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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 March 31, 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
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
233 South Patterson
Springfield, Missouri 65801
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(Address of principal executive offices, Zip code)
(417) 862-6708
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(Registrant's telephone number, including area code)
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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 [_]
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Common stock, $0.01 par value - 10,428,062 shares outstanding as of March 31,
1996
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
FORM 10-Q
Quarter Ended March 31, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
----
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
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
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PART I FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------------------------
(Unaudited) (Note)
(In thousands, except share data)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,812 $ 2,833
Short-term investments 20,756 23,410
Accounts receivable 10,816 9,460
Inventory 74,191 58,979
Other current assets 3,261 3,964
-------- --------
Total current assets 111,836 98,646
Property and equipment, at cost 75,124 68,391
Accumulated depreciation 17,046 16,440
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58,078 51,951
Other assets 3,147 3,007
-------- --------
Total assets $173,061 $153,604
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,893 $ 13,013
Income taxes payable 1,279 -
Other current liabilities 4,371 4,931
Current portion of long-term debt 182 231
-------- --------
Total current liabilities 31,725 18,175
Long-term debt, less current portion 352 358
Other liabilities 1,256 1,201
Stockholders' equity:
Common stock, $.01 par value:
Authorized shares - 30,000,000
Issued and outstanding shares - 10,428,062
in 1996 and 10,362,170 in 1995 104 104
Additional paid-in capital 72,794 71,024
Retained earnings 66,830 62,742
-------- --------
Total stockholders' equity 139,728 133,870
-------- --------
Total liabilities and stockholders'
equity $173,061 $153,604
======== ========
</TABLE>
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
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------
1996 1995
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(In thousands, except per share data)
<S> <C> <C>
Product sales $55,321 $42,766
Cost of goods sold, including warehouse and distribution expenses 32,912 25,210
Operating, selling, general and administrative expenses 16,255 12,994
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49,167 38,204
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Operating income 6,154 4,562
Other income, net 319 99
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Income before income taxes 6,473 4,661
Provision for income taxes 2,385 1,748
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Net income $ 4,088 $ 2,913
======= =======
Net income per share $0.39 $0.34
======= =======
Weighted average common shares outstanding 10,380 8,692
======= =======
</TABLE>
See note to condensed consolidated financial statements.
4
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
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(In thousands)
<S> <C> <C>
Net cash provided by operating activities $ 3,761 $ 1,025
Investing activities:
Purchases of property and equipment (7,528) (4,828)
Proceeds from sale of property and equipment 137 12
Purchases of short-term investments (6,456) -
Proceeds from sale of short-term investments 9,110 1,075
Payments received on notes receivable 9 -
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Net cash used in investing activities (4,728) (3,741)
Financing activities:
Borrowings on note payable to bank - 1,000
Borrowings on long-term note - 108
Payments on long-term debt (55) (69)
Proceeds from issuance of common stock 1,001 342
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Net cash provided by financing activities 946 1,381
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Net decrease in cash (21) (1,335)
Cash at beginning of period 2,833 3,364
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Cash at end of period $ 2,812 $ 2,029
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</TABLE>
See note to condensed consolidated financial statements.
5
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 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 with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 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
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
------------------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
RESULTS OF OPERATIONS
Product sales for the first quarter of 1996 increased by $12.6 million, or
29.4%, over product sales for the first quarter of 1995 due to a 18.4% increase
in comparable store product sales for the quarter, the opening of 20 new
O'Reilly stores during the last three quarters of 1995 and the opening of 3 new
stores during the first quarter of 1996. 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 three months of 1996 at the levels set in
1995, an increase in the broad selection of SKU's available at the newer
O'Reilly stores and the increasing penetration of the general geographic markets
in which the Company operates.
Gross profit increased 27.6% from $17.6 million (or 41.1% of product sales) in
the first quarter of 1995 to $22.4 million (or 40.5% of product sales) in the
first quarter of 1996. The increased dollar amount of gross profit resulted
primarily from increased sales volume. The decrease in the gross profit margin
for the first quarter of 1996 was primarily due to start-up costs associated
with the opening of the Company's new Oklahoma City, Oklahoma distribution
center and changes in product sales mix during the first quarter of 1996.
