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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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.
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(Exact name of registrant as specified in its charter)
Missouri 44-0618012
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(State or other jurisdiction (IRS 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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.01 par value
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 check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. -------
At February 27, 1998, an aggregate of 21,149,429 shares of the common stock of
the registrant were outstanding. As of that date, the aggregate market value of
the voting stock held by non-affiliates of the Company was approximately
$418,915,154 based on the last sale price of the common stock reported by the
Nasdaq Stock Market (National Market).
DOCUMENTS INCORPORATED BY REFERENCE
As provided herein, portions of the registrant's documents specified below are
incorporated herein by reference:
Document Part-Form 10-K
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Portions of the Annual Shareholders' Report
for the Year Ended December 31, 1997 Parts I, II and IV
Proxy Statement for 1998 Annual Meeting of
Stockholders (to be filed pursuant to
Regulation 14A within 120 days of the end of
registrant's most recently completed fiscal year) Part III
The information contained in this Form 10-K includes statements regarding
matters which are not historical facts (including statements as to O'Reilly
Automotive, Inc.'s (the "Company") plans, beliefs or expectations) which are
forward-looking statements within the meaning of the federal securities laws.
Because such forward-looking statements involve certain risks and uncertainties,
the Company's actual results and the timing of certain events could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include those discussed in the Sections captioned "Business"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" (incorporated herein by reference) and those risk factors discussed
in Exhibit 99.1 hereto.
PART I
ITEM 1 BUSINESS
General
O'Reilly Automotive, Inc. ("O'Reilly" or the "Company") is a specialty
retailer and supplier of automotive aftermarket parts, tools, supplies,
equipment and accessories ("Automotive Products") to both "do-it-yourself"
("DIY") customers and professional mechanics or service technicians
("Professional Installers"). The Company, which was founded in 1957 by the
O'Reilly family in Springfield, Missouri, operates 259 stores (at December 31,
1997) within the states of Missouri, Arkansas, Kansas, Oklahoma, Nebraska and
Iowa. See "Growth and Expansion Strategies." O'Reilly stores carry an extensive
product line consisting of (i) new and remanufactured automotive hard parts,
such as alternators, starters, fuel pumps, water pumps, and brake shoes and
pads, (ii) maintenance items, such as oil, antifreeze, fluids, engine additives
and appearance products, (iii) accessories, such as floor mats and seat covers,
and (iv) a complete line of auto body paint and related materials, automotive
tools and professional service equipment. The Company offers machining services
through its O'Reilly stores, but does not sell tires or perform automotive
repairs or installations. Approximately 97% of the Company's 1997 product sales
were generated through the O'Reilly store network, of which approximately
one-half was derived from DIY customers and one-half from Professional
Installers. The remaining 3% of the Company's product sales was generated by its
wholly-owned subsidiary, Ozark Automotive Distributors, Inc. ("Ozark"), through
wholesale sales to independently owned auto parts stores.
Background
O'Reilly was founded in 1957 by Charles F. O'Reilly and his son, Charles H.
"Chub" O'Reilly, Sr. (a current director of the Company) and initially operated
from a single store in Springfield, Missouri, with 12 employees selling
primarily to the Professional Installer portion of the market. O'Reilly
established Ozark in October 1960 to purchase Automotive Products directly from
the manufacturer and to distribute such Automotive Products to O'Reilly.
The Company has experienced steady growth from its first year of operation.
By 1980, each of Chub O'Reilly's children, Charles, Lawrence and David O'Reilly
and Rosalie O'Reilly Wooten, had assumed leadership roles in the Company.
Together with their father, they have managed the Company through a period of
rapid growth and profitability.
The Company's goal is to continue its pattern of growth in sales and
profitability by capitalizing on its role as a leading specialty retailer and
supplier of Automotive Products throughout its markets. The key elements of the
multifaceted business strategy developed by the Company to achieve this goal are
discussed below.
Operating Strategies
Dual Market Strategy. The Company believes that because it aggressively
pursues both the DIY and the Professional Installer portions of the automotive
aftermarket through its O'Reilly store network, the Company can successfully
compete not only in large metropolitan markets but also in less densely
populated areas. In 1997, the Company derived approximately one-half of its
O'Reilly store network sales by selling to the DIY market and approximately
one-half of such sales by selling to the Professional Installer market. By
serving both portions of the market, the Company believes that it is able to
reach substantially all consumers Automotive Products within its market areas.
The increased demand generated by this expanded customer base permits the
Company to (i) stock
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(either in-store or at its distribution centers) a broader selection of
stock-keeping units ("SKU's"), and (ii) restock and fill special orders from its
distribution centers on an overnight, or in some cases, a same-day basis. See
"Inventory Management and Distribution Systems."
The Company also believes that its service to both the DIY and Professional
Installer portions of the automotive aftermarket results in additional benefits
not generally enjoyed by competitors serving only one portion of the market.
Because the Company deals with the more technically-oriented Professional
Installers, the Company's Professional Parts People are required to be more
technically proficient, particularly with regard to hard parts. The Company has
found that such technical proficiency is also valued by its DIY consumers,
thereby enhancing the Company's ability to execute its customer service
strategy. Further, the Company has found that the more progressive marketing
concepts utilized in the DIY portion of its business can be applied to increase
sales of Automotive Products to the Company's Professional Installer customers.
Inventory Management and Distribution Systems. The Company's inventory
management and distribution systems, which electronically link each O'Reilly
store to a distribution center, provide an efficient and sophisticated means of
inventory control and management. The computer system at each O'Reilly store
records each sale, makes a corresponding inventory adjustment and orders
replacement inventory from the distribution center. The Company utilizes an
industry ranking method, in addition to its own evaluation criteria, for each
SKU carried at the distribution center which identifies and classifies each SKU
by demand. Refinements to inventory levels to be carried in the stores are made
continuously based in large part on the sales movement shown by the Company's
computerized inventory control system and on management's assessment of the
changes and trends in the marketplace. Under arrangements with most suppliers of
Automotive Products, slow moving or obsolete merchandise is returned to the
supplier for full credit. Accordingly, the Company experiences little
obsolescence in its inventory.
