O’Reilly Automotive

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O ’ R e i l l y   A u t o m o t i v e
A n n u a l   R e p o r t

S e e i n g   G re e n .
Th e   co lo r   o f   re s u lts .  

An in-depth look at the performance of our company and 
the culture that brands it – O’Reilly Automotive.

233 South Patterson
Springfield, Missouri 65802
417-862-3333
www.oreillyauto.com

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p i c t u re d   a b ov e   a re   t h e   o r i g i n a l   t e a m   m e m b e r s   a n d  
f o u n d e r s   o f   O ’ R e i l ly   Au to m ot i ve .

L to R: Red Hale, Wayne Schuler, Paul Ankrom, Jewel Sechler, C.F. O’Reilly, Chub O’Reilly,
Ann Drennan, Bob Bach, Hubert Cox, Tony O’Reilly and Paul Branson. Not pictured are 
Vic Semmelbeck and Chris Bridwell.

M i s s i o n   S tat e m e n t  

“O’Reilly Automotive will be the dominant supplier of auto parts in our market areas by offering our
retail customers, professional installers and jobbers the best combination of inventory, price, quality and
service; providing our team members with competitive wages and benefits, and working conditions which
promote high achievement and ensure fair and equitable treatment; and, providing our stockholders with
an excellent return on their investment.”

Certain statements contained in this annual report are forward-looking statements. These statements discuss, among
other things, expected growth, store development and expansion strategy, business strategies, future revenues and future
performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not
guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but
not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, 
consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated 
with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results 
may materially differ from anticipated results described in these forward-looking statements. Please refer to the Risk
Factors sections of the company’s Form 10-K for the year ended December 31, 2003, for more details.

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We s e e   t h e   b e g i n n i n g s   o f   a   l e g ac y.

The year was 1957. Chevrolet launched their classic 1957 Bel Air, the Russians launched the Sputnik and a
father-and-son duo launched O’Reilly Automotive, a family owned auto parts store that would become
one of the nation’s largest auto parts retailers. 

C.F. and C.H. “Chub” O’Reilly, along with 11 other team members, approached their job with commitment
and dedication to a common cause, a full day’s work for a day’s pay, honesty and integrity, and working
together to provide the best customer service in town.

While all of those initial team members were not related, they did take care of business as a “family.” Each
one realized that every person on the team was relying on them to successfully perform their duties and
responsibilities. Without exception, these team members put their nose to the grindstone and together
worked hard to accomplish their goals. They treated each other and their customers with respect, and
committed themselves to the common goal of “winning for the team” by being honest and professional 
in their daily activities.

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We s e e   t h at   o ri g i n a l   l e g ac y   a l i ve   i n   a   c u lt u re
o f   t e a m   s p i ri t,   i m pe cc a b l e   c u s to m e r   s e rv i c e
a n d   g ri t t y   d e t e r m i n at i o n .

The year is 2003 and the mission of our business remains the same … be the dominant supplier of
auto parts in our market areas. The standards set by the original team members in 1957 created the culture
that our team members take pride in today. It’s about doing whatever it takes to get the job done by 
offering our retail customers, professional installers and jobbers the best combination of inventory 
availability, price, quality and service.

We continue to build our business around a culture created by our founders that believes in honest and
fair dealings with our customers, suppliers and team members, and treating people with respect. We
believe our culture will continue to drive results.

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Letter  to  Our  Shareholders

We s e e   co n t i n u e d   pe r f o r m a n c e   a n d   re s u lts .

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

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2 0 0 3   f i n a n c i a l   h i g h l i g h ts

In thousands, except earnings per share data and operating data

Year ended December 31

Product Sales

Operating Income

Net Income

Working Capital

Total Assets

Long-Term Debt

Shareholders’ Equity

Net Income Per Common Share 

2003

2002

2001

2000

1999

$

1,511,816

$

1,312,490 

$

1,092,112 

$

890,421 

$

754,122 

165,275

100,087

441,617 

138,301 

81,992 

483,623

1,187,592

1,009,419 

120,977

784,285

190,470 

650,524 

113,831 

66,352 

429,527 

856,859 

165,618 

556,291 

90,029 

51,708 

296,272 

715,995 

90,463 

463,731 

76,920 

45,639 

249,351 

610,442 

90,704 

403,044 

(assuming dilution)

1.84

1.53 

1.26 

1.00 

0.92 

Weight-Average Common Share 

(assuming dilution)

Stores At Year-End

Same-Store Sales Gain

54,530

1,109

7.8%

53,692 

52,786 

51,728 

49,715 

981 

3.7%

875 

8.8%

672 

5.0%

571 

9.6%

Team O'Reilly is committed to capitalizing on the demand for auto parts and accessories. Our 2-4-Your Future initiative, representing our
goal to reach $2 billion in sales per year by December 31, 2005, demonstrates this commitment.

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e a r n i n g s   pe r   s h a re
(assuming  dilution)

$1.84

$1.53

$1.26

$1.00

$0.92

1999

2000

2001

2002

2003

5-year compound annual growth rate: 21.0%

Earnings per share (EPS) refers to net after-tax income of our company applicable to each share of common stock. 
Our goal is to increase EPS by 18-20% each year, reflecting our goals of growth in sales and expense control. Our team
accepts the challenge of driving EPS growth and benefits from such growth as most of them are also shareholders.

co m pa r a b l e   s to re   s a l e s

9.6%

8.8%

7.8%

5.0%

3.7%

1999

2000

2001

2002

2003

5-year average: 7.0%

Comparable store sales percentage measures the sales increases or decreases of existing stores. We calculate 
comparable store sales data based on the change in product sales of stores open at least one year.

pag e   6

o pe r at i n g   i n co m e
(dollars in millions)

$165.3

$138.3

$113.8

$90.0

$76.9

1999

2000

2001

2002

2003

5-year compound annual growth rate: 23.8%

Operating income refers to product sales, less cost of goods sold and operating expenses. Our goal is for operating
income, as a percentage of sales, to be 11% or greater. Our team is committed to achieving this goal by offering excellent
customer service to drive sales, coupled with relentless expense control.

n e t   i n co m e
(dollars in millions)

$100.1

$82.0

$66.4

$51.7

$45.6

1999

2000

2001

2002

2003

5-year compound annual growth rate: 26.6%

Net income represents more than sales less all expenses and adjustments. It’s a critical metric of performance that is 
near and dear to all O’Reilly Team Members and the reward for a job well-done. Our team knows that taking care of
our customers each day and watching our pennies drives net income.

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The Team  O’Reilly

C u lt u re

We s e e   a   c u lt u re   g e a re d   f o r   pe r f o r m a n c e .  
Th at’s w h at   s e ts   u s   a pa rt   f ro m   t h e   re s t.

Since 1957, we have adapted to many changes and have enjoyed many successes in the auto parts business.
We have completed various acquisitions from single stores to large chains that nearly doubled our company’s
size. We have grown from operating one store in Springfield, Missouri to over 1,100 stores in 18 contiguous
states. Through it all one thing remains the same, the O’Reilly Culture. The 10 values that make up our
culture include respect, honesty, teamwork, expense control, hard work, professionalism, enthusiasm,
excellent customer service, dedication and a win-win attitude. When considering a prospective team member,
we seek individuals who will embrace our core values and dedicate themselves to the O’Reilly Culture. For
new team members, a significant amount of their training focuses on our culture, to carry forward those
values that have been critical to the success of the company. Our monthly publication, Team Spirit, and
weekly team memo remind our veteran team members that our culture plays a significant role in the success
of our company. It is both our goal and our challenge to continue promoting the values that make up our
culture throughout our entire team, now more than 15,000 strong.

As we look to 2004 and the challenges we will face, we are confident that the time we have invested to develop
the O’Reilly Culture will pay dividends for years to come and continue to guide our team members. Team
O’Reilly takes pride in what we do, the values we have and the customers we serve.

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We s e e   s at i s f i e d   c u s to m e r s   f u e l i n g  
o u r   b ot to m   l i n e   ev e ry   d ay.

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p ro d u c t   s a l e s
(dollars in millions)

$1,511.8

$1,312.5

$1,092.1

$890.4

$754.1

1999

2000

2001

2002

2003

5-year compound annual growth rate: 19.7%

Our goal of 15-20% annual sales growth supports our “2-4-Your Future” initiative, obtaining 
$2 billion in sales by December 31, 2005.

n u m b e r   o f   s to re s

1,109

981

875

672

571

number 5 of the top
100 auto parts chains
Source: January 2004
Aftermarket Business
Magazine

1999

2000

2001

2002

2003

5-year compound annual growth rate: 17.7%

Our growth plans for 2004 include the addition of approximately 140 new stores, an increase of 12.6%.

pag e   1 1

t e a m   m e m b e r s
(in thousands)

15.5

14.3

12.7

10.8

9.5

1999

2000

2001

2002

2003

The addition of team members is to support the expanded level of our operations. They are truly our best “part.”

c a p i ta l   s t ru c t u re
(dollars  in  millions)

$784.3

$650.5

$556.3

$463.7

$403.0

$182.5

$191.2

$139.6

$110.1

$121.9

1999

2000

2001

2002

2003

total shareholders’ equity       total debt       

Our capital structure consists of debt and shareholders’ equity. Our strong balance sheet supports our expansion plans
and gives us the flexibility to capitalize on potential acquisitions.

pag e   1 2

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We s e e   o p p o rt u n i t i e s   t h at
m a k e   a   d i f f e re n c e .

Our customers have become accustomed to the many advantages of
shopping at O’Reilly Auto Parts. A friendly greeting within their 
first five steps in the store, unparalleled availability of parts and our
knowledgeable parts professionals helping them find the right part for
the job are just a few of the reasons our customers keep coming back.

Our professional installer customers rely on the frequent clinics we
host, to educate them on the latest in automotive technology. We 
also have a dedicated sales force that caters to their special needs. This
commitment coupled with an excellent track record of service has
earned us a reputation of being the “First Call” for professional installers.

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O’Reilly  Automotive

S t r at e g i c
D i s t r i bu t i o n   Sy s t e m s

We s e e   o u r   d e l i ve ry   m o d e l   s e t t i n g   t h e  
s ta n d a rd   f o r   t h e   f u t u re   o f   t h e   au to m ot i ve
a f t e r m a rk e t   i n d u s t ry.

On average, we stock over 100,000 individual stock keeping units (SKUs) in our distribution centers.
Customers have unparalleled access to hard-to-find parts, creating a competitive advantage for our company.
They have become accustomed to our same-day or overnight delivery of any part in our distribution center,
making any substitute unacceptable. We believe they deserve this level of service and will continue to
reward our company with their loyalty.

We continue to evaluate the efficiencies and capacity of our distribution network. We have successfully
completed expansions of our distribution centers in Little Rock, Arkansas and Houston, Texas. We 
completed the remodel of our distribution centers in Knoxville, Tennessee and Springfield, Missouri 
and expect to complete the remodel of our distribution center in Nashville, Tennessee in spring of 2004.

It’s our commitment to extraordinary customer service that determines the number and location of 
our distribution centers. Our distribution centers are strategically located to pursue new, contiguous
markets, allowing for growth, while sustaining overnight delivery to every store. In June 2003, we 
successfully opened our 10th distribution center near Mobile, Alabama, which will enable further 
penetration into the Southeast and further capitalize on the acquisition of Mid-State Automotive
Distributors, Inc., completed in 2001.

