UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 10-Q
x
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|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
quarterly period ended March 31, 2008
OR
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
transition period from
to
Commission
file number 0-21318
OREILLY
AUTOMOTIVE, INC.
(Exact name of
registrant as specified in its charter)
Missouri
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44-0618012
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(State or other
jurisdiction
of incorporation or
organization)
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(I.R.S. Employer
Identification No.)
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233 South
Patterson
Springfield,
Missouri 65802
(Address of
principal executive offices, Zip code)
(417)
862-6708
(Registrants
telephone number, including area code)
Not
applicable
(Former name,
former address and former fiscal year, if changed since last report)
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.
Indicate by a check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of
large accelerated filer, accelerated filer, and smaller reporting company
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting
company
o
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(Do not check if a
smaller reporting company)
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Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2of
the Exchange Act).
Indicate the number of
shares outstanding of each of the issuers classes of common stock as of the
latest practicable date:
Common stock, $0.01 par
value 115,481,606 shares outstanding as of March 31, 2008.
OREILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES
FORM 10-Q
Quarter Ended March 31,
2008
TABLE OF CONTENTS
2
PART I FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
OREILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands,
except share data)
|
|
March 31,
2008
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December 31,
2007
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(Unaudited)
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(Note)
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Assets
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Current assets:
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|
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Cash and cash
equivalents
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$
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113,287
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$
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47,555
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Accounts
receivable, net
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93,123
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84,242
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Amounts
receivable from vendors
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47,293
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48,263
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Inventory
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892,583
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881,761
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Other current
assets
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20,331
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40,483
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Total current
assets
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1,166,617
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1,102,304
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Property and
equipment, at cost
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1,534,819
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1,479,779
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Accumulated
depreciation and amortization
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408,856
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389,619
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Net property and
equipment
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1,125,963
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1,090,160
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Notes
receivable, less current portion
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24,253
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25,437
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Goodwill
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50,583
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50,447
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Other assets
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30,320
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11,389
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Total assets
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$
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2,397,736
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$
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2,279,737
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Liabilities
and shareholders equity
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Current
liabilities:
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Accounts payable
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$
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417,128
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$
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380,683
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Accrued payroll
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27,445
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23,739
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Accrued benefits
and withholdings
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46,536
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43,463
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Deferred income
taxes
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10,364
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6,235
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Other current
liabilities
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61,530
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49,536
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Current portion
of long-term debt
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25,323
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25,320
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Total current
liabilities
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588,326
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528,976
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Long-term debt,
less current portion
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75,068
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75,149
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Deferred income
taxes
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26,651
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27,241
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Other
liabilities
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56,678
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55,894
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Shareholders
equity:
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Common stock,
$0.01 par value: Authorized shares 245,000,000 Issued and outstanding
shares 115,481,606 as of March 31, 2008, and 115,260,564 as of December 31,
2007
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1,155
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1,153
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Additional
paid-in capital
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448,173
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441,731
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Retained
earnings
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1,202,724
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1,156,393
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Accumulated
other comprehensive loss
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(1,039
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)
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(6,800
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)
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Total
shareholders equity
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1,651,013
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1,592,477
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Total
liabilities and shareholders equity
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$
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2,397,736
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$
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2,279,737
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See notes to
condensed consolidated financial statements.
Note: The balance sheet at December 31, 2007
has been derived from the audited consolidated financial statements at that
date, but does not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete
financial statements.
3
OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
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Three MonthsEnded
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March 31,
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2008
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2007
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Sales
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$
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646,220
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$
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613,145
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Cost of goods
sold, including warehouse and distribution expenses
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357,726
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343,864
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Gross profit
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288,494
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269,281
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Selling, general
and administrative expenses
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214,338
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192,089
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Operating income
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74,156
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77,192
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Other expense,
net
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450
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10
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Income before
income taxes
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73,706
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77,182
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Provision for
income taxes
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27,375
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28,775
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Net income
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$
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46,331
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$
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48,407
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Net income per
common share basic
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$
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0.40
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$
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0.42
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Net income per
common share assuming dilution
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$
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0.40
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$
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0.42
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Weighted-average
common shares outstanding basic
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115,386
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113,936
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Adjusted
weighted-average common shares outstanding assuming dilution
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116,291
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115,537
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See notes to
condensed consolidated financial statements.
4
OREILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Three Months Ended
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March 31,
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2008
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2007
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Net cash
provided by operating activities
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$
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118,854
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$
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128,631
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Investing
activities:
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Purchases of
property and equipment
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(59,186
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)
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(64,089
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)
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Proceeds from
sale of property and equipment
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1,367
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223
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Payments received
on notes receivable
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1,193
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1,132
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Other
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48
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(1,402
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)
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Net cash used in
investing activities
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(56,578
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)
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(64,136
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)
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Financing
activities:
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Proceeds from
issuance of long-term debt
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16,450
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Tax benefit of
stock options exercised
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549
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1,418
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Principal
payments of long-term debt
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(79
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)
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(26,226
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)
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Net proceeds
from issuance of common stock
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2,986
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4,177
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|
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Net cash
provided by (used in) financing activities
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3,456
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(4,181
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)
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|
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|
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Net increase in
cash and cash equivalents
|
|
65,732
|
|
60,314
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Cash and cash
equivalents at beginning of period
|
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47,555
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|
29,903
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|
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Cash and cash
equivalents at end of period
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$
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113,287
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$
|
90,217
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|
See notes to condensed consolidated financial
statements.
5
OREILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31,
2008
1.
