O REILLY AUTOMOTIVE INC - 10-Q Quarterly Report

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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, 2004

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ___________________ to ____________________

Commission file number 0-21318

O'REILLY AUTOMOTIVE, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Missouri 44-0618012
- -------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)

233 South Patterson
Springfield, Missouri 65802
- -------------------------------------------------------------------------------
(Address of principal executive offices, Zip code)

(417) 862-6708
- -------------------------------------------------------------------------------
(Registrant's 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.

Yes [X] No [ ]

Indicate by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

Common stock, $0.01 par value - 54,784,667 shares outstanding as of March 31,
2004. As of that date, the aggregate market value of the voting stock held by
non-affiliates of the Company was approximately $2,193,578,067 based on the last
sale price of the common stock reported by the Nasdaq Stock Market (National
Market).

This report contains a total of 19 pages of which this page is number 1.

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
FORM 10-Q
Quarter Ended March 31, 2004

TABLE OF CONTENTS

Page 2

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

NOTE: The balance sheet at December 31, 2003, has been derived from the audited
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.

See notes to condensed consolidated financial statements.

Page 3

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended
March 31,
------------------------
2004 2003
---------- ----------
(In thousands, except
per share data)

Product sales $ 403,294 $ 339,475

Cost of goods sold, including
warehouse and distribution expenses 233,956 198,529
---------- ----------
Gross profit 169,338 140,946

Operating, selling, general
and administrative expenses 125,566 107,605
---------- ----------
Operating income 43,772 33,341
Other expense, net (446) (1,763)
---------- ----------
Income before income taxes 43,326 31,578

Provision for income taxes 16,200 11,850
---------- ----------
Net income $ 27,126 $ 19,728
========== ==========

Net income per common
share - basic $ 0.50 $ 0.37
========== ==========
Weighted-average common
shares outstanding - basic 54,694 53,402
========== ==========
Net income per common
share - assuming dilution $ 0.49 $ 0.37
========== ==========
Adjusted weighted-average
common shares outstanding
- assuming dilution 55,381 53,753
========== ==========

See notes to condensed consolidated financial statements.

Page 4

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended
March 31,
------------------------
2004 2003
---------- ----------
(In thousands)

Net cash provided by operating activities $ 82,012 $ 57,344

Investing activities:
Purchases of property and equipment (40,078) (32,189)
Proceeds from sale of property and equipment 667 71
Payments received on notes receivable 936 173
Investments in other assets (1,428) (1,974)
---------- ----------
Net cash used in investing activities (39,903) (33,919)

Financing activities:
Principal payments on long-term debt (20,246) (35,204)
Net proceeds from issuance of common stock 2,380 2,190
---------- ----------
Net cash used in financing activities (17,866) (33,014)
---------- ----------
Net increase (decrease) in cash and cash equivalents 24,243 (9,589)
Cash and cash equivalents at beginning of period 21,094 29,333
---------- ----------
Cash and cash equivalents at end of period $ 45,337 $ 19,744
========== ==========

See notes to condensed consolidated financial statements.

Page 5

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2004

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
O'Reilly Automotive, Inc. and Subsidiaries (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States
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 accounting principles generally accepted in the United
States 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, 2004, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2004. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.

2. Stock-based Compensation

The Company has elected to use the intrinsic value method of accounting for
stock options issued under our stock option plans and accordingly does not
record an expense for such stock options. For purposes of pro forma disclosures
under the fair value method, the estimated fair value of the options is
amortized to expense over the options' vesting period. The Company's pro forma
information for the quarters ended March 31, is as follows:

2004 2003
---------------------
(In thousands, except
per share data)

Net income as reported....................... $ 27,126 $ 19,728
Stock-based compensation expense
as reported................................ - -
Stock-based compensation expense
under fair value method.................... 2,896 2,031
---------------------
Pro forma net income......................... $ 24,230 $ 17,697
=====================
Pro forma basic net income per share......... $ 0.44 $ 0.33
=====================
Pro forma net income per share-
assuming dilution.......................... $ 0.44 $ 0.33
=====================