The Company's distribution centers are equipped with highly automated
conveyor systems which expedite the movement of Automotive Products to loading
areas for shipment to individual stores on a nightly basis. The distribution
centers utilize computer assisted technology to electronically receive orders
from computers located in each O'Reilly store. The Company, which continually
seeks to further enhance these systems, has installed a bar code system in its
stores. In addition, the Company has established a satellite-based data
interchange system between those O'Reilly stores in which high-speed data
transmission technology is not readily available, the distribution center which
services such stores and the O'Reilly corporate headquarters.
During 1997, the Company's three distribution centers experienced an annual
inventory turn of approximately 5.3 times, and the O'Reilly store network had an
average inventory turn of approximately 3.7 times. The Company believes that its
warehouse distribution system enables it to maintain optimum inventory levels
throughout the O'Reilly store network and, at the same time, provide its
customers with an outstanding selection of SKU's at each O'Reilly store site.
The Company further believes that its ability to provide its customers with
access to over 105,000 SKU's (many of which are lower turnover items not
typically stocked at other parts stores) on an overnight and, in some cases, a
same day basis results in an important competitive advantage enjoyed by the
Company in this key area of SKU selection and availability.
Superior Customer Service. The Company's number one priority is customer
satisfaction. The Company seeks to attract new DIY and Professional Installer
customers and to retain existing customers by conducting a variety of
advertising and promotional programs and by offering (i) superior in-store
service through highly-motivated, technically-proficient Professional Parts
People using advanced point-of-sale systems, (ii) an extensive selection of
SKU's stocked in each store, (iii) same day or overnight availability of over
105,000 SKU's made possible through the Company's rapid, on-line communication
with its distribution centers, (iv) attractive stores in convenient locations,
and (v) competitive pricing supported by the Company's Right Part, Right Price,
Right Now(R) policy.
Each of O'Reilly's Professional Parts People is required to be technically
proficient in the workings and application of Automotive Products. See "Store
Operations--Store Personnel and Training." This degree of technical proficiency
is essential because of the significant portion of the Company's business
represented by the Professional Installer. The Company has found that the
typical DIY customer often seeks assistance from sales persons, particularly in
connection with the purchase of hard parts. The Company believes that the
ability of its Professional Parts People to provide such assistance to the DIY
consumer is valued by the DIY customer, and therefore is likely to result in
repeat DIY business. To assist the Company's Professional Parts People in
providing superior customer service, the Company has installed advanced
point-of-sale information systems. These systems provide individual O'Reilly
stores with access to the Company's database of manufacturer recommended parts
(the "electronic catalog") and the ability to locate parts at other O'Reilly
stores. These systems also significantly shorten the time period required to
obtain credit card and personal check approvals.
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The Company believes that the satisfaction of DIY and Professional
Installer customers often is substantially dependent upon the Company's ability
to offer the specific Automotive Product requested. Accordingly, each O'Reilly
store carries a broad selection of Automotive Products designed to cover a broad
range of vehicle specifications. To emphasize its commitment to providing its
customers with the Automotive Products requested, the Company has instituted a
Right Part, Right Price, Right Now(R) policy. Under this policy, if any of the
15,000 most commonly requested Automotive Products is not available in-store
when the customer requests it, the Company will apply a 5% discount to the
purchase price of the item and the part will usually be available within 24
hours from one of the Company's distribution centers.
The Company believes that O'Reilly stores are "destination stores"
generating their own traffic rather than relying on traffic created by the
presence of other stores in the immediate vicinity. Consequently, most O'Reilly
stores are free-standing buildings situated on or near major traffic
thoroughfares. O'Reilly stores offer ample parking and easy customer access.
The Company believes that a competitive pricing policy is essential within
product categories in order to compete successfully. Product pricing is
generally established to meet the pricing policies of competitors in the market
area served by each store. Most Automotive Products sold by the Company are
priced at discounts from the manufacturer suggested prices and additional
savings are offered through volume discounts and special promotional pricing.
Consistent with its Right Part, Right Price, Right Now(R) policy, each O'Reilly
store will match any verifiable price on any in-stock product of the same or
comparable quality offered by any of its competitors.
Growth and Expansion Strategies
Accelerated New Store Openings. The Company's ability to open new stores in
both existing and new markets since the beginning of 1980 has been a significant
factor in achieving its rapid growth in product sales and profitability. At
December 31, 1997, the Company operated 259 stores within the states of
Missouri, Arkansas, Kansas, Oklahoma, Nebraska and Iowa. For the five years
ended December 31, 1997, the Company has increased the number of stores at an
average annual rate of approximately 15%. Aside from the substantial growth
resulting from the Hi-Lo Automotive, Inc. merger (see below) in January 1998,
the Company has adopted certain strategic initiatives designed to accelerate its
new store opening rate to approximately 16% by 1998. The Company intends to open
50 new stores in 1998 and 80 new stores in 1999, including stores to be opened
in the new market areas of Texas, Iowa and Nebraska, and additional stores in
the Company's current market areas. Management believes that the Company's
ability to open new stores at this accelerated rate will continue to be a
significant factor in achieving its growth objectives for the future, and that
substantial opportunities exist for the opening of new stores to achieve greater
penetration in existing markets and to expand into new contiguous markets.
On January 30, 1998, the Company completed a merger with Hi-Lo Automotive,
Inc. and its subsidiaries ("Hi/LO") by acquiring 100% of the outstanding capital
stock. Hi/LO is a specialty retailer and supplier of Automotive Products
headquartered in Houston, Texas. Hi/LO is now a wholly-owned subsidiary of the
Company, with 189 stores located in Texas (165), Louisiana (17) and California
(7), and a 375,000 square foot distribution center located in Houston. Excluding
California and its seven stores, the Hi/LO operations are contiguous to
O'Reilly's existing operations, thereby creating a natural geographic extension
for the Company into market areas already slated for future growth and
development. The equity purchase price was approximately $47.8 million, or $4.35
per common share. Additionally, approximately $43.2 million of debt was assumed
for a total purchase price of $91 million.