Basis
of Presentation
The accompanying
unaudited condensed consolidated financial statements of OReilly Automotive, Inc.
and Subsidiaries (the Company) have been prepared in accordance with United
States 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 U.S. generally
accepted accounting principles for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results
for the three months ended March 31, 2008, are not necessarily indicative
of the results that may be expected for the year ended December 31,
2008. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31,
2007.
2.
Stock-based
Employee Compensation Plans
In accordance with
Statement of Financial Accounting Standards No. 123R,
Share Based Payment
(SFAS No. 123R), the Company recognizes share-based compensation expense
based on the fair value of the awards.
Share-based payments include stock option awards issued under the
Companys employee stock option plan, director stock option plan, stock issued
through the Companys employee stock purchase plan and stock awarded to
employees through other benefit programs.
Stock Options
The Companys employee
stock-based incentive plan provides for the granting of stock options for the
purchase of common stock of the Company to directors and certain key employees
of the Company. Options are granted at
an exercise price that is equal to the market value of the Companys common
stock on the date of the grant. Director
options granted under the plan expire after seven years and are fully vested
after six months. Employee options
granted under the plan expire after ten years and typically vest 25% a year,
over four years. The Company records
compensation expense for the grant date fair value of option awards evenly over
the vesting period under the straight-line method. The following table summarizes the stock
option transactions during the first quarter of 2008:
|
|
Shares
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|
Weighted-
Average
Exercise
Price
|
|
Outstanding at
December 31, 2007
|
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6,459,840
|
|
$
|
23.30
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|
Granted
|
|
381,000
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|
28.05
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Exercised
|
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(139,101
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)
|
16.00
|
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Forfeited
|
|
(148,000
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)
|
31.97
|
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Outstanding at
March 31, 2008
|
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6,553,739
|
|
23.54
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Exercisable at
March 31, 2008
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4,738,355
|
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$
|
20.26
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|
The Company recognized
stock option compensation costs of approximately $1,366,000 and $1,136,000 in
the first quarter of 2008 and 2007, respectively, and recognized a
corresponding income tax benefit of approximately $507,000 and $424,000,
respectively.
The fair value of each
stock option grant 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 expected
volatility, expected life, the risk free rate and the expected dividend
yield. Expected volatility is based upon
the historical volatility of the Companys stock. Expected life represents the period of time
that options granted are expected to be outstanding. The Company uses historical data and
experience to estimate the expected life of options granted. The risk free interest rate for periods
within the contractual life of the options are based on the United States
Treasury rates in effect for the expected life of the options.
6
OREILLY AUTOMOTIVE, INC. AND
SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2008
Stock-based
Employee Compensation Plans (continued)
Stock
Options (continued)
The following
weighted-average assumptions were used for grants issued in the three months
ended March 31, 2008 and 2007:
|
|
2008
|
|
2007
|
|
Risk free
interest rate
|
|
2.44
|
%
|
4.72
|
%
|
Expected life
|
|
3.7 Years
|
|
4.9 Years
|
|
Expected
volatility
|
|
32.3
|
%
|
34.6
|
%
|
Expected
dividend yield
|
|
0
|
%
|
0
|
%
|
The weighted-average
grant-date fair value of options granted during the first three months of 2008
was $7.86 compared to $12.75 for the first three months of 2007. The remaining unrecognized compensation cost
related to unvested awards at March 31, 2008, was $18,391,000 and the
weighted-average period of time over which this cost will be recognized is 2.8
years.
Other
Employee Benefit Plans
The Company
sponsors other share-based employee benefit plans including a contributory
profit sharing and savings plan that covers substantially all employees, an
employee stock purchase plan which permits all eligible employees to purchase
shares of the Companys common stock at 85% of the fair market value and a
performance incentive plan under which the Companys senior management is
awarded shares of restricted stock that vest equally over a three-year
period. Compensation expense recognized
under these plans is measured based on the market price of the Companys common
stock on the date of award and is recorded over the vesting period. During the first three months of 2008, the
Company recorded approximately $1,807,000 of compensation cost for benefits
provided under these plans and a corresponding income tax benefit of
approximately $670,000. During the first
three months of 2007, the Company recorded approximately $1,953,000 of
compensation cost for benefits provided under these plans and recognized a
corresponding income tax benefit of approximately $728,000.
3.
Synthetic
Lease Facility
On September 28, 2007, the Company completed a second amended and
restated master agreement to its $49 million Synthetic Operating Lease Facility
with a group of financial institutions.
The terms of such lease facility provide for an initial lease period of
seven years, a residual value guarantee of approximately $39.7 million at March 31,
2008 and purchase options on the properties.
The lease facility also contains a provision for an event of default
whereby the lessor, among other things, may require the Company to purchase any
or all of the properties. Management
believes it is reasonable to assume that such an event of default will not
occur. One additional renewal period of
seven years may be requested from the lessor, although the lessor is not
obligated to grant such renewal. The
second amended and restated lease facility has been accounted for as an
operating lease under SFAS No. 13 and related interpretations, including
FASB Interpretation No. 46R.
4.
Goodwill
At March 31, 2008 and December 31, 2007, the value of the
Companys goodwill was as follows:
|
|
(In thousands)
|
|
Balance at
December 31, 2007
|
|
$
|
50,447
|
|
Acquisitions
|
|
136
|
|
Balance at
March 31, 2008
|
|
$
|
50,583
|
|
7
OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31,
2008
5.
