-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FQXvOAX56bOK257hbe/QF1PoaVFLAz/pLR4fFFkfETLmqsCzwIb8luLfbmak4Q6c IaCAg0H8EE1zA6tJYy5GYQ== 0000950131-96-005855.txt : 19961118 0000950131-96-005855.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950131-96-005855 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OREILLY AUTOMOTIVE INC CENTRAL INDEX KEY: 0000898173 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 440618012 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21318 FILM NUMBER: 96665350 BUSINESS ADDRESS: STREET 1: 233 S PATTERSON CITY: SPRINGFIELD STATE: MO ZIP: 65801 BUSINESS PHONE: 4178626708 MAIL ADDRESS: STREET 1: 233 SOUTH PATTERSON CITY: SPRINGFIELD STATE: MO ZIP: 65802 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR (_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _______________ Commission file number 0-21318 O'REILLY AUTOMOTIVE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Missouri 44-0618012 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 233 South Patterson Springfield, Missouri 65801 - -------------------------------------------------------------------------------- (Address of principal executive offices, Zip code) (417) 862-6708 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- ----------- Common stock, $0.01 par value - 10,453,668 shares outstanding as of September 30, 1996 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES FORM 10-Q Quarter Ended September 30, 1996 TABLE OF CONTENTS
Page ---- PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Cash Flows 5 Note to Condensed Consolidated Financial Statements 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 7 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 9 SIGNATURE PAGE 10 EXHIBIT INDEX 11
2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1996 1995 ------------- ------------ (Unaudited) (Note) (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 3,686 $ 2,833 Short-term investments 7,194 23,410 Accounts receivable 11,858 9,460 Inventory 80,311 58,979 Other current assets 2,542 3,964 -------- -------- Total current assets 105,591 98,646 Property and equipment, at cost 91,452 68,391 Accumulated depreciation 19,864 16,440 -------- -------- 71,588 51,951 Other assets 3,330 3,007 -------- -------- Total assets $180,509 $153,604 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 19,492 $ 13,013 Income taxes payable 1,622 - Other current liabilities 6,946 4,931 Current portion of long-term debt 127 231 -------- -------- Total current liabilities 28,187 18,175 Long-term debt, less current portion 311 358 Other liabilities 1,183 1,201 Stockholders' equity: Common stock, $.01 par value: Authorized shares - 30,000,000 Issued and outstanding shares - 10,453,668 in 1996 and 10,362,170 in 1995 105 104 Additional paid-in capital 73,524 71,024 Retained earnings 77,199 62,742 -------- -------- Total stockholders' equity 150,828 133,870 -------- -------- Total liabilities and stockholders' equity $180,509 $153,604 ======== ========
NOTE: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See note to condensed consolidated financial statements. 3 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 1996 1995 1996 1995 ------- ------- -------- -------- (In thousands, except per share data) Product sales $70,432 $57,181 $194,535 $150,591 Cost of goods sold, including warehouse and distribution expenses 41,185 33,495 114,667 88,800 Operating, selling, general and administrative expenses 20,953 17,009 57,742 45,108 ------- ------- -------- -------- 62,138 50,504 172,409 133,908 ------- ------- -------- -------- Operating income 8,294 6,677 22,126 16,683 Other income (expense), net 259 (63) 822 74 ------- ------- -------- -------- Income before income taxes 8,553 6,614 22,948 16,757 Provision for income taxes 3,131 2,475 8,491 6,258 ------- ------- -------- -------- Net income 5,422 4,139 14,457 10,499 ======= ======= ======== ======== Net income per share $ 0.52 $ 0.47 $ 1.39 $ 1.20 ======= ======= ======== ======== Weighted average common shares outstanding 10,448 8,741 10,422 8,720 ======= ======= ======== ========
See note to condensed consolidated financial statements. 4 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, -------------------- 1996 1995 -------- -------- (In thousands) Net cash provided by operating activities $ 7,156 $ 263 Investing activities: Purchases of property and equipment (24,204) (19,821) Purchases of short-term investments (13,879) - Proceeds from sale of short-term investments 30,095 1,075 Other 282 (72) -------- -------- Net cash used in investing activities (7,706) (18,818) Financing activities: Borrowings on note payable to bank - 9,100 Borrowings under long-term credit facility - 8,500 Borrowings on long-term note - 108 Payments on long-term debt (151) (216) Proceeds from issuance of common stock 1,554 818 -------- -------- Net cash provided by financing activities 1,403 18,310 -------- -------- Net increase (decrease) in cash 853 (245) Cash at beginning of period 2,833 3,364 -------- -------- Cash at end of period $ 3,686 $ 3,119 ======== ========