In order to support O'Reilly's acquisition of Hi/LO, and continued working
capital and general corporate needs, the Company replaced its lines of credit in
January 1998 with new, unsecured, syndicated credit facilities totaling $175
million. The facilities are comprised of a $125 million five-year revolving
credit facility which includes a $5 million sublimit for the issuance of letters
of credit and a $50 million five-year term loan facility. These new credit
facilities are guaranteed by the subsidiaries of the Company and the acquired
Hi/LO subsidiaries. The Company is required to meet various financial covenants
as detailed in the credit agreement.
During 1998, the Company will convert the Hi/LO stores and distribution
center to the corresponding O'Reilly systems, strategies and policies. Other
than the description of the merger transaction as outlined above and as
discussed in Management's Discussion and Analysis of Financial Condition and
Results of Operations (see Exhibit 13.1) of the Company, the results of
operations of Hi/LO and other related information are not included in this
report.
Page 4
Until 1986, the Company's expansion was targeted to markets with
populations of less than 100,000. The Company entered into a more densely
populated market in August 1986 with the opening of the first of its 29 stores
which now serve the greater Kansas City, Missouri, marketing area. Of the 40
(net) stores opened in 1997, 10 are located in Nebraska, 10 in Oklahoma, 8 in
Kansas, 7 in Iowa and the remainder are located in Missouri and Arkansas. While
the Company has faced, and expects to continue to face, more aggressive
competition in its more densely populated markets, the Company believes that it
has competed effectively, and that it is well positioned to continue to compete
effectively, in such markets and achieve its goal of continued sales and profit
growth within these markets. The Company also believes that because of its Dual
Market Strategy, the Company is better able to operate stores in less densely
populated areas within its regional market which would not otherwise support a
national or regional chain store selling to one portion of the market or the
other. Consequently, the Company expects to continue to open new stores in less
densely populated market areas.
To date, the Company has experienced no significant difficulties in
locating suitable store sites for construction of new stores or identifying
suitable acquisition candidates for conversion to O'Reilly stores. New stores
are typically opened by the Company either (i) by constructing a new store at a
site which is purchased or leased and stocking the new store with fixtures and
inventory, or (ii) by acquiring an independently owned parts store, typically by
the purchase of substantially all of the inventory and other assets (other than
realty) of such store. The costs associated with the opening of a new O'Reilly
store (including the cost of land acquisition, improvements, fixtures, inventory
and computer equipment) are estimated to average approximately
$900,000-$1,100,000; however, such costs may be significantly reduced where the
Company leases, rather than purchases, 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, the Company estimates that the average cost to acquire such a
business and convert it to an O'Reilly store is approximately $350,000. Store
sites are strategically located in clusters within geographic areas which
complement the Company's distribution system in order to achieve economies of
scale in management, advertising, and distribution costs. Other key factors
considered by the Company in the site selection process include population
density and growth patterns, age and per capita income, vehicle traffic counts,
the number and type of existing automotive repair facilities, auto parts stores,
and other competitors within a pre-determined radius, and the operational
strength of such competitors. When entering new, more densely populated markets,
the Company generally seeks to initially open several stores within a short span
of time in order to maximize the effect of initial promotional programs and
achieve further economies of scale.
Same store growth through increased sales and profitability is also an
important part of the Company's growth strategy. To achieve improved sales and
profitability at existing O'Reilly stores, the Company continually strives to
improve upon the service provided to its customers. The Company believes that
while competitive pricing is essential in the competitive environment of the
automotive aftermarket business, it is customer satisfaction (whether of the DIY
consumer or Professional Installer), resulting from superior customer service
that generates increased sales and profitability.
Store Design and Location. The Company's current prototype store design,
completed in 1994, features several enhancements designed to increase product
sales, customer service and operating efficiencies, which generally includes
greater square footage, higher ceilings, new fixtures, more convenient interior
store layouts, brighter lighting, increased parking availability and dedicated
counters to serve Professional Installers. The Company aggressively manages its
store network through systematic renovation and relocation of existing O'Reilly
stores which conform with the Company's prototype store design. In 1997, the
Company renovated or relocated 28 stores.
Expansion of Distribution System. In order to facilitate its store
expansion strategy, the Company utilizes a central warehouse distribution system
to distribute Automotive Products to its O'Reilly store network. The Company,
through its Ozark subsidiary, currently operates a 212,000 square foot warehouse
distribution center (including 51,000 square feet of mezzanine space) located in
Springfield, Missouri, a 113,000 square foot warehouse distribution center
(including 36,000 square feet of mezzanine space) located in Kansas City,
Missouri and a 123,000 square foot distribution center (including 33,000 square
feet of mezzanine space) located in Oklahoma City, Oklahoma, for receiving,
storing and distributing Automotive Products. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations. In January 1998, a
375,000 square foot warehouse distribution center was added in Houston, Texas as
a result of the Hi/LO merger. By the end of 1998, the Company expects the
construction of the 160,000 square foot warehouse distribution center in Des
Moines, Iowa to be completed. The Company also operates a 36,000 square foot
bulk merchandise warehouse in Springfield, Missouri for the distribution of bulk
products such as motor oil, antifreeze, batteries, lubricants and other fast
moving bulk products. The bulk warehouse facility is located adjacent to the
main distribution center in Springfield. The Company believes that its
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distribution system results in lower inventory carrying costs, improved in-stock
positions at the O'Reilly stores, and superior inventory control and management.
Moreover, the Company believes that its expanding network of distribution
centers allows it to efficiently service existing O'Reilly stores, as well as
new stores planned for opening in contiguous market areas. The Company's
distribution center expansion strategy also complements its new store opening
strategy by supporting newly established clusters of stores located in the
regions surrounding each distribution center.