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2 0 0 3   o’re i l ly   au to   pa rts   s to re s  
a n d   d i s t ri bu t i o n   c e n t e r s

o’reilly auto parts states

alabama
arkansas
florida
georgia
illinois
indiana
iowa
kansas
kentucky

43  Stores
72 Stores
7 Stores
8 Stores
19 Stores
6 Stores
64 Stores
57 Stores
21 Stores

louisiana
mississippi
missouri
nebraska
north carolina
oklahoma
tennessee
texas
virginia

50 Stores
32 Stores
132 Stores
24 Stores
15 Stores
99 Stores
78 Stores
381 Stores
1 Store

total number of stores: 1,109

distribution centers

dallas, texas
des moines, iowa
houston, texas
kansas city, missouri
knoxville, tennessee
little rock, arkansas
mobile, alabama
nashville, tennessee
oklahoma city, oklahoma 
springfield, missouri

Customer service is the No. 1 priority in every aspect of our business. We will continue the successful O’Reilly strategy of expanding to new, contiguous 
markets, keeping all stores within a 150-mile to 200-mile radius of an O’Reilly distribution center ensuring overnight delivery to every store.

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O’Reilly  Automotive

D ua l   M a r k e t   S t r at e g y

We s e e   a   co m pe t i t i ve   a dva n tag e   i n  
s e rv i n g   t wo   m a rk e ts .

Maintaining an approximate 50/50 balance between serving professional installer and do-it-yourself (DIY)
customers is a challenging, but rewarding task. This blend of customers is very unique in our industry.
Through 46 years of perseverance and dedication to our customers, we have successfully served these two,
very different markets. This approach has enabled us to reach markets otherwise too small for traditional
retail auto parts stores.

Both our professional installer and our DIY customers value the outstanding customer service provided by
our professional parts people. Our DIY customers appreciate our attractive, conveniently located stores that
are easy to shop with clearly labeled aisles and products. Our competitive prices and low-price guarantee
compels our customers to continue rewarding us with their business. They rely on our professional parts
people to ensure they have the right part and the right tool for the job.

Many programs and services are made available to our professional installer customers to further strengthen
the relationship we share. Our customer support programs keep them up to date with new developments
and changes in automotive technologies. Hot-shot delivery service allows them access to parts on demand.
Our unmatched parts availability assures they can get hard-to-find parts and our knowledgeable parts 
professionals are an excellent resource for their business. All of our professional parts people receive ongoing
training to provide this level of service, and many achieve ASE certification. These programs and services
deliver an unbeatable combination for our professional installers.

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pag e   2 1

pag e   2 2

au to m ot i ve   a f t e r m a rk e t   i n d u s t ry
u n d e r pe r f o r m e d   m a i n t e n a n c e

$60 Billion
Underperformed
Maintenance

$36 Billion
Existing DIY Market*

$71 Billion
Existing DIFM Market**

Experts estimate automotive underperformed maintenance to be approximately $60 billion. We continue to 
promote routine maintenance through our advertising efforts raising awareness to customers and driving additional sales.
The “Be Car Care Aware™” campaign educates drivers in our markets about automotive underperformed maintenance
and the benefits performing maintenance can have on their second largest investment, their automobile.

o’re i l ly   re ta i l   v s .   co m m e rc i a l   s a l e s

53%
DIY Market*

47%
DIFM Market**

Our dual market strategy provides us a competitive advantage allowing penetration into smaller rural 
markets otherwise not suitable for traditional retail outlets.

*diy – do-it-yourself or retail market
**difm – do-it-for-me or commercial market, also known as professional installer market

pag e   2 3

We s e e   a   s t ro n g   c u lt u re   co u p l e d   w i t h  
u n m atc h e d   pe r f o r m a n c e   t h at   l e a d s  
to a   b ri g h t   f u t u re .

pag e   2 4

2 0 0 3   F i n a n c i a l   R e s u lts

pag e   2 5

s e l e c t e d   co n s o l i d at e d   f i n a n c i a l   d ata

(In thousands, except per share data)
years ended december 31, 

i n co m e   s tat e m e n t   d ata :

Product sales

Cost of goods sold, including warehouse and distribution expenses

Gross profit

Operating, selling, general and administrative expenses

Operating income

Other income (expense), net

Provision for income taxes

Net income

b a s i c   e a r n i n g s   pe r   co m m o n   s h a re :

Net income per share 

Weighted-average common shares outstanding

2003

2002

2001

$1,511,816

$1,312,490

$1,092,112

873,481

638,335

473,060

165,275

(5,233)

59,955

759,090

553,400

415,099

138,301

(7,319)

48,990

624,294

467,818

353,987

113,831

(7,104)

40,375

$   100,087

$     81,992

$    66,352

$        1.86

$        1.54

$        1.27

53,908

53,114

52,121

e a r n i n g s   pe r   co m m o n   s h a re - a s s u m i n g   d i lu t i o n :

Net income per share 

$        1.84

$        1.53

$        1.26

Weighted-average common shares outstanding – adjusted

54,530

53,692

52,786

s e l e c t e d   o pe r at i n g   d ata :

Number of stores at year-end (a)

Total store square footage at year-end (in 000’s) (a) (b)

Weighted-average product sales per store (in 000’s) (a) (b)

Weighted-average product sales per square foot (b) (d)

Percentage increase in same-store product sales (c)

b a l a n c e   d ata   s h e e t:

Working capital

Total assets

Short-term debt

Long-term debt, less current portion

Shareholders’ equity

1,109

7,348

$      1,413

$    

215

981

6,408

$      1,372

$

211

875

5,882

$      1,426

$

219

7.8%

3.7%

8.8%

$   441,617

1,187,592

925

120,977

784,285

$   483,623

1,009,419

682

190,470

650,524

$   429,527

856,859

16,843

165,618

556,291

(a) Store count for 2002 does not include 27 stores acquired from Dick Smith Enterprises and Davie Automotive, Inc. in December 2002.

(b) Total square footage includes normal selling, office, stockroom and receiving space. Weighted-average product sales per store and per square foot are weighted to consider the 

approximate dates of store openings or expansions.

(c) Same-store product sales data are calculated based on the change in product sales of stores open at least one year. Prior to 2000, same-store product sales data 

were calculated based on the change in product sales of only those stores open during both full periods being compared. Percentage increase in same-store product sales is calculated 
based on store sales results, which exclude sales of specialty machinery, sales by outside salesmen and sales to employees.

(d) 1998 does not include stores acquired from Hi/LO. Consolidated weighted average product sales per square foot were $207.

pag e   2 6

2000

1999

1998

1997

1996

1995

1994

$   890,421

$   754,122

$   616,302

$   316,399

$   259,243

$   201,492

$   167,057

507,720

382,701

292,672

90,029

(6,870)

31,451

428,832

325,290

248,370

76,920

(3,896)

27,385

358,439

257,863

200,962

56,901

(6,958)

19,171

181,789

134,610

97,526

37,084

472

14,413

150,772

108,471

79,620

28,851

1,182

11,062

116,768

84,724

62,687

22,037

236

8,182

97,758

69,299

52,142

17,157

376

6,461

$   51,708

$    45,639

$   30,772

$    23,143

$   18,971

$   14,091

$

11,072

$    

1.01

$  

0.94

$   

0.72

$  

0.55

$  

0.45

$   

0.40

$ 

0.32

51,168

48,674

42,476

42,086

41,728

35,640

34,620

$   

1.00

$  

0.92

$  

0.71

$   

0.54

$   

0.45

$   

0.39

$  

0.32

51,728

49,715

43,204

42,554

42,064

35,804

34,778

672

4,491

$  

1,412

$

218

571

3,777

$  

1,422

$

223

491

3,172

$    1,368

$

238

259

1,417

$  

1,300

$

244

219

1,151

$  

1,240

$

251

188

923

165

785

$  

1,101

$

227

$  

1,007

$

215

5.0%

9.6%

6.8%

6.8%

14.4%

8.9%

8.9%

$   296,272 

$   249,351

$   208,363

$  93,763

$  74,403

$  80,471

$  41,416

715,995

49,121

90,463

463,731

610,442

19,358

90,704

403,044

493,288

13,691

170,166

218,394

247,617

130

22,641

182,039

183,623

3,154

237

155,782

153,604

231

358

133,870

87,327

311

461

70,224

pag e   2 7

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s

The following discussion of our financial condition, results of operations and liquidity and capital resources should be read in conjunction
with our consolidated financial statements, related notes and other financial information included elsewhere in this annual report. 

We are one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United
States, selling our products to both do-it-yourself (DIY) customers and professional installers. Our stores carry an extensive product
line consisting of new and remanufactured automotive hard parts, maintenance items and accessories, and a complete line of auto
body paint and related materials, automotive tools and professional service equipment. 

We calculate same-store product sales based on the change in product sales for stores open at least one year. Prior to January 2000, 
we calculated same-store product sales based on the change in product sales of only those stores open during both full periods being
compared. We calculate the percentage increase in same-store product sales based on store sales results, which exclude sales of 
specialty machinery, sales by outside salesmen and sales to employees. 

Cost of goods sold consists primarily of product costs and warehouse and distribution expenses. Cost of goods sold as a percentage of
product sales may be affected by variations in our product mix, price changes in response to competitive factors and fluctuations in
merchandise costs and vendor programs. 

Operating, selling, general and administrative expenses consist primarily of salaries and benefits for store and corporate team members,
occupancy, advertising expenses, general and administrative expenses, data processing, professional expenses and other related expenses.

critical accounting policies and estimates
The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend the business
activities of our company. To aid in that understanding, management has identified our “critical accounting policies.” These policies
have the potential to have a more significant impact on our financial statements, either because of the significance of the financial
statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring,
at a specific point in time, events which are continuous in nature.

Cost of goods sold – Cost of goods sold includes warehouse and distribution expenses and estimates of amounts due from vendors
for certain merchandise allowances and rebates. These estimates are consistent with historical experience.
Operating, selling, general and administrative expense (OSG&A) – Operating, selling, general and administrative expense includes
estimates for medical, worker’s compensation and other general liability obligations, which are partially based on estimates of certain
claim costs and historical experience.
Accounts receivable – Allowance for doubtful accounts is estimated based on historical loss ratios and consistently has been within
management’s expectations.
Revenue – Over-the-counter retail sales are recorded when the customer takes possession of merchandise. Sales to professional
installers, also referred to as “commercial sales”, are recorded upon delivery of merchandise to the customer, generally at the customer’s
place of business. Wholesale sales to other retailers, also referred to as “jobber sales” are recorded upon shipment of merchandise. All
sales are recorded net of estimated allowances and discounts.
Vendor concessions – The Company receives concessions from its vendors through a variety of programs and arrangements, including
co-operative advertising, devaluation programs, allowances for warranties and volume purchase rebates. Co-operative advertising
allowances that are incremental to our advertising program, specific to a product or event and identifiable for accounting purposes 
are reported as a reduction of advertising expense in the period in which the advertising occurred. All other vendor concessions are
recognized as a reduction of cost of sales when recognized in the consolidated statement of income.

pag e   2 8

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

Stock-based compensation – We have elected to use the intrinsic value method of accounting for stock options issued under our 
stock option plans and accordingly do not record an expense for such stock options. For purposes of pro forma disclosures under 
the fair value method, the estimated fair value of the options is amortized to expense over the options’ vesting period. 