3. Synthetic Lease Facility

On June 26, 2003, we completed an amended and restated master agreement relating
to our properties leased from SunTrust Equity Funding, LLC ("the Facility"). The
terms of the amended and restated Facility provide for an initial lease period
of five years, a residual value guarantee of approximately $44.2 million at
March 31, 2004, and purchase options on the properties. The Facility also
contains a provision for an event of default whereby the lessor, among other
things, may require us to purchase any or all of the properties. One additional
renewal period of five years may be requested from the lessor, although the
lessor is not obligated to grant such renewal. The agreement with SunTrust
Equity Funding, LLC has been recorded and disclosed as an operating lease in
accordance with Financial Accounting Standards Board Statement No. 13 and
Financial Interpretation No. 46 and 46R

Page 6

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2004

4. 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:

2004 2003
----------------------

Numerator (basic and diluted):
Net income..................................... $ 27,126 $ 19,728
======================
Denominator:
Denominator for basic income per common
share-weighted-average shares............... 54,694 53,402
Effect of stock options........................ 687 351
----------------------
Denominator for diluted income per common
share-adjusted weighted-average shares
and assumed conversion...................... 55,381 53,753
======================
Basic net income per common share.................... $ 0.50 $ 0.37
======================
Net income per common share-assuming
dilution....................................... $ 0.49 $ 0.37
======================

5. Recent Accounting Pronouncements

In January 2003 and as revised in December 2003, FASB issued FASB Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("Interpretation 46") and
FASB Interpretation No. 46R. Interpretations 46 and 46R require companies with a
variable interest in a variable interest entity to apply this guidance as of the
beginning of the first reporting period after December 31, 2003. The application
of the guidance could result in the consolidation of a variable interest entity.
The Company's adoption of Interpretations 46 and 46R did not have a material
effect on the Company's financial position or results of operations.

Page 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Unless otherwise indicated, "we," "us," "our" and similar terms, as well as
references to the "Company" or "O'Reilly" refer to O'Reilly Automotive, Inc. and
its subsidiaries.

Critical Accounting Policies and Estimates

The fundamental objective of financial reporting is to provide useful
information that allows a reader to comprehend the business activities of our
company. To aid in that understanding, management has identified our "critical
accounting policies." These policies have the potential to have a more
significant impact on our financial statements, either because of the
significance of the financial statement item to which they relate, or because
they require judgment and estimation due to the uncertainty involved in
measuring, at a specific point in time, events which are continuous in nature.

o Cost of goods sold - Cost of goods sold includes warehouse and distribution
expenses and estimates of amounts due from vendors for certain merchandise
allowances and rebates. These estimates are consistent with historical
experience.

o Operating, selling, general and administrative expense (OSG&A) - Operating,
selling, general and administrative expense includes estimates for medical,
worker's compensation and other general liability obligations, which are
partially based on estimates of certain claim costs and historical
experience.

o Accounts receivable - Allowance for doubtful accounts is estimated based on
historical loss ratios and consistently has been within management's
expectations.

o Revenue - Over-the-counter retail sales are recorded when the customer
takes possession of merchandise. Sales to professional installers, also
referred to as "commercial sales", are recorded upon delivery of
merchandise to the customer, generally at the customer's place of business.
Wholesale sales to other retailers, also referred to as "jobber sales" are
recorded upon shipment of merchandise. All sales are recorded net of
estimated allowances and discounts.

o Vendor concessions - The Company receives concessions from its vendors
through a variety of programs and arrangements, including co-operative
advertising, devaluation programs, allowances for warranties 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 reported as a reduction of advertising expense
in the period in which the advertising occurred. All other vendor
concessions are recognized as a reduction of cost of sales when recognized
in the consolidated statement of income.

o Stock-based compensation - We have elected to use the intrinsic value
method of accounting for stock options issued under our stock option plans
and accordingly do not record an expense for such stock options. For
purposes of pro forma disclosures under the fair value method, the
estimated fair value of the options is amortized to expense over the
options' vesting period. Our pro forma information for the years ended
March 31, is as follows:

2004 2003
---------------------
(In thousands, except
per share data)

Net income as reported....................... $ 27,126 $ 19,728
Stock-based compensation expense
as reported................................ - -
Stock-based compensation expense
under fair value method.................... 2,896 2,031
---------------------
Pro forma net income......................... $ 24,230 $ 17,697
=====================
Pro forma basic net income per share......... $ 0.44 $ 0.33
=====================
Pro forma net income per share-
assuming dilution.......................... $ 0.44 $ 0.33
=====================

Page 8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONT.)

Results of Operations

Product sales increased $63.8 million, or 18.8% from $339.5 million in the first
quarter of 2003, to $403.3 million in the first quarter of 2004. This increase
was primarily due to the opening of 23 net, new stores during the first quarter
of 2004, in addition to a 12.4% increase in comparable store product sales for
the first quarter of 2004. At March 31, 2004, we operated 1,132 stores compared
to 1,011 stores at March 31, 2003.

Gross profit increased $28.4 million, or 20.1% from $140.9 million (or 41.5% of
product sales) in the first quarter of 2003, to $169.3 million (or 42.0% of
product sales) in the first quarter of 2004. The increase in gross profit
dollars was primarily a result of the increase in sales resulting from the
increase in the number of stores open during the first quarter of 2004 compared
to the same period in 2003, and increased sales levels at existing stores. The
increase in gross profit as a percentage of product sales was primarily a result
of a change in our product sales mix.

Operating, selling, general and administrative expenses ("OSG&A expenses")
increased $18.0 million, or 16.7% from $107.6 million (or 31.7% of product
sales) in the first quarter of 2003 to $125.6 million (or 31.1% of product
sales) in the first quarter of 2004. The dollar increase in OSG&A expenses
resulted from the addition of team members and resources in order to support the
increased level of our operations. The decrease in OSG&A as a percentage of
product sales was primarily due to economies of scale achieved and the result of
management's efforts to increase labor productivity.

Other expense, net decreased by $1.3 million in the first quarter of 2004
compared to the first quarter of 2003. The overall decrease in other expense was
primarily due to a decrease in interest expense as a result of a decrease in
average borrowings.

Our estimated provision for income taxes increased $4.4 million to $16.2 million
for the first quarter of 2004 compared to the same period in 2003, as a result
of our increased taxable income. Our effective tax rate was 37.4% of income
before income taxes for the first quarter of 2004 and 37.5% for the first
quarter of 2003.

Principally, as a result of the foregoing, net income increased from $19.7
million (or 5.8% of product sales) in the first quarter of 2003 to $27.1 million
(or 6.7% of product sales) in the first quarter of 2004.

Liquidity and Capital Resources

Net cash provided by operating activities increased from $57.3 million for the
first three months in 2003 to $82.0 million for the first three months of 2004.
This increase was principally the result of increased net income and an increase
in accounts payable, income taxes payable and accrued benefits and withholdings,
partially offset by increases in accounts receivable, inventory and other
current assets. The increase in accounts payable was primarily attributable to
the timing of payments and more favorable payment terms from vendors. The
increases in accounts receivable and inventory are primarily due to our
continuing store growth.

Net cash used in investing activities increased from $33.9 million during the
first three months in 2003 to $39.9 million for the comparable period in 2004,
primarily due to the increased purchases of property and equipment for new store
growth.

Net cash used in financing activities decreased from $33.0 million in the first
three months of 2003 to $17.9 million in the first three months of 2004,
primarily due to a decrease in principal payments on long-term debt.

We have available an unsecured, three-year syndicated revolving credit facility
in the amount of $150 million. The credit facility is guaranteed by all of our
subsidiaries and may be increased to a total of $200 million, subject to
availability of such additional credit from either existing banks within the
syndicate or other banks. At March 31, 2004, none of the revolving credit
facility was outstanding. Additionally, letters of credit totaling $13.8 million
were outstanding at March 31, 2004. Accordingly, we have aggregate availability
for additional borrowings of $136.2 million under the revolving credit facility.
The revolving credit facility, which bears interest at LIBOR plus a spread
ranging from 0.875% to 1.375% (2.00% at March 31, 2004), expires in July 2005.