Store Operations
Store Layout. Although the Company has no present intention to open new
Level 2 Stores, the O'Reilly store network is composed generally of three store
formats consisting of the Level 2 Store, the Level 1 Store and the Master
Inventory Store which, as of December 31, 1997, are categorized based on the
number of in-stock SKU's as follows:
Approximate
Number of Range of Number of
Store Format Stores Square Footage In-Stock SKUs
--------------------------- ------ ----------------- ---------------
Level 2 Stores 28 3,000 - 5,000 12,000 - 16,000
Level 1 Stores (prototype) 198 4,000 - 8,000 16,001 - 25,000
Master Inventory Stores 33 6,000 - 12,000 25,001 - 44,000
---------
259
=========
The primary function of the Master Inventory Stores, like all other
O'Reilly stores, is to sell Automotive Products to both portions of the
marketplace. However, because Master Inventory Stores carry a greater selection
of SKU's, including certain lower turnover hard parts not typically carried in
the Level 1 or Level 2 Stores, a Master Inventory Store also provides the other
O'Reilly stores within its area with access to a greater selection of SKU's on a
same-day basis.
O'Reilly stores offer the DIY and the Professional Installer customer a
wide selection of nationally recognized brand name and private label SKU's for
domestic and imported automobiles, vans and trucks. New and remanufactured
automotive hard parts, such as engine and transmission parts, alternators,
starters, water pumps, and brake shoes and pads, have accounted for a majority
of total sales. An O'Reilly store also carries an extensive selection of
maintenance items, such as oil, antifreeze, fluids, engine additives, appearance
products, and accessories, such as floor mats and seat covers, and a complete
line of auto body paint and related materials, automotive tools and professional
service equipment. Maintenance items and accessories have accounted for most of
the remaining sales. The Company operates machine shops in 9 regional locations,
7 of which are located at an O'Reilly store. There are two free-standing machine
shops, one located in Springfield, Missouri, and the other in Tulsa, Oklahoma.
The O'Reilly machine shops perform engine machining services (such as block
boring, head resurfacing, and crankshaft grinding) for DIY and Professional
Installer consumers of such services. The Company believes that its performance
of this service is valuable not only in maintaining its relationships with its
DIY and Professional Installer customers but in attracting new customers, in
each case resulting in increased sales of Automotive Products. Each O'Reilly
machine shop is equipped with sophisticated equipment, and employs ASE certified
machinists having an average of approximately ten years experience in machining.
Store exteriors generally feature a light tan facade highlighted by an
attractive red, white and green stripe, with the name O'Reilly Auto Parts
written in Kelly green letters on a white background in a lighted sign. During
1994, a friendlier and more modern store format with an open architectural style
was introduced. These new stores feature greater square footage, higher
ceilings, brighter lighting, taller fixtures and a more attractive interior
design. The Company utilizes a computer-assisted "plan-o-grammed" store layout
system to provide uniform and consistent merchandise presentation; however some
variation occurs in order to meet the specific needs of a particular market
area. Merchandise is arranged to provide easy customer access and maximum
selling space, keeping high-turnover products and accessories within view of the
customer, and aisle displays are generally used to feature high-demand or
seasonal merchandise, new items and advertised specials. All stores have a
counter adjacent to the front display area where automotive replacement hard
parts that do not lend themselves to display are available. Although store hours
may vary by market area, O'Reilly stores are generally open Monday through
Friday, 8:00 a.m. to 9:00 p.m., Saturday, 8:00 a.m. to 8:00 p.m. and Sunday,
9:00 a.m. to 6:00 p.m. O'Reilly stores accept cash, checks and major credit
cards and extend short-term credit to those Professional Installers who satisfy
the Company's credit requirements.
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Store Automation. To enhance store level operations and customer service,
the Company has installed advanced point-of-sale computer terminals which are
generally located on the hard parts counters. These point-of-sale terminals are
linked with the IBM AS/400 computers located in each of the Company's
distribution centers and utilize bar code scanning technology to price
merchandise in sales transactions. In addition, the point-of-sale terminals
provide immediate access to the Company's electronic catalog to display parts
and pricing information by make, model and year of vehicle. This system speeds
transaction times, reduces register lines and provides enhanced customer
service. Moreover, this system captures sales information which assists in store
management, strategic planning, inventory control and distribution
effectiveness.
Store Personnel and Training. The Company believes that technical
proficiency on the part of each sales specialist is essential to meet the needs
of its customers, particularly the Professional Installer, and that the
technical proficiency of its Professional Parts People resulting from O'Reilly's
extensive and ongoing training program provides the Company with a significant
advantage over its competitors, particularly the smaller retail operators and
the less specialized mass merchandisers.
The Company's training function is managed by a full time vice-president of
marketing and training who, together with his staff, is headquartered in
Springfield, Missouri. There currently are regional trainers located in
Springfield, Missouri, Kansas City, Missouri and Oklahoma City, Oklahoma. The
Company screens prospective employees to identify highly-motivated individuals
with either experience in automotive parts or repairs, or an aptitude for
automotive knowledge. Each person who becomes an employee, or "team member,"
first participates in an intensive two-day orientation program designed to
introduce the team member to the Company culture and specific job duties before
being assigned specific job responsibilities. The successful completion of
additional training is required before a team member is deemed qualified as a
parts specialist and thus able to work at the parts counter at an O'Reilly
store. All new counter people are required to successfully complete a six-month
basic automotive systems training course and are then enrolled in a six-month
advanced automotive systems course for ASE certification. As of December 31,
1997, approximately 500 parts specialists were ASE certified.
In addition to extensive on-the-job training under the supervision of the
store manager or assistant store manager, each team member completes a weekly
training assignment and has available to him or her a number of training
programs (videos, booklets, etc.) presented by the Company under the direction
of the training director. For example, team members are given notice of and
encouraged to attend seminars designed by the Company primarily for its
Professional Installer customers. The seminars are generally conducted by the
Company's technical trainer or by representatives of a manufacturer or supplier,
and focus primarily on advanced automotive systems and parts knowledge.
Each O'Reilly store participates in the Company's sales specialist training
program that is conducted by the operations training manager. Under this
program, selected team members complete two days of extensive sales call
training for business development, after which these team members will spend one
day per week calling on existing and new Professional Installer customers.
Additionally, each team member engaged in such sales activities will participate
in quarterly advanced training programs for sales and business development.
