoption date and recognize a cumulative-effective adjustment to the opening balance of retained earnings in the period of adoption, while comparative periods presented will continue to be in accordance with current U.S. GAAP Topic 840. For public companies, Topic 842 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Company established a task force, composed of multiple functional groups inside of the Company, which has substantially completed its objective of reviewing the critical components of the standard and implementing changes to systems and controls necessary to support the adoption of the new standard beginning with its first quarter ending March 31, 2019. The Company will adopt this guidance using the additional, optional transition method, the package of transitional practical expedients relating to the identification, classification and initial direct costs of leases commencing before the effective date of Topic 842, and the transitional practical expedient for the treatment of existing land easements; however, the Company will not elect the hindsight transitional practical expedient. The Company will make an accounting policy election to not apply recognition requirements of the guidance to short-term leases. The adoption of the new guidance will have a material impact on the total assets and liabilities reported on the Company’s consolidated balance sheet, and the Company estimates net right-of-use assets and lease liabilities to be approximately $1.9 billion and $2.0 billion, respectively, as of January 1, 2019. The difference between these amounts is primarily due to the accrual for straight-line rent expense. These estimates are based on the Company’s current lease portfolio and changes to the lease portfolio, including the total number of leases, lease commencement and end dates and lease termination expectations, as well as changes in anticipated lease discount rates, could impact these estimates. The Company expects to make an adjustment to opening “Retained Deficit” on the Consolidated Balance Sheet of approximately $1.4 million related to the adoption of this new guidance. The adoption of this new guidance will not have a material impact on the Company’s results of operations, cash flows, liquidity or the Company’s covenant compliance under its existing credit agreement. In March of 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). Under ASU 2016-09, several aspects of the accounting for share-based payment transactions, including tax consequence, classification of awards as equity or liabilities, and classification on the statement of cash flows, were changed. The Company adopted this guidance with its first quarter ending March 31, 2017. Upon adoption of ASU 2016-09, the Company elected to change its accounting policy to account for forfeitures as they occur; this change was applied using the modified retrospective transition method with a cumulative effect adjustment of $0.3 million to opening “Retained earnings” on the accompanying Consolidated Balance Sheet as of December 31, 2017. The Company applied the amendments related to the presentation of tax withholdings on the statement of cash flows using the retrospective transition method, which resulted in $0.6 million of tax withholdings being reclassified from “Net cash provided by operating activities” to “Net cash used in financing activities” on the accompanying Consolidated Statement of Cash Flows for the year ended December 31, 2016. The Company elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using the retrospective transition method, which resulted in $56.0 million of excess tax benefits related to share-based compensation being reclassified from “Net cash used in financing activities” to “Net cash provided by operating activities” in the accompanying Consolidated Statement of Cash Flows for the year ended December 31, 2016. ASU 2016-09 amendments related to accounting for excess tax benefits in the income statement were adopted prospectively, resulting in the reduction of $34.7 million and $48.7 million in “Provision for income taxes” in the accompanying Consolidated Statements of Income for the years ended December 31, 2018, and 2017, respectively. In June of 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Under ASU 2016-13, businesses and other organizations are required to present financial assets, measured at amortized costs basis, at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis, such as trade receivables. The measurement of expected credit loss will be based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. For public companies, ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2020. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In January of 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates the second step in the previous process for goodwill impairment testing; instead, the test is now a one-step process that calls for goodwill impairment loss to be measured as the excess of the reporting unit’s carrying amount over its fair value. For public companies, ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, and requires prospective adoption, with early adoption after January 1, 2017. The Company will adopt this guidance beginning with its first quarter ending March 31, 2019. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In August of 2018, the FASB issued ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within that reporting period, and allows for either retrospective or prospective adoption, with early adoption permitted. The Company early adopted this guidance with its third quarter ended September 30, 2018, using the prospective adoption method. The Company did not capitalize any implementation costs incurred in cloud computing arrangements that are service contracts subsequent to adoption, and therefore, the adoption of this new guidance did not impact the Company’s consolidated financial condition, results of operations or cash flows during the period. The Company does not expect that the application of this new guidance will have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. |
Fair Value Measurements |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | NOTE 2 – FAIR VALUE MEASUREMENTS Financial assets and liabilities measured at fair value on a recurring basis: The Company’s marketable securities were accounted for as trading securities and the carrying amount of its marketable securities were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. The Company recorded a decrease in fair value related to its marketable securities in the amount of $1.7 million for the year ended December 31, 2018, and an increase in the amount of $3.6 million for the year ended December 31, 2017, which were included in “Other income (expense)” on the accompanying Consolidated Statements of Income. The tables below identify the estimated fair value of the Company’s marketable securities, determined by reference to quoted market prices (Level 1), as of December 31, 2018 and 2017 (in thousands):
Non-financial assets and liabilities measured at fair value on a nonrecurring basis: Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired in a business combination or property and equipment that are determined to be impaired. As of December 31, 2018 and 2017, the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition. Fair value of financial instruments: The carrying amounts of the Company’s senior notes and unsecured revolving credit facility borrowings are included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair values as of December 31, 2018 and 2017, were determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands):
The carrying amount of the Company’s unsecured revolving credit facility approximates fair value, as borrowings under the facility bear variable interest at current market rates. See Note 5 for further information concerning the Company’s senior notes and unsecured revolving credit facility. The accompanying Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts receivable, amounts receivable from suppliers and accounts payable. Due to the short-term nature of these financial instruments, the Company believes that the carrying values of these instruments approximate their fair values. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | NOTE 3 – PROPERTY AND EQUIPMENT The following table identifies the types and balances of property and equipment included in “Property and equipment, at cost” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017, and includes the estimated useful lives for its types of property and equipment (in thousands, except original useful lives):
The Company recorded depreciation and amortization expense related to property and equipment in the amounts of $246.0 million, $232.7 million and $217.0 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. The Company recorded a charge of $11.4 million related to property and equipment for the year ended December 31, 2018, primarily due to the disposal of a software project that was no longer expected to provide a long-term benefit, which was included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. |
Goodwill and Other Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangibles | NOTE 4 – GOODWILL AND OTHER INTANGIBLES Goodwill: Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in business conditions indicate that impairment may exist. Goodwill is not amortizable for financial statement purposes. The Company did not record any goodwill impairment during the years ended December 31, 2018 or 2017. The carrying amount of the Company’s goodwill was included in “Goodwill” on the accompanying Consolidate Balance Sheets as of December 31, 2018 and 2017. During the year ended December 31, 2018 and 2017, the Company recorded an increase in goodwill of $18.2 million and $3.7 million, respectively, resulting from small acquisitions. The following table identifies the changes in goodwill for the years ended December 31, 2018 and 2017 (in thousands):
As of December 31, 2018 and 2017, other than goodwill, the Company did not have any indefinite-lived intangible assets. Intangibles other than goodwill: The following table identifies the components of the Company’s amortizable intangibles as of December 31, 2018 and 2017 (in thousands):
During the years ended December 31, 2018 and 2017, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amounts of $0.9 million and $0.2 million, respectively. The Company recorded favorable lease assets in conjunction with a previous acquisition; these favorable lease assets represent the values of operating leases acquired with favorable terms. These favorable leases had an estimated weighted-average remaining useful life of approximately 8.4 years as of December 31, 2018. For the years ended December 31, 2018, 2017 and 2016, the Company recorded amortization expense of $1.4 million, $1.6 million and $2.1 million, respectively, related to its amortizable intangible assets, which were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. The Company recorded unfavorable lease liabilities in conjunction with a previous acquisition; these unfavorable lease liabilities represent the values of operating leases acquired with unfavorable terms. These unfavorable leases had an estimated weighted-average remaining useful life of approximately 2.7 years as of December 31, 2018. For the years ended December 31, 2018, 2017 and 2016, the Company recognized an amortized benefit of $0.9 million, $1.5 million and $2.1 million, respectively, related to these unfavorable operating leases, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. The following table identifies the estimated amortization expense and benefit of the Company’s intangibles for each of the next five years as of December 31, 2018 (in thousands):
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Financing |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing | NOTE 5 – FINANCING The following table identifies the amounts of the Company’s financing facilities, which were included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017 (in thousands):
The following table identifies the principal maturities of the Company’s financing facilities as of December 31, 2018 (in thousands):