Income
Per Common Share
The following table sets
forth the computation of basic and diluted income per common share for the
quarters ended March 31:
|
|
2008
|
|
2007
|
|
Numerator (basic
and diluted):
|
|
|
|
|
|
Net income
|
|
$
|
46,331
|
|
$
|
48,407
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Denominator for
basic income per common share weighted-average shares
|
|
115,386
|
|
113,936
|
|
Effect of stock
options
|
|
905
|
|
1,601
|
|
|
|
|
|
|
|
Denominator for
diluted income per common share- adjusted weighted-average shares and assumed
conversion
|
|
116,291
|
|
115,537
|
|
|
|
|
|
|
|
Basic net income
per common share
|
|
$
|
0.40
|
|
$
|
0.42
|
|
|
|
|
|
|
|
Net income per
common share-assuming dilution
|
|
$
|
0.40
|
|
$
|
0.42
|
|
6.
Recent
Accounting Pronouncements
In September 2006,
the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 157,
Fair
Value Measurements
(SFAS No. 157), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. The provisions of SFAS No. 157 for
financial assets and liabilities, as well as any other assets and liabilities
that are carried at fair value on a recurring basis in financial statements,
are effective for financial statements issued for fiscal years beginning after November 15,
2007 (fiscal year 2008 for the Company). FASB Staff Position FAS 157-2,
Effective Date of FASB Statement No.
157,
delayed the effective date of SFAS No. 157 for most nonfinancial assets
and nonfinancial liabilities until fiscal years beginning after November 15,
2008 (fiscal year 2009 for the Company). The implementation of SFAS No. 157
for financial assets and financial liabilities, effective January 1, 2008,
did not have a material impact on the Companys consolidated financial
position, results of operations or cash flows. The Company is currently
assessing the impact of SFAS No. 157 for nonfinancial assets and
liabilities on its consolidated financial position, results of operations or
cash flows.
In February 2007,
the FASB issued SFAS No. 159,
The Fair
Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159).
SFAS No. 159 permits entities to choose to measure selected financial
assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings at each subsequent reporting date. The provisions of SFAS No. 159 are
effective as of the beginning of the Companys 2008 fiscal year. The adoption of SFAS No. 159 did not
have a material impact on the Companys consolidated financial position,
results of operations or cash flows.
In December 2007,
the FASB issued SFAS No. 141,
Business
Combinations (revised 2007)
(SFAS No. 141(R)). SFAS
No. 141(R) applies to any transaction or other event that meets the
definition of a business combination. Where applicable, SFAS No. 141(R) establishes
principles and requirements for how the acquirer recognizes and measures
identifiable assets acquired, liabilities assumed, noncontrolling interest in
the acquiree and goodwill or gain from a bargain purchase. In
addition, SFAS No. 141(R) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This statement is to be applied
prospectively for fiscal years beginning after December 15, 2008.
The Company is in the process of evaluating the impact, if any, of SFAS No. 141(R) on
its consolidated financial statements.
8
OREILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31,
2008
7.
Other
Comprehensive Loss
The
adjustment to reduce unrealized holding loss on available-for-sale securities
included in accumulated other comprehensive loss for the period ended March 31,
2008 totaled $9,262,000 with a corresponding tax liability of $3,501,000 resulting
in a net of tax effect of $5,761,000.
Changes in
accumulated other comprehensive loss for the period ended March 31, 2008
consist of the following:
|
|
Unrealized
Losses on
Securities
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
(In thousands)
|
|
Balance at
December 31, 2007
|
|
$
|
(6,800
|
)
|
$
|
(6,800
|
)
|
Current-period
change
|
|
5,761
|
|
5,761
|
|
Balance at
March 31, 2008
|
|
$
|
(1,039
|
)
|
$
|
(1,039
|
)
|
Comprehensive
income for the first quarter ended March 31, 2008 was $52,092,000 and for
the first quarter ended March 31, 2007 was $48,407,000.
8.
Subsequent
events
On April 1, 2008,
the company entered into a definitive merger agreement with CSK Auto
Corporation (CSK) under which the company will acquire all of the outstanding
shares of CSK common stock. Under the
terms of the agreement, CSK shareholders will receive $11.00 of the companys
common stock, subject to a collar, plus $1.00 in cash for each share of CSK
stock. The collar will be determined
using an exchange ratio equal to $11.00 divided by the average trading price of
the companys common stock for the five trading days ending two trading days
prior to the consummation of the exchange offer. However, if the average trading price of the
companys stock is greater than $29.95, then the exchange ratio shall equal
0.3673, and if the average trading price is less than $25.67, then the exchange
ratio shall equal 0.4285. The $1.00 in
cash is subject to reduction for costs, if any, in excess of $3 million
associated with obtaining any credit agreement waivers or amendments from CSKs
lenders that may be required prior to the closing of the merger agreement. If CSK sought to accept a superior proposal,
CSK would be required to pay the company a termination fee of $22 million. The transaction is valued at approximately
$1.0 billion, including $500 million of assumed debt. The company has entered into a commitment for
a $1.2 billion asset based revolving credit facility with Bank of America and
Lehman Brothers Inc. which will be used to refinance debt, fund the cash portion
of the consideration, pay for other transaction-related expenses and provide
liquidity for the combined company going forward. The boards of directors of both companies
have approved the transaction. Completion
of this acquisition, subject to regulatory approval and customary closing
conditions, is expected in the summer of 2008.
On April 18, 2008,
the company announced that the Federal Trade Commission granted early
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 for the merger agreement. Termination of the waiting period satisfies
one of the regulatory approvals required for closing the merger agreement.
9
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Unless otherwise
indicated, we, us, our and similar terms, as well as references to the Company
or OReilly refer to OReilly Automotive, Inc. and its subsidiaries.