Our pro forma information for the years ended December 31, is as follows:

(In thousands, except per share data)

Net income as reported

Stock-based compensation expense as reported
Stock-based compensation expense under fair value method

Pro forma net income

Pro forma basic net income per share

Pro forma net income per share - assuming dilution

2003

$100,087

–
9,204

$  90,883

$1.69

$1.67

2002

$81,992

–
7,217

$74,775

$1.41

$1.39

results of operations 
The following table sets forth, certain income statement data as a percentage of product sales for the years indicated:

years ended december 31,

Product sales
Cost of goods sold, including warehouse 

and distribution expenses

Gross profit
Operating, selling, general and administrative expenses

Operating income
Other expense, net

Income before income taxes
Provision for income taxes

Net income

2003

100.0%

57.8

42.2
31.3

10.9
(0.3)

10.6
4.0

6.6%

2002

100.0%

57.8

42.2
31.6

10.6
(0.6)

10.0
3.7

6.3%

2001

$66,352

–
5,406

$60,946

$1.17

$1.15

2001

100.0%

57.2

42.8
32.4

10.4
(0.6)

9.8
3.7

6.1%

2003 compared to 2002
Product sales increased $199.3 million, or 15.2% from $1.31 billion in 2002 to $1.51 billion in 2003, primarily due to 128 net 
additional stores opened during 2003, and a 7.8% increase in same-store product sales for stores open at least one year. We believe
that the increased product sales achieved by the existing stores are the result of our offering of a broader selection of products in most
stores, an increased promotional and advertising effort through a variety of media and localized promotional events, and continued
improvement in the merchandising and store layouts of most stores. Also, our continued focus on serving professional installers 
contributed to increased product sales.

pag e   2 9

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

Gross profit increased 15.4% from $553.4 million (42.2% of product sales) in 2002 to $638.3 million (42.2% of product sales) in
2003. The increase in gross profit dollars is due to the increase in product sales.

Operating, selling, general and administrative expenses (OSG&A) increased $58.0 million from $415.1 million (31.6% of product sales) in
2002 to $473.1 million (31.3% of product sales) in 2003. The increase in these expenses in dollar amount was primarily attributable
to increased salaries and benefits, rent and other costs associated with the addition of employees and facilities to support the increased
level of our operations. The decrease in OSG&A expenses as a percent of product sales was primarily due to achieving greater economies
of scale resulting from increased product sales and through management’s expense control initiatives.

Other expense, net, decreased by $2.1 million from $7.3 million in 2002 to $5.2 million in 2003. The decrease was primarily due to
a reduction in interest expense as a result of lower average borrowings under the Company’s credit facility and to a lesser extent lower
average interest rates.

Provision for income taxes increased from $49.0 million in 2002 (37.4% effective tax rate) to $60.0 million in 2003 (37.5% effective
tax rate). The increase in the dollar amount was primarily due to the increase of income before income taxes.

Principally as a result of the foregoing, net income in 2003 was $100.1 million (6.6% of product sales), an increase of $18.1 million or
22.1%, from net income in 2002 of $82.0 million (6.3% of product sales).

2002 compared to 2001
Product sales increased $220.4 million, or 20.2% from $1.09 billion in 2001 to $1.31 billion in 2002, due to 106 net additional
stores opened during 2002, and a 3.7% increase in same-store product sales for stores open at least one year. We believe that the
increased product sales achieved by the existing stores are the result of our offering of a broader selection of products in most stores,
an increased promotional and advertising effort through a variety of media and localized promotional events, and continued improvement
in the merchandising and store layouts of most stores. Also, our continued focus on serving professional installers contributed to
increased product sales.

Gross profit increased 18.3% from $467.8 million (42.8% of product sales) in 2001 to $553.4 million (42.2% of product sales) in
2002. The increase in gross profit dollars is primarily due to increases in sales. The decrease in gross profit as a percent of product
sales is primarily due to increased product sales to independent jobbers, which are at a lower gross margin, and increased distribution
costs at the distribution centers acquired from Mid-State Automotive Distributors, Inc.

Operating, selling, general and administrative expenses increased $61.1 million from $354.0 million (32.4% of product sales) in
2001 to $415.1 million (31.6% of product sales) in 2002. The increase in these expenses in dollar amount was primarily attributable to
increased salaries and benefits, rent and other costs associated with the addition of employees and facilities to support the increased
level of our operations. The decrease in OSG&A expenses as a percent of product sales was primarily due to reductions in payroll,
benefits and other OSG&A expenses through management’s expense control initiatives.

Other expense, net, increased by $215,000 from $7.1 million in 2001 to $7.3 million in 2002. The increase was primarily due to
interest expense on increased borrowings under our credit facility and a decrease in interest income.

Provision for income taxes increased from $40.4 million in 2001 (37.8% effective tax rate) to $49.0 million in 2002 (37.4% effective
tax rate). The increase in the dollar amount was primarily due to the increase of income before income taxes. The decrease in the
effective rate was primarily due to changes in the mix of business between the states in which we operate.

pag e   3 0

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

Principally as a result of the foregoing, net income in 2002 was $82.0 million (6.3% of product sales), an increase of $15.6 million 
or 23.6%, from net income in 2001 of $66.4 million (6.1% of product sales). 

liquidity and capital resources 
Net cash provided by operating activities was $172.8 million in 2003, $104.5 million in 2002 and $50.0 million in 2001. The
increase in cash provided by operating activities in 2003 compared to 2002 was primarily due to increases in net income, accounts
payable, accrued payroll, accrued benefits and withholdings, partially offset by increases in receivables and inventory. The increase in
accounts payable was primarily due to management’s efforts with vendors to extend the terms of payment. The increases in accrued
payroll, benefits and withholdings, accounts receivable and inventory primarily relate to the increased level of our operations.

The increase in cash provided by operating activities in 2002 compared to 2001 was primarily due to increases in net income, accounts
payable, income taxes payable, accrued payroll and accrued benefits and withholdings, partially offset by increases in receivables and
inventory. These increases relate primarily to the increased level of our operations.

Net cash used in investing activities was $134.6 million in 2003, $105.4 million in 2002 and $77.8 million in 2001. The increase in
cash used in investing activities in 2003 and 2002 was primarily due to increased purchases of property and equipment.

On December 29, 2000, we completed a sale-leaseback transaction. Under the terms of the transaction, we sold 90 properties,
including land, buildings and improvements, which generated $52.3 million of additional cash. The lease, which is being accounted 
for as an operating lease, provides for an initial lease term of 21 years and may be extended for one initial ten-year period and two
additional successive periods of five years each. The resulting gain of $4.5 million has been deferred and is being amortized over the
initial lease term. Net rent expense during the initial term will be approximately $5.5 million annually and is included in the table 
of contractual obligations under non-cancelable operating leases. 

On May 16, 2001, we completed a $100 million private placement of two series of unsecured senior notes (Senior Notes). The 
Series 2001-A Senior Notes were issued for $75 million, are due May 16, 2006, and bear interest at 7.72% per year. The Series 2001-B
Senior Notes were issued for $25 million, are due May 16, 2008, and bear interest at 7.92% per year. The private placement agreement
allows for a total of $200 million of Senior Notes issuable in series and is guaranteed by all of our subsidiaries. Proceeds from the
transaction were used to reduce outstanding borrowings under our former revolving credit facility.

In August 2001, we completed a sale-leaseback with O’Reilly-Wooten 2000 LLC (an entity owned by certain shareholders of the
Company). The transaction involved the sale and leaseback of nine O’Reilly Auto Parts stores and resulted in approximately 
$5.6 million of additional cash to the Company. The transaction did not result in a material gain or loss. The lease, which has 
been accounted for as an operating lease, calls for an initial term of 15 years with three five-year renewal options.

On June 26, 2003, we completed an amended and restated master agreement to our $50 million Synthetic Operating Lease Facility
(the Facility or the Synthetic Lease) with a group of financial institutions. The terms of the Facility provide for an initial lease period
of five years, a residual value guarantee of approximately $44.2 million at December 31, 2003, and purchase options on the properties.
The Facility also contains a provision for an event of default whereby the lessor, among other things, may require us to purchase 
any or all of the properties. One additional renewal period of five years may be requested from the lessor, although the lessor is not
obligated to grant such renewal. The Facility has been accounted for as an operating lease under the provisions of Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 13 and related interpretations, including Financial
Interpretation No. 46. Future minimum rental commitments under the Facility have been included in the table of contractual 
obligations below.

pag e   3 1

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

Capital expenditures were $136.5 million in 2003, $102.3 million in 2002 and $68.5 million in 2001. These expenditures were primarily
related to the opening of new stores, as well as the relocation or remodeling of existing stores. We either opened or acquired 128, 106
and 203 net stores in 2003, 2002 and 2001, respectively. We remodeled or relocated 46 stores and two distribution centers in 2003,
27 stores in 2002 and 16 stores in 2001. Three new distribution centers were acquired; one in 2003, located near Mobile, Alabama
and two in October 2001, located in Nashville, Tennessee and Knoxville, Tennessee.

Our continuing store expansion program requires significant capital expenditures and working capital principally for inventory
requirements. Our 2004 growth plans call for approximately 140 new stores and capital expenditures of $125 million to $135 million.
The costs associated with the opening of a new store (including the cost of land acquisition, improvements, fixtures, inventory and
computer equipment) are estimated to average approximately $900,000 to $1.1 million; however, such costs may be significantly
reduced where we lease, rather than purchase, the store site. Although the cost to acquire the business of an independently owned
parts store varies, depending primarily upon the amount of inventory and the amount, if any, of real estate being acquired, we 
estimate that the average cost to acquire such a business and convert it to one of our stores is approximately $400,000. We plan to
finance our expansion program through cash expected to be provided from operating activities and available borrowings under our
existing credit facilities.

On July 29, 2002, the Company completed an unsecured, three-year syndicated credit facility (Credit Facility) in the amount of
$150 million led by Wells Fargo Bank as the Administrative Agent, replacing a five-year syndicated credit facility. The Credit Facility
is guaranteed by all of our subsidiaries and may be increased to a total of $200 million, subject to the availability of such additional
credit from either existing banks within the Credit Facility or other banks. The Credit Facility bears interest at LIBOR plus a spread
ranging from 0.875% to 1.375% (2.06% at December 31, 2003 and 2.26% at December 31, 2002) and expires in July 2005. At
December 31, 2003 and 2002, $20.0 million and $90.0 million, respectively, of the Credit Facility was outstanding. Additionally,
letters of credit totaling $11.0 million and $6.0 million were outstanding at December 31, 2003 and 2002, respectively. Accordingly,
our aggregate availability for additional borrowings under the Credit Facility was $119.0 million and $54.0 million at December 31,
2003 and 2002, respectively. Prior to July 29, 2002, the Company had available an unsecured credit facility providing for maximum
borrowings of $140 million. The facility was comprised of a revolving credit facility of $125 million, and a term loan of $15 million.
The credit facility, which bore interest at LIBOR plus 0.50%, expired in January 2003. All borrowings outstanding under the old
credit facility were fully repaid in July 2002.

off balance sheet arrangements 
We have utilized various financial instruments from time to time as sources of cash when such instruments provided a cost effective
alternative to our existing sources of cash. We do not believe, however, that we are dependent on the availability of these instruments
to fund our working capital requirements or our growth plans.

