SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to ________.
Commission file number: 0-21318
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
O'Reilly Automotive, Inc. Profit Sharing and Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
O'Reilly Automotive, Inc.
233 South Patterson
Springfield, Missouri 65802
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
REQUIRED INFORMATION
(a) Financial Statements. Filed as part of this Report on Form 11-K are the
financial statements and the schedules thereto of the O'Reilly Automotive,
Inc. Profit Sharing and Savings Plan as required by Form 11-K, together
with the report thereon of Ernst & Young LLP, independent auditors, dated
June 3, 1998.
(b) Exhibits. A consent of Ernst and Young LLP is being filed as Exhibit 23 to
this Report.
<PAGE>
Financial Statements and Schedules
(Modified Cash Basis)
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Years ended December 31, 1997 and 1996
With Report of Independent Auditors
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Financial Statements
and Schedules
Years ended December 31, 1997 and 1996
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements (Modified Cash Basis)
Statements of Net Assets Available for Plan Benefits ..........................3
Statements of Changes in Net Assets Available for Plan Benefits
With Fund Information.....................................................4
Notes to Financial Statements..................................................6
Supplemental Schedules (Modified Cash Basis)
Item 27a - Schedule of Assets Held for Investment Purposes ...................13
Item 27d - Schedule of Reportable Transactions ...............................14
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions which are prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
Schedules of loans, fixed income obligations and leases in default or
uncollectible have not been presented, since such loans, fixed income
obligations or leases were not present.
<PAGE>
Report of Independent Auditors
The Plan Administrators and Participants
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits (modified cash basis) of the O'Reilly Automotive, Inc. Profit Sharing
and Savings Plan (the Plan) as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits (modified cash
basis) for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements have been prepared on the
modified cash basis, which is a comprehensive basis of accounting other than
generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the Plan's net assets available for plan benefits
(modified cash basis) at December 31, 1997 and 1996, and changes in its net
assets available for plan benefits (modified cash basis) for the years then
ended on the basis of accounting described in Note 1.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
(modified cash basis) of assets held for investment purposes as of December 31,
1997 and reportable transactions for the year then ended are presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 and are not a required part of the basic financial statements. The fund
information in the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the changes in net assets available for benefits of each fund. The supplemental
schedules (modified cash basis) and fund information have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
Ernst & Young LLP
Kansas City, Missouri
June 3, 1998
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Statements of Net Assets Available for Plan Benefits
(Modified Cash Basis)
December 31,
1997 1996
-------------------------------
Assets
Investments (Note 3):
Common collective trusts at fair value:
Principal Preservation Fund $ 1,482,087 $ 1,435,513
Intermediate Bond Fund 1,357,928 1,299,639
Balanced Fund 3,051,940 2,655,320
Value Plus Equity Fund 3,607,126 2,885,157
O'Reilly Automotive, Inc. Stock Fund 9,706,933 4,822,355
-------------------------------
Net assets available for plan benefits $19,206,014 $13,097,984
===============================
See accompanying notes.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Statements of Changes in Net Assets
Available for Plan Benefits with Fund Information
(Modified Cash Basis)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
O'Reilly
Principal Automotive,
Preservation Intermediate Balanced Value Plus Inc.
Cash Fund Bond Fund Fund Equity Fund Stock Fund Total
--------------------------------------------------------------------------------------
Additions to net assets attributable to Investment income:
Net realized and unrealized
appreciation
<S> <C> <C> <C> <C> <C> <C> <C>
in fair value of investments $ -- $ 79,431 $ 90,961 $ 313,444 $ 589,740 $3,415,225 $ 4,488,801
Contributions:
Employer -- -- -- -- -- 1,279,856 1,279,856
Employee -- 192,013 159,687 372,569 466,670 404,643 1,595,582
-------------------------------------------------------------------------------------
-- 192,013 159,687 372,569 466,670 1,684,499 2,875,438
-------------------------------------------------------------------------------------
Total additions -- 271,444 250,648 686,013 1,056,410 5,099,724 7,364,239
Deductions from net assets attributable to
Distributions to participants -- (250,334) (118,064) (169,448) (238,735) (479,628) (1,256,209)
-------------------------------------------------------------------------------------
Total deductions -- (250,334) (118,064) (169,448) (238,735) (479,628) (1,256,209)
-------------------------------------------------------------------------------------
Net increase prior to interfund -- 21,110 132,584 516,565 817,675 4,620,096 6,108,030
transfers
Interfund transfers (net) -- 25,464 (74,295) (119,945) (95,706) 264,482 --
-------------------------------------------------------------------------------------
Net increase -- 46,574 58,289 396,620 721,969 4,884,578 6,108,030
Net assets available for plan benefits
Beginning of year -- 1,435,513 1,299,639 2,655,320 2,885,157 4,822,355 13,097,984
-------------------------------------------------------------------------------------
End of year $ -- $1,482,087 $1,357,928 $3,051,940 $3,607,126 $9,706,933 $19,206,014
=====================================================================================
</TABLE>
See accompanying notes.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Statements of Changes in Net Assets
Available for Plan Benefits with Fund Information
(Modified Cash Basis)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
O'Reilly
Principal Automotive,
Preservation Intermediate Balanced Value Plus Inc.
