SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11 - K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 0-21318
A. Full title of the plan and the address of the plan, if different from that
of the Issuer named below.
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
O'Reilly Automotive, Inc.
233 South Patterson
Springfield, Missouri 65802
REQUIRED INFORMATION
The following audited financial statements are being furnished for the
O'Reilly Automotive, Inc. Profit Sharing and Savings Plan (the "Plan"):
1. Statement of Net Assets Available for Plan Benefits as of December 31, 2002
and 2001.
2. Statement of Changes in Net Assets Available for Plan Benefits for the
years ended December 31, 2002 and 2001.
EXHIBITS
Exhibit No. Description
----------- -----------
23.1 Consent of Independent Auditors
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 27, 2003 O'REILLY AUTOMOTIVE, INC.
PROFIT SHARING AND SAVINGS PLAN
By: /s/ James R. Batten
-------------------------------
Vice President and CFO
O'Reilly Automotive, Inc.
Financial Statements and Schedule
(Modified Cash Basis)
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
December 31, 2002 and 2001, and the year ended
December 31, 2002
with Report of Independent Auditors
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Financial Statements
and Schedule
December 31, 2002 and 2001, and the year ended
December 31, 2002
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements (Modified Cash Basis)
Statements of Net Assets Available for Plan Benefits...........................2
Statement of Changes in Net Assets Available for Plan Benefits.................3
Notes to Financial Statements..................................................4
Supplemental Schedule (Modified Cash Basis)
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes at End of Year.....................................................10
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Report of Independent Auditors
The Plan Administrators and Participants
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits (modified cash basis) of the O'Reilly Automotive, Inc. Profit Sharing
and Savings Plan (the Plan) as of December 31, 2002 and 2001, and the related
statement of changes in net assets available for plan benefits (modified cash
basis) for the year ended December 31, 2002. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As described in Note 1, the financial statements and supplemental schedule were
prepared on the modified cash basis of accounting, which is a comprehensive
basis of accounting other than accounting principles generally accepted in the
United States.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits (modified cash
basis) as of December 31, 2002 and 2001, and the changes in net assets available
for plan benefits (modified cash basis) for the year ended December 31, 2002, on
the basis of accounting described in Note 1.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule (modified
cash basis) of assets held for investment purposes at the end of the year is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule (modified
cash basis) is the responsibility of the Plan's management. The supplemental
schedule (modified cash basis) has been subjected to the auditing procedures
applied in our audits of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ Ernst & Young LLP
Kansas City, Missouri ------------------------
June 6, 2003
1
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Statements of Net Assets Available for Plan Benefits
(Modified Cash Basis)
December 31,
2002 2001
----------- -----------
Assets
Investments, at fair value (Note 3) $58,676,893 $63,724,017
----------- -----------
Net assets available for benefits $58,676,893 $63,724,017
=========== ===========
See accompanying notes.
2
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
(Modified Cash Basis)
Year ended December 31, 2002
Additions:
Dividend and interest income $ 461,758
Discontinuance of Mid-State Automotive Distributors
Inc. Plan 7,685,798
Contributions:
Employer 3,707,195
Employee 3,903,692
---------------
7,610,887
---------------
Total additions 15,758,443
Deductions:
Net realized and unrealized depreciation )
in fair value of investments (Note 3) (15,756,754)
Distributions to participants (5,048,813)
---------------
Total deductions (20,805,567)
Net decrease (5,047,124)
Net assets available for benefits, at beginning of year 63,724,017
---------------
Net assets available for benefits, at end of year $ 58,676,893
===============
See accompanying notes.
3
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements
December 31, 2002
1. Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies of the
O'Reilly Automotive, Inc. (the "Company") Profit Sharing and Savings Plan (the
"Plan"):
Basis of Presentation
The accompanying financial statements have been prepared on the modified cash
basis of accounting, which is a comprehensive basis of accounting other than
generally accepted accounting principles. Under this basis, contributions are
recorded when received rather than in the period to which they relate, and
expenses are recorded when paid rather than when incurred.
Valuation of Investments
The value of investments in common and collective trusts, registered investment
company funds and O'Reilly Automotive, Inc. common stock is based on quoted
market values received from SunTrust Bank, Central Florida, N.A. (SunTrust) on
the last business day of the plan year.
Administrative Expenses
The Company pays the administrative expenses of the Plan.
Use of Estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
4
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
2. Description of the Plan
The following description of the Plan is provided for general information only.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
The Plan is a defined contribution pension plan providing retirement benefits to
substantially all employees of the Company who have attained age 21 and
completed six months and at least 1,000 hours of service in a 12 consecutive
month period of employment. The Plan is sponsored by the Company and is subject
to the pro visions of the Employee Retirement Income Security Act of 1974
(ERISA).