Unsecured revolving credit facility: On April 5, 2017, the Company entered into a credit agreement (the “Credit Agreement”). The Credit Agreement provides for a $1.2 billion unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by JPMorgan Chase Bank, N.A., which is scheduled to mature in April 2022. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $600 million, provided that the aggregate amount of the commitments does not exceed $1.8 billion at any time. As of December 31, 2018 and 2017, the Company had outstanding letters of credit, primarily to support obligations related to workers’ compensation, general liability and other insurance policies, in the amounts of $35.1 million and $36.8 million, respectively, reducing the aggregate availability under the Revolving Credit Facility by those amounts. Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at either an Alternate Base Rate or an Adjusted LIBO Rate (both as defined in the Credit Agreement) plus an applicable margin. Swing line loans made under the Revolving Credit Facility bear interest at an Alternate Base Rate plus the applicable margin for Alternate Base Rate loans. In addition, the Company pays a facility fee on the aggregate amount of the commitments under the Credit Agreement in an amount equal to a percentage of such commitments. The interest rate margins and facility fee are based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s Ratings Services, subject to limited exceptions. As of December 31, 2018, based upon the Company’s current credit ratings, its margin for Alternate Base Rate loans was 0.000%, its margin for Eurodollar Revolving Loans was 0.900% and its facility fee was 0.100%. The Credit Agreement contains certain covenants, including limitations on subsidiary indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, five-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 (subject to customary grace periods, cure rights and materiality thresholds) contained in the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. As of December 31, 2018, the Company remained in compliance with all covenants under the Credit Agreement. Senior notes: On May 17, 2018, the Company issued $500 million aggregate principal amount of unsecured 4.350% Senior Notes due 2028 (“4.350% Senior Notes due 2028”) at a price to the public of 99.732% of their face value with UMB Bank, N.A. (“UMB”) as trustee. Interest on the 4.350% Senior Notes due 2028 is payable on June 1 and December 1 of each year, which began on December 1, 2018, and is computed on the basis of a 360-day year. The Company has issued a cumulative $3.2 billion aggregate principal amount of unsecured senior notes, which are due between 2021 and 2028, with UMB as trustee. Interest on the senior notes, ranging from 3.550% to 4.875%, is payable semi-annually and is computed on the basis of a 360-day year. None of the Company’s subsidiaries is a guarantor under the senior notes. Each of the senior notes is subject to certain customary covenants, with which the Company complied as of December 31, 2018. |
Leasing |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leasing | NOTE 6 – LEASING The following table identifies the future minimum lease payments under all of the Company’s operating leases for each of the next five years and in the aggregate as of December 31, 2018 (in thousands):
See Note 12 for further information concerning the Company’s related party operating leases. Operating lease commitments: The Company leases certain office space, retail stores, property and equipment under long-term, non-cancelable operating leases. Most of these leases include renewal options and some include options to purchase, provisions for percentage rent based on sales and/or incremental step increase provisions. The future minimum lease payments under the Company’s operating leases, in the table above, do not include potential amounts for percentage rent or other operating lease related costs and have not been reduced by expected future minimum sublease income. Expected future minimum sublease income under non-cancelable subleases is approximately $15.6 million at December 31, 2018. The following table summarizes the net rent expense amounts for the years ended December 31, 2018, 2017 and 2016, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income (in thousands):
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Warranties |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranties | NOTE 7 – WARRANTIES The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. The following table identifies the changes in the Company’s aggregate product warranty liabilities for the years ended December 31, 2018 and 2017 (in thousands):
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Share Repurchase Program |
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Share repurchase program | NOTE 8 – SHARE REPURCHASE PROGRAM In January of 2011, the Company’s Board of Directors approved a 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. The Company’s Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on February 7, 2018, and November 13, 2018, the Company’s Board of Directors each time approved a resolution to increase the authorization amount under the share repurchase program by an additional $1.0 billion, resulting in a cumulative authorization amount of $11.8 billion. Each additional authorization is effective for a three-year period, beginning on its respective announcement date. The following table identifies shares of the Company’s common stock that have been repurchased as part of the Company’s publicly announced share repurchase program (in thousands, except per share data):
As of December 31, 2018, the Company had $1.0 billion remaining under its share repurchase program. Subsequent to the end of the year and through February 27, 2019, the Company repurchased an additional 0.8 million shares of its common stock under its share repurchase program, at an average price of $342.95, for a total investment of $268.9 million. The Company has repurchased a total of 73.1 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through February 27, 2019, at an average price of $150.73, for a total aggregate investment of $11.0 billion. |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | NOTE 9 – REVENUE The table below identifies the Company’s revenues disaggregated by major customer type for the years ended December 31, 2018, 2017 and 2016 (in thousands):
As of December 31, 2018 and 2017, the Company had recorded a deferred revenue liability of $4.3 million and $4.7 million, respectively, related to its loyalty program, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets. During the years ended December 31, 2018, 2017 and 2016, the Company recognized $15.9 million, $17.6 million and $12.7 million, respectively, of deferred revenue related to its loyalty program, which were included in “Sales” on the accompanying Consolidated Statements of Income. |
Share-Based Compensation and Benefit Plans |
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Share-based compensation and benefit plans | NOTE 10 – SHARE-BASED COMPENSATION AND 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 compensation includes stock option awards issued under the Company’s employee incentive plans and director stock plan, restricted stock awarded under the Company’s employee incentive plans and director stock plan and stock issued through the Company’s employee stock purchase plan. The table below identifies the shares that have been authorized for issuance and the shares available for future issuance under the Company plans, as of December 31, 2018 (in thousands):
Stock options: The Company’s employee incentive plans provide for the granting of stock options for the purchase of common stock of the Company to certain key employees of the Company. Employee stock 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. Employee stock options granted under the plans expire after ten years and typically vest 25% per year, over four years. The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period or minimum required service period. The table below identifies the employee stock option activity under these plans during the year ended December 31, 2018:
The Company’s director stock plan provides for the granting of stock options for the purchase of common stock of the Company to directors of the Company. Director stock 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 stock options granted under the plans expire after seven years and vest fully after six months. The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period or minimum required service period. As of December 31, 2018 and 2017, there were no director stock options outstanding under this plan. The fair value of each stock option award 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 the risk free rate, expected life, expected volatility and expected dividend yield.
The table below identifies the weighted-average assumptions used for stock options awarded by the Company during the years ended December 31, 2018, 2017 and 2016:
Upon adoption of ASU 2016-09, during the three months ended March 31, 2017, the Company elected to change its accounting policy to account for forfeitures as they occur; this change resulted in the calculation for forfeitures for the year ended December 31, 2016, not being altered or restated. Prior to the year ended December 31, 2017, the Company’s forfeiture rate was the estimated percentage of options awarded that were expected to be forfeited or canceled prior to becoming fully vested, and the estimate was evaluated periodically and was based upon historical experience at the time of evaluation and reduced expense ratably over the vesting period or the minimum required service period. The following table summarizes activity related to stock options awarded by the Company for the years ended December 31, 2018, 2017 and 2016:
At December 31, 2018, the remaining unrecognized compensation expense related to unvested stock option awards was $31.3 million, and the weighted-average period of time, over which this cost will be recognized, is 2.6 years. Restricted stock: The Company’s performance incentive plans provide for the award of shares of restricted stock to its corporate and senior management that vest evenly over a three-year period and are held in escrow until such vesting has occurred. Generally, unvested shares are forfeited when an employee ceases employment. The fair value of shares awarded under these plans is based on the closing market price of the Company’s common stock on the date of award and compensation expense is recorded over the vesting period or minimum required service period. The table below identifies employee restricted stock activity under these plans during the year ended December 31, 2018 (in thousands, except per share data):
The Company’s director stock plan provides for the award of shares of restricted stock to the directors of the Company that vest evenly over a three-year period and are held in escrow until such vesting has occurred. Unvested shares are forfeited when a director ceases their service on the Company’s Board of Directors for reasons other than death or retirement. The fair value of shares awarded under this plan is based on the closing market price of the Company’s common stock on the date of award, and compensation expense is recorded evenly over the minimum required service period. The table below identifies director restricted stock activity under this plan during the year ended December 31, 2018 (in thousands, except per share data):
The following table summarizes activity related to restricted stock awarded by the Company for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share data):
At December 31, 2018, the remaining unrecognized compensation expense related to unvested restricted share awards was $0.3 million, and the weighted-average period of time, over which this cost will be recognized, is 0.1 years. Employee stock purchase plan: The Company’s employee stock purchase plan (the “ESPP”) permits eligible employees to purchase shares of the Company’s common stock at 85% of the fair market value. Employees may authorize the Company to withhold up to 5% of their annual salary to participate in the plan. The fair value of shares issued under the ESPP is based on the average of the high and low market prices of the Company’s common stock during the offering periods. Compensation expense is recognized based on the discount between the grant-date fair value and the employee purchase price for the shares sold to employees. The table below summarizes activity related to the Company’s ESPP for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share data):