Cash Fund Bond Fund Fund Equity Fund Stock Fund Total
--------------------------------------------------------------------------------------
Additions to net assets attributable to
Investment income:
Net realized and unrealized
appreciation in fair value
<S> <C> <C> <C> <C> <C> <C> <C>
of investments $ -- $ 68,502 $ 34,287 $ 261,671 $ 418,744 $ 239,559 $ 1,022,763
Contributions:
Employer -- -- -- -- -- 1,041,523 1,041,523
Employee -- 173,116 150,758 289,144 334,684 291,403 1,239,105
-------------------------------------------------------------------------------------
-- 173,116 150,758 289,144 334,684 1,332,926 2,280,628
-------------------------------------------------------------------------------------
Total additions -- 241,618 185,045 550,815 753,428 1,572,485 3,303,391
Deductions from net assets attributable to
Distributions to participants -- (70,807) (58,034) (114,067) (164,646) (266,317) (673,871)
-------------------------------------------------------------------------------------
Total deductions -- (70,807) (58,034) (114,067) (164,646) (266,317) (673,871)
-------------------------------------------------------------------------------------
Net increase prior to interfund
transfers -- 170,811 127,011 436,748 588,782 1,306,168 2,629,520
Interfund transfers (net) (23,064) 60,142 (120,312) (121,086) (47,251) 251,571 --
-------------------------------------------------------------------------------------
Net increase (decrease) (23,064) 230,953 6,699 315,662 541,531 1,557,739 2,629,520
Net assets available for plan benefits
Beginning of year 23,064 1,204,560 1,292,940 2,339,658 2,343,626 3,264,616 10,468,464
-------------------------------------------------------------------------------------
End of year $ -- $1,435,513 $1,299,639 $2,655,320 $2,885,157 $4,822,355 $13,097,984
======================================================================================
</TABLE>
See accompanying notes.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements
December 31, 1997 and 1996
1. Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies of the
O'Reilly Automotive, Inc. Profit Sharing and Savings Plan (the Plan):
Basis of Presentation
The accompanying financial statements have been prepared on the modified cash
basis of accounting, which is a comprehensive basis of accounting other than
generally accepted accounting principles. Under this basis, contributions are
recorded when received rather than in the period to which they relate, and
expenses are recorded when paid rather than when incurred.
Valuation of Investments
The value of investments in common collective trusts and in the O'Reilly
Automotive, Inc. Stock Fund is based on quoted market values received from
NationsBank on the last business day of the plan year.
Use of Estimates
The preparation of financial statements require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. Description of the Plan
The following description of the Plan is provided for general information only.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
The Plan is a defined contribution pension plan providing retirement benefits to
substantially all employees of O'Reilly Automotive, Inc. (the Company) who have
attained age 21 and completed six months and at least 1,000 hours of service in
a 12-consecutive-month period of employment. The Plan is sponsored by the
Company and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
2. Description of the Plan (continued)
The Plan allows participants to contribute up to 15% of their compensation to
the Plan. At its discretion, the Company has elected to contribute 50% of each
employee's voluntary contribution up to 2% of the employee's compensation and
25% of the next 2% of each employee's voluntary contribution. Additionally, the
Company may make voluntary contributions to the Plan annually, as determined by
its Board of Directors, up to a maximum aggregate company contribution of 15% of
participants' annual compensation. All employer contributions made after
December 31, 1993 will be invested in the O'Reilly Automotive, Inc. Stock Fund.
During the years ended December 31, 1997 and 1996, the Plan received
discretionary contributions from the Company amounting to $884,000 and $684,000,
respectively, not including matching contributions.