We completed two sale-leaseback transactions in 2000 and 2001 and the Synthetic Lease in 2000, the terms of all which are described
above under Liquidity and Capital Resources. The purpose of the sale-leaseback transactions was to reduce outstanding borrowings under
our former revolving credit facility. The purpose of the Synthetic Lease was to fund a portion of our store growth, primarily in 2001 and 2002.

We issue stand-by letters of credit provided by a $20 million sublimit under the Credit Facility that reduce our available borrowings.
These letters of credit are issued primarily to satisfy the requirements of workers compensation, general liability and other insurance
policies. Substantially all of the outstanding letters of credit have a one-year term from the date of issuance and have been issued 
to replace surety bonds that were previously issued. Letters of credit totaling $11.0 million and $6.0 million were outstanding at
December 31, 2003 and 2002, respectively.

pag e   3 2

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

contractual obligations
Our contractual obligations, including commitments for future payments under non-cancelable lease arrangements and short- and
long-term debt arrangements, are summarized below and are fully disclosed in Notes 5 and 6 to the consolidated financial statements.

(In thousands)

co n t r ac t ua l   o b l i g at i o n s :
Notes payable
Long-term debt
Capital lease obligations
Operating leases

Total contractual cash obligations

payments due by period

total

less than
1 year

2-3
years

4-5
years

after 5
years

$        17
120,064
1,821
321,282

$443,184

$      12
13
900
32,671

$33,596

$        5
95,029
921
58,200

$154,155

$        –
25,022
–
48,191

$73,213

$        –
–
–
182,220

$182,220

We believe that our existing cash and cash equivalents, cash expected to be provided by operating activities, available bank credit
facilities and trade credit will be sufficient to fund both our short- and long-term capital needs for the foreseeable future.

inflation and seasonality 
We succeeded, in many cases, in reducing the effects of merchandise cost increases principally by taking advantage of vendor incentive
programs, economies of scale resulting from increased volume of purchases and selective forward buying. As a result, we do not
believe that our operations have been materially affected by inflation. 

Our business is somewhat seasonal, primarily as a result of the impact of weather conditions on store sales. Store sales and profits have
historically been higher in the second and third quarters (April through September) of each year than in the first and fourth quarters. 

quarterly results 
The following table sets forth certain quarterly unaudited operating data for fiscal 2003 and 2002. The unaudited quarterly information
includes all adjustments which management considers necessary for a fair presentation of the information shown. 

The unaudited operating data presented below should be read in conjunction with our consolidated financial statements and related
notes included elsewhere in this annual report, and the other financial information included therein.

pag e   3 3

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

(In thousands, except per share data)

Product sales
Gross profit
Operating income
Net income
Basic net income per common share
Net income per common share – assuming dilution

(In thousands, except per share data)

Product sales
Gross profit
Operating income
Net income
Basic net income per common share
Net income per common share – assuming dilution

first
quarter

$339,475
140,946
33,341
19,728
0.37
0.37

first
quarter

$295,489
126,028
28,638
16,642
0.31
0.31

second
quarter

$393,112
165,713
44,726
26,924
0.50
0.50

second
quarter

$343,181
144,186
37,769
22,547
0.42
0.42

third
quarter

$412,182
175,653
48,362
29,533
0.55
0.54

third
quarter

$359,579
152,196
40,723
24,096
0.45
0.45

fiscal 2003    
fourth
quarter

$367,047
156,023
38,846
23,902
0.44
0.43

fiscal 2002    
fourth
quarter

$314,241
130,990
31,171
18,707
0.35
0.35

shareholder rights plan
On May 17, 2002, the Board of Directors adopted a Shareholder Rights Plan. One Right was distributed for each share of common
stock, par value $.01 per share, of the Company held by shareholders of record as of the close of business on May 31, 2002. Each
right initially entitles shareholders to buy a unit representing one one-hundredth of a share of a new series of preferred stock of the
Company for $160 and expires on May 30, 2012. The rights generally will be exercisable only if a person or group acquires beneficial
ownership of 15% or more of the Company’s common stock or commences a tender or exchange offer upon consummation of 
which such person or group would beneficially own 15% or more of the Company's common stock. If a person or group acquires
beneficial ownership of 15% or more of the Company's common stock, each right (other than rights held by the acquiror) will,
unless the rights are redeemed by the Company, become exercisable upon payment of the exercise price of $160 for common stock 
of the Company having a market value of twice the exercise price of the right. A copy of the Stockholder Rights Plan was filed on
May 28, 2002, with the Securities and Exchange Commission, as Exhibit 99.1 to our report on Form 8-K.

new accounting standards 
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Under the new rules, 
a liability for the costs associated with an exit or disposal activity will be recognized when the liability is incurred as opposed to the
date of an entity’s commitment to an exit plan. The new rules were effective for exit or disposal activities initiated after December 31,
2002. The adoption of the new rules did not have a significant impact on our consolidated financial position or results of operations.

In November 2002, the FASB issued Financial Interpretation 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees.
The interpretation elaborates on the disclosures to be made in interim and annual financial statements of a guarantor about its 
obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in issuing such guarantee. Initial recognition and measurement 
provisions of the interpretation were applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002. As of
December 31, 2003 and 2002, we did not have any outstanding guarantees other than subsidiary guarantees of parent debt and a
residual value guarantee as disclosed in Notes 5 and 6, respectively, to the consolidated financial statements.

pag e   3 4

m a n ag e m e n t’s   d i s c u s s i o n   a n d   a n a ly s i s  
o f   f i n a n c i a l   co n d i t i o n   a n d   re s u lts   o f   o pe r at i o n s   (continued)

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, amending
SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 148 gives companies electing to expense employee stock options three
methods to do so. In addition, the statement amends the disclosure requirements to require more prominent disclosure about the
method of accounting for stock-based employee compensation and the effect of the method used on reported results in both annual
and interim financial statements. We have elected to continue using the intrinsic value method of accounting for stock-based 
compensation, therefore, SFAS No. 148 did not have any effect on our consolidated financial position or results of operations. 
See Note 9 to the consolidated financial statements for additional information regarding stock-based compensation.

In January 2003, the FASB issued Financial Interpretation 46, Consolidation of Variable Interest Entities. The interpretation expands
upon and strengthens existing accounting guidance that addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity. A variable interest entity is a corporation, partnership, trust or any other legal structure used
for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide 
sufficient financial resources for the entity to support its activities. The interpretation requires a variable interest entity to be consolidated
by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to
receive a majority of the entity’s residual returns or both. The consolidation requirements of the interpretation applied immediately to
variable interest entities created after January 31, 2003. The consolidation requirements applied to older entities in the first fiscal year
or interim period beginning after December 15, 2003. On June 26, 2003, we signed an Amended and Restated Agreement relating 
to our properties leased from SunTrust Equity Funding, LLC. The agreement with SunTrust Equity Funding, LLC has been 
recorded and disclosed as an operating lease in the consolidated financial statements in accordance with SFAS No. 13 and Financial
Interpretation 46.

In March 2003, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 02-16, Accounting by a Customer (including a
Reseller) for Certain Consideration Received from a Vendor. Under the new guidance, cash consideration received from a vendor should
be classified as a reduction of cost of sales. If the consideration received represents a payment for assets delivered to the vendor, it
should be classified as revenue. If the consideration is a reimbursement of a specific, incremental, identifiable cost incurred in selling
the vendor’s product, the cost should be characterized as a reduction of that cost incurred. The guidance was adopted by the Company
on January 1, 2003. The Company’s policies and practices for recording such vendor concessions as co-operative advertising and 
vendor allowances and discounts were aligned with the EITF’s guidance both prior to and after the application date, therefore, the
release did not have any effect on our consolidated financial position or results of operations.

forward-looking statements
We claim the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Certain statements contained within this annual report discuss, among other things, expected growth, store
development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements
are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are
subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto
parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified
employees, risks associated with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual
results may materially differ from anticipated results described in these forward-looking statements. Please refer to the Risk Factors
sections of the Company’s annual report on Form 10-K for the year ended December 31, 2003, for more details.

pag e   3 5

co n s o l i d at e d   b a l a n c e   s h e e ts

(In thousands, except per share data)
december 31,

a s s e ts
Current assets:

2003

2002   

Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts 

$     21,094

$     29,333

of $986 in 2003 and $865 in 2002
Amounts receivable from vendors, net
Inventory
Deferred income taxes
Other current assets

Total current assets

Property and equipment, at cost:

Land
Buildings
Leasehold improvements
Furniture, fixtures and equipment 
Vehicles

Accumulated depreciation and amortization

Net property and equipment
Notes receivable, less current portion
Other assets, net

Total assets

l i a b i l i t i e s   a n d   s h a re h o l d e r s’   e qu i t y
Current liabilities:

Income taxes payable
Accounts payable
Accrued payroll
Accrued benefits and withholdings
Other current liabilities
Current portion of long-term debt

Total current liabilities

Long-term debt, less current portion
Deferred income taxes
Other liabilities
Commitments and contingencies
Shareholders’ equity:

Preferred stock, $0.01 par value: Authorized shares – 5,000,000

Issued and outstanding shares – none

Common stock, $0.01 par value: Authorized shares – 90,000,000

Issued and outstanding shares – 54,664,976 in 2003 and 53,371,242 in 2002

Additional paid-in capital 
Retained earnings

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying notes.

pag e   3 6

52,235
50,695
554,309
4,753
4,399

687,485

58,571
212,937
79,994
220,123
54,517

626,142
177,084

449,058
24,313
26,736

45,421
42,918
504,098
5,040
4,235

631,045

52,362
160,425
57,376
177,293
44,067

491,523
137,922

353,601
1,880
22,893

$1,187,592

$1,009,419

$     6,872
176,513
17,307
27,368
16,883
925

245,868
120,977
29,448
7,014
–

–

547
302,691
481,047

784,285

$      9,798
85,370
15,257
19,165
17,150
682

147,422
190,470
15,939
5,064
–

–

534
269,030
380,960

650,524

$1,187,592

$1,009,419

co n s o l i d at e d   s tat e m e n ts   o f   i n co m e

(In thousands, except per share data)
december 31,

Product sales
Cost of goods sold, including warehouse and 

distribution expenses

Operating, selling, general and administrative expenses

Operating income
Other income (expense):

Interest expense
Interest income
Other, net

Income before income taxes
Provision for income taxes

Net income

Basic income per common share:
Net income per common share

Weighted-average common shares outstanding

Income per common share – assuming dilution:
Net income per common share – assuming dilution

Adjusted weighted-average common shares outstanding

See accompanying notes.