Page 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONT.)

Our continuing store expansion program requires significant capital expenditures
and working capital principally for inventory requirements. The costs associated
with the opening of a new store (including the cost of land acquisition,
improvements, fixtures, inventory and computer equipment) are estimated to
average approximately $900,000 to $1.1 million; however, such costs may be
significantly reduced where we lease, rather than purchase, the store site.
Although the cost to acquire the business of an independently owned parts store
varies, depending primarily upon the amount of inventory and the amount, if any,
of real estate being acquired, we estimate that the average cost to acquire such
a business and convert it to one of our stores is approximately $400,000,
exclusive of the cost of inventory. We plan to finance our expansion program
through cash expected to be provided from operating activities and available
borrowings under our existing credit facilities.

During the first three months of 2004, 23 net, new stores were opened. The
Company plans to open 117 additional stores during the remainder of 2004. The
funds required for such planned expansions are expected to be provided by
operating activities and the existing and available bank credit facilities.

We believe that our existing cash, short-term investments, cash expected to be
provided by operating activities, available bank credit facilities and trade
credit will be sufficient to fund both our short-term and long-term capital and
liquidity needs for the foreseeable future.

New Accounting Standards

In January 2003 and as revised in December 2003, FASB issued FASB Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("Interpretation 46") and
FASB Interpretation No. 46R. Interpretations 46 and 46R require companies with a
variable interest in a variable interest entity to apply this guidance as of the
beginning of the first reporting period after December 31, 2003. The application
of the guidance could result in the consolidation of a variable interest entity.
The Company's adoption of Interpretations 46 and 46R did not have a material
effect on the Company's financial position or results of operations.

Inflation and Seasonality

We have been successful, in many cases, in reducing the effects of merchandise
cost increases principally by taking 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 our operations have been
materially affected by inflation.

Our business is seasonal to some extent primarily as a result of the impact of
weather conditions on store sales. 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 the
Company's 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 www.sec.gov. Such reports are generally available on the
day they are filed. Additionally, the Company will furnish interested readers
upon request and free of charge, a paper copy of such reports.

Page 10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONT.)

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. Certain
statements contained within this filing discuss, 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 in these forward-looking statements. Please refer
to the Risk Factors sections of the Company's Form 10-K for the year ended
December 31, 2003, for more details.

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, 2004, 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 Company's 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 Company's disclosure controls and procedures
as of March 31, 2004. 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, 2004, to ensure that the
information required to be disclosed by the Company in the reports that it files
or submits under the Securities Exchange Act of 1934, as amended, (a) is
recorded, processed, summarized and reported within the time period specified in
the SEC's rules and forms and (b) is accumulated and communicated to the
Company's management, including the officers, as appropriate to allow timely
decisions regarding required disclosure. There were no material changes in the
Company's internal control over financial reporting during the first quarter of
2004 that have materially affected or are reasonably likely to materially affect
the Company's internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION

In January 2003 and as revised in December 2003, FASB issued FASB Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("Interpretation 46") and
FASB Interpretation No. 46R. Interpretations 46 and 46R require companies with a
variable interest in a variable interest entity to apply this guidance as of the
beginning of the first reporting period after December 31, 2003. The application
of the guidance could result in the consolidation of a variable interest entity.
The Company's adoption of Interpretations 46 and 46R did not have a material
effect on the Company's financial position or results of operations.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits: See Exhibit Index on page 14 hereof.