Profit sharing and savings plan: The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age and have completed one year of service. The Company makes matching contributions equal to 100% of the first 2% of each employee’s wages that are contributed and 25% of the next 4% of each employee’s wages that are contributed. An employee generally must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. The Company may also make additional discretionary profit sharing contributions to the plan on an annual basis as determined by the Board of Directors. The Company did not make any discretionary contributions to the 401(k) Plan during the years ended December 31, 2018, 2017 or 2016. The Company expensed matching contributions under the 401(k) Plan in the amounts of $24.8 million, $22.6 million and $20.6 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. Nonqualified deferred compensation plan: The Company sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitations under the Internal Revenue Code. The Deferred Compensation Plan provides these employees with the opportunity to defer the full 6% of matched compensation, including salary and incentive based compensation, that was precluded under the Company’s 401(k) Plan, which is then matched by the Company using the same formula as the 401(k) Plan. An employee generally must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The Company has an unsecured obligation to pay, in the future, the value of the deferred compensation and Company match, adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. The liability for compensation deferred under the Deferred Compensation Plan was $25.5 million and $25.7 million as of December 31, 2018 and 2017, respectively, which were included in “Other liabilities” on the Consolidated Balance Sheets. The Company expensed matching contributions under the Deferred Compensation Plan in the amount of $0.1 million for each of the years ended December 31, 2018, 2017 and 2016, which were primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. |
Commitments |
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Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | NOTE 11 – COMMITMENTS Construction commitments: As of December 31, 2018, the Company had construction commitments in the amount of $177.7 million. Letters of credit commitments: As of December 31, 2018, the Company had outstanding letters of credit, primarily to satisfy workers’ compensation, general liability and other insurance policies, in the amount of $35.1 million. See Note 5 for further information concerning the Company’s letters of credit commitments. Debt financing commitments: Each series of senior notes is 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 (i) 100% of the principal amount thereof or (ii) 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 at the applicable Treasury Yield plus basis points identified in the indenture governing such series of senior notes; provided, that on or after the date that is three months prior to the maturity date of the series of senior notes, such series of senior notes is redeemable at a redemption price equal to par 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 such series of senior notes, the holders may require the Company to repurchase all or a portion of their senior notes at a price equal to 101% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any, but not including the repurchase date. See Note 5 for further information concerning the Company’s debt financing commitments. Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure to this obligation. |
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Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related parties | NOTE 12 – RELATED PARTIES The Company leases certain land and buildings related to 74 of its O’Reilly Auto Parts stores under fifteen- or twenty-year operating lease agreements with entities that include one or more of the Company’s affiliated directors or members of an affiliated director’s immediate family. Generally, these lease agreements provide for renewal options for an additional five years at the option of the Company and the lease agreements are periodically modified to further extend the lease term for specific stores under the agreements. Lease payments under these operating leases totaled $4.6 million, $4.6 million and $4.5 million during the years ended December 31, 2018, 2017 and 2016, respectively. The Company believes that the lease agreements with the affiliated entities are on terms comparable to those obtainable from third parties. See Note 6 for further information concerning the Company’s operating leases. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | OTE 13 – INCOME TAXES Deferred income tax assets and liabilities: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and also include the tax effect of carryforwards. The following table identifies significant components of the Company’s net deferred tax liabilities included in “Deferred income taxes” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017 (in thousands):
Provision for income taxes: The following tables reconcile the amounts included in “Provision for income taxes” on the accompanying Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016 (in thousands):
The following table outlines the reconciliation of the “Provision for income taxes” amounts included on the accompanying Consolidated Statements of Income to the amounts computed at the federal statutory rate for the years ended December 31, 2018, 2017 and 2016 (in thousands):
As a result of the adoption of ASU 2016-09, during the three months ended March 31, 2017, the excess tax benefit associated with the exercise of non-qualified stock options has been included in “Provision for income taxes” on the accompanying Consolidated Statements of Income beginning with the year ended December 31, 2017. Prior to the year ended December 31, 2017, the excess tax benefit associated with the exercise of non-qualified stock options was included in “Additional paid-in capital” on the accompanying Consolidated Balance Sheets. The U.S. Tax Cuts and Jobs Act, enacted in December 2017 (the “Tax Act”), significantly reduced the federal corporate income tax rate for tax years beginning in 2018 and required the Company to revalue its deferred income tax liabilities. The Company recorded a one-time tax benefit of $53.2 million in “Provision for income taxes” on the accompanying Consolidated Statements of Income for the year ended December 31, 2017, to reflect the reduced federal corporate income tax rate in the tax years the deferred tax differences are expected to reverse. This provisional tax benefit from the revaluation of the Company’s deferred income tax liabilities was recorded based on the Company’s initial evaluation of the impact of the Tax Act. During the year ended December 31, 2018, the Company completed its evaluation of the impact of the Tax Act and recorded an additional $1.3 million of tax benefit, finalizing the revaluation of its deferred income tax liabilities due to the Tax Act, which was recorded in “Provision for income taxes” on the accompanying Consolidated Statements of Income for the year ended December 31, 2018. As of December 31, 2018, the Company had tax credit carryforwards available for state tax purposes, net of federal impact, in the amount of $5.6 million, which generally expire in 2024. Unrecognized tax benefits: The following table summarizes the changes in the gross amount of unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2018, 2017 and 2016 (in thousands):
For the years ended December 31, 2018, 2017 and 2016, the Company recorded a reserve for unrecognized tax benefits, including interest and penalties, in the amounts of $38.9 million, $40.9 million and $40.6 million, respectively. All of the unrecognized tax benefits recorded as of December 31, 2018, 2017 and 2016, respectively, would affect the Company’s effective tax rate if recognized, generally net of the federal tax effect of approximately $8.2 million. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2018, 2017 and 2016, the Company had accrued approximately $5.1 million, $5.5 million and $5.8 million, respectively, of interest and penalties related to uncertain tax positions before the benefit of the deduction for interest on state and federal returns. During the years ended December 31, 2018, 2017 and 2016, the Company recorded tax expense related to an increase in its liability for interest and penalties in the amounts of $2.3 million, $2.0 million and $2.4 million, respectively. Although unrecognized tax benefits for individual tax positions may increase or decrease during 2019, the Company expects a reduction of $8.1 million of unrecognized tax benefits during the one-year period subsequent to December 31, 2018, resulting from settlement or expiration of the statute of limitations. The Company’s United States federal income tax returns for tax years 2015 and beyond remain subject to examination by the Internal Revenue Service (“IRS”). The IRS concluded an examination of the O’Reilly consolidated 2014, 2015 and 2016 federal income tax returns in the third quarter of 2018. The Company’s state income tax returns remain subject to examination by various state authorities for tax years ranging from 2007 through 2017. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | NOTE 14 – EARNINGS PER SHARE The following table illustrates the computation of basic and diluted earnings per share for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share data):
Subsequent to the end of the year and through February 27, 2019, the Company repurchased 0.8 million shares of its common stock, at an average price of $342.95, for a total investment of $268.9 million. |
Quarterly Results (Unaudited) |
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Quarterly results (unaudited) | NOTE 15 – QUARTERLY RESULTS (Unaudited) The following tables set forth certain quarterly unaudited operating data for the fiscal years ended December 31, 2018 and 2017. The unaudited quarterly information includes all adjustments, which the Company considers necessary for a fair presentation of the information shown (in thousands, except per share data):
The unaudited operating data presented above should be read in conjunction with the Company’s consolidated financial statements and related notes, and the other financial information included therein. |
Schedule II - Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - valuation and qualifying accounts | O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
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Summary of Significant Accounting Policies (Policy) |
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Policy Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Nature of business | Nature of business: O’Reilly Automotive, Inc. and its subsidiaries, collectively, “O’Reilly” or the “Company,” is a specialty retailer and supplier of automotive aftermarket parts. The Company’s stores carry an extensive product line, including new and remanufactured automotive hard parts, maintenance items and various automotive accessories. As of December 31, 2018, the Company owned and operated 5,219 stores in 47 states, servicing both do-it-yourself (“DIY”) and the professional service provider customers. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett Auto Supply, Inc. and its affiliates, including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018. The Company’s robust distribution system provides stores with same-day or overnight access to an extensive inventory of hard-to-find items not typically stocked in the stores of other auto parts retailers. |
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Segment reporting | Segment reporting: The Company is managed and operated by a single management team reporting to the chief operating decision maker. O’Reilly stores have similar characteristics, including the nature of the products and services, the type and class of customers and the methods used to distribute products and provide service to its customers and, as a whole, make up a single operating segment. The Company does not prepare discrete financial information with respect to product lines, types of customers or geographic locations and as such has one reportable segment. |
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Principles of consolidation | Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. |
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Use of estimates | Use of estimates: The preparation of the consolidated financial statements, in conformity with United States generally accepted accounting principles (“GAAP”), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. |
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Cash equivalents | Cash equivalents: Cash equivalents include investments with maturities of 90 days or less on the date of purchase. |
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Accounts receivable | Accounts receivable: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable. Amounts due to the Company from its Team Members are included in “Accounts receivable” on the accompanying Consolidated Balance Sheets. These amounts consist primarily of purchases of merchandise on Team Member accounts. Accounts receivable due from Team Members was approximately $1.1 million and $0.9 million as of December 31, 2018 and 2017, respectively. The Company grants credit to certain customers who meet the Company’s pre-established credit requirements. Concentrations of credit risk with respect to these receivables are limited because the Company’s customer base consists of a large number of small customers, spreading the credit risk across a broad base. The Company also controls this credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures. Generally, the Company does not require security when credit is granted to customers. Credit losses are provided for in the Company’s consolidated financial statements and have consistently been within management’s expectations. |