Management training is also an important part of the Company's training
program. Each O'Reilly store is staffed with a store manager and an assistant
manager, in addition to the counter sales persons and support staff required to
meet the specific needs of each store. There are currently 31 district managers,
each of whom has general supervisory responsibility for an average of eight
O'Reilly stores within such manager's district. Each district manager receives
comprehensive training on a monthly basis at the Company's headquarters focusing
on management techniques, new product announcements, advanced automotive systems
and Company policies and procedures. In turn, the information covered at such
monthly meetings is discussed in full by district managers at monthly meetings
with their store managers. All assistant managers and manager trainees are
required to successfully complete a six-month manager development program, which
includes 85 hours of classroom and field training, as a prerequisite to becoming
a store manager. This program covers operations extensively, as well as
principles of successful management.
The Company provides financial incentives to its district managers, store
managers, assistant managers and sales specialists through an incentive
compensation program. Under the Company's incentive compensation program, the
base salary of most team members engaged in the sale of Automotive Products,
particularly district managers and store managers, is augmented by incentive
compensation which is based upon the achievement of sales and profitability
goals. Such sales and profitability goals are based upon the performance of an
individual store or district in which the team member performs services. The
Company believes that its incentive compensation program significantly increases
the motivation and overall performance of its Professional Parts People and
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the Company's ability to attract and retain qualified management and other
personnel. Most of the Company's current senior management, district managers
and store managers were promoted to their positions from within the Company.
Most members of senior management have at least 20 years experience with the
Company, and district managers and store managers have an average length of
service with the Company of approximately eight years and six years,
respectively.
Marketing and Products
Marketing to the Professional Installer. Throughout its history, the
Company has been a seller of Automotive Products to the Professional Installer.
The Company considers this portion of its business to be an integral part of its
entire business strategy and devotes substantial time and energy to the
development of its Professional Installer business. The Company's Director of
Sales is primarily responsible for the development and maintenance of the
Company's Professional Installer business. There are 40 full time O'Reilly sales
representatives strategically located in the more densely populated market areas
served by the Company dedicated solely to calling upon and selling to the
Professional Installer. Moreover, each district manager and store manager
participates in these activities by calling upon existing and potential new
Professional Installers on a regular and periodic basis. Most of the O'Reilly
stores operate one or more small trucks or vans in order to provide prompt
delivery service to the Professional Installer. In addition, many O'Reilly
stores provide a dedicated counter to serve Professional Installers. In order to
promote the Professional Installer portion of its business, the Company provides
various services of special interest to the Professional Installer. For example,
the Company provides trade credit for qualified Professional Installers and
sponsors seminars concerning topics of interest to Professional Installers, such
as technical updates, safety and general business management.
Marketing to the Independently Owned Parts Store. Along with the operation
of the distribution centers and the distribution of Automotive Products to the
O'Reilly stores, Ozark also sells Automotive Products to independently owned
parts stores whose retail stores are generally located in areas not serviced by
an O'Reilly store. The Company generally does not compete with any independently
owned parts store to which it sells Automotive Products, but has, on occasion,
acquired the business assets of an independently owned parts store supplied by
Ozark. Ozark operates its own separate marketing program to independently owned
parts stores through a staff of five. Of the approximately 60 independently
owned parts stores currently purchasing Automotive Products from Ozark, 55
participate in the Auto Value(R) program through Ozark. As a participant in this
program, an independently owned parts store which meets certain minimum
financial and operational standards is permitted to indicate its Auto Value(R)
membership through the display of the Auto Value(R) logo, which is owned by Auto
Value Associates, Inc. ("Auto Value Associates"), a non-profit buying group
consisting of 43 members as of December 31, 1997, including the Company, engaged
in the distribution or sale of Automotive Products. Additionally, the Company
provides advertising and promotional assistance to Auto Value(R) stores
purchasing Automotive Products from Ozark, as well as marketing and sales
support. In return for a commitment to purchase Automotive Products from Ozark,
the Company offers assistance to an Auto Value(R) independently owned parts
store by providing loan guarantees and financing secured by inventory, furniture
and fixtures, making available computer software for inventory control and
performing certain accounting and bookkeeping functions.
Pricing. The Company believes that a competitive pricing strategy is
essential within all product categories in order to compete successfully. The
Company's pricing is established by senior management, with input from store
management, in a manner designed to meet product prices charged by the Company's
competitors in the market. To assure competitive pricing, the Company has
established its Low Price Guarantee(R) policy under which each O'Reilly store,
at the request of a customer, will match any verifiable price on any in-stock
product of the same or comparable quality. Most Automotive Products sold by the
Company are priced at discounts from the manufacturer's suggested prices and
additional savings are offered through volume discounts. Special promotions are
also offered to attract customers, particularly the DIY customer, to the
O'Reilly stores, which special promotions are often times supported through
newspaper and electronic advertising and through the use of special flyers.
Advertising and Promotion. The Company aggressively promotes sales to
consumers through an extensive advertising program which includes direct mail,
newspaper and radio and television advertising in selected markets. The Company
believes that its advertising and promotional activities have resulted in
significant name recognition in each of its market areas. Newspaper and radio
advertisements are generally directed towards specific product and price
promotions, frequently in connection with specific sale events and promotions.
Total advertising expenses (excluding amounts received from suppliers as
allowances), have decreased from approximately 1.2% in 1996 to approximately
1.1% of product sales in 1997.
Page 8
Products and Purchasing. Aided by the Company's computerized inventory
control and management system, the product selection and purchasing functions
are managed centrally at the Company's executive offices. The Company's
merchandise generally consists of nationally recognized, well advertised, name
brand products such as A.C. Delco, Moog, Wagner, Gates Rubber, Federal Mogul,
Monroe, Prestone, Quaker State, Pennzoil, Castrol, Valvoline, STP, Armor All and
Turtle Wax. In addition to name brand products, O'Reilly stores carry a wide
variety of high-quality private label products under its O'Reilly Auto Parts(R),
SuperStart(R), BrakeBest(R), Ultima(R) and Omnispark(R) proprietary name brands,
and the Parts Master(R) name brand (which are provided through Auto Value
Associates). Because most of such products are produced by nationally recognized
manufacturers in accordance with the Company's specifications, the Company
believes that the private label products are of equal or, in some cases, better
quality than comparable name brand products, a characteristic which is important
to the Company's Professional Installer clientele. The Company further believes
that the private label products are packaged attractively to promote customer
interest and are generally priced below comparable name brand products carried
in the store.
