Item 6. Selected Financial Data

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Item 6. Selected Financial Data

The table below compares the “Company’s selected financial data over a ten-year period:


Years ended December 31,	2019		2018		2017		2016		2015		2014		2013		2012		2011		2010
(In thousands, except per share, Team Members, stores and ratio data)

INCOME STATEMENT DATA:

Sales ($)	10,149,985		9,536,428		8,977,726		8,593,096		7,966,674		7,216,081		6,649,237		6,182,184		5,788,816		5,397,525
Cost of goods sold, including warehouse and distribution expenses	4,755,294		4,496,462		4,257,043		4,084,085		3,804,031		3,507,180		3,280,236		3,084,766		2,951,467		2,776,533
Gross profit	5,394,691		5,039,966		4,720,683		4,509,011		4,162,643		3,708,901		3,369,001		3,097,418		2,837,349		2,620,992
Selling, general and administrative expenses	3,473,965		3,224,782		2,995,283		2,809,805		2,648,622		2,438,527		2,265,516		2,120,025		1,973,381		1,887,316
Former CSK officer clawback	—		—		—		—		—		—		—		—		(2,798)		—
Legacy CSK Department of Justice investigation charge	—		—		—		—		—		—		—		—		—		20,900
Operating income	1,920,726		1,815,184		1,725,400		1,699,206		1,514,021		1,270,374		1,103,485		977,393		866,766		712,776
Write-off of asset-based revolving credit agreement debt issuance costs	—		—		—		—		—		—		—		—		(21,626)		—
Termination of interest rate swap agreements	—		—		—		—		—		—		—		—		(4,237)		—
Gain on settlement of note receivable	—		—		—		—		—		—		—		—		—		11,639
Other income (expense), net	(130,397)		(121,097)		(87,596)		(62,015)		(53,655)		(48,192)		(44,543)		(35,872)		(25,130)		(35,042)
Total other income (expense)	(130,397)		(121,097)		(87,596)		(62,015)		(53,655)		(48,192)		(44,543)		(35,872)		(50,993)		(23,403)
Income before income taxes	1,790,329		1,694,087		1,637,804		1,637,191		1,460,366		1,222,182		1,058,942		941,521		815,773		689,373
Provision for income taxes (a)(b)	399,287		369,600		504,000		599,500		529,150		444,000		388,650		355,775		308,100		270,000
Net income ($) (a)(b)	1,391,042		1,324,487		1,133,804		1,037,691		931,216		778,182		670,292		585,746		507,673		419,373

Basic earnings per common share:
Earnings per share – basic ($)	18.07		16.27		12.82		10.87		9.32		7.46		6.14		4.83		3.77		3.02
Weighted-average common shares outstanding – basic	76,985		81,406		88,426		95,447		99,965		104,262		109,244		121,182		134,667		138,654

Earnings per common share -assuming dilution: (a)(b)
Earnings per share – assuming dilution ($)	17.88		16.10		12.67		10.73		9.17		7.34		6.03		4.75		3.71		2.95
Weighted-average common shares outstanding – assuming dilution	77,788		82,280		89,502		96,720		101,514		106,041		111,101		123,314		136,983		141,992

SELECTED OPERATING DATA:

Number of Team Members at year end (c)	81,223		78,882		75,552		74,580		71,621		67,569		61,909		53,063		49,324		46,858
Total number of stores at year end (d)(e)	5,460		5,219		5,019		4,829		4,571		4,366		4,166		3,976		3,740		3,570
Number of U.S. stores at year end (d)	5,439		5,219		5,019		4,829		4,571		4,366		4,166		3,976		3,740		3,570
Number of Mexico stores at year end (e)	21		—		—		—		—		—		—		—		—		—
Store square footage at year end (c)(f)	40,227		38,455		36,685		35,123		33,148		31,591		30,077		28,628		26,530		25,315
Sales per weighted-average store ($) (c)(g)	1,881		1,842		1,807		1,826		1,769		1,678		1,614		1,590		1,566		1,527
Sales per weighted-average square foot ($) (c)(f)(h)	255		251		248		251		244		232		224		224		221		216
Percentage increase in comparable store sales (c)(i)	4.0	%	3.8	%	1.4	%	4.8	%	7.5	%	6.0	%	4.6	%	3.5	%	4.6	%	8.8	%


Years ended December 31,	2019		2018		2017		2016		2015		2014		2013		2012		2011		2010
(In thousands, except per share, Team Members, stores and ratio data)