The Plan allows participants to contribute up to 100% of their annual
compensation to the Plan up to $11,000. The Company has elected to contribute
50% of each employee's voluntary contribution up to 2% of the employee's
compensation and 25% of the next 4% of each employee's voluntary contribution.
Additionally, the Company may make voluntary contributions to the Plan annually,
as determined by its Board of Directors, up to a maximum aggregate company
contribution of 15% of participants' annual compensation. Participants may elect
to allocate their contributions to their account balances in various equity,
bond or fixed income funds or the O'Reilly Automotive, Inc. Stock Fund, or a
combination thereof. However, all employer contributions are invested in the
O'Reilly Automotive, Inc. Stock Fund. During the year ended December 31, 2002,
the Plan received discretionary contributions from the Company amounting to
$2,199,997, not including matching contributions.
Mid States Automotive Distributors Inc. 401(k) Plan was discontinued in 2002.
The net assets of that plan were then transferred into the O'Reilly Plan.
Each participant's account is credited with the participant's contribution and
an allocation of the Company's contribution and Plan earnings. Allocations of
Company contributions are based on participant contributions and compensation.
Allocations of Plan earnings are based on participants' account balances.
Forfeitures of terminated participants' non-vested accounts are allocated based
on participant compensation. Total forfeitures at the end of 2002, amounting to
$918,341, were first applied to administrative expenses and then reduced
employer contributions.
Participants are immediately vested with respect to their voluntary
contributions. During 2002, the Company amended the vesting schedule for the
Plan. With respect to employer contributions, participants become 20% vested
after two years of service with the Company. Vesting increases in 20% increments
annually to 100% after six years.
Participating employees are entitled to borrow from the Plan the lesser of
$50,000 or 50% of the employee's vested account balance at a rate equal to one
percentage point above the prime interest rate in effect as reported in the The
Wall Street Journal on the last business day of the month prior to the date the
loan is made. Loans are repaid by payroll deductions over a period no longer
than five years.
5
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
2. Description of the Plan (continued)
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100% vested in their accounts.
Benefit distributions are payable in monthly payments to the beneficiary or in a
lump sum, as elected by the participant. At December 31, 2002, and 2001,
terminated employees had approximately $212,352 and $408,480, respectively,
included in net assets available for plan benefits which were to be paid in 2003
and 2002, respectively. The Plan pays all administrative expenses. During 2002,
administrative expenses totaled $402,800 and are included in the net
realized/unrealized depreciation in fair value of investments in the
accompanying Statement of Changes in Net Assets Available for Plan Benefits.
3. Investments
At December 31, 2002, and 2001, the Plan's investments are held by SunTrust, in
a bank-administered trust fund. SunTrust has authority for the purchase and sale
of investments based on participant discretion, subject to certain restrictions
as specified in the trust agreement and in ERISA.
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
December 31,
2002 2001
------------ -------------
SunTrust common collective trusts:
Classic Balanced Fund $ 3,588,094 $ 3,978,469
Stable Asset Fund 9,137,535 5,380,347
Classic 500 Index Fund 4,268,155 4,988,900
Classic Investment Grade Bond Fund 3,065,989 1,743,073
Registered investment company fund:
O'Reilly Automotive, Inc. common stock:
Participant Directed 29,033,640 14,790,033
Non-participant Directed -- 25,961,178
6
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
3. Investments (Continued)
During 2002, the Plan's investments (including investments purchased, sold, as
well as held, during the year) appreciated (depreciated) in fair value as
follows:
Net Realized
And
Unrealized
Appreciation
(Depreciation)
in Fair Value of
Investments
-------------------
Year ended December 31, 2002
Stable Asset Fund $ 326,553
Classic 500 Index Fund (1,163,760)
Classic Investment Grade Bond Fund 73,594
Classic Balanced Fund (430,964)
Classic Capital Appreciation Fund (512,780)
Classic Life Vision-Moderate Growth (8,545)
Classic Life Vision-Growth & Income (15,112)
Classic Life Vision-Aggressive Growth (11,528)
Franklin Small Cap Growth Fund (86,470)
Fidelity Advisor Equity Income Fund (140,624)
Fidelity Advisor Growth Opportunities Fund (140)
Fidelity Advisor Equity Growth Fund 3,011
Vanguard 500 (33)
Janus Worldwide Fund (391,961)
Janus Advisor Aggressive Growth Fund (30,961)
Classic Small Cap Fund (14,344)
Classic Small Cap Growth Stk Fund (50,777)
Classic Mid-cap Equity (102,507)
Classic Value Income Stock Fund (217,995)
American Century Value Advisor Fund (66,082)
O'Reilly Automotive, Inc. common stock (12,915,329)
-------------------
$ (15,756,754)
===================
7
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
4. Non-participant Directed Investments
Information about the net assets and the significant components of the changes
in net assets relating to the non-participant directed investments is as
follows:
December 31,
2002 2001
------------- -------------
Investments, at fair value:
O'Reilly Automotive, Inc. common stock $ -- $ 25,961,178
------------- -------------
$ -- $ 25,961,178
============= =============
5. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
2002 2001
------------- -------------
Net assets available for benefits per
the financial statements $ 58,676,893 $ 63,724,017
Accrual for employer voluntary contribution
to be received in the subsequent year -- 2,201,499
------------- -------------
Net assets available for benefits per the
Form 5500 $ 58,676,893 $ 65,925,516
============= =============
In 2002, the Form 5500 is being prepared based on cash basis accounting, which
is consistent with financial statements. Accordingly, there is no accrual for
employer voluntary contribution in 2002.