See note to condensed consolidated financial statements. 5 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1996 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the O'Reilly Automotive, Inc. and Subsidiaries' annual report on Form 10-K for the year ended December 31, 1995. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF ------------------------------------------------ RESULTS OF OPERATIONS AND FINANCIAL CONDITION --------------------------------------------- RESULTS OF OPERATIONS Product sales for the third quarter of 1996 increased by $13.3 million, or 23.2%, over product sales for the third quarter of 1995 due to an 8.2% increase in comparable store product sales for the quarter, the opening of 8 new O'Reilly stores during the fourth quarter of 1995 and the opening of 22 new stores during the first nine months of 1996. Product sales for the first nine months of 1996 increased by $43.9 million, or 29.2% over product sales for the first nine months of 1995 due to a 15.6% increase in comparable store product sales and the opening of new O'Reilly stores discussed above. Management believes that the consumer acceptance experienced by these new O'Reilly stores and the increased product sales achieved by the existing O'Reilly stores is the result of the continuation of media advertising during the first nine months of 1996 at the levels set in 1995, an increase in the broad selection of stock keeping units (SKU's) available at both new and existing O'Reilly stores and the increasing penetration of the general geographic markets in which O'Reilly Automotive, Inc. (the "Company") operates. Gross profit increased 23.5% from $23.7 million (or 41.4% of product sales) in the third quarter of 1995 to $29.2 million (or 41.5% of product sales) in the third quarter of 1996. Gross profit for the first nine months increased 29.3% from $61.8 (or 41.0% of product sales) in 1995 to $79.9 million (or 41.1% of product sales) in 1996. The increased dollar amount of gross profit resulted primarily from increased sales volume. Operating, selling, general and administrative expenses (OSG&A expenses) increased $4.0 million from $17.0 million (or 29.7% of product sales) in the third quarter of 1995 to $21.0 million (or 29.7% of product sales) in the third quarter of 1996. OSG&A expenses increased $12.6 million from $45.1 million (or 30.0% of product sales) in the first nine months of 1995 to $57.7 million (or 29.7% of product sales) in the first nine months of 1996. The increased dollar amount of OSG&A expenses resulted primarily from the new stores opened during the last quarter of 1995 and the first nine months of 1996 as well as additions to administrative staff in order to support increased operations. The decrease in OSG&A expenses as a percent of product sales in the first nine months of 1996 was primarily the result of increased product sales. Other income (expense), net, increased by $322,000 in the third quarter of 1996 versus the third quarter of 1995 and increased by $748,000 for the first nine months of 1996 compared to the first nine months of 1995. These increases were primarily due to interest income resulting from increased cash and short-term investment balances. The Company's estimated provision for income taxes decreased from 37.4% of income before income taxes in the third quarter of 1995 to 36.6% in the third quarter of 1996 and decreased from 37.3% in the first nine months of 1995 to 37.0% in the first nine months of 1996. The decrease in the effective income tax rate was primarily due to more of the Company's sales occurring in states with lower income tax rates. 7 Net income increased from $4.1 million or 7.2% of product sales in the third quarter of 1995 to $5.4 million or 7.7% of product sales in the third quarter and from $10.5 million or 7.0% of product sales in the first nine months of 1995 to $14.5 million or 7.4% of product sales in the first nine months of 1996, due primarily to the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES Net cash of $7.2 million was provided by operating activities for the first nine months of 1996 as compared to $0.3 million net cash provided by operating activities for the first nine months of 1995 principally as a result of increases in net income, accounts payable and accrued expenses and decreases in other current assets offset by an increase in accounts receivable and inventory. The increases in accounts payable and inventory are primarily due to the addition of the Oklahoma City distribution center in March 1996, the addition of new stores and increased sales levels in existing and newly opened stores. Net cash used in investing activities has decreased from $18.8 million in 1995 to $7.7 million in 1996 primarily as a result of a $15.1 million increase in net proceeds from sales of short-term investments offset by a $4.4 million increase in purchases of property and equipment. Cash provided by financing activities has decreased from $18.3 million in the first nine months of 1995 to $1.4 million in the first nine months of 1996. The decrease was primarily due to no borrowings under the Company's credit facilities during the first nine months of 1996. The Company has available a short-term unsecured line of credit with Boatmen's Bank of Southern Missouri. Under the terms thereof, the Company may borrow up to $17.0 million until September 1997. Borrowings outstanding under the line of credit bear interest at LIBOR plus 1% (6.47% as of September 30, 1996). At September 30, 1996, no amounts were outstanding under the line of credit. The Company also has available a long-term unsecured revolving credit facility with Commerce Bank, N.A. of Springfield, Missouri. Under terms of this agreement, the Company may borrow up to $15 million upon compliance with various minimum financial ratios. This credit facility bears interest at LIBOR plus 1.25% (6.72% at September 30, 1996) and matures in May 1997. At September 30, 1996, no amounts were outstanding under this credit