2003

2002

2001

$1,511,816

$1,312,490

$1,092,112

873,481
473,060

1,346,541

165,275

(6,864)
298
1,333

(5,233)

160,042
59,955

759,090
415,099

1,174,189

138,301

(9,248)
989
940 

(7,319)

130,982
48,990

624,294
353,987

978,281

113,831

(9,092)
1,362
626 

(7,104)

106,727
40,375

$   100,087

$     81,992

$     66,352

$        1.86

53,908

$        1.84

54,530

$

$

1.54

53,114

1.53 

53,692 

$        1.27

52,121

$        1.26 

52,786 

pag e   3 7

co n s o l i d at e d   s tat e m e n ts   o f   s h a re h o l d e r s’   e qu i t y

(In thousands)

b a l a n c e   at   d e c e m b e r   3 1 ,   2 0 0 0
Issuance of common stock under

employee benefit plans

Issuance of common stock under 

stock option plans

Tax benefit of stock options exercised
Net income

b a l a n c e   at   d e c e m b e r   3 1 ,   2 0 0 1
Issuance of common stock under

employee benefit plans

Issuance of common stock under 

stock option plans

Tax benefit of stock options exercised
Net income

b a l a n c e   at   d e c e m b e r   3 1 ,   2 0 0 2
Issuance of common stock under

employee benefit plans

Issuance of common stock under 

stock option plans

Tax benefit of stock options exercised
Net income

b a l a n c e   at   d e c e m b e r   3 1 ,   2 0 0 3

See accompanying notes.

common stock

shares  

par value

additional
paid-in
capital

retained
earnings

total

51,545

$515

$230,600

$232,616

$463,731

223

1,083
–
–

52,851

223

297
–
–

2

11
–
–

4,856

14,924
6,415
–

–

4,858

–
–
66,352

14,935
6,415
66,352

528

256,795

298,968

556,291

3

3
–
–

6,094

4,677
1,464
–

–

6,097

–
–
81,992

4,680
1,464
81,992

53,371

534

269,030

380,960

650,524

242

1,052
–
–

54,665

2

11
–
–

6,746

21,429
5,486
–

–

6,748

–
–
100,087

21,440
5,486
100,087

$547

$302,691

$481,047

$784,285

pag e   3 8

co n s o l i d at e d   s tat e m e n ts   o f   c a s h   f low s

(In thousands)
december 31,

o pe r at i n g   ac t i v i t i e s
Net income
Adjustments to reconcile net income to net cash 

provided by operating activities:

Depreciation
Amortization
Provision for doubtful accounts and notes
Gain on sale of property and equipment
Deferred income taxes
Common stock contributed to employee benefit plans
Tax benefit of stock options exercised
Changes in operating assets and liabilities,

net of the effects of the acquisition:

Accounts receivable
Amounts receivable from vendors 
Inventory
Refundable income taxes
Other current assets
Accounts payable
Income taxes payable
Accrued payroll
Accrued benefits and withholdings
Other current liabilities
Other liabilities

Net cash provided by operating activities

i n v e s t i n g   ac t i v i t i e s
Purchases of property and equipment
Proceeds from sale of property and equipment 
Acquisition, net of cash acquired
Payments received on notes receivable
(Investment in) reduction of other assets

Net cash used in investing activities

f i n a n c i n g   ac t i v i t i e s
Borrowings on notes payable to bank
Payments on notes payable to bank
Proceeds from issuance of long-term debt
Principal payments on long-term debt
Net proceeds from issuance of common stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

2003

2002

2001

$  100,087

$    81,992

$    66,352

41,216
1,158
2,461
(264)
13,796
4,026
5,486

(9,108)
(4,824)
(50,211)
–
(540)
60,319
(2,926)
2,050
8,203
(267)
2,179

172,841

(136,497)
1,273
–
871
(212)

(134,565)

–
–
27,900
(98,577)
24,162

(46,515)

(8,239)
29,333

35,923
984
1,873
(58)
5,666
3,512
1,464

(5,701) 
(4,478) 
(56,305)
168 
(788)
23,495
9,798
2,391
5,127
(1,148)
618

104,533

(102,257)
2,278
–
862
(6,268)

(105,385)

– 
(5,000)
179,640
(166,761)
7,265

15,144

14,292
15,041

28,963
1,581
2,635
(158)
6,371
2,690
6,415

(3,432)
(7,908)
(35,115)
(76)
1,244
(16,891)
(1,011)
3,557
4,678
(9,756)
(110)

50,029 

(68,521)
8,534
(20,536)
721
1,956

(77,846)

5,000
(35,000)
289,974
(243,422)
17,102

33,654

5,837
9,204

Cash and cash equivalents at end of year

$    21,094

$    29,333

$    15,041

See accompanying notes. 

pag e   3 9

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts

note 1—summary of significant accounting policies 

Nature of Business 
O’Reilly Automotive, Inc. (the Company) is a specialty retailer and supplier of automotive aftermarket parts, tools, supplies 
and accessories to both the do-it-yourself (DIY) customer and the professional installer throughout Alabama, Arkansas, Florida,
Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma,
Tennessee, Texas and Virginia.

Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant 
intercompany balances and transactions have been eliminated in consolidation. 

Revenue Recognition 
Over-the-counter retail sales are recorded when the customer takes possession of merchandise. Sales to professional installers, also
referred to as “commercial sales”, are recorded upon delivery of merchandise to the customer, generally at the customer’s place of 
business. Wholesale sales to other retailers, also referred to as “jobber sales” are recorded upon shipment of merchandise. All sales 
are recorded net of estimated allowances and discounts.

Use of Estimates 
The preparation of the consolidated financial statements, in conformity with accounting principles generally accepted in the United
States (GAAP), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those estimates. 

Inventory 
Inventory, which consists of automotive hard parts, maintenance items, accessories and tools, is stated at the lower of cost or market. Cost
has been determined using the last-in, first-out (LIFO) method. If the first-in, first-out (FIFO) method of costing inventory had been used
by the Company, inventory would have been $543,924,000 and $499,501,000 as of December 31, 2003, and 2002, respectively. During
2003, the Company entered into various programs and arrangements with certain of its vendors that provide for extended dating and 
payment terms for inventory purchases, including pay-on-scan arrangements.

Amounts Receivable from Vendors
The Company receives concessions from its vendors through a variety of programs and arrangements, including co-operative 
advertising, devaluation programs, allowances for warranties and volume purchase rebates. Co-operative advertising allowances that
are incremental to our advertising program, specific to a product or event and identifiable for accounting purposes are reported as 
a reduction of advertising expense in the period in which the advertising occurred. All other vendor concessions are recognized as 
a reduction of cost of sales when recognized in the consolidated income statement. Amounts receivable from vendors also include
amounts due the Company for changeover merchandise and product returns. Reserves for uncollectable amounts receivable from vendors
are provided for in the Company’s consolidated financial statements and consistently have been within management’s expectations. 

Property and Equipment 
Property and equipment are carried at cost. Depreciation is provided on straight-line and accelerated methods over the estimated 
useful lives of the assets. Service lives for property and equipment generally range from three to forty years. Leasehold improvements
are amortized over the lesser of the useful lives or the term of the respective underlying lease. Maintenance and repairs are charged to
expense as incurred. Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is

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n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

included in the determination of net income as a component of other income (expense). The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. 

The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average rates paid for
long-term borrowings. Total interest costs capitalized for the years ended December 31, 2003, 2002 and 2001, were $1,808,000,
$369,000 and $1,358,000, respectively.

Income Taxes 
The Company accounts for income taxes using the liability method in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109. The liability method provides that deferred tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

Advertising Costs 
The Company expenses advertising costs as incurred. Advertising expense charged to operations amounted to $19,533,000,
$14,442,000 and $12,796,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Pre-opening Costs 
Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to operations 
as incurred.

Stock Option Plans 
The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25),
and related interpretations in accounting for its employee stock options because, as discussed in Note 10, the alternative fair value
accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation, requires the use of option valuation 
models that were not developed for use in valuing employee stock options. SFAS No. 148, Accounting for Stock-Based Compensation –
Transition and Disclosure, further established accounting and disclosure requirements using a fair-value-based method of accounting
for stock-based employee compensation plans. Under the intrinsic value method in accordance with APB 25, because the exercise
price of the Company’s stock options equals the market price of the underlying stock on the date of grant, no compensation 
expense is recognized.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period.
The Company’s pro forma information for the year ended December 31, is as follows:

(In thousands, except per share data)

Net income as reported
Stock-based compensation expense as reported
Stock-based compensation expense under fair value method

Pro forma net income

Pro forma basic net income per share

Pro forma net income per share-assuming dilution

2003

$100,087
–
9,204

$  90,883

$     1.69

$     1.67

2002

$  81,992
–
7,217

$ 74,775

$ 

1.41

$    1.39

2001

$ 66,352
–
5,406

$ 60,946

$ 

$ 

1.17

1.15

pag e   4 1

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

earnings per share
Basic earnings per share is based on the weighted-average outstanding common shares. Diluted earnings per share is based on the
weighted-average outstanding shares adjusted for the effect of common stock equivalents. Common stock equivalents that could
potentially dilute basic earnings per share in the future that were not included in the fully diluted computation because they would
have been antidilutive were 66,750, 816,250 and 28,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

cash equivalents
Cash equivalents consist of investments with maturities of 90 days or less at the day of purchase.

concentration of credit risk 
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash 
equivalents and trade notes receivable.

The Company grants credit to certain customers who meet the Company’s pre-established credit requirements. Concentrations of
credit risk with respect to these trade receivables are limited because the Company’s customer base consists of a large number of smaller
customers, thus spreading the trade credit risk. The Company controls credit risk through credit approvals, credit limits and monitoring
procedures and generally does not require security when trade credit is granted to customers. Credit losses are provided for in the
Company’s consolidated financial statements and consistently have been within management’s expectations.

The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and long-term debt, as reported in the accompanying consolidated balance sheets, approximates fair value.

notes receivable
The Company had notes receivable from vendors and other third parties amounting to $27,636,000 and $2,362,000 at December 31,
2003 and 2002, respectively. The notes receivable, which bear interest at rates ranging from 0% to 6%, are due in varying amounts
through August 2017.

new accounting pronouncements
In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. Under the new rules, a liability for the costs associated with an exit or
disposal activity will be recognized when the liability is incurred as opposed to the date of an entity’s commitment to an exit plan.
The new rules are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of the new rules 
did not have a significant impact on our consolidated financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, amending
SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 gives companies electing to expense employee stock options
three methods to do so. In addition, the statement amends the disclosure requirements to require more prominent disclosure about
the method of accounting for stock-based employee compensation and the effect of the method used on reported results in both
annual and interim financial statements. The Company has elected to continue using the intrinsic value method of accounting for
stock-based compensation, therefore, SFAS No. 148 did not have any effect on the Company’s consolidated financial position or 
results of operations. See Note 9 to the consolidated financial statements for additional information regarding stock-based compensation.

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n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

In November 2002, the FASB issued Financial Interpretation 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees.
The interpretation elaborates on the disclosures to be made in interim and annual financial statements of a guarantor about its 
obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in issuing such guarantee. Initial recognition and measurement 
provisions of the interpretation were applicable on a prospective basis to guarantees issued or modified after December 31, 2002. 
The disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002. 
As of December 31, 2003 and 2002, the Company did not have any outstanding guarantees other than subsidiary guarantees of 
parent debt and a residual value guarantee as disclosed in Notes 5 and 6, respectively, to the consolidated financial statements.

In January 2003, the FASB issued Financial Interpretation 46, Consolidation of Variable Interest Entities. The interpretation expands
upon and strengthens existing accounting guidance that addresses when a company should include in its financial statements the
assets, liabilities and activities of another entity. A variable interest entity is a corporation, partnership, trust or any other legal structure
used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not 
provide sufficient financial resources for the entity to support its activities. The interpretation requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or 
is entitled to receive a majority of the entity’s residual returns or both. The consolidation requirements of the interpretation applied
immediately to variable interest entities created after January 31, 2003. The consolidation requirements applied to older entities in
the first fiscal year and interim period beginning after December 15, 2003. On June 26, 2003, the Company signed an Amended
and Restated Agreement relating to our properties leased from SunTrust Equity Funding, LLC. As a result, the agreement with
SunTrust Equity Funding, LLC has been properly recorded and disclosed as an operating lease in the consolidated financial statements.