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Amounts receivable from suppliers | Amounts receivable from suppliers: The Company receives concessions from its suppliers through a variety of programs and arrangements, including allowances for new stores and warranties, volume purchase rebates and co-operative advertising. Co-operative advertising allowances that are incremental to the Company’s advertising program, specific to a product or event and identifiable for accounting purposes are reported as a reduction of advertising expense in the period in which the advertising occurred. All other supplier concessions are recognized as a reduction to the cost of sales. Amounts receivable from suppliers also include amounts due to the Company for changeover merchandise and product returns. The Company regularly reviews supplier receivables for collectability and assesses the need for a reserve for uncollectable amounts based on an evaluation of the Company’s suppliers’ financial positions and corresponding abilities to meet financial obligations. |
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Inventory | Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories and tools, is stated at the lower of cost or market. Inventory also includes capitalized costs related to procurement, warehousing and distribution centers (“DC”s). Cost has been determined using the last-in, first-out (“LIFO”) method, which more accurately matches costs with related revenues. Over time, as the Company’s merchandise inventory purchases have increased, the Company negotiated improved acquisition costs from its suppliers and the corresponding price deflation exhausted the Company’s LIFO reserve balance. The Company’s policy is to not write up the value of its inventory in excess of its replacement cost, and accordingly, the Company’s merchandise inventory has been effectively recorded at replacement cost since December 31, 2013. |
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Fair value of financial instruments | Fair value of financial instruments: 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:
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Property and equipment | Property and equipment: Property and equipment are carried at cost. Depreciation is calculated using the straight-line method, generally over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the estimated economic life of the assets. The lease term includes renewal options determined by management at lease inception, for which failure to execute renewal options would result in a substantial economic penalty to the Company. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is recognized in the Company’s Consolidated Statements of Income. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. |
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Goodwill and other intangibles | Goodwill and other intangibles: The accompanying Consolidated Balance Sheets at December 31, 2018 and 2017, include goodwill and other intangible assets recorded as the result of acquisitions. The Company reviews goodwill for impairment annually during the fourth quarter, or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. During 2018 and 2017, the goodwill impairment test included a quantitative assessment, which compared the fair value of the reporting unit to its carrying amount, including goodwill. The Company operates as a single reporting unit, and the Company determined that its fair value exceeded its carrying value, including goodwill, as of December 31, 2018 and 2017; as such, no goodwill impairment adjustment was required as of December 31, 2018 and 2017. Finite-lived intangibles are carried at cost and amortization is calculated using the straight-line method, generally over the estimated useful lives of the intangibles. |
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Impairment of long-lived assets | Impairment of long-lived assets: The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset (asset group) with the carrying amounts of the asset. If the undiscounted expected future cash flows are less than the carrying value of the assets, the Company measures the amount of impairment loss as the amount, by which the carrying amount of the assets exceeds the fair value of the assets. |
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Valuation of investments | Valuation of investments: The Company has an unsecured obligation to pay, in the future, the value of deferred compensation and a Company match relating to employee participation in the Company’s nonqualified deferred compensation plan (the “Deferred Compensation Plan”). The future obligation is adjusted to reflect the performance, whether positive or negative, of selected investment measurement options, chosen by each participant. The Company invests in various marketable securities with the intention of selling these securities to fulfill its future obligations under the Deferred Compensation Plan. The investments in this plan were stated at fair value based on quoted market prices, were accounted for as trading securities and were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017. |
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Self-insurance reserves | Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure. The Company estimates its self-insurance liabilities by considering a number of factors, including historical claims experience and trend-lines, projected medical and legal inflation, growth patterns and exposure forecasts. |
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Warranties | Warranties: The Company offers warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company, in lieu of warranty obligations and estimated warranty expense, are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. |
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Litigation reserves | Litigation accruals: O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company accrues for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably estimate the probable loss. The Company accrues for an estimate of material legal costs to be incurred in pending litigation matters. 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 accruals, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period. |
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Share repurchases | Share repurchases: In January of 2011, the Company’s Board of Directors approved a 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. All shares repurchased under the share repurchase program are retired and recorded under the par value method on the accompanying Consolidated Balance Sheets. |
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Revenue recognition | Revenue recognition: The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for transferring goods to the customer. Generally, the Company’s performance obligations are satisfied when the customer takes possession of the merchandise, which normally occurs immediately at the point of sale or through same day delivery of the merchandise. All sales are recorded net of estimated returns allowances, discounts and taxes. The company does not recognize revenue related to product warranties, as these are considered assurance warranty obligations. See the new recent accounting pronouncements section for information regarding the adoption implementation of Accounting Standard Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” Over-the-counter retail sales to do-it-yourself (“DIY”) customers are recorded when the customer takes possession of the merchandise. Internet retail sales, included in sales to DIY customers, are recorded when the merchandise is shipped or when the customer picks up the merchandise at a store. Sales to professional service provider customers, also referred to as “commercial sales,” are recorded upon same-day delivery of the merchandise to the customer, generally at the customer’s place of business. Other sales and sales adjustments primarily includes sales to Team Members, wholesale sales to other retailers (“jobber sales”), equipment sales, discounts, rebates, deferred revenue adjustments relating to the Company’s retail loyalty program and adjustments to estimated sales returns allowances. Sales to Team Members are recorded when the Team Member takes possession of the merchandise. Jobber sales are recorded upon shipment of the merchandise from a regional distribution center with same-day delivery to the jobber customer’s location. The Company maintains a retail loyalty program named O’Reilly O’Rewards, which represents a performance obligation. The Company records a deferred revenue liability, based on a breakage adjusted, estimated redemption rate, and a corresponding reduction in revenue in periods when loyalty points are earned by members. The Company recognizes revenue and a corresponding reduction to the deferred revenue liability in periods when loyalty program issued coupons are redeemed by members, generally within a period of three months from issuance, or when unredeemed points expire, generally within 12 months after the date they were earned, which satisfies the Company’s performance obligation. |
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Cost of goods sold and selling, general and administrative expenses | Cost of goods sold and selling, general and administrative expenses: The following table illustrates the primary costs classified in each major expense category:
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Operating leases | Operating leases: The Company recognizes rent expense on a straight-line basis over the lease terms of its stores, DCs and corporate offices. Generally, the lease term for stores and corporate offices is the base lease term and the lease term for DCs includes the base lease term plus certain renewal option periods, for which renewal is reasonably assured and failure to exercise the renewal option would result in a significant economic penalty. The Company’s policy is to amortize leasehold improvements associated with the Company’s operating leases over the lesser of the lease term or the estimated economic life of those assets. |
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Advertising expenses | Advertising expenses: Advertising expense consists primarily of expenses related to the Company’s integrated marketing program, which includes radio, in-store, digital and social media promotions, as well as sports and event sponsorships and direct mail and newspaper promotional distribution. The Company expenses advertising costs as incurred. The Company also participates in cooperative advertising arrangements with certain of its suppliers. |
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Share-based compensation and benefit plans | Share-based compensation and benefit plans: The Company sponsors employee share-based benefit plans and employee and director share-based compensation plans. The Company recognizes compensation expense over the requisite service period for its share-based plans based on the fair value of the awards on the date of the grant, award or issuance. Share-based plans include stock option awards issued under the Company’s employee incentive plans and director stock plan, stock issued through the Company’s employee stock purchase plan and restricted stock awarded to employees and directors through other compensation plans. |
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Pre-opening expenses | Pre-opening expenses: Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income as incurred. Costs associated with the opening of new distribution centers, which consist primarily of payroll and occupancy costs, are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income as incurred. |