facility. The Company plans to open an additional eight stores in 1996 (for a total of 30). The funds required for such planned expansions will come from the cash provided by operating activities, short-term investments and existing bank credit facilities. Management believes that the cash expected to be provided by operating activities, existing cash and short-term investments, existing bank credit facilities and trade credit will be sufficient to fund both the short and long- term capital and liquidity needs of the Company for the foreseeable future. The above discussion contains statements regarding matters that are not historical facts (including statements as to beliefs or expectations of the Company) which are forward-looking statements. Because such forward-looking statements include risks and uncertainties, the Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed in Exhibit 99.1. 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings - --------------------------- Not applicable Item 2. Changes in Securities - ------------------------------- Not applicable Item 3. Defaults Upon Senior Securities - ----------------------------------------- Not applicable Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------- Not applicable Item 5. Other information - --------------------------- Not applicable Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits: See Exhibit Index on page 11 hereof (b) Reports on Form 8-K: No reports on Form 8-K were filed by the Registrant during the three months ended September 30, 1996. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. O'REILLY AUTOMOTIVE, INC. November 12, 1996 David E. O'Reilly - ----------------------- ----------------------------------- Date David E. O'Reilly, President and Chief Executive Officer November 12, 1996 James R. Batten - ----------------------- ----------------------------------- Date James R. Batten, Chief Financial Officer (Principal Financial and Accounting Officer) 10 EXHIBIT INDEX Number Description Page - ------ ----------- ---- 27.1 Financial Data Schedule, filed herewith. 12 99.1 Certain Risk Factors, filed herewith. 13 11 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet at September 30, 1996 (Unaudited) and the Condensed Consolidated Statement of Income for the Nine Months Ended September 30, 1996 (Unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 3,686 7,194 11,858 386 80,311 2,542 91,452 19,864 180,509 28,187 0 105 0 0 150,723 180,509 194,535 195,357 114,667 57,742 0 467 26 22,948 8,491 14,457 0 0 0 14,457 1.39 0
EX-99.1 3 CERTAIN RISK FACTORS O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES Exhibit 99.1 - Certain Risk Factors The following factors could affect the Company's actual results, including its revenues, expenses and net income, and could cause them to differ from any forward-looking statements made by or on behalf of the Company. Competition The Company competes with a large number of retail and wholesale automotive aftermarket product suppliers. The distribution of automotive aftermarket products is a highly competitive industry, particularly in the more densely populated market areas served by the Company. Competitors include national and regional automotive parts chains, independently owned parts stores (some of which are associated with national auto parts distributors or associations), automobile dealerships, mass or general merchandise, discount and convenience chains that carry automotive products, independent warehouse distributors and parts stores and national warehouse distributors and associations. Some of the Company's competitors are larger than the Company and have greater financial resources than the Company. No Assurance of Future Growth Management believes that the Company's ability to open additional stores at an accelerated rate will be a significant factor in achieving its growth objectives for the future. The ability of the Company to accomplish its growth is dependent, in part, on matters beyond the Company's control, such as weather conditions, zoning and other issues related to new store site development, the availability of qualified management personnel and general business and economic conditions. No assurance can be given that the Company's current growth rate can be maintained. Dependence Upon Key and Other Personnel The success of the Company has been largely dependent on the efforts of certain key personnel of the Company, including David E. O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly, Jr., Rosalie O'Reilly Wooten and Ted F. Wise. The loss of the services of one or more of these individuals could have a material adverse effect on the Company's business and results of operations. Additionally, in order to successfully implement and manage its growth strategy, the Company will be dependent upon its ability to continue to attract and retain qualified personnel. There can be no assurance that the Company will be able to continue to attract such personnel. Concentration of Ownership by Management The Company's executive officers and directors as a group beneficially own a substantial percentage of the outstanding shares of the Company's common stock. These officers and directors have the ability to exercise effective voting control of the Company, including the election of all of the Company's directors, and to effectively determine the vote on any matter being voted on by the Company shareholders, including any merger, sale of assets or other change in control of the Company. 13 -----END PRIVACY-ENHANCED MESSAGE-----