Overview
We are one of the
largest specialty retailers of automotive aftermarket parts, tools, supplies,
equipment and accessories in the United States, selling our products to both
do-it-yourself customers and professional installers. At March 31, 2008, we operated 1,867
stores in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North
Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota,
Tennessee, Texas, Virginia, Wisconsin and Wyoming. Our stores carry an extensive line of
products consisting of new and remanufactured automotive hard parts,
maintenance items and accessories and a complete line of auto body paint and
related materials, automotive tools and professional service equipment. We do not sell tires or perform automotive
repairs or installations.
We view the following
factors to be the key drivers of current and future demand for the products we
sell:
Number
of miles driven and number of registered vehicles
the total
number of miles driven in the US heavily influences the demand for the repair
and maintenance products we sell. The
long-term trend in the number of vehicles on the road and the total miles
driven in the U.S. has exhibited steady growth over the past decade. Since 1998, the total number of miles driven
in the United States has increased at an annual rate of approximately
1.6%. The total number of vehicles on
the road has increased from 191 million registered light vehicles in 1998 to
237 million in 2007. Total number of
miles driven remained relatively unchanged in 2007 as many consumers responded
to rising fuel prices and other economic constraints in part by curtailing
automobile usage. We believe that the
long-term trend in miles driven will resemble historical growth rates primarily
because of the increasing number of vehicles on the road.
Average
vehicle age
changes in the average age of vehicles on the
road impacts demand for automotive aftermarket products. As the average age of a vehicle increases,
the vehicle goes through more routine maintenance cycles requiring replacement
parts such as brakes, belts, hoses, batteries, and filters. The sales of these products are a key
component of our business. The average
age of the vehicle population has increased over the past decade from 8.9 years
for passenger cars and 8.3 years for light trucks in 1998 to 10.1 and 8.8
years, respectively, in 2007. We expect
that consumers will continue to choose to keep their vehicles longer and drive
them at higher mileages and that the increasing trend in average vehicle age
will continue.
Unperformed
maintenance
according to estimates compiled by the
Automotive Aftermarket Industry Association, the annual amount of unperformed
or underperformed maintenance in the United States totaled $60 billion for
2007. This metric represents the degree
to which routine vehicle maintenance recommended by the manufacturer is not
being performed. Consumer decisions to
avoid or defer maintenance affect demand for our products and the total amount
of unperformed maintenance represents potential future demand. We believe that challenging macroeconomic
conditions in 2007and the first quarter of 2008 contributed to an increase in
unperformed maintenance.
Product
quality differentiation
we provide our customers with an
assortment of products that are differentiated by quality for most of the
product lines we offer. For many of our
product offerings, this quality differentiation reflects good, better, and best
alternatives. Our sales and total gross
margin dollars are highest for the best quality category of products. Consumers willingness to select products at
a higher point on the value spectrum is a driver of sales and profitability in
our industry. We believe that the
average consumers tendency has been to trade-down to lower quality products
during the recent challenging economic conditions. We have ongoing initiatives targeted to
marketing higher quality products to our customers and expect our customers to
be more willing to return to purchasing up on the value spectrum in the future.
We recorded net sales of
$646 million for the quarter ended March 31, 2008, an increase of 5.4%
compared to $613 million in first quarter of 2007. We recorded diluted earnings per common share
of $0.40 for the three months ended March 31, 2008 down from $0.42 for the
first three months of 2007. The addition
of new stores continues to fuel consistent growth; however, the challenging
macroeconomic conditions in addition to strong comparable store sales
comparisons for the first quarter of 2007 led to lower than anticipated
comparable store sales results for the first quarter of 2008. Selling, general and administrative expenses
were higher during the first quarter of 2008 and, together with slightly lower
demand, resulted in less net income compared to the first quarter of 2007. While the current economic conditions have
affected our short-term results, we believe that the impact of current economic
conditions on consumer demand is not permanent, and we remain confident that
the long-term drivers of demand in the automotive aftermarket business are
positive.
10
Our strategy
continues to be to expand market share by aggressively entering new markets,
expanding our store base in our current markets and increasing the productivity
of our existing stores. We feel that our
dual market strategy of targeting both the do-it-yourself retail customer and
commercial installer positions the company extremely well to take advantage of
growth in the automotive aftermarket business.
We continue to remain focused on profitable expansion of our store base
through entry into geographic regions contiguous to our existing markets,
incremental store growth in compelling markets within our current regions and
selective acquisitions. We believe our
investment in store growth will be funded with the cash flows generated by our
existing operations and through available borrowings under our current credit
facility or our anticipated asset based revolving credit facility that has been
previously committed by Bank of America and Lehman Brothers, Inc.
Recent Developments
On April 1, 2008, we
entered into a definitive merger agreement with CSK Auto Corporation (CSK)
under which we will acquire all of the outstanding shares of CSK common
stock. Under the terms of the agreement,
CSK shareholders will receive $11.00 of our common stock, subject to a collar,
plus $1.00 in cash for each share of CSK stock.
The collar will be determined using an exchange ratio equal to $11.00
divided by the average trading price of our common stock for the five trading
days ending two trading days prior to the consummation of the exchange
offer. However, if the average trading
price of our stock is greater than $29.95, then the exchange ratio shall equal
0.3673, and if the average trading price is less than $25.67, then the exchange
ratio shall equal 0.4285. The $1.00 in
cash is subject to reduction for costs, if any, in excess of $3 million
associated with obtaining any credit agreement waivers or amendments from CSKs
lenders that may be required prior to the closing of the merger agreement. If CSK sought to accept a superior proposal,
CSK would be required to pay us a termination fee of $22 million. The transaction is valued at approximately
$1.0 billion, including $500 million of assumed debt. We have entered into a commitment for a $1.2
billion asset based revolving credit facility with Bank of America and Lehman
Brothers Inc. which will be used to refinance debt, fund the cash portion of
the consideration, pay for other transaction-related expenses and provide
liquidity for the combined company going forward. The boards of directors of both companies
have approved the transaction. Completion
of this acquisition, subject to regulatory approval and customary closing
conditions, is expected in the summer of 2008.