In March 2003, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 02-16, Accounting by a Customer (including
a Reseller) for Certain Consideration Received from a Vendor. Under the new guidance, cash consideration received from a vendor
should be classified as a reduction of cost of sales. If the consideration received represents a payment for assets delivered to the 
vendor, it should be classified as revenue. If the consideration is a reimbursement of a specific, incremental and identifiable cost
incurred in selling the vendor’s product, the cost should be characterized as a reduction of that cost incurred. The guidance was
adopted by the Company on January 1, 2003. The Company’s policies and practices for recording such vendor concessions as 
co-operative advertising and vendor allowances and discounts were aligned with the EITF’s guidance both prior to and after the
application date, therefore, the release did not have any effect on our consolidated financial position or results of operations.

note 2 – acquisition 
On October 1, 2001, the Company purchased all of the outstanding stock of Mid-State Automotive Distributors, Inc. (Mid-State)
for approximately $20.5 million including acquisition costs. Mid-State was a specialty retailer which supplied automotive aftermarket
parts throughout certain states in the southeastern part of the United States. The acquisition was accounted for using the purchase
method of accounting, and accordingly, the results of operations of Mid-State are included in the consolidated statements of income
from the date of acquisition. The purchase price was allocated to assets acquired and liabilities assumed based on their estimated fair
values on the date of acquisition. The pro forma effect on earnings of the acquisition of Mid-State was not material.

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n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

note 3 – related parties 
The Company leases certain land and buildings related to nine of its O’Reilly Auto Parts stores under six-year operating lease agreements
with O’Reilly Investment Company and O’Reilly Real Estate Company, partnerships in which certain shareholders and directors of
the Company are partners. Generally, these lease agreements provide for renewal options for an additional six years at the option of
the Company. Additionally, the Company leases certain land and buildings related to nine of its O’Reilly Auto Parts stores under 
15-year operating lease agreements with O’Reilly-Wooten 2000 LLC, which is owned by certain shareholders of the Company.
Generally, these lease agreements provide for renewal options for two additional five-year terms at the option of the Company (see
Note 6). Rent expense under these operating leases totaled $3,238,000, $3,222,000 and $2,894,000 in 2003, 2002 and 2001, respectively.

note 4 – note payable to bank
At December 31, 2001, the Company had available short-term unsecured bank lines of credit providing for maximum borrowings of
$5 million, all of which was outstanding at December 31, 2001. The lines of credit were fully repaid in 2002.

note 5 – long-term debt 
On July 29, 2002, the Company completed an unsecured, three-year syndicated credit facility (Credit Facility) in the amount of
$150 million led by Wells Fargo Bank as the Administrative Agent, replacing a five-year syndicated credit facility. The Credit Facility
is guaranteed by all of our subsidiaries and may be increased to a total of $200 million, subject to availability of such additional credit
from either existing banks within the Credit Facility or other banks. The Credit Facility bears interest at LIBOR plus a spread ranging
from 0.875% to 1.375% (2.06% at December 31, 2003 and 2.26% at December 31, 2002) and expires in July 2005. At December
31, 2003 and 2002, $20.0 million and $90.0 million, respectively, of the Credit Facility was outstanding. Additionally, letters of
credit totaling $11.0 million and $6.0 million were outstanding at December 31, 2003 and 2002, respectively. Accordingly, our
aggregate availability for additional borrowings under the Credit Facility was $119.0 million and $54.0 million at December 31,
2003 and 2002, respectively. Prior to July 29, 2002, the Company had available an unsecured credit facility providing for maximum
borrowings of $140 million. The former credit facility was comprised of a revolving credit facility of $125 million, and a term loan 
of $15 million. The credit facility, which bore interest at LIBOR plus 0.50%, expired in January 2003. All borrowings outstanding
under the former credit facility were fully repaid in July 2002.

The Company issues stand-by letters of credit provided by a $20 million sublimit under the Credit Facility that reduce available 
borrowings. These letters of credit are issued primarily to satisfy the requirements of workers compensation, general liability and
other insurance policies. Substantially all of the outstanding letters of credit have a one-year term from the date of issuance and 
have been issued to replace surety bonds that were previously issued. Letters of credit totaling $11.0 million and $6.0 million were
outstanding at December 31, 2003 and 2002, respectively.

On May 16, 2001, the Company completed a $100 million private placement of two series of unsecured senior notes (Senior Notes).
The Series 2001-A Senior Notes were issued for $75 million, are due May 16, 2006, and bear interest at 7.72% per year. The Series
2001-B Senior Notes were issued for $25 million, are due May 16, 2008, and bear interest at 7.92% per year. The private placement
agreement allows for a total of $200 million of Senior Notes issuable in series. Proceeds from the transaction were used to reduce out-
standing borrowings under the Company’s former revolving credit facility.

The Company leases certain computer equipment under capitalized leases. The lease agreements have terms ranging from 30 months
to 36 months, expiring from 2004 to 2006. At December 31, 2003, the monthly installments under these agreements were approxi-
mately $85,000. The present value of the future minimum lease payments under these agreements totaled $882,000 and $549,000 at
December 31, 2003, and 2002, respectively, which has been classified as long-term debt in the accompanying consolidated financial
statements. During 2003, 2002 and 2001, the Company purchased $1,426,000, $812,000 and $467,000, respectively, of assets
under capitalized leases. 

pag e   4 4

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

Additionally, the Company has various unsecured notes payable to individuals and banks, amounting to $81,000 and $172,000, at
December 31, 2003, and 2002, respectively. The weighted-average interest rate on these notes is 7.2% with monthly installments of
approximately $2,000 including interest.

Principal maturities of long-term debt for each of the next five years ending December 31, are as follows:

(amounts in thousands)

2004
2005
2006
2007
2008
Thereafter

$      925
20,650
75,305
17
25,005 
–

$121,902

Cash paid by the Company for interest during the years ended December 31, 2003, 2002, and 2001, amounted to $6,864,000,
$9,248,000, and $9,092,000, respectively.

note 6 – commitments
Lease Commitments 
On June 26, 2003, we completed an amended and restated master agreement to our $50 million Synthetic Operating Lease Facility
(the Facility or the Synthetic Lease) with a group of financial institutions. The terms of the Facility provide for an initial lease period of
five years, a residual value guarantee of approximately $44.2 million at December 31, 2003, and purchase options on the properties.
The Facility also contains a provision for an event of default whereby the lessor, among other things, may require us to purchase 
any or all of the properties. One additional renewal period of five years may be requested from the lessor, although the lessor is not 
obligated to grant such renewal. The amended and restated Facility has been accounted for as an operating lease under SFAS No. 13
and related interpretations, including Financial Interpretation No. 46. Future minimum rental commitments under the Facility have
been included in the table of future minimum annual rental commitments below.

On December 29, 2000, the Company completed a sale-leaseback transaction. Under the terms of the transaction, the Company sold
90 properties, including land, buildings and improvements, which generated $52.3 million of additional cash. The lease, which is
being accounted for as an operating lease, provides for an initial lease term of 21 years and may be extended for one initial ten-year
period and two additional successive periods of five years each. The resulting gain of $4.5 million has been deferred and is being
amortized over the initial lease term. Net rent expense is approximately $5.5 million annually and is included in the table of future
minimum annual rental commitments below. 

In August 2001, the Company completed a sale-leaseback with O’Reilly-Wooten 2000 LLC (an entity owned by certain shareholders
of the Company). The transaction involved the sale and leaseback of nine O’Reilly Auto Parts stores and resulted in approximately
$5.6 million of additional cash to the Company. The transaction did not result in a material gain or loss. The lease, which has been
accounted for as an operating lease, calls for an initial term of 15 years with three five-year renewal options.

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n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

The Company also leases certain office space, retail stores, property and equipment under long-term, non-cancelable operating leases.
Most of these leases include renewal options and some include options to purchase and provisions for percentage rent based on sales.
At December 31, 2003, future minimum rental payments under all of the Company’s operating leases for each of the next five years
and in the aggregate are as follows:

(amounts in thousands) 

2004
2005
2006
2007
2008
Thereafter

related
parties

$     3,255
3,062
2,882
2,865
2,790
52,732

$   67,586

non-related
parties

$     29,416
27,016
25,240
22,909
19,627 
129,488

$   253,696

total

$     32,671
30,078
28,122
25,774
22,417
182,220

$   321,282

Rental expense amounted to $31,865,000, $29,652,000 and $25,122,000 for the years ended December 31, 2003, 2002, and 2001,
respectively.

Other Commitments 
The Company had construction commitments, which totaled approximately $52.8 million, at December 31, 2003.

note 7 – legal proceedings
The Company is involved in various legal proceedings incidental to the conduct of its business. Although the Company cannot ascertain
the amount of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, they will have
a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

note 8 – employee benefit plans
The Company sponsors a contributory profit sharing and savings plan that covers substantially all employees who are 21 years of 
age with at least six months of service. A total of 1,600,000 shares of common stock were reserved for issuance under the plan.
Employees may contribute up to 100% of their annual compensation subject to Internal Revenue Code maximum limitations. The
Company has agreed to make matching contributions equal to 50% of the first 2% of each employee’s contribution and 25% of the
next 4% of each employee’s contribution. Additional contributions to the plan may be made as determined annually by the Board 
of Directors. After two years of service, Company contributions and earnings thereon vest at the rate of 20% per year. Company 
contributions charged to operations amounted to $4,353,000 in 2003, $3,438,000 in 2002 and $3,207,000 in 2001. Company 
contributions, in the form of common stock, to the profit sharing and savings plan to match employee contributions during the 
years ended December 31 were as follows: 

year
contributed

2003
2002
2001

shares

42,183 
38,354
37,567

market
value

$1,478,000
1,136,000
969,000

pag e   4 6

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

Profit sharing contributions accrued at December 31, and funded in the next year through the issuance of shares of the Company’s
common stock were as follows:

year
funded

2003
2002
2001

market
shares

85,184 
77,876
88,118

value

$2,300,000
2,200,000
1,729,000

The Company also sponsors a non-funded non-contributory defined benefit health care plan, which provides certain health benefits
to qualified retired employees. According to the terms of this plan, retirees’ annual benefits are limited to $1,000 per employee starting
at age 66 for employees with 20 or more years of service. Post-retirement benefit costs for each of the years ended December 31,
2003, 2002, and 2001 amounted to $12,000.