8
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
(Modified Cash Basis)
Notes to Financial Statements (Continued)
5. Differences Between Financial Statements and Form 5500 (Continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31, 2002
---------------------
Benefits paid to the participants per
the financial statements $ 5,048,813
Amounts allocated on Form 5500 as
corrective distributions 289,487
---------------------
Benefits paid to the participants per
the Form 5500 $ 5,338,300
=====================
6. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated February 7, 1995, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Subsequent to this issuance of the determination letter,
the Plan was amended. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes the Plan as amended is
qualified and the related trust is tax exempt.
7. Related Party Transactions
Certain Plan investments are shares in registered investment companies managed
by SunTrust. SunTrust is the Trustee as described by the Plan and, therefore,
these transactions qualify as party-in-interest transactions.
9
Supplemental Schedule
(Modified Cash Basis)
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Schedule H, Line 4i
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2002
Identity of Issue, Borrower, Number Cost Fair Value
Lessor, or Similar Party of Shares
-------------------------------------------- ----------------- --------------- --------------
SunTrust common and collective trusts*:
Stable Asset Fund $ 6,320,209 $ 9,137,535
Classic Investment Grade Bond Fund 2,905,591 3,065,989
Classic Balanced Fund 3,393,298 3,588,094
Classic Capital Appreciation Fund 2,329,844 1,817,403
Classic Small Cap Fund 449,554 482,399
Classic 500 Index Fund 5,056,834 4,268,155
Classic Mid-Cap Equity 462,508 371,815
Classic Small Cap Growth Stock Fund 206,139 162,871
Classic Value Income Stock Fund 1,234,770 1,034,500
Classic Life Vision-Moderate Growth 144,276 131,984
Classic Life Vision-Growth & Income 107,662 94,707
Classic Life Vision-Aggressive Growth 82,685 68,123
Registered investment company funds:
Fidelity Advisor Equity Income Fund 887,253 733,557
Fidelity Advisor Equity Growth Fund 12,553 11,662
Franklin Small Cap Growth Fund 356,342 253,582
Janus Worldwide Fund 1,787,208 1,102,159
American Century Value Advisor Fund 416,532 385,186
O'Reilly Automotive, Inc. common stock* 1,148,028 19,335,911 29,033,640
Participant loans (interest rates ranging
from 5.25% to 10.5%) -- 2,933,532
--------------- --------------
$ 45,489,169 $ 58,676,893
=============== ==============
* Party-in-interest to the Plan
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
EXHIBIT INDEX
Exhibit No. Description
------------ --------------------------------------------------------------
23.1 Consent of Ernst & Young LLP
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-73892) pertaining to the Profit Sharing and Savings Plan of O'Reilly
Automotive, Inc. of our report dated June 6, 2003, with respect to the financial
statements and schedule of the O'Reilly Automotive, Inc. Profit Sharing and
Savings Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 2002.
/s/ Ernst & Young LLP
-----------------------------
Kansas City, Missouri
June 26, 2003
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
EXHIBIT 99.1
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 Annual Report of O'Reilly Automotive, Inc. Profit Sharing
and Savings Plan (the "Plan") for the period ending December 31, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, David E. O'Reilly, Chief Executive Officer of O'Reilly Automotive, Inc.,
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 results of operations
of the Plan.
/s/ David E. O'Reilly
------------------------------------
David E. O'Reilly
Chief Executive Officer
June 27, 2003
This certification is made solely for purposes of 18 U.S.C. Section 1350, and
not for any other purpose.
O'Reilly Automotive, Inc.
Profit Sharing and Savings Plan
EXHIBIT 99.2
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 Annual Report of O'Reilly Automotive, Inc. Profit Sharing
and Savings Plan (the Plan) for the period ending December 31, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, James R. Batten, Chief Financial Officer of O'Reilly Automotive, Inc.,
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 results of operations
of the Plan.
/s/ James R. Batten
-----------------------------------
James R. Batten
Chief Financial Officer
June 27, 2003
This certification is made solely for purposes of 18 U.S.C. Section 1350, and
not for any other purpose.