On April 18, 2008, we announced that the Federal Trade Commission
had granted early termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 for the merger agreement. Termination of the waiting period satisfies
one of the regulatory approvals required for closing the merger agreement.
Forward-Looking
Statements
We claim the
protection of the safe-harbor for forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. You can identify these statements by
forward-looking words such as expect, believe, anticipate, should, plan,
intend, estimate, project, will or similar words. In addition, statements contained within this
quarterly report that are not historical facts are forward-looking statements,
such as statements discussing among other things, expected growth, store
development and expansion strategy, business strategies, future revenues and
future performance. These
forward-looking statements are based on estimates, projections, beliefs and
assumptions and are not guarantees of future events and results. Such statements are subject to risks,
uncertainties and assumptions, including, but not limited to, competition,
product demand, the market for auto parts, the economy in general, inflation,
consumer debt levels, governmental approvals, our ability to hire and retain
qualified employees, risks associated with the integration of acquired
businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from
anticipated results described or implied in these forward-looking
statements. Please refer to the Risk
Factors section of our annual report on Form 10-K for the year ended December 31,
2007, for additional factors that could materially affect our financial
performance.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
The preparation of our
financial statements in accordance with accounting policies generally accepted
in the United States (GAAP) requires the application of certain estimates and
judgments by management. Management
bases its assumptions, estimates, and adjustments on historical experience,
current trends and other factors believed to be relevant at the time the
consolidated financial statements are prepared.
Management believes that the following policies are critical due to the
inherent uncertainty of these matters and the complex and subjective judgments
required to establish these estimates.
Management continues to review these critical accounting policies and
estimates to ensure that the consolidated financial statements are presented
fairly in accordance with GAAP. However,
actual results could differ from our assumptions and estimates and such
differences could be material.
·
Vendor concessions
We receive concessions from our vendors
through a variety of programs and arrangements, including co-operative
advertising, allowances for warranties, merchandise allowances and volume
purchase rebates. Co-operative
advertising allowances that are incremental to our advertising program,
specific to a product or event and identifiable for accounting purposes, are
11
reported as a reduction
of advertising expense in the period in which the advertising occurred. All other material vendor concessions are
recognized as a reduction to the cost of inventory. Amounts receivable from vendors also include
amounts due to us relating to vendor purchases and product returns. Management regularly reviews amounts
receivable from vendors and assesses the need for a reserve for uncollectible
amounts based on our evaluation of our vendors financial position and
corresponding ability to meet their financial obligations. Based on our historical results and current
assessment, we have not recorded a reserve for uncollectible amounts in our
consolidated financial statements, and we do not believe there is a reasonable
likelihood that our ability to collect these amounts will differ from our
expectations. The eventual ability of
our vendors to pay us the obliged amounts could differ from our assumptions and
estimates, and we may be exposed to losses or gains that could be material.
·
Self-Insurance Reserves
We use a combination of insurance
and self-insurance mechanisms to provide for potential liabilities from workers
compensation, general liability, vehicle liability, property loss, and employee
health care benefits. With the exception
of employee health care benefit liabilities, which are limited by the design of
these plans, we obtain third-party insurance coverage to limit our exposure for
any individual claim. When estimating
our self-insurance liabilities, we consider a number of factors, including
historical claims experience and trend-lines, projected medical and legal
inflation, and growth patterns and exposure forecasts. The assumptions made by management as they
relate to each of these factors represent our judgment as to the most probable
cumulative impact of each factor to our future obligations. Our calculation of our self-insurance
liabilities requires management to apply judgment to estimate the ultimate cost
to settle reported claims and claims incurred but not yet reported as of the
balance sheet date and the application of alternative assumptions would result
in a different estimate of these liabilities.
Actual claim activity or development may vary from our assumptions and
estimates, which may result in material losses or gains. As we obtain additional information that
affects the assumptions and estimates we used to recognize liabilities for
claims incurred in prior accounting periods, we adjust our self-insurance liabilities
to reflect the revised estimates based on this additional information. If
self-insurance reserves were changed 10% from our estimated reserves at December 31,
2007, the financial impact would have been approximately $4.7 million or 1.5%
of pretax income.
·
Accounts receivable
Management estimates the allowance for
doubtful accounts based on historical loss ratios and other relevant
factors. Actual results have
consistently been within managements expectations, and we do not believe that
there is a reasonable likelihood that there will be a material change in the
future that will require a significant change in the assumptions or estimates
we use to calculate our allowance for doubtful accounts. However, if actual results differ from our
estimates, we may be exposed to losses or gains. If the allowance for doubtful accounts were
changed 10% from our estimated allowance at December 31, 2007, the
financial impact would have been approximately $0.3 million or 0.1% of pretax
income.
·
Taxes
We operate within multiple taxing jurisdictions and
are subject to audit in these jurisdictions.