Operating, selling, general and administrative expenses (OSG&A expenses)
increased $3.3 from $13.0 million (or 30.4% of product sales) in the first
quarter of 1995 to $16.3 million (or 29.4% of product sales) in the first
quarter of 1996. The increased dollar amount of OSG&A expenses resulted
primarily from the new stores opened during the last three quarters of 1995 and
the first quarter of 1996 as well as additions to administrative staff in order
to support increased operations. The decrease in OSG&A expenses as a percentage
of product sales was primarily attributable to increased product sales.
The Company's estimated provision for income taxes decreased from 37.5% of
income before income taxes in the first quarter of 1995 to 36.8% in the first
quarter of 1996. The decrease in the estimated effective income tax rate was
primarily due to more of the Company's sales occurring in states with lower
income tax rates.
Net income increased from $2.9 million or 6.8% of product sales in the first
quarter of 1995 to $4.1 million or 7.4% of product sales in the first quarter of
1996, due primarily to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased from $1.0 million for the
first three months of 1995 to $3.8 million for the first three months of 1996
principally as a result of increases in net income, depreciation and accounts
payable offset by increases in accounts receivable and inventory.
Net cash used in investing activities has increased from $3.7 million in 1995 to
$4.7 million in 1996 primarily as a result of a $2.7 million increase in
purchases of property and equipment, most of which
7
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relates to the opening of the Oklahoma City distribution center, offset by an
increase in net proceeds from sales of short-term investments.
Cash provided by financing activities has decreased from $1.4 million in the
first three months of 1995 to $0.9 million in the first three months of 1996.
The decrease was primarily due to no borrowings under the Company's credit
facilities during the first three months of 1996.
The Company has available a short-term unsecured line of credit with Boatmen's
Bank of Southwest Missouri. Under the terms thereof, the Company may borrow up
to $17.0 million until May 1996. Borrowings outstanding under the line of credit
bear interest at LIBOR plus 1% (6.4687% as of March 31, 1996). At March 31,
1996, no amounts were outstanding under the line of credit. Terms of this
agreement, originally expiring May 1, 1996, will be extended to June 1, 1996.
The Company expects that this line of credit will be renewed with substantially
the same terms commencing on June 1, 1996.
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% (6.7187% at March 31, 1996). At March 31, 1996, there were no borrowings
outstanding under this credit facility.
The Company plans to open an additional 27 stores in 1996 (for a total of 30). A
portion of 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.
8
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Not applicable
Item 2. Changes in Securities
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Not applicable
Item 3. Defaults Upon Senior Securities
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Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable
Item 5. Other information
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Not applicable
Item 6. Exhibits and Reports on Form 8-K
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(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 March 31, 1996.
9
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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.
May 9, 1996 David E. O'Reilly
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Date David E. O'Reilly, President and Chief Executive
Officer
May 9, 1996 James R. Batten
- ---------------- -------------------------------------------------
Date James R. Batten, Chief Financial Officer
(Principal Financial and Accounting Officer)
10
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EXHIBIT INDEX
Number Description Page
- ------ ----------- ----
11.1 Computation of Earnings Per Share, filed herewith 12
27.1 Financial Data Schedule, filed herewith 13
11
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 11.1 - Computation of Earnings Per Share
Three Months Ended March 31,
---------------------------------------
1996 1995
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(In thousands, except per share data)
PRIMARY:
Weighted average shares outstanding 10,380 8,692
====== ======
Net income $4,088 $2,913
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Per share amount $ 0.39 $ 0.34
====== ======
FULLY DILUTED:
Not applicable
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at March 31, 1996 (Unaudited) and the
Condensed Consolidated Statement of Income for the Three Months Ended March 31,
1996 (Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,812
<SECURITIES> 20,756
<RECEIVABLES> 11,202
<ALLOWANCES> 386
<INVENTORY> 74,191
<CURRENT-ASSETS> 111,836
<PP&E> 75,124
<DEPRECIATION> 17,046
<TOTAL-ASSETS> 173,061
<CURRENT-LIABILITIES> 31,725
<BONDS> 0
<COMMON> 104
0
0
<OTHER-SE> 139,624
<TOTAL-LIABILITY-AND-EQUITY> 173,061
<SALES> 55,321
<TOTAL-REVENUES> 55,640
<CGS> 32,912
<TOTAL-COSTS> 16,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 159
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 6,473
<INCOME-TAX> 2,385
<INCOME-CONTINUING> 4,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,088
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.39
</TABLE>