Additionally, the Company has adopted a stock purchase plan under which 1,300,000 shares of common stock were reserved for
issuance. Under the plan, substantially all employees and non-employee directors have the right to purchase shares of the Company’s
common stock monthly at a price equal to 85% of the fair market value of the stock, not to exceed 5% of the participants annual
salary. Purchases of common stock under the plan during the years ended December 31 were as follows:

year

2003
2002
2001

shares

103,457 
102,662
97,991

weighted
average
price

$27.52
25.18
22.13

market
value

$2,723,000
2,585,000
2,168,000

The Company has in effect a performance incentive plan for the Company’s senior management under which 400,000 shares of
stock were reserved for issuance. Shares awarded under the plan vest equally over a three-year period and are held in escrow until 
such vesting has occurred. Shares are forfeited when an employee ceases employment. Shares, net of forfeitures, issued under the 
plan during the years ended December 31 were as follows:

year
funded

2003
2002
2001

shares

10,530 
4,779
(536)

market
value

$   248,000
175,000
(9,000)

pag e   4 7

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

note 9 – shareholders’ equity

Shareholder Rights Plan
On May 17, 2002, the Board of Directors adopted a Shareholder Rights Plan. One Right was distributed for each share of common
stock, par value $.01 per share, of the Company held by stockholders of record as of the close of business on May 31, 2002. The
Rights initially entitle stockholders to buy a unit representing one one-hundredth of a share of a new series of preferred stock of the
Company for $160 and expire on May 30, 2012. The Rights generally will be exercisable only if a person or group acquires beneficial
ownership of 15% or more of the Company’s common stock or commences a tender or exchange offer upon consummation of 
which such person or group would beneficially own 15% or more of the Company’s common stock. If a person or group acquires
beneficial ownership of 15% or more of the Company’s common stock, each Right (other than Rights held by the acquiror) will,
unless the Rights are redeemed by the Company, become exercisable upon payment of the exercise price of $160 for common stock
of the Company having a market value of twice the exercise price of the Right. A copy of the Stockholder Rights Plan was filed on
May 28, 2002, with the Securities and Exchange Commission, as Exhibit 99.1 to our report on Form 8-K.

Stock Option Plans
The Company has a stock option plan under which incentive stock options or non-qualified stock options may be granted to officers
and key employees. An aggregate of 12,000,000 shares of common stock were reserved for issuance under this plan. The exercise
price of options granted shall not be less than the fair market value of the stock on the date of grant and the options will expire no
later than 10 years from the date of grant. Options granted pursuant to the plan become exercisable no sooner than six months from
the date of grant. All grants under the plan since its inception have been non-qualified stock option grants. A summary of outstanding
stock options under this plan is as follows:

Outstanding at December 31, 2000

Granted
Exercised
Canceled

Outstanding at December 31, 2001

Granted
Exercised
Canceled

Outstanding at December 31, 2002

Granted
Exercised
Canceled

Outstanding at December 31, 2003

price per share

$  8.00 - 26.75
18.25 - 37.62
8.15 - 26.37
8.00 - 37.38

$  8.69 - 37.62
24.96 - 35.48
8.69 - 30.23
8.75 - 38.00

$  8.94 - 37.62
23.01 - 44.81
8.94 - 37.62
8.94 - 38.98

$10.56 - 44.81

number
of shares

3,295,830
1,214,750
(1,012,695)
(220,750)

3,277,135
712,500
(296,858)
(202,075)

3,490,702
1,035,750
(1,051,940)
(222,413)

3,252,099

Options to purchase 1,223,409, 1,566,104 and 1,250,261 shares of common stock were exercisable at December 31, 2003, 2002,
and 2001, respectively. 

pag e   4 8

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

The Company also maintains a stock option plan for non-employee directors of the Company under which 500,000 shares of common
stock were reserved for issuance. All director stock options are granted at fair market value on the date of grant and expire on the 
earlier of termination of service to the Company as a director or seven years. Options granted under this plan become exercisable six
months from the date of grant. A summary of outstanding stock options under this plan is as follows: 

Outstanding at December 31, 2000

Granted
Exercised

Outstanding at December 31, 2001

Granted

Outstanding at December 31, 2002

Granted

Outstanding at December 31, 2003

price per share

$  9.09-23.91
20.65
9.09-23.91

$12.44-23.91
29.02

$12.44-29.02
29.20

$12.44-29.20

number
of shares

90,000
30,000
(70,000)

50,000
30,000

80,000
30,000

110,000

All options under this plan were exercisable at December 31, 2003, 2002, and 2001.

Pro forma information regarding net income and earnings per share is required by SFAS No. 123, and has been determined as if the
Company had accounted for its employee and non-employee director stock options under the fair value method.

The fair values for these options were estimated at the date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2003, 2002, and 2001, respectively: risk-free interest rates of 3.61%, 4.01% and 5.16%; volatility
factors of the expected market price of the Company’s common stock of .458, .481, and .475; and weighted-average expected life of
the options of 9.4, 9.0 and 9.0 years. The Company assumed a 0% dividend yield over the expected life of the options. The
weighted-average fair values of options granted during the years ended December 31, 2003, 2002, and 2001 were $20.56, $17.75
and $16.52, respectively. The weighted-average remaining contractual life at December 31, 2003, for all outstanding options under
the Company’s stock option plans is 7.5 years. The weighted-average exercise price for all outstanding options under the Company’s
stock option plans was $26.11, $22.78 and $20.63 at December 31, 2003, 2002 and 2001, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including
the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s
opinion, the existing model does not necessarily provide a reliable single measure of the fair value of its employee stock options.

pag e   4 9

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

note 10 – income per common share
The following table sets forth the computation of basic and diluted income per common share: 

(In thousands, except per share data)
years ended december 31, 

Numerator (basic and diluted):

Net income

Denominator:

2003

2002 

2001

$100,087

$  81,992

$  66,352

Denominator for basic income per common share-

weighted-average shares

Effect of stock options (Note 9)

53,908
622

Denominator for diluted income per common share-

adjusted weighted-average shares and assumed conversion

54,530

Basic net income per common share

Net income per common share-assuming dilution

$      1.86

$     1.84

53,114
578

53,692

$ 

1.54

$   1.53

52,121
665

52,786

$ 

1.27

$    1.26

note 11 – income taxes 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax
assets and liabilities are as follows at December 31: 

(In thousands)

Deferred tax assets:

Current:

Allowance for doubtful accounts
Inventory carrying value
Other accruals

Total deferred tax assets

Deferred tax liabilities:

Current:

Inventory carrying value

Noncurrent:

Property and equipment
Other

Total deferred tax liabilities

Net deferred tax liabilities 

2003

2002

$

373
–
6,973

7,346

2,593

29,171
277

32,041

$       327
967
3,746

5,040

–

15,685
254

15,939

$ (24,695)

$ (10,899)

pag e   5 0

n ot e s   to   co n s o l i d at e d   f i n a n c i a l   s tat e m e n ts (continued)

The provision for income taxes consists of the following: 

current

deferred

total

(In thousands)

2003:

Federal
State

2002:

Federal
State

2001:

Federal
State

$        41,465
4,694

$        46,159

$        39,038
4,286

$        43,324

$        30,429
3,575

$        34,004

$        12,362
1,434

$        13,796

$  

$ 

5,113
553

5,666

$       5,702
669

$        6,371

$        53,827
6,128

$        59,955

$        44,151
4,839

$        48,990

$        36,131
4,244

$        40,375

2001

37,354
2,775
246

40,375

$

$

A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows: 

(In thousands)

Federal income taxes at statutory rate
State income taxes, net of federal tax benefit
Other items, net

2003

$        56,015
3,935
5

$        59,955

2002

45,844
3,140
6

48,990

$

$

The tax benefit associated with the exercise of non-qualified stock options has been reflected as additional paid-in capital in the
accompanying consolidated financial statements. 

During the years ended December 31, 2003, 2002, and 2001, cash paid by the Company for income taxes amounted to $43,007,000,
$31,119,000 and $28,676,000, respectively.

pag e   5 1

re p o rt   o f   i n d e pe n d e n t   au d i to r s

the board of directors and shareholders 
o’reilly automotive, inc. and subsidiaries 

We have audited the accompanying consolidated balance sheets of O’Reilly Automotive, Inc. and Subsidiaries as of December 31,
2003, and 2002, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years 
in the period ended December 31, 2003. These financial statements are the responsibility of the Company’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. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
O’Reilly Automotive, Inc. and Subsidiaries at December 31, 2003, and 2002, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States. 

Kansas City, Missouri 
February 19, 2004 

pag e   5 2

d i re c to r s   a n d   e xe c u t i v e   co m m i t t e e

Chub O’Reilly
Chairman of the Board
Emeritus 

Charlie O’Reilly
Vice Chairman of the Board
and Director

David O’Reilly 
Co-Chairman of the Board
and Chief Executive Officer
and Director

Larry O’Reilly
Co-Chairman of the Board 
and Director

Rosalie O’Reilly-Wooten
Director

Jay Burchfield 
Director since 1997
Compensation Committee –

Chairman

Corporate Governance/

Paul Lederer 
Director 1993-July 1997; 

Feb. 2001

Audit Committee 
Compensation Committee

John Murphy 
Director since December 2003
Audit Committee – Chairman
Corporate Governance/

Nominating Committee

Ronald Rashkow 
Director since December 2003
Audit Committee 
Compensation Committee

Ted Wise
Co-President

Greg Henslee 
Co-President

Jim Batten
Executive Vice President 

Nominating Committee

of Finance

Joe C. Greene 
Director since 1993
Corporate Governance/

Nominating Committee –
Chairman

Chief Financial Officer

Jeff Shaw
Senior Vice President of 
Store Operations and Sales

Mike Swearengin
Senior Vice President of
Merchandise

Tricia Headley
Vice President of 
Corporate Services and
Corporate Secretary

Tony Bartholomew
Vice President of Sales

Ron Byerly
Vice President of Marketing, 
Advertising and Training

Charlie Downs
Vice President of Real Estate

Alan Fears
Vice President of 
Store Expansion and
Acquisitions

Jaime Hinojosa
Vice President of Southern
Division

Steve Jasinski
Vice President of Information
Systems

Randy Johnson
Vice President of Store
Inventories

David McCready
Vice President of Distribution
Operations

Steve Pope
Vice President of Human
Resources

Wayne Price
Vice President of Risk
Management

Barry Sabor
Vice President of Loss
Prevention

Mike Williams
Vice President of Advanced
Technology

s e n i o r   m a n ag e m e n t

Allen Alexander
Director of Iowa/Nebraska
Region

Buddy Ball
Director of Kansas City
Region

Mike Ballard
Director of Internet
Development 
and Networking

Greg Beck
Director of Purchasing

o pe r at i o n s   m a n ag e m e n t

Bert Bentley
Director of Houston Region

Tom Connor
Regional DC Director

Brett Heintz
Director of Retail Systems

Rob Bodenhamer
Director of Technology
Development

Larry Boevers
Regional DC Director

Doug Bragg
Director of Oklahoma Region

Phyllis Evans
Director of Store
Administration

Ken Cope 
Director of Nashville Region

Jack House
Director of Customer Service

Joe Edwards
Director of Store Installations

Greg Johnson
Director of Distribution

Michelle Kimrey
Director of Internal Audit

Brad Knight
Director of Pricing

Richard Mann
Regional DC Director

Mike Chapman
Director of West Texas Region

John Grassham
Director of Dallas Region

Keith Childers
Director of Little Rock Region

Joe Hankins
Director of Store Design

pag e   5 3

Jim Deshotel
Regional Field Sales Manager

Doy Hensley
Help Support Manager

o pe r at i o n s   m a n ag e m e n t   (continued)