These audits can involve complex issues, which may require an extended
period of time to resolve. We regularly
review our 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. Changes
in our tax liability may occur in the future as our assessments change based on
the progress of tax examinations in various jurisdictions and/or changes in tax
regulations. In managements opinion,
adequate provisions for income taxes have been made for all years
presented. The estimates of our
potential tax liabilities contain uncertainties because management must use
judgment to estimate the exposures associated with our various tax positions
and actual results could differ from our estimates. Alternatively, we could have applied
assumptions regarding the eventual outcome of the resolution of open tax
positions that would differ from our current estimates but that would still be
reasonable given the nature of a particular position. Our judgment regarding the most likely
outcome of uncertain tax positions has historically resulted in an estimate of
our tax liability that is greater than actual results. While our estimates are subject to the
uncertainty noted in the preceding discussion, our initial estimates of our
potential tax liabilities have historically not been materially different from
actual results except in instances where we have reversed liabilities that were
recorded for periods that were subsequently closed with the applicable taxing
authority. The accounting for our tax
reserves changed with the adoption of Financial Accounting Standards Board (FASB)
Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109 (FIN 48) on January 1,
2007.
·
Share-based compensation
Effective January 1, 2006,
we adopted Statement of Financial Accounting Standards No. 123R,
Share Based Payment
(SFAS
No. 123R), under the modified prospective method. Under this application, we record share-based
compensation expense for all awards granted on or after the date of adoption
and for the portion of previously granted awards that remain unvested at the
date of adoption. Currently, our
share-based compensation relates to stock option awards, employee share purchase
plan discounts, restricted stock awards and shares contributed directly to
other employee benefit plans.
12
Under SFAS No. 123R,
we use a Black-Scholes option-pricing model to determine the fair value of
stock options. The Black-Scholes model includes various assumptions, including
the expected life of stock options, the expected volatility and the expected
risk-free interest rate. These assumptions reflect our best estimates,
but they involve inherent uncertainties based on market conditions generally
outside our control. Since our adoption
of SFAS No. 123R, share-based compensation cost would not have been
materially impacted by the variability in the range of reasonable assumptions
we could have applied to value option award grants, but we anticipate that
share-based compensation cost could be materially impacted by the application
of alternate assumptions in future periods.
Also, under SFAS No. 123R, we are required to record share-based
compensation expense net of estimated forfeitures. Our forfeiture rate assumption used in
determining share-based compensation expense is estimated based on historical
data. The actual forfeiture rate and
corresponding share-based compensation expense could differ from those
estimates.
·
Inventory Obsolescence and Shrink
Inventory, which consists of automotive hard parts, maintenance items,
accessories and tools is stated at the lower of cost or market. The extended nature of the life cycle of our
products is such that the risk of obsolescence of our inventory is
minimal. The products that we sell
generally have application in our markets for a relatively long period of time
in conjunction with the corresponding vehicle population. We have developed sophisticated systems for
monitoring the life cycle of a given product and, accordingly, have
historically been very successful in adjusting the volume of our inventory in
conjunction with a decrease in demand.
We do record a reserve to reduce the carrying value of our inventory
through a charge to cost of sales in the isolated instances where we believe
that the market value of a product line is lower than our recorded cost. This reserve is based on our assumptions
about the marketability of our existing inventory and is subject to uncertainty
to the extent that we must estimate, at a given point in time, the market value
of inventory that will be sold in future periods. Ultimately, our projections could differ from
actual results and could result in a material impact to our stated inventory
balances. We have historically not had
to materially adjust our obsolescence reserves due to the factors discussed
above and do not anticipate that we will experience material changes in our
estimates in the future.
We also record a reserve to reduce the carrying value of our perpetual
inventory to account for quantities in our perpetual records above the actual
existing quantities on hand caused by unrecorded shrink. We estimate this reserve based on the results
of our extensive and frequent cycle counting programs and periodic, full
physical inventories at our stores and distribution centers. To the extent that our estimates do not
accurately reflect the actual inventory shrinkage, we could potentially
experience a material impact to our inventory balances. We have historically been able to provide a
timely and accurate measurement of shrink and have not experienced material
adjustments to our estimates. If
unrecorded shrink at December 31, 2007 were double the estimate that we
recorded based on our historical experience, the financial impact would have
been less than $3 million or less than 1.0% of pretax income.
13
Results
of Operations
Sales increased
$33 million, or 5.4% from $613 million in the first quarter of 2007, to $646
million in the first quarter of 2008.
The addition of 37 net new stores opened in the first three months of
2008 contributed $2 million to the first quarter sales increase. A full three months of sales for stores
opened throughout 2007, excluding sales that are included in our comparable
store sales totals, added an additional $35 million to the first quarter sales
increase, slightly offset by a $2 million dollar decrease in other non-store
sales. We believe that the sales
achieved by our stores are the result of superior inventory availability,
offering a broader selection of products in most stores, a targeted promotional
and advertising effort through a variety of media and localized promotional events,
continued improvement in the merchandising and store layouts of most stores,
compensation programs for all store team members that provide incentives for
performance and our continued focus on serving professional installers. Comparable store sales are calculated based
on the change in sales of stores open at least one year and exclude sales of
specialty machinery, sales to independent parts stores and sales to team
members. Comparable store sales for the
first thee months of 2008 decreased by 0.4%, reducing the first quarter sales
increase by $2 million. We believe that
the comparable store sales decrease was primarily attributable to weakened
consumer demand resulting from the challenging macroeconomic environment in
addition to the very strong comparable store sales increase of 6.8% during the
first quarter of 2007. Demand in our
markets was affected by the constraints on our customers discretionary income
as a result of higher energy costs, inflation on consumable goods and general
economic conditions. At March 31,
2008, we operated 1,867 stores compared to 1,687 stores at March 31,
2007. Due to the proposed acquisition of
CSK Auto Corporation (CSK), we anticipate that new store unit growth will
range from 140 to 150 new stores in 2008, which is below our historical rate of
new store growth.