Although the Company is not obligated to make purchases through Auto Value
Associates, Auto Value Associates assists the Company in negotiating purchases
of Automotive Products from a variety of vendors (including purchases of Parts
Master(R) products). Because of its volume purchases of Automotive Products, the
Company believes that its long-term ability to buy Automotive Products on
favorable terms would not be materially adversely affected if the Company ceased
to be a member of Auto Value Associates. The Company believes, however, that its
membership in Auto Value Associates provides certain benefits, and does not
currently intend to terminate its membership therein.
The Company purchases Automotive Products from approximately 400 vendors,
the three largest of which accounted for approximately 13% of the Company's
total purchases in fiscal 1997 and none of which accounted for more than 5% of
such purchases. The Company has no long-term contractual purchase commitments
with any of its vendors. The Company has not experienced difficulty in obtaining
satisfactory alternative sources of supply for Automotive Parts, and believes
that adequate sources of supply exist at substantially similar costs, for
substantially all Automotive Products sold by the Company. The Company considers
its relationships with its suppliers to be good. Manufacturers of Automotive
Products, particularly hard parts, typically provide repair and replacement
warranties which are passed on by the Company to its customers. However, the
Company does provide warranties on a few product lines. The Company's Automotive
Product vendors generally permit the Company to return any slow moving or
obsolete inventory for a full credit. It is the Company's policy to take
advantage of early payment and seasonal purchasing discounts offered by its
vendors, and to utilize extended dating terms available from vendors due to
volume purchasing.
Competition
The Company believes that while the industry is still highly fragmented,
the ability of national and regional specialty retail chains, such as the
Company, to operate more efficiently than the smaller independent operator or
mass merchandiser will result in industry consolidation. The Company believes
that automotive specialty chains are able to operate more efficiently than small
or less specialized competitors because of economies of scale and internal
efficiencies, particularly in the areas of purchasing, distribution, inventory
management and advertising. The Company also believes that staffing sales
positions with technically proficient sales personnel is essential to meet the
needs of purchasers of today's more sophisticated and complex automotive parts
and that such staffing differentiates the specialty retailer from the less
specialized mass merchandiser. The Company believes that specialty retail
chains, such as the Company, which have the financial resources to provide for
such internal efficiencies and the ongoing training required to ensure the
staffing of technically proficient sales personnel, are well positioned to gain
market share from the smaller independent operators and mass merchandisers.
The Company competes in both the DIY and Professional Installer portions of
the automotive aftermarket business. Competitors in the DIY portion of its
business within its current market areas (primarily in the more densely
populated market areas) include automotive parts chains such as AutoZone, Parts
America (formerly known as Western Auto) and Pep Boys, independently owned parts
stores (some of which are associated with national auto parts distributors or
associations), automobile dealerships and mass or general merchandise, discount
and convenience chains that carry Automotive Products. The Company's major
competitors in the Professional Installer portion of its business include
independent warehouse distributors and independently owned parts stores,
automobile dealers and national warehouse distributors and associations, such as
National Automotive Parts Association (NAPA), Carquest and Parts Plus. AutoZone
entered into certain of the Company's Professional Installer markets in 1997.
The Company competes on the basis of customer service, merchandise selection and
availability, price, and store location. The Company believes that its principal
Page 9
strengths are its ability to provide both the DIY and Professional Installers
same day or overnight availability to more than 105,000 SKU's through its highly
motivated and technically proficient Professional Parts People. However, some of
the Company's current and potential competitors are larger than the Company and
have greater financial resources than the Company.
Employees
As of December 31, 1997, the Company had 3,945 team members, of whom 2,973
were employed at the O'Reilly stores, 595 were employed at the distribution
centers and 377 were employed at the corporate and administrative headquarters.
The Company's team members are not subject to a collective bargaining agreement.
The Company considers its relations with its team members to be excellent, and
strives to promote good employee relations through various programs designed for
such purposes.
Servicemarks and Trademarks
The Company has registered the servicemarks O'Reilly Automotive(R),
O'Reilly Auto Parts(R), Right Part, Right Price, Right Now(R), Because It's Your
Car We're Talking About(R) and Parts Payoff(R) and the trademarks SuperStart(R),
BrakeBest(R), Ultima(R) and Omnispark(R). Further, the Company is licensed to
use the registered trademarks and servicemarks Auto Value(R) and Parts Master(R)
in connection with its marketing program, which marks are owned by Auto Value
Associates. The Company believes that its business is not otherwise dependent
upon any patent, trademark, servicemark or copyright.
Regulation
Although subject to various laws and governmental regulations relating to
its business, including those related to the environment, the Company does not
believe that compliance with such laws and regulations has a material adverse
effect on its operations. Further, the Company is unaware of any failure to
comply with any such laws and regulations which could have a material adverse
effect on its operations. No assurance can be given, however, that significant
expenses could not be incurred by the Company to comply with any such law or
regulation in the future.
Page 10
ITEM 2 PROPERTIES
- ------------------------
The following table provides certain information with respect to the
Company's headquarters and distribution centers as of December 31, 1997:
Square
Location Principal Use(s) Footage Interest
- --------------- ------------------------------- ---------- --------
Springfield, MO Executive and Administrative
Offices and Distribution Center 256,000(a)(b) Owned
Springfield, MO Administrative Offices, Training
and Research 35,000 Leased(c)
Springfield, MO Bulk Merchandise Warehouse 36,000 Owned
Kansas City, MO Distribution Center 113,000(a) Owned
Oklahoma City, OK Distribution Center 123,000(a) Owned
- -----------------------
(a) Includes mezzanine space.
(b) Includes 212,000 square feet (including mezzanine space) utilized by the
Company for its distribution center.
(c) Occupied under the terms of a lease expiring in 2014 with an unaffiliated
party, subject to renewal for a term of 10 years at the option of the
Company. To facilitate construction, the Company loaned to the owner of the
facility an aggregate of approximately $2.5 million. The principal balance
of such loan bears interest at a rate of six percent per annum, is payable
in equal monthly installments through January 2005 and is secured by a
first deed of trust.