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Interest expense | Interest expense: The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on its long-term borrowings. Total interest costs capitalized for the years ended December 31, 2018, 2017 and 2016, were $9.1 million, $8.5 million and $7.9 million, respectively, which were included in “Interest expense” on the accompanying Consolidated Statements of Income. In conjunction with the issuance or amendment of long-term debt instruments, the Company incurs various costs, including debt registration fees, accounting and legal fees and underwriter and book runner fees. Debt issuance costs related to the Company’s long-term unsecured senior notes are recorded as a reduction of the principal amount of the corresponding unsecured senior notes. Debt issuance costs related to the Company’s unsecured revolving credit facility are recorded as an asset. These debt issuance costs have been deferred and are being amortized over the term of the corresponding debt instrument and the amortization expense is included in “Interest expense” on the accompanying Consolidated Statements of Income. Deferred debt issuance costs totaled $17.1 million and $15.9 million, net of accumulated amortization, as of December 31, 2018 and 2017, respectively, of which $1.5 million and $2.0 million were included in “Other assets, net” as of December 31, 2018 and 2017, respectively, with the remainder included in “Long-term debt” on the accompanying Consolidated Balance Sheets. The Company issued its long-term unsecured senior notes at a discount. The original issuance discounts on the senior notes are recorded as a reduction of the principal amount of the corresponding senior notes and are accreted over the term of the applicable senior note, with the accretion expense included in “Interest expense” on the accompanying Consolidated Statements of Income. |
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Income taxes | Income taxes: The Company accounts for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the GAAP basis and tax basis of assets and liabilities using enacted tax rules and rates currently scheduled to be in effect for the year in which the differences are expected to reverse. Tax carry forwards are also recognized in deferred tax assets and liabilities under this method. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date. The Company would record a valuation allowance against deferred tax assets to the extent it is more likely than not the amount will not be realized, based upon evidence available at the time of the determination and any change in the valuation allowance is recorded in the period of a change in such determination. The Company did not establish a valuation allowance for deferred tax assets as of December 31, 2018 and 2017, as it was considered more likely than not that deferred tax assets were realizable through a combination of future taxable income, the realization of deferred tax liabilities and tax planning strategies. The Company invests in certain tax credit funds that promote renewable energy. These investments generate a return primarily through the realization of federal tax credits and other tax benefits. The Company accounts for its renewable energy investments using the deferral method. Under this method, realized investment tax credits are recognized as a reduction of the renewable energy investments. The Company regularly reviews its potential tax liabilities for tax years subject to audit. The amount of such liabilities is based on various factors, such as differing interpretations of tax regulations by the responsible tax authority, experience with previous tax audits and applicable tax law rulings. In management’s opinion, adequate provisions for income taxes have been made for all years presented. The estimates of the Company’s potential tax liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company’s various tax positions and actual results could differ from estimates. |
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Earnings per share | Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the fiscal period. Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the common stock equivalents associated with the potential impact of dilutive stock options. Certain common stock equivalents that could potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been antidilutive. Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds the market price of the common shares. |
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New accounting pronouncements | New accounting pronouncements: In May of 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” now codified in the Accounting Standards Codification (“Topic 606”). Under Topic 606, an entity is required to follow a five-step process to determine the amount of revenue to recognize when promised goods or services are transferred to customers. Topic 606 offers specific accounting guidance for costs to obtain or fulfill a contract with a customer. In addition, an entity is required to disclose sufficient information to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted this guidance using the modified retrospective transition method with its first quarter ended March 31, 2018. Results of the year ended December 31, 2018, were presented under Topic 606, while amounts in prior periods were not adjusted and continue to be reported under the accounting standard in effect for the prior periods. The adoption of Topic 606 did not have a material impact on the Company’s business process, internal controls, systems, consolidated financial condition, results of operations or cash flows; as such, a cumulative effective adjustment was not recorded to opening retained earnings. In February of 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In July of 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvement” (“ASU 2018-11”), to provide an additional, optional transition method for adopting ASU 2016-02, which allows for an entity to choose to apply the new lease standard at adoption date and recognize a cumulative-effective adjustment to the opening balance of retained earnings in the period of adoption, while comparative periods presented will continue to be in accordance with current U.S. GAAP Topic 840. For public companies, Topic 842 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Company established a task force, composed of multiple functional groups inside of the Company, which has substantially completed its objective of reviewing the critical components of the standard and implementing changes to systems and controls necessary to support the adoption of the new standard beginning with its first quarter ending March 31, 2019. The Company will adopt this guidance using the additional, optional transition method, the package of transitional practical expedients relating to the identification, classification and initial direct costs of leases commencing before the effective date of Topic 842, and the transitional practical expedient for the treatment of existing land easements; however, the Company will not elect the hindsight transitional practical expedient. The Company will make an accounting policy election to not apply recognition requirements of the guidance to short-term leases. The adoption of the new guidance will have a material impact on the total assets and liabilities reported on the Company’s consolidated balance sheet, and the Company estimates net right-of-use assets and lease liabilities to be approximately $1.9 billion and $2.0 billion, respectively, as of January 1, 2019. The difference between these amounts is primarily due to the accrual for straight-line rent expense. These estimates are based on the Company’s current lease portfolio and changes to the lease portfolio, including the total number of leases, lease commencement and end dates and lease termination expectations, as well as changes in anticipated lease discount rates, could impact these estimates. The Company expects to make an adjustment to opening “Retained Deficit” on the Consolidated Balance Sheet of approximately $1.4 million related to the adoption of this new guidance. The adoption of this new guidance will not have a material impact on the Company’s results of operations, cash flows, liquidity or the Company’s covenant compliance under its existing credit agreement. In March of 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). Under ASU 2016-09, several aspects of the accounting for share-based payment transactions, including tax consequence, classification of awards as equity or liabilities, and classification on the statement of cash flows, were changed. The Company adopted this guidance with its first quarter ending March 31, 2017. Upon adoption of ASU 2016-09, the Company elected to change its accounting policy to account for forfeitures as they occur; this change was applied using the modified retrospective transition method with a cumulative effect adjustment of $0.3 million to opening “Retained earnings” on the accompanying Consolidated Balance Sheet as of December 31, 2017. The Company applied the amendments related to the presentation of tax withholdings on the statement of cash flows using the retrospective transition method, which resulted in $0.6 million of tax withholdings being reclassified from “Net cash provided by operating activities” to “Net cash used in financing activities” on the accompanying Consolidated Statement of Cash Flows for the year ended December 31, 2016. The Company elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using the retrospective transition method, which resulted in $56.0 million of excess tax benefits related to share-based compensation being reclassified from “Net cash used in financing activities” to “Net cash provided by operating activities” in the accompanying Consolidated Statement of Cash Flows for the year ended December 31, 2016. ASU 2016-09 amendments related to accounting for excess tax benefits in the income statement were adopted prospectively, resulting in the reduction of $34.7 million and $48.7 million in “Provision for income taxes” in the accompanying Consolidated Statements of Income for the years ended December 31, 2018, and 2017, respectively. In June of 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Under ASU 2016-13, businesses and other organizations are required to present financial assets, measured at amortized costs basis, at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis, such as trade receivables. The measurement of expected credit loss will be based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. For public companies, ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2020. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In January of 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates the second step in the previous process for goodwill impairment testing; instead, the test is now a one-step process that calls for goodwill impairment loss to be measured as the excess of the reporting unit’s carrying amount over its fair value. For public companies, ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, and requires prospective adoption, with early adoption after January 1, 2017. The Company will adopt this guidance beginning with its first quarter ending March 31, 2019. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In August of 2018, the FASB issued ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019, and interim periods within that reporting period, and allows for either retrospective or prospective adoption, with early adoption permitted. The Company early adopted this guidance with its third quarter ended September 30, 2018, using the prospective adoption method. The Company did not capitalize any implementation costs incurred in cloud computing arrangements that are service contracts subsequent to adoption, and therefore, the adoption of this new guidance did not impact the Company’s consolidated financial condition, results of operations or cash flows during the period. The Company does not expect that the application of this new guidance will have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. |
Summary of Significant Accounting Policies (Tables) |
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Components of self-insurance reserves |
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Fair Value Measurements (Tables) |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation of marketable securities |
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Valuation of senior notes |
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Property and Equipment (Tables) |
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Property and equipment, including original useful lives |
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Goodwill and Other Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in goodwill |
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Amortizable intangibles |
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Estimated net amortization of intangibles |
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Financing (Tables) |
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Outstanding financing facilities |
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Principle maturities of financing facilities |
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Leasing (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum lease payments for operating leases |
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Schedule of net rent expense |
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Warranties (Tables) |
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Product warranty liabilities |
