O'Reilly Auto Parts 2003 Annual Report Download - page 6

page 4
Letter to Our Shareholders
We see continued performance and results.
This year has been another outstanding year for Team O’Reilly. As a result of our team members’ dedication and
hard work, we have had many successes in 2003. In January, we opened our 1,000th store in Chattanooga,
Tennessee. We opened 128 new stores, expanding our footprint to 18 contiguous states including North
Carolina and Virginia. We opened our 10th distribution center (DC) just outside of Mobile, Alabama, which
allows us to further capitalize on the 2001 acquisition of Mid-State Automotive Distributors, Inc. We completed
the remodel of our Knoxville, Tennessee DC and expect to complete the remodel of our Nashville, Tennessee
DC in the spring of 2004. Both remodeling efforts will result in increased capacity and improved efficiency.
In 10 years as a public company, O’Reilly has been one of Wall Street’s most consistent performers. This year was
no exception. Our financial results for 2003 remained strong, with product sales increasing 15.2% to $1.51
billion, net income up 22.1% to $100.1 million, an operating margin of 10.9% and comparable store product
sales up 7.8%. Our efforts to better manage our inventory and negotiate better terms with our vendors resulted
in a 32% accounts payable to inventory ratio. Our net cash provided from operating activities significantly
outpaced our purchases of property and equipment by $36.3 million. Our performance did not go unnoticed as
the stock market once again rewarded our performance with an increase of 53% in our stock price. An investment
of $100 in O’Reilly stock in April 1993 would be worth approximately $981 today, an increase of 881%!
We continue to be extremely proud of the “Team O’Reilly Culture” that is the cornerstone of our customer
service driven approach to business. Greater than 15,000 team members are working toward the common
goal of being the dominant auto parts supplier in all of our markets. We are very confident in our ability to
continue our growth and progress in all of our markets.
We are pleased to have John Murphy and Ronald Rashkow join Team O’Reilly as independent directors.
Our board is now comprised of nine total directors, five of which are independent, giving us an independent
majority as required by the listing standards of NASDAQ.
O’Reilly is well-positioned to capitalize on strong industry trends. Undone or underperformed maintenance
is estimated at $60 billion. The average age of automobiles continues to increase as consumers choose to
maintain vehicles. The American passion for driving remains strong as the number of registered vehicles and
the total miles driven continue to rise. All of these factors point to continued opportunity for our company.
We are looking forward to the opportunities that lie ahead in 2004 and beyond, and will continue to make
decisions with a focus on the long-term health of our company, not just quarterly results. We remain
confident in our business model, the demand for our products and our team’s ability to sustain our growth.
Thank you to our valued customers and team members for making 2003 another successful year. We also
want to thank our loyal shareholders for your confidence and for partnering with us to take advantage of the
opportunities that lie ahead.
David O’Reilly
Chief Executive Officer
& Co-Chairman of the Board
Ted Wise
Co-President
Greg Henslee
Co-President
Jim Batten
Executive Vice President of
Finance & Chief Financial Officer