Kenny Martin
Director of Gulf States Region

Jim Maynard
Director of Employment and
Team Member Relations

Kim Mesenbrink
Director of Accounting

Brad Oplotnik
Director of Systems
Management

Shari Reaves
Director of Compensation 
and Benefits

Steve Rice
Director of Credit and
Collections

Art Rodriguez
Director of Southern 
Division Sales

Tom Seboldt
Director of Merchandise

Denny Smith
Director of Springfield Region

Dick Smith
Director of Construction 
and Maintenance

Charlie Stallcup
Director of Training

David Strom
Director of Houston Region

Mark Van Hoecke
Director of Knoxville Region

Wes Wise
Director of Marketing

Danny Woods
Director of Installer Marketing

co r p o r at e  
m a n ag e m e n t

Tom Allen
Computer Operations
Manager

Dan Altis
Distribution Center Manager

Keith Asby
Sales Manager of Special
Markets

Jay Enloe
Property and Liability Risk
Manager

Paula Eyman
Accounting Special Projects
Manager

Jeanene Asher
Telecommunications Manager

Carl Falke 
Regional Field Sales Manager

Gary Baker
Technical Assistance Manager

Becky Fincher
Advertising Manager

Carl Barina
Regional Field Sales Manager

Doug Bennett
O’Reilly Sales Department
Manager

Ron Biegay
Southern Division Training
and Recruiting Manager

Kevin Ford
Distribution Center Projects
and Procedures Manager

Randy Freund
Regional Field Sales Manager

David Furr
Service Equipment Sales
Manager

Larry Blundell
Regional Field Sales Manager

Lori Fuzzell
Customer Service Manager

Tom Bollinger
Regional Field Sales Manager

Art Glidewell
Distribution Center Manager

Marcus Boyer
Distribution Center Manager

David Glore
Jobber Sales Manager

Kent Brewer
Distribution Center
Transportation Manager

Yvonne Cannon
Payroll Manager

Garry Curbow
Replenishment Manager

Garry Glossip
Store Accounting Manager

Ron Greenway
Tax Manager

Larry Gregory
Real Estate Store Maintenance
Manager

Cecil Davis
Distribution Center Inbound
Manager

Kevin Greven
Retail Marketing and
Promotions Manager

Mark Decker 
Distribution Center Manager

Bridget Harmon
PC Support Manager

Ray Aguirre 
Regional Field Sales Manager

Randy Decoito
Regional Field Sales Manager

Mike Hauk
Division Training Manager

pag e   5 4

Julie Hibler
Corporate Services Manager

Diana Hicks
Internal Communications
Manager

Brad Hilker
Safety Manager

Mark Hoehne
Regional Field Sales Manager

Chris Holder 
Jobber Regional Field Sales
Manager

Joe Hook
Regional Field Sales Manager

Doug Hopkins
Distribution Systems Manager

Doug Hutchison
Inventory Project Manager

Karen James
Marketing Production
Manager

Curtis Johnson
Distribution Center Manager

Dave Jordan
Distribution Center Manager

Al Kasishke
Product Manager

Les Keeth
Supplier Credit Manager

Jennifer Kent
Store Design Manager

Dave Leonhart
Distribution Center Manager

Steve Lines
Sales Training Manager

Jim Litchford
Jobber Regional Field Sales
Manager

o pe r at i o n s   m a n ag e m e n t   (continued)

Jeff Main
Jobber Systems Sales Manager

Ed Randall
Property Manager

Darren Shaw
Product Manager 

Tamra Waitman
Assistant Controller

Ed Martinez
Distribution Center Manager

Lyn Robertson
Accounts Receivable Manager

Tim Smith
Credit Manager

Jeff McKinney
Customer Satisfaction
Manager

Bryan Mescher
Regional Field Sales Manager

Chapman Norman
Inventory Maintenance
Manager

Steve Peterie
Construction Design Manager

Tony Phelps
Distribution Center Manager

Jana Phillips
Corporate Counsel

Steve Phillips
Southern Division Loss
Prevention Manager

Chuck Rogers
Installer Systems Manager

Tom Smith
Training Manager

Mary Sabor
Distribution Center
Administrative Services
Manager

Rick Samsel
Inventory Control Manager

Tim Scholl
Distribution Center Field
Projects Manager

Joyce Schultz
Houston Office Manager

Bill Seiber
Distribution Center Manager

Dwayne Snow
Regional Field Sales Manager

Paul Stinson
Regional Field Sales Manager

Mary Stratton
Human Resources Records
Manager

Bert Tamez
Regional Manager in Training

Tom Tunnell
Financial Reporting and
Budgeting Manager

Rob Verch
Product Manager

Patton Walden
MidState Division Training
Manager

Jeff Watts
Regional Field Sales Manager

Larry Wiles
Audio Visual Communications
Manager

Saundra Wilkinson
Store Support Manager

Joe Winterberg
Product Manager

Terry Yates
Regional Field Sales Manager

d i s t ri c t  
co r p.   m g m t.

Abel Abila
Gary Addison
Eddie Allen
Henry Armington
Chuck Avis
Emmitt Barina
Brince Beasley
Brad Beckham
Steve Beil
Aaron Biggs
Kirk Bilski
Tim Brakebill
Patrick Brown 
David Byers
Mark Cannon
Fred Carrington

Jimmy Carter
David Chavis
Dirk Chester
Jim Dickens
Robert Doss
Bruce Dowell
Dan Dowell
Tommy Dunn
Paul Engaldo
Ron England
Tony Fagan
Bill Fellows
Kirk Frazier
Mark Frazier
Jason Frizzell
Scott Garrett
Samuel Garza
Dennis Gonzales

Kyle Gorzik
James Harris
Jon Haught
Rick Hedges
Gerry Hendrix
Perry Hess
Mike Hollis
Jeff Howard
Jeff Jennings
Chad Keel
Butch Kelton
Todd Kemper
Scott Kraus
John Krebs
Scott Leonhart
Chris Lewis
Kirk Locklin
Oliverio Lopez

Mark Mach
John Martinez
Rodger McClary
Marc McGehee
Travis McPherson
Chris Meade
Curt Miles
Randy Morris
Ciro Moya
Ramon Odems
Kenny Omland
Kevin Overmon
Ron Papay
Jude Patterson 
Mike Payne
Pernell Peters
David Pilat
Mike Platt

Will Reger
Tommy Rhoads
Alan Riddle
Larry Roof
Juan Salinas
Jim Scott
Brad Seaborn
Cliff Sedtal
Steve Severe
Garry Shelby
Kevin Shockey
Eric Sims
Mark Smith
Bob Snodgrass
Robert Spencer
Scott Strayhorn
Jeff Stutzman
Marvin Swaim

Randy Swaim
Jeff Tagert
Randy Tanner
Mike Tatum
Rick Tearney
Dallas Thompson
Justin Tracy 
Bo Waldrop
Brett Warstler
Steven Watkins
John Weatherly
Rob Weiskirch
John Wells
Allen Wise
Dexter Woods
Mike Yates
Jason York
Cody Zimmerman

pag e   5 5

s h a re h o l d e r   i n f o r m at i o n

corporate address
233 South Patterson
Springfield, Missouri 65802
417/862-3333
Web site – www.oreillyauto.com

registrar and transfer agent
UMB Bank
928 Grand Boulevard
Kansas City, Missouri 64141-0064
Inquiries regarding stock transfers, lost certificates or address
changes should be directed to UMB Bank at the above address.

independent auditors
Ernst & Young LLP
One Kansas City Place
Kansas City, Missouri 64105-2143

legal counsel
Gallop Johnson & Neuman, L.C.
101 South Hanley Road, Suite 1600
St. Louis, Missouri 63105

Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606

annual meeting
The annual meeting of shareholders of O’Reilly Automotive, Inc.
will be held at 10:00 a.m. local time on May 4, 2004, at the
University Plaza Convention Center, 333 John Q. Hammons
Parkway in Springfield, Missouri. Shareholders of record as of
February 27, 2004, will be entitled to vote at this meeting.

form 10-k report
The Form 10-K Report of O’Reilly Automotive, Inc. filed with 
the Securities and Exchange Commission and our quarterly press
releases are available without charge to shareholders upon written
request. These requests and other investor contacts should be directed
to James R. Batten, Executive Vice President of Finance/Chief
Financial Officer, at the corporate address.

trading symbol
The Company’s common stock is traded on The Nasdaq Stock
Market (National Market) under the symbol ORLY.

number of shareholders
As of February 27, 2004, O’Reilly Automotive, Inc. had 
approximately 26,299 shareholders based on the number of

holders of record and an estimate of the number of individual 
participants represented by security position listings.

analyst coverage
The following analysts provide research coverage of 
O’Reilly Automotive, Inc.:
Advest, Inc. – Derrick Irwin
AG Edwards & Sons – Brian Postol
Lehman Brothers Equities Research – Alan Rifkin
Raymond James & Associates – Gerald Marks
Sidoti & Company – Scott Stember
Smith Barney – Bill Sims
SunTrust Robinson Humphrey Capital Markets – Frank Brown
Wells Fargo Securities, LLC – Christopher Svezia
Whitaker Securities LLC – Cid Wilson
William Blair & Company – Sharon Zackfia
UBS Equities – Gary Balter
Piper Jaffray – Reed Anderson

market prices and dividend information
The prices in the table below represent the high and low sales
price for O’Reilly Automotive, Inc. common stock as reported
by The Nasdaq Stock Market.

The common stock began trading on April 22, 1993. No cash
dividends have been declared since 1992, and the Company does
not anticipate paying any cash dividends in the foreseeable future.
2003

2002

First Quarter  
Second Quarter    
Third Quarter     
Fourth Quarter    
For the Year     

high

$27.86
35.39
39.96
44.90
44.90

low

$22.91
26.76 
33.23
36.54
22.91

high

$37.25
34.42
32.47
31.40
37.25

low

$28.61
27.05
24.10
24.28
24.10

subsidiaries of the company 
subsidiary

state of incorporation

Ozark Automotive Distributors, Inc.
Greene County Realty Co.
O’Reilly II Aviation, Inc.
Ozark Services, Inc.
Hi-Lo Investment Co.
Hi-Lo Management Co.

Missouri
Missouri
Missouri
Missouri
Delaware
Delaware

One hundred percent of the capital stock of each of the above
listed subsidiaries is directly owned by O’Reilly Automotive, Inc.

pag e   5 6

p i c t u re d   a b ov e   a re   t h e   o r i g i n a l   t e a m   m e m b e r s   a n d  
f o u n d e r s   o f   O ’ R e i l ly   Au to m ot i ve .

L to R: Red Hale, Wayne Schuler, Paul Ankrom, Jewel Sechler, C.F. O’Reilly, Chub O’Reilly,
Ann Drennan, Bob Bach, Hubert Cox, Tony O’Reilly and Paul Branson. Not pictured are 
Vic Semmelbeck and Chris Bridwell.

M i s s i o n   S tat e m e n t  

“O’Reilly Automotive will be the dominant supplier of auto parts in our market areas by offering our
retail customers, professional installers and jobbers the best combination of inventory, price, quality and
service; providing our team members with competitive wages and benefits, and working conditions which
promote high achievement and ensure fair and equitable treatment; and, providing our stockholders with
an excellent return on their investment.”

Certain statements contained in this annual report are forward-looking statements. These statements discuss, among
other things, expected growth, store development and expansion strategy, business strategies, future revenues and future
performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not
guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but
not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, 
consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated 
with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results 
may materially differ from anticipated results described in these forward-looking statements. Please refer to the Risk
Factors sections of the company’s Form 10-K for the year ended December 31, 2003, for more details.

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D

 
 
 
 
 
 
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O ’ R e i l l y   A u t o m o t i v e
A n n u a l   R e p o r t

S e e i n g   G re e n .
Th e   co lo r   o f   re s u lts .  

An in-depth look at the performance of our company and 
the culture that brands it – O’Reilly Automotive.

233 South Patterson
Springfield, Missouri 65802
417-862-3333
www.oreillyauto.com

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