Gross profit increased
$19 million, or 7.1% from $269 million (or 43.9% of sales) in the first quarter
of 2007 to $288 million (or 44.6% of sales) in the first quarter of 2008. The increase in gross profit dollars was
primarily a result of the increase in sales resulting from the greater number
of stores open during the first quarter 2008 compared to the same period in
2007. The increase in gross profit as a
percentage of sales was the result of changes in product mix and lower product
acquisition cost. Changes in product mix
resulted from the recent trend by our customers to purchase a lower priced
product when offered an assortment of products differentiated by quality. This trend toward the lower end of the
value/quality spectrum resulted in higher gross margins as a percentage of
sales but lower total sales and gross margin dollars. Product acquisition cost improved due to
increased imports from lower cost providers in foreign countries as well as
improved negotiating leverage with our vendors resulting from our increased
purchasing power. We anticipate that
smaller incremental improvements in gross profit will occur throughout the
remainder of 2008.
Selling, general and
administrative expenses (SG&A) increased $22 million, or 11.6% from $192
million (or 31.3% of sales) in the first quarter of 2007 to $214 million (or
33.2% of sales) in the first quarter of 2008.
The increase in these expenses was primarily attributable to increased
salaries and benefits, rent and other costs associated with the addition of
employees and facilities to support the increased level of our operations. The increase in SG&A as a percentage of
sales was primarily driven by the decline in comparable store sales in the first
quarter in addition to increased fuel, advertising and depreciation costs.
Our estimated provision for income taxes decreased $1.4
million to $27.4 million for the first quarter 2008 compared to $28.8 million
for the same period in 2007. This decrease
is the result of our lower taxable income.
Our effective tax rate was 37.1% of income before income taxes for the
first quarter of 2008 versus 37.3% for the same period in 2007.
As a result of the
impacts discussed above, net income decreased $2 million from $48 million in
2007 (7.9% of sales) to $46 million in 2008 (7.2% of sales).
Liquidity
and Capital Resources
Net cash provided by
operating activities decreased from $128.6 million for the first quarter of
2007 to $118.9 million for the first quarter of 2008. This decrease was principally due to
decreased net income as discussed above in Results of Operation and less
improvement in the ratio of accounts payable to inventory in the first quarter
of 2008 than was realized in the first quarter of 2007.
Net cash used in investing activities decreased from $64.1
million during the first quarter of 2007 to $56.6 million for the comparable
period in 2008, primarily due to a decrease in capital expenditures from our
store expansion program. Our store expansion
program resulted in the addition of 37 new stores in the first three months of
2008 compared to the addition of 47 new stores for the same period in
2007. During the first three months of
2008, we relocated 12 stores compared to the relocation of six stores during
the same period in 2007.
Net cash provided by
financing activities increased $7.6 million from $4.2 million used in financing
activities during the first three months of 2007 to $3.4 million provided by
financing activities in the first three months of 2008. The increase in cash flows from financing
activities is the result of the repayment of long-term debt during the first
quarter of 2007 slightly offset by a decrease in the proceeds and tax benefits
from the exercise of stock options due to less activity in the first quarter of
2008 compared to the same period in 2007.
14
We have available
an unsecured, five-year syndicated revolving credit facility in the amount of
$100 million. The credit facility may be
increased at our request to a total of $200 million, subject to availability of
such additional credit from either existing banks within the credit facility or
other banks. At March 31, 2008,
there were no outstanding borrowings under the revolving credit facility. Letters of credit totaling $28.6 million were
outstanding under the credit facility at March 31, 2008. Accordingly, we have aggregate availability
for additional borrowings of $71.4 million under the revolving credit facility. The revolving credit facility, which bears
interest at LIBOR plus a spread ranging from 0.375% to 0.75% (at March 31,
2008, the spread was 0.375% resulting in an applicable rate of 3.5625%),
expires in July 2010.
Our continuing
store expansion program requires significant capital expenditures and working
capital principally for inventory requirements.
The costs associated with opening a new store (including the cost of
land acquisition, improvements, fixtures, net inventory investment and computer
equipment) are estimated to average approximately $1.2 to $1.4 million;
however, such costs may be significantly reduced where we lease, rather than
purchase, the store site. We plan to
finance our expansion program through cash expected to be provided from
operating activities and available borrowings under our existing credit
facilities or our anticipated asset based revolving credit facility that has
been previously committed by Bank of America and Lehman Brothers, Inc.
During the first
quarter of 2008, we opened 37 net new stores.
We plan to open approximately 113 additional stores during the remainder
of 2008. The funds required for such
planned expansions are expected to be provided by existing cash balances, cash
generated from operating activities and existing credit facilities or our
anticipated asset based revolving credit facility that has been previously
committed by Bank of America and Lehman Brothers, Inc.
In connection with the proposed acquisition of CSK, we have
entered into a commitment for a $1.2 billion asset based revolving credit
facility with Bank of America and Lehman Brothers Inc. which we anticipate
using to refinance debt, fund the cash portion of the acquisition, pay for
other transaction-related expenses and provide liquidity for the combined
company going forward. We believe that
our existing cash, cash expected to be provided by operation activities and our
current credit facility or, if we close the CSK transaction, our anticipated asset
based revolving credit facility will be sufficient to fund both our short-term
and long-term capital and liquidity needs for the foreseeable future.
Contractual Obligations
At March 31,
2008, we had long-term debt with maturities of less than one year of
$25,323,000 and long-term debt with maturities over one year of $75,068,000,
representing a total decrease in all outstanding debt of $78,000 from March 31,
2007.