Each participant's account is credited with the participant's contribution and
an allocation of the Company's contribution, plan earnings and forfeitures of
terminated participants' non vested accounts. Allocations of company
contributions and forfeitures of terminated participants' non vested accounts
are based on participant earnings. Allocations of plan earnings are based on
participants' account balances.
Participants are immediately vested with respect to their voluntary
contributions. With respect to employer contributions, participants become 20%
vested after three years of service with the Company. Vesting increases in 20%
increments annually to 100% after seven years.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100% vested in their accounts.
Benefit distributions are payable in monthly installments to the beneficiary or
in a lump sum, as elected by the participant. At December 31, 1997 and 1996,
terminated employees had approximately $104,000 and $37,000, respectively,
included in net assets available for plan benefits which were to be paid in 1998
and 1997, respectively. The Company currently pays 100% of the administrative
expenses associated with the Plan.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
2. Description of the Plan (continued)
Under the provisions of the Plan, participants may elect to have their
contributions invested in one or more of the following funds:
Principal Preservation Fund - Invests in high quality fixed income
securities. The objective of the fund is conservation of capital.
Intermediate Bond Fund - Invests in quality intermediate bonds and notes
with the goal of stable current income and long-term growth.
Balanced Fund - Invests in NationsBank Collective Funds which provide
exposure to the equity and fixed income markets with the goal of capital
growth, competitive long-term total return and below average volatility.
Value Plus Equity Fund - Invests in undervalued equities which have
superior expectations for sustainable growth in earnings and yield with the
objective of superior total return and below average market risk.
O'Reilly Automotive, Inc. Stock Fund - Invests in the common stock of
O'Reilly Automotive, Inc. with the goal of providing long-term
participation in the ownership and profitability of the Company. In August,
1997, a 100% stock dividend was paid to all shareholders of record as of
July 31, 1997. The balance in the O'Reilly Automotive, Inc. Stock Fund at
December 31, 1997 and 1996, includes $5,787,713 and $2,708,200,
respectively, representing Company contributions to the fund and earnings
thereon, which are not subject to participant investment direction.
3. Investments
At December 31, 1997 and 1996, the Plan's investments are held by NationsBank,
formerly known as Boatmens' Trust Company, in a bank-administered trust fund.
The trustee has full discretionary authority for the purchase and sale of
investments, subject to certain restrictions as specified in the trust agreement
and in ERISA.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
3. Investments (continued)
The Plan's investments included the following as of December 31:
1997 1996
---------------------------------
NationsBank Common Collective Trusts:
Principal Preservation Fund $ 1,482,087 $ 1,435,513
Intermediate Bond Fund 1,357,928 1,299,639
Balanced Fund 3,051,940 2,655,320
Value Plus Equity Fund 3,607,126 2,885,157
O'Reilly Automotive, Inc. Stock Fund 9,706,933 4,822,355
---------------------------------
$19,206,014 $13,097,984
=================================
At December 31, the fair value of individual investments that represent 5% or
more of the Plan's net assets available for benefits is as follows:
1997 1996
---------------------------------
NationsBank Common Collective Trusts:
Principal Preservation Fund $ 1,482,087 $ 1,435,513
Intermediate Bond Fund 1,357,928 1,299,639
Balanced Fund 3,051,940 2,655,320
Value Plus Equity Fund 3,607,126 2,885,157
O'Reilly Automotive, Inc. Stock Fund 9,706,933 4,822,355
---------------------------------
$19,206,014 $13,097,984
=================================
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
3. Investments (continued)
During 1997 and 1996, the Plan's investments (including investments bought and
sold, as well as held, during the year) appreciated in fair value as follows:
Net Appreciation Fair Value
in Fair Value at End
During Year of Year
------------------------------------
Year ended December 31, 1997
Fair value as determined by quoted market
prices of the underlying securities:
Principal Preservation Fund $ 79,431 $ 1,482,087
Intermediate Bond Fund 90,961 1,357,928
Balanced Fund 313,444 3,051,940
Value Plus Equity Fund 589,740 3,607,126
O'Reilly Automotive, Inc. Stock Fund 3,415,225 9,706,933
---------------------------------
$4,488,801 $ 19,206,014
=================================
Year ended December 31, 1996
Fair value as determined by quoted market
prices of the underlying securities:
Principal Preservation Fund $ 68,502 $ 1,435,513
Intermediate Bond Fund 34,287 1,299,639
Balanced Fund 261,671 2,655,320
Value Plus Equity Fund 418,744 2,885,157
O'Reilly Automotive, Inc. Stock Fund 239,559 4,822,355
---------------------------------
$1,022,763 $ 13,097,984
=================================
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
4. Income Tax Status
The Plan has obtained a favorable letter of determination from the Internal
Revenue Service and is thus not subject to income tax. The plan administrator is
aware of no events which may disqualify the Plan under Section 401(a) of the
Internal Revenue Code.