SELECT BALANCE SHEET AND CASH FLOW DATA:

Working capital ($) (j)	(635,765)		(350,918)		(249,694)		(142,674)		(36,372)		252,082		430,832		478,093		1,028,330		1,029,861
Total assets ($) (j)	10,717,160		7,980,789		7,571,885		7,204,189		6,676,684		6,532,083		6,057,895		5,741,241		5,494,174		5,031,950
Inventory turnover (c)(k)	1.4		1.4		1.4		1.5		1.5		1.4		1.4		1.4		1.5		1.4
Accounts payable to inventory (c)(l)	104.6	%	105.7	%	106.0	%	105.7	%	99.1	%	94.6	%	86.6	%	84.7	%	64.4	%	44.3	%
Current portion of long-term debt and short-term debt ($)	—		—		—		—		—		25		67		222		662		1,431
Long-term debt, less current portion ($) (j)	3,890,527		3,417,122		2,978,390		1,887,019		1,390,018		1,388,397		1,386,828		1,087,789		790,585		357,273
Shareholders’ equity ($) (a)	397,340		353,667		653,046		1,627,136		1,961,314		2,018,418		1,966,321		2,108,307		2,844,851		3,209,685
Cash provided by operating activities ($) (m)	1,708,479		1,727,555		1,403,687		1,510,713		1,345,488		1,190,430		908,026		1,251,555		1,118,991		703,687
Capital expenditures ($)	628,057		504,268		465,940		476,344		414,020		429,987		395,881		300,719		328,319		365,419
Free cash flow ($) (m)(n)	1,020,649		1,188,584		889,059		978,375		868,390		760,443		512,145		950,836		790,672		338,268

(a)

During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement. In compliance with the standard, the Company did not restate prior period amounts to conform to current period presentation. The Company recorded a cumulative effect adjustment to opening retained earnings, due to the adoption of the new accounting standard. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.

(b)

Following the enactment of the U.S. Tax Cuts and Jobs Act in December of 2017, the Company revalued its deferred income tax liabilities, which resulted in a one-time benefit to the Company’s Consolidated Statement of Income for the year ended December 31, 2018 and 2017. See Note 13 “Income Taxes” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2018, for more information.

(c)	Represents O’Reilly U.S. operations only.

(d)

In 2008, 2012, 2016, and 2018, the Company acquired CSK Auto Corporation (“CSK”), materially all assets of VIP Parts, Tires & Service (“VIP”), Bond Auto Parts (“Bond”) and Bennett Auto Supply, Inc. (“Bennett”), respectively. The 2008 CSK acquisition added 1,342 stores, the 2012 VIP acquisition added 56 stores and the 2016 Bond acquisition added 48 stores to the O’Reilly store count. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett, including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018, but beginning January 1, 2019, the operations of the acquired Bennett locations were included in the Company’s store count, and during the year ended December 31, 2019, the Company merged 13 of these acquired Bennett stores into existing O’Reilly locations and rebranded the remaining 20 Bennett stores as O’Reilly stores. Financial results for these acquired companies have been included in the Company’s consolidated financial statements from the dates of the acquisitions forward.

(e)	In 2019, the Company acquired Mayoreo de Autopartes y Aceites, S.A. de C.V. (“Mayasa”), which added 21 stores to the O’Reilly store count. Financial results for this acquired company have been included in the Company’s consolidated financial statements beginning from the date of the acquisition.

(f)	Square footage includes normal selling, office, stockroom and receiving space.

(g)	Sales per weighted-average store are weighted to consider the approximate dates of store openings, acquisitions or closures.

(h)	Sales per weighted-average square foot are weighted to consider the approximate dates of domestic store openings, acquisitions, expansions or closures.

(i)

Comparable store sales are calculated based on the change in sales of U.S. stores open at least one year and excludes sales of specialty machinery, sales to independent parts stores, sales to Team Members, sales from Leap Day during the years ended December 31, 2016 and 2012, and sales during the one to two week period certain CSK branded stores were closed for conversion. Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for U.S. stores open at least one year, are included in the comparable store sales calculation.

(j)

Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of new accounting standards during the fourth quarter ended December 31, 2015. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2015, for more information.

(k)	Inventory turnover is calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.

(l)	Accounts payable to inventory is calculated as accounts payable divided by inventory.

(m)	Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.

(n)	Free cash flow is calculated as net cash provided by operating activities less capital expenditures, excess tax benefit from share-based compensation payments, and investment in tax credit equity investments for the period.

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