O'Reilly Auto Parts 2013 Annual Report Download - page 35

FORM 10-K
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Commercial sales typically carry a lower gross profit as a percentage of sales than DIY sales, as volume discounts are granted on wholesale
transactions to professional service provider customers, therefore, outsized growth, as compared to DIY, creates pressure on our gross
profit as a percentage of sales.
Selling, general and administrative expenses:
Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2013, increased to $2.27 billion (or 34.1% of
sales) from $2.12 billion (or 34.3% of sales) for the same period one year ago, representing an increase of 7%. The increase in total
SG&A dollars was primarily the result of additional Team Members, facilities and vehicles to support our increased store count. The
decrease in SG&A as a percentage of sales was primarily the result of improved leverage of store payroll and occupancy costs on strong
comparable store sales results.
Operating income:
As a result of the impacts discussed above, operating income for the year ended December 31, 2013, increased to $1.10 billion (or 16.6%
of sales) from $977 million (or 15.8% of sales) for the same period one year ago, representing an increase of 13%.
Other income and expense:
Total other expense for the year ended December 31, 2013, increased to $45 million (or 0.7% of sales), from $36 million (or 0.6% of
sales) for the same period one year ago, representing an increase of 24%. The increase in total other expense for the year ended December
31, 2013, was primarily due to increased interest expense on higher average outstanding borrowings.
Income taxes:
Our provision for income taxes for the year ended December 31, 2013, increased to $389 million (36.7% effective tax rate) from $356
million (37.8% effective tax rate) for the same period one year ago, representing an increase of 9%. The increase in our provision for
income taxes was due to the increase in our taxable income. The decrease in our tax rate was primarily due to the benefits of employment
tax credits realized in the current year, adjustments to tax reserves related to the favorable resolution of certain income tax audits during
the current year and unfavorable adjustments relating to certain income tax audits in the prior year.
Net income:
As a result of the impacts discussed above, net income for the year ended December 31, 2013, increased to $670 million (or 10.1% of
sales), from $586 million (or 9.5% of sales) for the same period one year ago, representing an increase of 14%.
Earnings per share:
Our diluted earnings per common share for the year ended December 31, 2013, increased 27% to $6.03 on 111 million shares from $4.75
on 123 million shares for the same period one year ago.
2012 Compared to 2011
Sales:
Sales for the year ended December 31, 2012, increased $393 million to $6.18 billion from $5.79 billion for the same period one year ago,
representing an increase of 7%. Comparable store sales for stores open at least one year increased 3.8% and 4.6% for the years ended
December 31, 2012 and 2011, respectively. Comparable store sales are calculated based on the change in sales of stores open at least
one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members.
The following table presents the components of the increase in sales for the year ended December 31, 2012 (in millions):
Increase in Sales for the Year Ended December 31, 2012,
Compared to the Same Period in 2011
Store sales:
Comparable store sales $ 215
Non-comparable store sales:
Sales for stores opened throughout 2011, excluding stores open at
least one year that are included in comparable store sales 78
Sales in 2011 for stores that have closed (3)
Sales for stores opened throughout 2012 96
Non-store sales:
Includes sales of machinery and sales to independent parts stores and
Team Members 7
Total increase in sales $ 393