5. Subsequent Events
Effective January 1, 1998, the Company transferred all assets from NationsBank
to a new plan administrator, Banker's Trust Company.
Effective January 31, 1998, the Company acquired 100% of the outstanding capital
stock of Hi-Lo Automotive, Inc. and its subsidiaries. The plan assets of the
profit sharing plan of the acquired company will be rolled over into the
O'Reilly Automotive, Inc. Profit Sharing and Savings Plan.
6. Year 2000 Issue (unaudited)
The Company is developing a plan to modify its internal information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant. The
Company does not expect this project to have significant effect on plan
operations.
<PAGE>
Supplemental Schedules
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Item 27a - Schedule of Assets Held for Investment Purposes
(Modified Cash Basis)
December 31, 1997
<TABLE>
<CAPTION>
Number of Fair
Identity of Issue Shares Cost Value
- --------------------------------------------------------------------------------
NationsBank Common
Collective Trusts*:
<S> <C> <C>
Principal Preservation Fund $ 1,288,542 $ 1,482,087
Intermediate Bond Fund 1,150,267 1,357,928
Balanced Fund 2,231,634 3,051,940
Value Plus Equity Fund 2,335,049 3,607,126
O'Reilly Automotive, Inc. Stock Fund* 369,788 6,218,798 9,706,933
-----------------------------
$13,224,290 $19,206,014
=============================
</TABLE>
*Party-in-interest to the Plan.
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Item 27d - Schedule of Reportable Transactions
(Modified Cash Basis)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Current
Identity of Cost of Value of Net
Party Involved Description of Assets Purchases Sales Assets Assets Gain
- --------------------------------------------------------------------------------------------------------------------------
Category (i) - Single transactions in excess of 5% of plan assets
NationsBank* O'Reilly Automotive, Inc. Stock Fund
<S> <C> <C> <C> <C> <C> <C>
(1 purchase) $ 884,000 $ -- $ 884,000 $ 884,000 $ --
Category (iii) - Series of transactions in excess of 5% of plan assets
NationsBank* Principal Preservation Fund
(68 purchases) 345,208 -- 345,208 345,208 --
NationsBank* Principal Preservation Fund
(112 sales) -- 378,065 341,496 378,065 36,569
NationsBank* Intermediate Bond Fund
(43 purchases) 227,543 -- 227,543 227,543 --
NationsBank* Intermediate Bond Fund
(84 sales) -- 260,215 233,457 260,215 26,758
NationsBank* Balanced Fund
(55 purchases) 462,644 -- 462,644 462,644 --
NationsBank* Balanced Fund
(103 sales) -- 379,467 297,905 379,467 81,562
NationsBank* Value Plus Equity Fund
(73 purchases) 750,121 -- 750,121 750,121 --
NationsBank* Value Plus Equity Fund
(94 sales) -- 617,879 457,342 617,879 160,537
NationsBank* O'Reilly Automotive, Inc. Stock Fund
(118 purchases) 2,561,539 -- 2,561,539 2,561,539 --
NationsBank* O'Reilly Automotive, Inc. Stock Fund
(107 sales) -- 1,091,859 919,659 1,091,859 172,200
There were no category (ii) or (iv) reportable transactions during 1997.
*Party-in-interest to the Plan.
</TABLE>
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
FORM 11-K
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Board of Directors, which administers the Plan, have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Date: June 26, 1998 By:/s/ David E. O'Reilly
-------------------------------------
Plan Adminstrator
<PAGE>
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
FORM 11-K
Exhibit Index
Exhibit
Number Exhibit
- ------- -----------------------------------------------------------------
23 Consent of Ernst & Young LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-73892) pertaining to the Profit Sharing and Savings Plan of O'Reilly
Automotive, Inc. of our report dated June 3, 1998 with respect to the financial
statements and schedules of the O'Reilly Automotive, Inc. Profit Sharing and
Savings Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1997.
By: /s/ Ernst & Young LLP
-------------------------------------
Ernst & Young LLP
Kansas City, Missouri
June 23, 1998