Page 11

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 4, 2004 /s/ David E. O'Reilly
- ----------- --------------------------------------------------------
Date David E. O'Reilly, Co-Chairman of the Board and Chief
Executive Officer (Principal Executive Officer)

May 4, 2004 /s/ James R. Batten
- ----------- --------------------------------------------------------
Date James R. Batten, Executive Vice-President of Finance and
Chief Financial Officer (Principal Financial and
Accounting Officer)

Page 12

EXHIBIT INDEX

Number Description Page
- ------ ------------------------------------------------------------------------- ----

31.1 Certificate of the Chief Executive Officer pursuant to Section 302 of the 14
Sarbanes-Oxley Act of 2002, filed herewith.
31.2 Certificate of the Chief Financial Officer pursuant to Section 302 of the 15
Sarbanes-Oxley Act of 2002, filed herewith.
32.1 Certificate of the Chief Executive Officer pursuant to Section 906 of the 16
Sarbanes-Oxley Act of 2002, filed herewith.
32.2 Certificate of the Chief Financial Officer pursuant to Section 906 of the 17
Sarbanes-Oxley Act of 2002, filed herewith.
99.1 Certain Risk Factors, filed herewith. 18

Page 13

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 31.1 - CEO Certification

CERTIFICATIONS

I, David E. O'Reilly, certify that:

1. I have reviewed this quarterly report on Form 10-Q of O'Reilly Automotive,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.

Date: May 4, 2004 /s/ David E. O'Reilly
- ------------------ -----------------------------------------------
David E. O'Reilly, Co-Chairman of the Board and
Chief Executive Officer (Principal Executive
Officer)

Page 14

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 31.2 - CFO Certification

CERTIFICATIONS

I, James R. Batten, certify that:

1. I have reviewed this quarterly report on Form 10-Q of O'Reilly Automotive,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.

Date: May 4, 2004 /s/ James R. Batten
- ------------------ -----------------------------------------------
James R. Batten, Vice President of Finance
and Chief Financial Officer (Principal
Financial and Accounting Officer)

Page 15

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 32.1 - CEO Certification

O'REILLY AUTOMOTIVE, INC.

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of O'Reilly Automotive, Inc. (the
"Company") on Form 10-Q for the period ending March 31, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, David
E. O'Reilly, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.

/s/ David E. O'Reilly
- --------------------------------------------
David E. O'Reilly
Chief Executive Officer

May 4, 2004

This certification is made solely for purposes of 18 U.S.C. Section 1350, and
not for any other purpose.

Page 16

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 32.2 - CFO Certification

O'REILLY AUTOMOTIVE, INC.

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of O'Reilly Automotive, Inc. (the
"Company") on Form 10-Q for the period ending March 31, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, James
R. Batten, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.

/s/ James R. Batten
- ------------------------------------------
James R. Batten
Chief Financial Officer

May 4, 2004

This certification is made solely for purposes of 18 U.S.C. Section 1350, and
not for any other purpose.

Page 17

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 99.1 - Certain Risk Factors

Some of the information in this Form 10-Q contains and future reports and press
releases and other public information may contain forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. These
"forward-looking statements" are made in reliance upon the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 (See Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.) You should read statements that contain these words carefully because
they: (1) discuss our future expectations; (2) contain projections of our future
results of operations or of our financial condition; or (3) state other
"forward-looking" information. We believe it is important to communicate our
expectations to our investors. However, there may be events in the future that
we are not able to accurately predict or over which we have no control.

The risk factors listed in this exhibit, as well as any cautionary language in
this Form 10-Q, 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 business, weather, terrorist activities, war and the
threat of war. Actual results may materially differ from anticipated results
described in these forward-looking statements. You should be aware that the
occurrence of the events described in these risk factors and elsewhere in our
annual report on Form 10-K for the year ended December 31, 2003 (the "2003 Form
10-K") could have a material adverse effect on our business, operating results
and financial condition.

Competition

We compete with a large number of retail (DIY) and wholesale (professional
installers) automotive aftermarket product suppliers. The distribution of
automotive aftermarket products is a highly competitive industry, particularly
in the more densely populated market areas that we serve. Competitors include
national and regional automotive parts chains, independently owned parts stores
(some of which are associated with national auto parts distributors or
associations), automobile dealerships, mass or general merchandise, discount and
convenience chains that carry automotive products, independent warehouse
distributors and parts stores and national warehouse distributors and
associations. Some of our competitors are larger than we are and have greater
financial resources. In addition, some of our competitors are smaller than we
are overall but have a greater presence than we do in a particular market. For a
list of our principal competitors, see the "Competition" section of Item 1 to
our 2003 Form 10-K.