New
Accounting Standards
In September 2006,
the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 157,
Fair
Value Measurements
(SFAS No. 157), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. The provisions of SFAS No. 157 for
financial assets and liabilities, as well as any other assets and liabilities
that are carried at fair value on a recurring basis in financial statements,
are effective for financial statements issued for fiscal years beginning after November 15,
2007 (fiscal year 2008 for us). FASB Staff Position FAS 157-2,
Effective Date of FASB Statement No.
157,
delayed the effective date of SFAS No. 157 for most nonfinancial assets
and nonfinancial liabilities until fiscal years beginning after November 15,
2008 (fiscal year 2009 for us). The implementation of SFAS No. 157
for financial assets and financial liabilities, effective January 1, 2008,
did not have a material impact on our consolidated financial position, results
of operations or cash flows. We are currently assessing the impact of
SFAS No. 157 for nonfinancial assets and liabilities on our consolidated
financial position, results of operations or cash flows.
In February 2007,
the FASB issued SFAS No. 159,
The Fair
Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159).
SFAS No. 159 permits entities to choose to measure selected financial
assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings at each subsequent reporting date. The provisions of SFAS No. 159 are
effective as of the beginning of our 2008 fiscal year. The adoption of SFAS No. 159 did not
have a material impact on our consolidated financial position, results of
operations or cash flows.
In December 2007,
the FASB issued SFAS No. 141,
Business
Combinations (revised 2007)
(SFAS No. 141(R)). SFAS
No. 141(R) applies to any transaction or other event that meets the
definition of a business combination. Where applicable, SFAS No. 141(R) establishes
principles and requirements for how the acquirer recognizes and measures
identifiable assets acquired, liabilities assumed,
15
noncontrolling interest
in the acquiree and goodwill or gain from a bargain purchase. In
addition, SFAS No. 141(R) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This statement is to be applied
prospectively for fiscal years beginning after December 15, 2008. We
are in the process of evaluating the impact, if any, of SFAS No. 141(R) on
our consolidated financial statements.
Inflation and Seasonality
We attempt to mitigate the effects of merchandise cost
increases principally by adjustments to our retail prices. We will also take advantage of vendor
incentive programs, economies of scale resulting from increased volume of
purchases and selective forward buying.
As a result, we do not believe that our operations have been materially
affected by inflation. Our business is
somewhat seasonal, primarily as a result of the impact of weather conditions on
customer buying patterns. Store sales
and profits have historically been higher in the second and third quarters (April through
September) of each year than in the first and fourth quarters.
Internet
Address and Access to SEC Filings
Our Internet
address is www.oreillyauto.com.
Interested readers can access our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, through the
Security and Exchange Commissions website at www.sec.gov. Such reports are generally available on the
day they are filed. Additionally, we
will furnish interested readers upon request and free of charge, a paper copy
of such reports.
16
ITEM
3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
We are subject to
interest rate risk to the extent we borrow against our revolving credit
facility with variable interest rates.
Since no amounts were outstanding under the revolving credit facility at
March 31, 2008, changes in interest rates would not have any effect. In the event of an adverse change in interest
rates and assuming the Company had amounts outstanding under the credit
facility, management would likely take actions that would mitigate our exposure
to interest rate risk particularly if our borrowing levels increase to any
significant extent; however, due to the uncertainty of the actions that would
be taken and their possible effects, this analysis assumes no such action. Further, this analysis does not consider the
effects of the change in the level of overall economic activity that could
exist in such an environment.
ITEM
4. CONTROLS AND PROCEDURES
The Companys management,
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, has reviewed and evaluated the effectiveness of
the Companys disclosure controls and procedures as required by Rule 13a-15(b) of
the Securities Exchange Act of 1934, as amended (the Exchange Act,) as of March 31,
2008. Based on such review and
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that the disclosure controls and procedures were effective as of March 31,
2008, to ensure that the information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act (a) is
recorded, processed, summarized and reported within the time period specified
in the Securities and Exchange Commissions rules and forms and (b) is
accumulated and communicated to the Companys management, including the
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure.
There were no material changes in the Companys internal control over
financial reporting during the first quarter of 2008 that have materially
affected or are reasonably likely to materially affect the Companys internal
controls over financial reporting.
17
PART II
- OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We are not a party
to any legal proceedings, other than routine claims and lawsuits arising in the
ordinary course of our business. We do
not believe such claims and lawsuits, individually or in the aggregate, will have
a material adverse effect on our business.
ITEM 1A.
RISK FACTORS
There have been no
material changes in the risk factors discussed in our Annual Report on Form 10-K
for the year ended December 31, 2007.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.
OTHER INFORMATION
None.
18
ITEM
6. EXHIBITS
Exhibits:
Number
|
|
Description
|
|
|
|
31.1
|
|
Certificate of the
Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
31.2
|
|
Certificate of the
Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
32.1
|
|
Certificate of the
Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
32.2
|
|
Certificate of the
Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
19
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.
|
|
OREILLY AUTOMOTIVE, INC.
|
|
|
|
May 9, 2008
|
|
/s/ Greg Henslee
|
Date
|
|
Greg
Henslee, Co-President and Chief Executive
Officer (Principal Executive Officer)
|
|
|
|
|
|
|
May 9, 2008
|
|
/s/ Thomas McFall
|
Date
|
|
Thomas
McFall, Executive Vice-President of Finance and
Chief Financial Officer (Principal Financial and
Accounting Officer)
|
20
INDEX
TO EXHIBITS
Number
|
|
Description
|
|
|
|
31.1
|
|
Certificate of the
Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
31.2
|
|
Certificate of the
Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
32.1
|
|
Certificate of the
Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
32.2
|
|
Certificate of the
Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, filed herewith.
|
21
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