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Share Repurchase Program (Tables) |
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Schedule of shares repurchased |
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Revenue (Tables) |
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Disaggregation of revenue |
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Share-Based Compensation and Benefit Plans (Tables) |
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Summary of shares authorized and available for future issuance under compensation and benefit plans |
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Summary of activity of share-based compensation and benefit plans |
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Summary of ESPP plan activity |
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Employee [Member] | Restricted stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Benefit Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock |
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Director [Member] | Restricted stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Benefit Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock |
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Stock option [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Benefit Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Black-Scholes option pricing model |
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Summary of activity of share-based compensation and benefit plans |
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Stock option [Member] | Employee stock option [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation and Benefit Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock options |
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deferred tax assets and liabilities |
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Schedule of components of the provision for income taxes |
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Reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate |
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Summary of changes in gross amount of unrecognized tax benefits, excluding interest and penalties |
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted earnings per share |
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Quarterly Results (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly operating data (unaudited) |
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Schedule II - Valuation and Qualifying Accounts (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and qualifying accounts |
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Summary of Significant Accounting Policies (Components of Self-Insurance Reserves) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Policy Text Block [Abstract] | ||
Self-insurance reserves (undiscounted) | $ 157,538 | $ 147,664 |
Self-insurance reserves (discounted) | $ 146,718 | $ 137,970 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
(Decrease) increase in fair value of marketable securities | $ (1,700) | $ 3,600 |
Non-financial assets and liabilities measured at fair value on a nonrecurring basis | $ 0 | $ 0 |
Fair Value Measurements (Fair Value of Marketable Securities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 25,493 | $ 25,706 |
Fair value, inputs, Level 1 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | 25,493 | 25,706 |
Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | 0 | 0 |
Fair value, inputs, Level 3 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 0 | $ 0 |
Fair Value Measurements (Fair Value of Senior Notes) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Measurements | ||
Carrying amount of senior notes | $ 3,130,122 | $ 2,632,390 |
Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | $ 3,116,046 | $ 2,728,167 |
Property and Equipment (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property and Equipment | |||
Depreciation and amortization expense | $ 258,937 | $ 233,845 | $ 217,866 |
Impairment of long-lived assets | 11,400 | 0 | |
Property and equipment [Member] | |||
Property and Equipment | |||
Depreciation and amortization expense | $ 246,000 | $ 232,700 | $ 217,000 |
Goodwill and Other Intangibles (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill and Other Intangibles | |||
Increase in Goodwill | $ 18,202 | $ 3,659 | |
Goodwill impairment | 0 | 0 | |
Increase in non-compete agreements | 900 | 200 | |
Indefinite-lived intangible assets, other than goodwill | 0 | 0 | |
Amortization expense of amortizable intangible assets | $ 1,400 | 1,600 | $ 2,100 |
Favorable Leases [Member] | |||
Goodwill and Other Intangibles | |||
Weighted-average remaining useful life of favorable leases | 8 years 4 months 24 days | ||
Unfavorable Leases [Member] | |||
Goodwill and Other Intangibles | |||
Weighted-average remaining useful life of unfavorable leases | 2 years 7 months 27 days | ||
Amortization benefit of unfavorable operating leases | $ 900 | $ 1,500 | $ 2,100 |
Goodwill and Other Intangibles (Changes in Net Goodwill) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning balance | $ 789,058 | $ 785,399 |
Change in goodwill | 18,202 | 3,659 |
Goodwill, ending balance | $ 807,260 | $ 789,058 |
Goodwill and Other Intangibles (Amortizable Intangibles) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortizable Intangibles | ||
Amortizable intangible assets, cost | $ 21,687 | $ 24,351 |
Amortizable intangible assets, accumulated amortization expense | (13,243) | (14,959) |
Net amortizable intangible assets | 8,444 | 9,392 |
Favorable Leases [Member] | ||
Amortizable Intangibles | ||
Amortizable intangible assets, cost | 18,930 | 22,500 |
Amortizable intangible assets, accumulated amortization expense | (12,564) | (14,495) |
Net amortizable intangible assets | 6,366 | 8,005 |
Non-compete Agreements [Member] | ||
Amortizable Intangibles | ||
Amortizable intangible assets, cost | 2,757 | 1,851 |
Amortizable intangible assets, accumulated amortization expense | (679) | (464) |
Net amortizable intangible assets | 2,078 | 1,387 |
Unfavorable Leases [Member] | ||
Amortizable Intangibles | ||
Amortizable intangibles, cost | 10,180 | 14,470 |
Amortizable intangibles, accumulated amortization benefit | 8,486 | 11,853 |
Net amortizable intangibles | $ 1,694 | $ 2,617 |
Goodwill and Other Intangibles (Estimated Amortization of Intangibles) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 amortization expense | $ (1,483) |
2020 amortization expense | (1,306) |
2021 amortization expense | (1,078) |
2022 amortization expense | (961) |
2023 amortization expense | (787) |
Total amortization expense | (5,615) |
2019 amortization benefit | 713 |
2020 amortization benefit | 541 |
2021 amortization benefit | 389 |
2022 amortization benefit | 51 |
2023 amortization benefit | 0 |
Total amortization benefit | 1,694 |
2019 amortization, net | (770) |
2020 amortization, net | (765) |
2021 amortization, net | (689) |
2022 amortization, net | (910) |
2023 amortization, net | (787) |
Total amortization, net | $ (3,921) |
Financing (Unsecured Revolving Credit Facility) (Narrative) (Details) - Line of credit facility [Member] - Unsecured debt [Member] - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Unsecured Revolving Credit Facility | ||
Credit agreement description | On April 5, 2017, the Company entered into a credit agreement (the “Credit Agreement”). The Credit Agreement provides for a $1.2 billion unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by JPMorgan Chase Bank, N.A., which is scheduled to mature in April 2022. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $600 million, provided that the aggregate amount of the commitments does not exceed $1.8 billion at any time. | |
Credit agreement inception date | Apr. 05, 2017 | |
Current maximum borrowing capacity under credit facility | $ 1,200.0 | |
Line of credit facility expiration date | Apr. 05, 2022 | |
Maximum aggregate increase to credit facility allowable | $ 600.0 | |
Maximum aggregate capacity of credit facility allowable | 1,800.0 | |
Letters of credit | $ 35.1 | $ 36.8 |
Line of credit facility fee percentage | 0.10% | |
Covenant description for debt instrument | The Credit Agreement contains certain covenants, including limitations on subsidiary indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, five-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 (subject to customary grace periods, cure rights and materiality thresholds) contained in the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. | |
Line of credit facility covenant compliance | As of December 31, 2018, the Company remained in compliance with all covenants under the Credit Agreement. | |
Spread over Alternate Base rate [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit current interest rate | 0.00% | |
Spread over Eurodollar Revolving rate [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit current interest rate | 0.90% | |
Through maturity [Member] | ||
Unsecured Revolving Credit Facility | ||
Minimum debt instrument consolidated fixed charge coverage ratio covenant | 250.00% | |
Maximum debt instrument consolidated leverage ratio covenant | 350.00% | |
Letter of credit [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit facility sublimit | $ 200.0 | |
Swing line revolver [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit facility sublimit | $ 75.0 |
Financing (Senior Notes) (Narrative) (Details) $ in Millions |
12 Months Ended | |
---|---|---|
May 17, 2018
USD ($)
d
Rate
|
Dec. 31, 2018
USD ($)
d
Rate
|
|
Financing | ||
Unsecured senior notes description | The Company has issued a cumulative $3.2 billion aggregate principal amount of unsecured senior notes, which are due between 2021 and 2028, with UMB as trustee. Interest on the senior notes, ranging from 3.550% to 4.875%, is payable semi-annually and is computed on the basis of a 360-day year. None of the Company’s subsidiaries is a guarantor under the senior notes. | |
Debt instrument covenant description | Each of the senior notes is subject to certain customary covenants, with which the Company complied as of December 31, 2018. | |
Senior notes [Member] | ||
Financing | ||
Number of days in annual interest calculation period | d | 360 | |
Aggregate principle of unsecured senior notes | $ | $ 3,200 | |
Minimum [Member] | Senior notes [Member] | ||
Financing | ||
Interest rate of senior notes | 3.55% | |
Senior notes maturity, year | 2021 | |
Maximum [Member] | Senior notes [Member] | ||
Financing | ||
Interest rate of senior notes | 4.875% | |
Senior notes maturity, year | 2028 | |
$500 million, 4.350% Senior Notes due 2028 [Member] | Senior notes [Member] | ||
Financing | ||
Issuance date of senior notes | May 17, 2018 | |
Face amount of senior notes | $ | $ 500 | $ 500 |
Interest rate of senior notes | 4.35% | 4.35% |
Senior notes maturity, year | 2028 | 2028 |
Percentage of face value of debt instrument | 99.732% | |
Number of days in annual interest calculation period | d | 360 |
Financing Financing (Principal Maturities of Financing Facilities) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Maturities of Long-term Debt [Abstract] | |
2019 principal maturities of financing facilities scheduled | $ 0 |
2020 principal maturities of financing facilities scheduled | 0 |
2021 principal maturities of financing facilities scheduled | 800,000 |
2022 principal maturities of financing facilities scheduled | 587,000 |
2023 principal maturities of financing facilities scheduled | 300,000 |
Principal maturities of financing facilities scheduled thereafter | 1,750,000 |
Total principal maturities of financing facilities | $ 3,437,000 |
Leasing (Narrative) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Leases [Abstract] | |
Description of lessee leasing arrangements, operating lease commitments | The Company leases certain office space, retail stores, property and equipment under long-term, non-cancelable operating leases. Most of these leases include renewal options and some include options to purchase, provisions for percentage rent based on sales and/or incremental step increase provisions. |
Future minimum sublease income under non-cancelable subleases | $ 15.6 |
Leasing (Future Minimum Lease Payments for Operating Leases) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Leases | |
2019 minimum lease payment | $ 309,743 |
2020 minimum lease payment | 292,868 |
2021 minimum lease payment | 264,223 |
2022 minimum lease payment | 239,156 |
2023 minimum lease payment | 208,451 |
Minimum lease payment thereafter | 1,114,603 |
Total minimum lease payment | 2,429,044 |
Related parties [Member] | |
Leases | |
2019 minimum lease payment | 4,682 |
2020 minimum lease payment | 3,896 |
2021 minimum lease payment | 3,429 |
2022 minimum lease payment | 2,671 |
2023 minimum lease payment | 2,448 |
Minimum lease payment thereafter | 3,515 |