Of the 259 stores operated by the Company at December 31, 1997, 131 stores
were owned, 69 stores were leased from unaffiliated parties and 59 stores were
leased from one of two real estate investment partnerships formed by the
O'Reilly family. Leases with unaffiliated parties generally provide for payment
of a fixed base rent, payment of certain tax, insurance and maintenance expense,
and an original term of ten years, subject to one or more renewals at the option
of the Company. The original terms of 15 stores leased from unaffiliated parties
expire prior to the end of 1998. The Company has entered into separate master
lease agreements with each of the affiliated real estate investment partnerships
for the occupancy of the stores covered thereby. Such master lease agreements
expire on December 31, 1998, subject to renewal at the option of the Company for
an additional period of up to six years.
The Company believes that its present facilities are in good condition, are
adequately insured and together with those under construction, are suitable and
adequate for the conduct of its current operations.
ITEM 3 LEGAL PROCEEDINGS
- ------------------------------
The Company is not a party to any legal proceedings, other than routine claims
and lawsuits arising in the ordinary course of its business. The Company does
not believe that such claims and lawsuits, individually or in the aggregate,
will have a material adverse effect on the Company's business.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ----------------------------------------------------------------
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1997.
Page 11
ITEM 4A EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------------------
The following paragraphs set forth certain information with respect to the
executive officers of the Company, who are not also directors:
Ted F. Wise, age 47, Executive Vice-President, has served in this capacity since
March 1993. Mr. Wise had served as Vice President-Operations of the Company from
June, 1984 until being elected to his current position.
James R. Batten, CPA, age 35, Vice-President of Finance/Chief Financial Officer,
has served in this capacity since October 1997. From March 1994 until promotion
to his current position, Mr. Batten served as Chief Financial Officer of the
Company and previously held the position of Finance Manager of the Company from
January 1993 until March 1994. From September 1986 until joining the Company in
January 1993, Mr. Batten was employed by the accounting firm of Whitlock, Selim
& Keehn where he attained the position of Audit Manager in 1991.
Christopher T. Stange, CPA, age 30, is the Director of Accounting since October
1997, in addition to holding the position of Corporate Controller since
September 1996. He previously held the position of Accounting Supervisor. Mr.
Stange joined the Company in 1994 as the Investor Relations Coordinator and was
previously employed by Deloitte & Touche, LLP in St. Louis Missouri.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -------------------------------------------------------------------------------
The material contained in the registrant's annual report to its shareholders
(the "Annual Shareholders' Report") under the captions "Market Prices and
Dividend Information" and "Number of Stockholders" included on page 28, is
incorporated herein by this reference.
ITEM 6 SELECTED FINANCIAL DATA
- ------------------------------------
The material contained in the Annual Shareholders' Report under the caption
"Selected Consolidated Financial Data" included on page 10 and 11, is
incorporated herein by this reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ----------------------------------------------------------------------------
RESULTS OF OPERATIONS
------------------------
The material contained in the Annual Shareholders' Report under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included on pages 12 through 16, is incorporated herein by this
reference.
ITEM 7(a) QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------------
None.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------
The Company's consolidated financial statements, the notes thereto and the
report of Ernst and Young LLP, independent auditors, appearing in the Annual
Shareholders' Report under the captions "Consolidated Financial Statements",
"Notes to Consolidated Financial Statements" and "Report of Independent
Auditors" included on pages 17 through 27, are incorporated herein by this
reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------------
FINANCIAL DISCLOSURE
------------------------
None.
Page 12
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ---------------------------------------------------------------
The information regarding the directors of the Company contained in the
Company's Proxy Statement for the 1998 Annual Meeting of Stockholders ("the
Proxy Statement") under the caption "Election of Directors" is incorporated
herein by this reference. The Proxy Statement is being filed with the Securities
and Exchange Commission within 120 days of the end of the Company's most recent
fiscal year end. The information regarding executive officers called for by item
401 of Regulation S-K is included in Part I as Item 4A, in accordance with
General Instruction G(3) to Form 10-K, for the executive officers of the Company
who are not also directors.
The information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 included in the Company's Proxy Statement under the caption
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" is
incorporated herein by this reference.
ITEM 11 EXECUTIVE COMPENSATION
- ------------------------------------
The material in the Proxy Statement under the caption "Executive Compensation"
other than the material under the caption "Report of the Compensation Committee"
is incorporated herein by this reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ----------------------------------------------------------------------------
The material in the Proxy Statement under the caption "Security Ownership of
Management and Certain Beneficial Owners" is incorporated herein by this
reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------------
The material in the Proxy Statement under the caption "Transactions with
Insiders and Others" is incorporated herein by this reference.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
- -----------------------------------------------------------------------------
(a) 1. Financial Statements-O'Reilly Automotive, Inc. and Subsidiaries
The following consolidated financial statements of O'Reilly Automotive,
Inc. and Subsidiaries included in the Annual Shareholders' Report of the
registrant for the year ended December 31, 1997, are incorporated herein by
this reference in Part II, Item 8:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements for the years ended
December 31, 1997, 1996 and 1995
Report of Independent Auditors
Page 13
(a) 2. Financial Statement Schedule-O'Reilly Automotive, Inc. and Subsidiaries
The following consolidated financial statement schedule of O'Reilly
Automotive, Inc. and subsidiaries is included in Item 14(d):
Schedule II-Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
(a) 3. Management Contracts and Compensatory Plans or Arrangements
Each of the Company's management contracts and compensatory plans or
arrangements are identified in the Exhibit Index on Page E-1.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last quarter of
the year ended December 31, 1997.
(c) Exhibits
See Exhibit Index on page E-1.
