O'Reilly Auto Parts 2005 Annual Report Download - page 12

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2005 was truly a momentous year for Team O’Reilly.
We again realized significant expansion in our store base
through aggressive growth in existing and new markets
and the successful acquisition and integration of Midwest
Auto Parts Distributors. Due to the dedication of our
team members, we were able to overcome the extreme
challenges presented by the Gulf Coast hurricanes with
very little disruption to the service that we provide to our
customers. We are also pleased to report that we have
reached the milestone of $2 billion in sales this year,
which was our “2-4-Your Future” goal that we set in
2002 to reach $2 billion in sales within four years.
The achievement of our “2-4-Your Future” goal was
the result of the continued dedication from our Professional
Parts People working together as one team, striving for one
goal. Product sales rose to $2.05 billion in 2005, an 18.8%
increase over 2004, and net income, before the cumulative
effect of accounting change, increased 39.6% to $164.3
million in 2005. Our comparable store sales growth of 7.5%
was among the best in the industry, continuing the tradition
of market leadership by O’Reilly. Our overall operating
margin improved to 12.3% in 2005, the best level ever for
the Company. This performance was made possible by
initiatives such as our improved wholesale pricing system
and refinement of our merchandising mix, as well as ongoing
incremental improvements in our merchandise acquisition
costs which have been facilitated by our growth.
In addition to achieving the exceptional financial
performance that our shareholders have come to expect,
our stock price has continued to climb and set new records
in 2005. In May, our Board of Directors declared a two-
for-one stock split as a result of our continued financial
performance and their confidence in our future success.
The acquisition of Midwest has proven to be an
excellent fit for O’Reilly, both geographically and
operationally. The Midwest acquisition provides O’Reilly
a presence in Minnesota, Montana, North Dakota, South
Dakota, Wisconsin and Wyoming. These six Northern
Plains states are a bolt-on growth area to our existing
territory and expand our presence to 25 contiguous states.
We are excited about the opportunities these new markets
present and we are well along the way in evaluating sites for
O’REILLY AUTOMOTIVE 2005 ANNUAL REPORT
10
Letter to Shareholders