Total minimum lease payment | 20,641 |
Non-related parties [Member] | |
Leases | |
2019 minimum lease payment | 305,061 |
2020 minimum lease payment | 288,972 |
2021 minimum lease payment | 260,794 |
2022 minimum lease payment | 236,485 |
2023 minimum lease payment | 206,003 |
Minimum lease payment thereafter | 1,111,088 |
Total minimum lease payment | $ 2,408,403 |
Leasing (Net Rent Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Operating Leases, Rent Expense, Net [Abstract] | |||
Minimum operating lease expense | $ 305,613 | $ 289,245 | $ 273,559 |
Contingent rents | 806 | 1,049 | 892 |
Other lease related occupancy costs | 14,449 | 12,478 | 13,241 |
Total rent expense | 320,868 | 302,772 | 287,692 |
Less: sublease income | 3,585 | 4,158 | 4,439 |
Net rent expense | $ 317,283 | $ 298,614 | $ 283,253 |
Warranties (Product Warranty Liabilities) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Product Warranties Disclosures [Abstract] | ||
Warranty liabilities, beginning balance | $ 44,398 | $ 36,623 |
Warranty claims | (89,557) | (79,660) |
Warranty accruals | 97,379 | 87,435 |
Warranty liabilities, ending balance | $ 52,220 | $ 44,398 |
Share Repurchase Program (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
2 Months Ended | 12 Months Ended | 98 Months Ended | |||
---|---|---|---|---|---|---|
Nov. 13, 2018 |
Feb. 07, 2018 |
Feb. 27, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Feb. 27, 2019 |
|
Share Repurchase Program | ||||||
Increase in authorized amount | $ 1,000,000 | $ 1,000,000 | ||||
Cumulative authorized amount | $ 11,800,000 | |||||
Authorization effective period | 3 years | 3 years | ||||
Remaining balance under share repurchase program | $ 1,000,000 | |||||
Common stock repurchased, shares | 6,061 | 9,301 | ||||
Common stock repurchased, average price per share | $ 282.80 | $ 233.57 | ||||
Common stock repurchased, value | $ 1,713,953 | $ 2,172,437 | ||||
Subsequent event [Member] | ||||||
Share Repurchase Program | ||||||
Common stock repurchased, shares | 800 | 73,100 | ||||
Common stock repurchased, average price per share | $ 342.95 | $ 150.73 | ||||
Common stock repurchased, value | $ 268,900 | $ 11,000,000 |
Share Repurchase Program (Schedule Of Shares Repurchased) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Proceeds from (Repurchase of) Equity [Abstract] | ||
Shares repurchased | 6,061 | 9,301 |
Average price per share | $ 282.80 | $ 233.57 |
Total investment | $ 1,713,953 | $ 2,172,437 |
Revenue (Narrative) (Details) - Loyalty program [Member] - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenue | |||
Deferred revenue | $ 4.3 | $ 4.7 | |
Deferred revenue, recognized | $ 15.9 | $ 17.6 | $ 12.7 |
Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disaggregation of Revenue | |||||||||||
Disaggregated sales | $ 2,314,957 | $ 2,482,717 | $ 2,456,073 | $ 2,282,681 | $ 2,190,808 | $ 2,339,830 | $ 2,290,829 | $ 2,156,259 | $ 9,536,428 | $ 8,977,726 | $ 8,593,096 |
DIY customer [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Disaggregated sales | 5,351,035 | 5,113,288 | 4,911,826 | ||||||||
Professional service provider customer [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Disaggregated sales | 4,035,898 | 3,724,220 | 3,540,116 | ||||||||
Other customers and sales adjustments [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Disaggregated sales | $ 149,495 | $ 140,218 | $ 141,154 |
Share-Based Compensation and Benefit Plans (Stock Option) (Narrative) (Details) - Stock option [Member] - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Share-Based Compensation and Benefit Plans | ||
Remaining unrecognized compensation expense | $ 31.3 | |
Weighted-average period for cost recognition | 2 years 7 months 15 days | |
Employee stock option [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Vesting of options, description | The Company’s employee incentive plans provide for the granting of stock options for the purchase of common stock of the Company to certain key employees of the Company. Employee stock 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. | |
Options expiration date | 10 years | |
Stock options outstanding | 1,860,000 | 2,364,000 |
Options vesting period | 4 years | |
Option vesting rate per year | 25.00% | |
Director [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Vesting of options, description | The Company’s director stock plan provides for the granting of stock options for the purchase of common stock of the Company to directors of the Company. Director stock 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. | |
Options expiration date | 7 years | |
Stock options outstanding | 0 | 0 |
Options vesting period | 6 months |
Share-Based Compensation and Benefit Plans (Restricted Stock) (Narrative) (Details) - Restricted stock [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Share-Based Compensation and Benefit Plans | |
Remaining unrecognized compensation expense | $ 0.3 |
Weighted-average period for cost recognition | 1 month 17 days |
Employee [Member] | |
Share-Based Compensation and Benefit Plans | |
Restricted stock awards plan description | The Company’s performance incentive plans provide for the award of shares of restricted stock to its corporate and senior management that vest evenly over a three-year period and are held in escrow until such vesting has occurred. Generally, unvested shares are forfeited when an employee ceases employment. The fair value of shares awarded under these plans is based on the closing market price of the Company’s common stock on the date of award and compensation expense is recorded over the vesting period or minimum required service period. |
Director [Member] | |
Share-Based Compensation and Benefit Plans | |
Restricted stock awards plan description | The Company’s director stock plan provides for the award of shares of restricted stock to the directors of the Company that vest evenly over a three-year period and are held in escrow until such vesting has occurred. Unvested shares are forfeited when a director ceases their service on the Company’s Board of Directors for reasons other than death or retirement. The fair value of shares awarded under this plan is based on the closing market price of the Company’s common stock on the date of award, and compensation expense is recorded evenly over the minimum required service period. |
Share-Based Compensation and Benefit Plans (Employee Stock Purchase Plan) (Narrative) (Details) - Employee stock purchase plan [Member] |
12 Months Ended |
---|---|
Dec. 31, 2018
Rate
| |
Share-Based Compensation and Benefit Plans | |
Other employee benefit plan descriptions | The Company’s employee stock purchase plan (the “ESPP”) permits eligible employees to purchase shares of the Company’s common stock at 85% of the fair market value. Employees may authorize the Company to withhold up to 5% of their annual salary to participate in the plan. |
Employee stock purchase plan stock purchase percentage | 85.00% |
Share-Based Compensation and Benefit Plans (Profit Sharing and Savings Plan) (Narrative) (Detail) - Profit sharing and savings plan [Member] - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Profit sharing and savings plan, description | The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age and have completed one year of service. The Company makes matching contributions equal to 100% of the first 2% of each employee’s wages that are contributed and 25% of the next 4% of each employee’s wages that are contributed. | ||
Profit sharing and savings plan, employer discretionary contribution | $ 0.0 | $ 0.0 | $ 0.0 |
Profit sharing and savings plan, cost recognized | $ 24.8 | $ 22.6 | $ 20.6 |
Employee's first 2% of contributed wages [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Profit sharing and savings plan, Company match | 100.00% | ||
Employee's next 4% of contributed wages [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Profit sharing and savings plan, Company match | 25.00% |
Share-Based Compensation and Benefit Plans (Nonqualified Deferred Compensation Plan) (Narrative) (Details) - Nonqualified Deferred Compensation Plan [Member] - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Deferred compensation plan description | The Company sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitations under the Internal Revenue Code. The Deferred Compensation Plan provides these employees with the opportunity to defer the full 6% of matched compensation, including salary and incentive based compensation, that was precluded under the Company’s 401(k) Plan, which is then matched by the Company using the same formula as the 401(k) Plan. | ||
Deferred compensation plan obligation | $ 25.5 | $ 25.7 | |
Deferred compensation plan cost recognized | $ 0.1 | $ 0.1 | $ 0.1 |
Share-Based Compensation and Benefit Plans (Summary of Shares Authorized and Available for Future Issuance Under Benefit and Compensation Plans) (Details) shares in Thousands |
Dec. 31, 2018
shares
|
---|---|
Profit sharing and savings plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 4,200 |
Shares available for future issuance under compensation and benefit plans | 349 |
Employee stock purchase plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 4,250 |
Shares available for future issuance under compensation and benefit plans | 594 |
Performance shares [Member] | Restricted stock [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 650 |
Shares available for future issuance under compensation and benefit plans | 368 |
Stock option [Member] | Employee stock option [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 34,000 |
Shares available for future issuance under compensation and benefit plans | 5,573 |
Stock option [Member] | Director [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 1,000 |
Shares available for future issuance under compensation and benefit plans | 263 |
Share-Based Compensation and Benefit Plans (Summary of Stock Options) (Details) - Stock option [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Exercisable at the end of the year, average remaining contractual term | 4 years 5 months 7 days | 3 years 9 months 21 days | 3 years 10 months 14 days |
Employee stock option [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Outstanding beginning balance, shares | 2,364 | ||
Outstanding at the beginning of the year, weighted-average exercise price | $ 137.08 | ||
Granted, shares | 293 | ||
Granted, weighted-average exercise price | $ 264.34 | ||
Exercised, shares | (763) | ||
Exercised, weighted-average exercise price | $ 80.52 | ||
Forfeited, shares | (34) | ||
Forfeited, weighted-average exercise price | $ 231.53 | ||
Outstanding ending balance, shares | 1,860 | 2,364 | |
Outstanding at the end of the year, weighted-average exercise price | $ 178.57 | $ 137.08 | |
Outstanding at the end of the year, average remaining contractual term | 5 years 10 months 10 days | ||
Outstanding at the end of the year, aggregate intrinsic value | $ 308,297 | ||
Vested or expected to vest at the end of the year, shares | 1,819 | ||
Vested or expected to vest at the end of the year, weighted-average exercise price | $ 176.78 | ||
Vested or expected to vest at the end of the year, average remaining contractual term | 5 years 9 months 19 days | ||
Vested or expected to vest at the end of the year, aggregate intrinsic value | $ 304,818 | ||
Exercisable at the end of the year, shares | 1,174 | ||
Exercisable at the end of the year, weighted-average exercise price | $ 133.24 | ||
Exercisable at the end of the year, average remaining contractual term | 4 years 5 months 7 days | ||
Exercisable at the end of the year, aggregate intrinsic value | $ 247,816 |
Share-Based Compensation and Benefit Plans (Black-Scholes Option Pricing Model) (Details) - Stock option [Member] |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
Rate
|
Dec. 31, 2017
Rate
|
Dec. 31, 2016
Rate
|
|
Share-Based Compensation and Benefit Plans | |||
Risk-free interest rate | 2.63% | 1.98% | 1.44% |
Expected life | 5 years 10 months 29 days | 5 years 5 months | 5 years 5 months 22 days |
Expected volatility | 24.00% | 22.40% | 22.30% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Share-Based Compensation and Benefit Plans (Stock Option Activity) (Details) - Stock option [Member] - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Compensation expense for share-based compensation | $ 16,521 | $ 15,561 | $ 15,404 |
Income tax benefit from compensation expense for share-based compensation | 4,093 | 5,934 | 5,753 |
Total intrinsic value of options exercised | 156,327 | 135,533 | 157,115 |
Cash received from the exercise of stock options | $ 61,403 | $ 33,229 | $ 47,394 |
Weighted-average grant date fair value of options awarded | $ 76.57 | $ 62.79 | $ 63.42 |
Weighted-average remaining contractual life of options currently exercisable | 4 years 5 months 7 days | 3 years 9 months 21 days | 3 years 10 months 14 days |