(d) Financial Statement Schedules
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
- ---------------------------------- -------------------- --------------------------------------- ------------------- ----------------
Col. A Col. B Col. C Col. D Col. E
- ---------------------------------- -------------------- --------------------------------------- ------------------- ----------------
Additions -
Description Balance at Additions - Charged to Other Deductions - Balance at End
Beginning of Period Charged to Costs Accounts - Describe of Period
and Expenses Describe
- ---------------------------------- -------------------- ------------------- ------------------- ------------------- ----------------
Year Ended December 31, 1997:
Deducted from asset account:
Allowance for doubtful $444 $662 $0 $743 (1) $363
accounts
Year Ended December 31, 1996:
Deducted from asset account:
Allowance for doubtful $386 $592 $0 $534 (1) $444
accounts
Year Ended December 31, 1995:
Deducted from asset account:
Allowance for doubtful $293 $467 $0 $374 (1) $386
accounts
(1) Uncollectible accounts written off.
Page 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
Date: March 31, 1998 By /s/ David E. O'Reilly
------------------------
David E. O'Reilly
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
Signature Title Date
/s/David E. O'Reilly Director, President and March 31, 1998
- --------------------------- Chief Executive Officer
David E. O'Reilly (principal executive officer)
/s/James R. Batten Vice-President of Finance/ March 31, 1998
- --------------------------- Chief Financial Officer
James R. Batten (principle financial officer)
/s/Lawrence P. O'Reilly Director, President and March 31, 1998
- --------------------------- Chief Operating Officer
Lawrence P. O'Reilly
/s/Charles H. O'Reilly, Jr. Director and Chairman March 31, 1998
- --------------------------- of the Board
Charles H. O'Reilly, Jr.
/s/Rosalie O'Reilly Wooten Director and Executive March 31, 1998
- --------------------------- Vice-President
Rosalie O'Reilly Wooten
/s/Charles H. O'Reilly, Sr. Director and Chairman Emeritus March 31, 1998
- ---------------------------
Charles H. O'Reilly, Sr.
/s/Jay D. Burchfield Director March 31, 1998
- ---------------------------
Jay D. Burchfield
/s/Joe C. Greene Director March 31, 1998
- ---------------------------
Joe C. Greene
/s/Chris T. Stange Director of Accounting/ March 31, 1998
- ---------------------------- Controller
Chris T. Stange (principal accounting officer)
Page 15
EXHIBIT INDEX
Exhibit
No. Description
- ------- ---------------------------------------------------------------------
2.1* Plan of Reorganization Among the Registrant, Greene County Realty Co.
("Greene County Realty") and Certain Shareholders.
2.2 Agreement and Plan of Merger, dated as of December 23, 1997, by and
among O'Reilly Automotive, Inc., Shamrock Acquisition, Inc. and Hi-Lo
Automotive, Inc., filed as Exhibit (c)(1) to the Registrants' Tender
Offer Statement on Schedule 14D-1 dated December 23, 1997.
3.1* Restated Articles of Incorporation of the Registrant.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* Form of Stock Certificate for Common Stock.
10.1* Form of Employment Agreement between the Registrant and
David E. O'Reilly, Lawrence P. O'Reilly, Charles H.
O'Reilly, Jr. and Rosalie O'Reilly Wooten.
10.2* Lease between the Registrant and O'Reilly Investment Company.
10.3* Lease between the Registrant and O'Reilly Real Estate Company.
10.4 Form of Retirement Agreement between the Registrant and
David E. O'Reilly, Lawrence P. O'Reilly, Charles H.
O'Reilly, Jr. and Rosalie O'Reilly Wooten, filed herewith.
10.7(a) O'Reilly Automotive, Inc. Profit Sharing and Savings Plan, filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form S-8,
File No. 33-73892, and incorporated herein by this
reference.
10.8*(a) O'Reilly Automotive, Inc. 1993 Stock Option Plan.
10.9*(a) O'Reilly Automotive, Inc. Stock Purchase Plan.
10.10*(a) O'Reilly Automotive, Inc. Director Stock Option Plan.
10.11* Commercial and Industrial Real Estate Sale Contract between
Westinghouse Electric Corporation and Registrant.
10.12* Form of Assignment, Assumption and Indemnification Agreement between
Greene County Realty and Shamrock Properties, Inc.
Page E - 1
EXHIBIT INDEX (continued)
Exhibit
No. Description
- ------- ----------------------------------------------------------------------
10.13 Loan commitment and construction loan agreement between the Registrant
and Deck Enterprises, filed as Exhibit 10.13 to the Registrant's Annual
Shareholders' Report on Form 10-K for the year ended December 31, 1993
10.14 Lease between the Registrant and Deck Enterprises, filed as
Exhibit 10.14 to the Registrant's Annual Shareholders' Report on
Form 10-K for the year ended December 31, 1993
10.15 Amended Employment Agreement between the Registrant and Charles H.
O'Reilly, Jr., filed as Exhibit 10.17 to the Registrant's Annual
Shareholders' Report on Form 10-K for the year ended
December 31, 1996
10.16 Second Amendment to the O'Reilly Automotive, Inc. 1993 Stock Option
Plan, filed as Exhibit 10.20 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997.
10.17 Credit Agreement between the Registrant and NationsBank, N.A.,
dated October 16, 1997, filed as Exhibit 10.17 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
10.18 O'Reilly Automotive, Inc. Performance Incentive Plan, filed as
Exhibit 10.18 (a) to the Registrant's Annual Shareholders' Report on
Form 10-K for the year ended December 31, 1996
10.19 Loan Agreement between the Registrant and Commerce Bank, N.A., dated
October 1, 1997, filed as Exhibit 10.19 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997.
13.1 1997 Annual Report to Shareholders, filed herewith. Portions not
specifically incorporated by reference in this Report are not deemed
"filed" for the purposes of the Securities Exchange Act of 1934.
21.1 Subsidiaries of the Registrant, filed herewith.
23.1 Consent of Ernst & Young LLP, independent auditors, filed herewith.
27.1 Financial Data Schedule, filed herewith.
99.1 Certain Risk Factors, filed herewith.
- --------------------
* Previously filed as Exhibit of same number to the Registration Statement of
the Registrant on Form S-1, File No.33-58948, and incorporated herein by this
reference.
(a) Management contract or compensatory plan or arrangement required to be filed
pursuant to Item 14(c) of Form 10-K.
Page E - 2