No Assurance of Future Growth

We believe that our ability to open additional stores at an accelerated rate
will be a significant factor in achieving our growth objectives for the future.
Failure to achieve our growth objectives may negatively impact the trading price
of our common stock. Our ability to accomplish our growth objectives is
dependent, in part, on matters beyond our control, such as weather conditions,
zoning and other issues related to new store site development, the availability
of qualified management personnel and general business and economic conditions.
We cannot be sure that our growth plans for 2004 and beyond will be achieved.
For a discussion of our growth strategies, see the "Growth and Expansion
Strategies" section of Item 1 to our 2003 Form 10-K.

Acquisitions May Not Lead to Expected Growth

We expect to continue to make acquisitions as an element of our growth strategy.
Acquisitions involve certain risks that could cause our actual growth to differ
from our expectations. For example: (1) we may not be able to continue to
identify suitable acquisition candidates or to acquire additional companies at
favorable prices or on other favorable terms; (2) our management's attention may
be distracted; (3) we may fail to retain key acquired personnel; (4) we may
assume unanticipated legal liabilities and other problems; and (5) we may not be
able to successfully integrate the operations (accounting and billing functions,
for example) of businesses we acquire to realize economic, operational and other
benefits.

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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 99.1 - Certain Risk Factors (continued)

Sensitivity to Regional Economic and Weather Conditions

All of our stores are located in the Central and Southern United States. In
particular, approximately 33.6% of our stores are located in Texas. Therefore,
our business is sensitive to the economic and weather conditions of this region.
Unusually severe or inclement weather tends to reduce sales, particularly to DIY
customers.

Dependence Upon Key and Other Personnel

Our success has been largely dependent on the efforts of certain key personnel,
including David E. O'Reilly, Ted F. Wise, Greg L. Henslee and Jim Batten. Our
business and results of operations could be materially adversely affected by the
loss of the services of one or more of these individuals. Additionally, our
successful implementation and management of our growth and expansion strategies
will depend on our ability to continue to attract and retain qualified
personnel. We cannot be sure that we will be able to continue to attract such
personnel. For a further discussion of our management and personnel, see the
"Business" section of Item 1 and Item 4a of our 2003 Form 10-K and our Proxy
Statement on Schedule 14A for the 2004 Annual Meeting of Shareholders.

Concentration of Ownership by Management

Our executive officers and directors as a group beneficially own a substantial
percentage of the outstanding shares of our common stock. These officers and
directors have the ability to exercise effective voting control of the company,
including the election of all of our directors, and to effectively determine the
vote on any matter being voted on by our shareholders, including any merger,
sale of assets or other change in control of the company.

Possible Volatility of Our Stock Price

The stock market and the price of our common stock may be subject to volatile
fluctuations based on general economic and market conditions. The market price
for our common stock may also be affected by our ability to meet analysts'
expectations. Failure to meet such expectations, even slightly, could have an
adverse effect on the market price of our common stock. In addition, stock
market volatility has had a significant effect on the market prices of
securities issued by many companies for reasons unrelated to the operating
performance of these companies. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against such a company. If similar litigation were
instituted against us, it could result in substantial costs and a diversion of
our management's attention and resources, which could have an adverse effect on
our business.

Shares Eligible for Future Sale

All of the shares of common stock currently held by our affiliates may be sold
in reliance upon the exemptive provisions of Rule 144 of the Securities Act of
1933, as amended, subject to certain volume and other conditions imposed by such
rule. We cannot predict the effect, if any, that future sales of shares of
common stock or the availability of such shares for sale will have on the market
price of the common stock prevailing from time to time. Sales of substantial
amounts of common stock, or the perception that such sales might occur, could
adversely affect the prevailing market price of the common stock.

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