Employee stock option [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Weighted-average remaining contractual life of options currently exercisable | 4 years 5 months 7 days |
Share-Based Compensation and Benefit Plans (Summary of Restricted Stock) (Details) - Restricted stock [Member] - $ / shares shares in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
||||
Share-Based Compensation and Benefit Plans | ||||||
Restricted stock granted during period, weighted-average grant date fair value | $ 263.89 | $ 253.78 | $ 264.24 | |||
Shares withheld to cover employees' taxes upon vesting | 1 | |||||
Employee [Member] | ||||||
Share-Based Compensation and Benefit Plans | ||||||
Non-vested restricted stock at beginning of the year, weighted-average grant date fair value | $ 244.06 | |||||
Restricted stock granted during period, weighted-average grant date fair value | 262.38 | |||||
Restricted stock vested during the period, weighted-average grant date fair value | [1] | 232.30 | ||||
Restricted stock forfeited during the period, weighted-average grant date fair value | 0.00 | |||||
Non-vested restricted stock at the end of the year, weighted-average grant date fair value | $ 260.42 | $ 244.06 | ||||
Employee [Member] | Performance shares [Member] | ||||||
Share-Based Compensation and Benefit Plans | ||||||
Non-vested restricted stock beginning balance, shares | 3 | |||||
Restricted stock granted during the period, shares | 2 | |||||
Restricted stock vested during the period, shares | [1] | (1) | ||||
Restricted stock forfeited during the period, shares | 0 | |||||
Non-vested restricted stock ending balance, shares | 4 | 3 | ||||
Director [Member] | ||||||
Share-Based Compensation and Benefit Plans | ||||||
Non-vested restricted stock at beginning of the year, weighted-average grant date fair value | $ 250.85 | |||||
Restricted stock granted during period, weighted-average grant date fair value | 265.41 | |||||
Restricted stock vested during the period, weighted-average grant date fair value | 248.53 | |||||
Restricted stock forfeited during the period, weighted-average grant date fair value | 0.00 | |||||
Non-vested restricted stock at the end of the year, weighted-average grant date fair value | $ 261.07 | $ 250.85 | ||||
Director [Member] | Performance shares [Member] | ||||||
Share-Based Compensation and Benefit Plans | ||||||
Non-vested restricted stock beginning balance, shares | 5 | |||||
Restricted stock granted during the period, shares | 3 | |||||
Restricted stock vested during the period, shares | (3) | |||||
Restricted stock forfeited during the period, shares | 0 | |||||
Non-vested restricted stock ending balance, shares | 5 | 5 | ||||
|
Share-Based Compensation and Benefit Plans (Restricted Stock Activity) (Details) - Restricted stock [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Compensation expense for share-based compensation | $ 1,370 | $ 1,628 | $ 1,293 |
Income tax benefit from compensation expense for share-based compensation | 340 | 621 | 483 |
Total fair value of shares vested, at vest date | $ 1,230 | $ 1,202 | $ 2,384 |
Weighted-average grant-date fair value of shares issued during the period in compensation and benefit plans other than stock options | $ 263.89 | $ 253.78 | $ 264.24 |
Performance shares [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Shares awarded or issued under employee benefit plans, shares | 5 | 4 | 4 |
Share-Based Compensation and Benefit Plans (Employee Stock Purchase Plan Activity) (Details) - Employee stock purchase plan [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-Based Compensation and Benefit Plans | |||
Compensation expense for shares issued under the ESPP | $ 2,285 | $ 2,212 | $ 2,162 |
Income tax benefit from compensation expense for shares issued under the ESPP | $ 566 | $ 844 | $ 807 |
Shares awarded or issued under employee benefit plans, shares | 53 | 64 | 54 |
Weighted-average grant-date fair value of shares issued during the period in compensation and benefit plans other than stock options | $ 245.26 | $ 196.72 | $ 227.12 |
Commitments (Commitments) (Narrative) (Details) $ in Millions |
Dec. 31, 2018
USD ($)
d
Rate
|
Dec. 31, 2017
USD ($)
|
---|---|---|
Unsecured debt [Member] | Line of credit facility [Member] | ||
Commitments | ||
Letters of credit | $ | $ 35.1 | $ 36.8 |
Senior notes [Member] | ||
Commitments | ||
Debt instrument minimum number of days callable | d | 30 | |
Debt instrument maximum number of days callable | d | 60 | |
Percentage principal amount of debt that can be redeemed by the Company | Rate | 100.00% | |
Percentage principal amount of debt redeemable upon change in control | Rate | 101.00% | |
Construction [Member] | ||
Commitments | ||
Construction commitments | $ | $ 177.7 |
Related Parties (Narrative) (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
stores
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Related Parties | |||
Number of stores | 5,219 | ||
Related parties [Member] | |||
Related Parties | |||
Number of stores | 74 | ||
Lease payments under related party operating leases | $ | $ 4.6 | $ 4.6 | $ 4.5 |
Income Taxes (Provision for Income Taxes) (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Taxes | |||
Revaluation of deferred tax liability, benefit | $ (1,262) | $ (53,240) | $ 0 |
State and local jurisdiction [Member] | |||
Income Taxes | |||
Tax credit carryforwards available for state tax purposes, net of federal impact | $ 5,600 | ||
Tax credit carryforwards available for state tax purposes, expiration year | 2024 |
Income Taxes (Unrecognized Tax Benefits) (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract] | |||
Reserve for unrecognized tax benefits, including interest and penalties | $ 38.9 | $ 40.9 | $ 40.6 |
Amounts that would affect the effective tax rate if recognized | 38.9 | 40.9 | 40.6 |
Federal tax effect for unrecognized tax benefits | 8.2 | ||
Accrual of interest and penalties related to uncertain tax positions | 5.1 | 5.5 | 5.8 |
Tax expense related to an increase in liabilities for interest and penalties | 2.3 | $ 2.0 | $ 2.4 |
Reduction of unrecognized tax benefits due to lapse of statute of limitations and settlements over the next twelve months | $ 8.1 | ||
Other information pertaining to income taxes | The Company’s United States federal income tax returns for tax years 2015 and beyond remain subject to examination by the Internal Revenue Service (“IRS”). The IRS concluded an examination of the O’Reilly consolidated 2014, 2015 and 2016 federal income tax returns in the third quarter of 2018. The Company’s state income tax returns remain subject to examination by various state authorities for tax years ranging from 2007 through 2017. | ||
Open tax year | 2015 |
Income Taxes (Schedule of Components of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Allowance for doubtful accounts | $ 1,944 | $ 1,885 |
Tax credits | 5,606 | 7,179 |
Other accruals | 105,894 | 97,247 |
Net operating losses | 0 | 346 |
Other | 14,770 | 14,784 |
Total deferred tax assets | 128,214 | 121,441 |
Deferred tax liabilities: | ||
Inventories | 62,846 | 55,965 |
Property and equipment | 140,019 | 122,354 |
Other | 30,915 | 28,528 |
Total deferred tax liabilities | 233,780 | 206,847 |
Net deferred tax liabilities | $ (105,566) | $ (85,406) |
Income Taxes (Schedule of Components of the Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Expense (Benefit), Continuing Operations, by Jurisdiction [Abstract] | |||
Federal income tax expense, current | $ 289,953 | $ 467,577 | $ 540,090 |
Federal income tax expense (benefit), deferred | 16,309 | (13,053) | 7,558 |
Federal income tax expense, total | 306,262 | 454,524 | 547,648 |
State income tax expense, current | 59,487 | 41,183 | 49,016 |
State income tax expense (benefit), deferred | 3,851 | 8,293 | 2,836 |
State income tax expense, total | 63,338 | 49,476 | 51,852 |
Current income tax expense | 349,440 | 508,760 | 589,106 |
Deferred income tax expense (benefit) | 20,160 | (4,760) | 10,394 |
Provision for income taxes | $ 369,600 | $ 504,000 | $ 599,500 |
Income Taxes (Reconciliation of the Provision for Income Taxes to the Amounts Computed at the Federal Statutory Rate) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Federal income taxes at statutory rate | $ 355,758 | $ 573,231 | $ 573,020 |
State income taxes, net of federal tax benefit | 56,345 | 39,062 | 35,285 |
Excess tax benefit from share-based compensation | (34,703) | (48,688) | 0 |
Revaluation of deferred tax liability | (1,262) | (53,240) | 0 |
Other items, net | (6,538) | (6,365) | (8,805) |
Provision for income taxes | $ 369,600 | $ 504,000 | $ 599,500 |
Income Taxes (Summary of Changes in Gross Amount of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Uncertainties [Abstract] | |||
Unrealized tax benefit, beginning balance | $ 35,388 | $ 34,798 | $ 36,928 |
Additions based on tax positions related to the current year | 3,550 | 6,299 | 6,116 |
Additions based on tax positions related to prior years | 4,255 | 0 | 0 |
Payments related to items settled with taxing authorities | (2,792) | 0 | (195) |
Reduction due to lapse of statute of limitations and settlements | (6,635) | (5,709) | (8,051) |
Unrealized tax benefit, ending balance | $ 33,766 | $ 35,388 | $ 34,798 |
Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
2 Months Ended | 12 Months Ended | 98 Months Ended | |
---|---|---|---|---|
Feb. 27, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Feb. 27, 2019 |
|
Earnings Per Share | ||||
Common stock repurchased, shares | 6,061 | 9,301 | ||
Common stock repurchased, average price per share | $ 282.80 | $ 233.57 | ||
Common stock repurchased, value | $ 1,713,953 | $ 2,172,437 | ||
Subsequent event [Member] | ||||
Earnings Per Share | ||||
Common stock repurchased, shares | 800 | 73,100 | ||
Common stock repurchased, average price per share | $ 342.95 | $ 150.73 | ||
Common stock repurchased, value | $ 268,900 | $ 11,000,000 |
Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
||||||||||||||
Numerator (basic and diluted): | ||||||||||||||||||||||||
Net income | $ 300,357 | $ 366,151 | $ 353,073 | $ 304,906 | $ 302,315 | $ 283,734 | $ 282,821 | $ 264,934 | $ 1,324,487 | $ 1,133,804 | $ 1,037,691 | |||||||||||||
Denominator: | ||||||||||||||||||||||||
Denominator for basic earnings per share - weighted-average shares | 81,406 | 88,426 | 95,447 | |||||||||||||||||||||
Effect of stock options | [1] | 874 | 1,076 | 1,273 | ||||||||||||||||||||
Denominator for diluted earnings per share - weighted-average shares and assumed conversion | 82,280 | 89,502 | 96,720 | |||||||||||||||||||||
Earnings per share - basic | $ 3.76 | [2] | $ 4.54 | [2] | $ 4.32 | [2] | $ 3.65 | [2] | $ 3.56 | [2] | $ 3.26 | [2] | $ 3.14 | [2] | $ 2.88 | [2] | $ 16.27 | $ 12.82 | $ 10.87 | |||||
Earnings per share - assuming dilution | $ 3.72 | [2] | $ 4.50 | [2] | $ 4.28 | [2] | $ 3.61 | [2] | $ 3.52 | [2] | $ 3.22 | [2] | $ 3.10 | [2] | $ 2.83 | [2] | $ 16.10 | $ 12.67 | $ 10.73 | |||||
Antidilutive stock options | [1] | 567 | 715 | 332 | ||||||||||||||||||||
Weighted-average exercise price per share of antidilutive stock options | [1] | $ 268.55 | $ 252.16 | $ 265.77 | ||||||||||||||||||||
|
Quarterly Results (unaudited) (Unaudited Operating Data) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||||||||||
Quarterly Financial Data [Abstract] | |||||||||||||||||||||
Sales | $ 2,314,957 | $ 2,482,717 | $ 2,456,073 | $ 2,282,681 | $ 2,190,808 | $ 2,339,830 | $ 2,290,829 | $ 2,156,259 | $ 9,536,428 | $ 8,977,726 | $ 8,593,096 | ||||||||||
Gross profit | 1,234,315 | 1,315,755 | 1,288,638 | 1,201,258 | 1,159,180 | 1,230,294 | 1,200,062 | 1,131,147 | 5,039,966 | 4,720,683 | 4,509,011 | ||||||||||
Operating income | 428,040 | 485,148 | 479,150 | 422,846 | 402,835 | 461,963 | 457,445 | 403,157 | 1,815,184 | 1,725,400 | 1,699,206 | ||||||||||
Net income | $ 300,357 | $ 366,151 | $ 353,073 | $ 304,906 | $ 302,315 | $ 283,734 | $ 282,821 | $ 264,934 | $ 1,324,487 | $ 1,133,804 | $ 1,037,691 | ||||||||||
Earnings per share - basic | $ 3.76 | [1] | $ 4.54 | [1] | $ 4.32 | [1] | $ 3.65 | [1] | $ 3.56 | [1] | $ 3.26 | [1] | $ 3.14 | [1] | $ 2.88 | [1] | $ 16.27 | $ 12.82 | $ 10.87 | ||
Earnings per share - assuming dilution | $ 3.72 | [1] | $ 4.50 | [1] | $ 4.28 | [1] | $ 3.61 | [1] | $ 3.52 | [1] | $ 3.22 | [1] | $ 3.10 | [1] | $ 2.83 | [1] | $ 16.10 | $ 12.67 | $ 10.73 | ||
|
Schedule II - Valuation and Qualifying Accounts (Valuation and Qualifying Accounts) (Details) - Allowance for doubtful accounts [Member] - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||
Valuation and Qualifying Accounts | |||||
Balance at beginning of period | $ 12,717 | $ 12,040 | $ 9,637 | ||
Additions - charged to costs and expenses | 9,475 | 8,598 | 9,587 | ||
Additions - charged to other accounts - describe | 0 | 0 | 0 | ||
Deductions - describe | [1] | 8,954 | 7,921 | 7,184 | |
Balance at end of period | $ 13,238 | $ 12,717 | $ 12,040 | ||
|
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