O'Reilly Automotive, Inc., Reports Fourth Quarter 2007 Earnings

SPRINGFIELD, Mo.--O’Reilly Automotive, Inc. (“O’Reilly” or “the Company”) today announced revenues and earnings for the fourth quarter and year ended December 31, 2007, representing 15 consecutive years of record revenues and earnings and positive comparable store sales increases for O’Reilly since becoming a public company in April 1993.

Sales for the fourth quarter ended December 31, 2007, totaled $604 million, up 8.2% from $558 million for the same period a year ago. Gross profit for the fourth quarter ended December 31, 2007, increased to $270 million (or 44.7% of sales) from $249 million (or 44.6% of sales) for the same period a year ago, representing an increase of 8.5%. Operating, selling, general and administrative (“OSG&A”) expenses for the fourth quarter of 2007 increased to $207 million (or 34.2% of sales) from $185 million (or 33.1% of sales) for the same period a year ago, representing an increase of 11.7%.

Net income for the fourth quarter ended December 31, 2007, totaled $40.6 million, up 0.6% from $40.4 million for the same period in 2006. Diluted earnings per common share for the fourth quarter ended December 31, 2007 were even at $0.35 on 116.3 million shares versus $0.35 a year ago on 115.4 million shares.

For the year ended December 31, 2007, sales increased $239 million, or 10.5%, to $2.52 billion from $2.28 billion for the year ended December 31, 2006. Gross profit for the year ended December 31, 2007, increased to $1.12 billion (or 44.4% of sales) from $1.01 billion (or 44.1% of sales) for the year ended December 31, 2006, representing an increase of 11.3%. OSG&A expenses for the year ended December 31, 2007, increased to $815 million (or 32.3% of sales) from $724 million (or 31.7% of sales) for the year ended December 31, 2006, representing an increase of 12.6%.

Net income for the year ended December 31, 2007, totaled $194.0 million, up 8.9% from $178.1 million for the year ended December 31, 2006. Diluted earnings per common share for the year ended December 31, 2007, increased 7.7% to $1.67 on 116.1 million shares versus $1.55 a year ago on 115.1 million shares.

Comparable store sales for stores open at least one year increased 2.1% and 3.7% for the fourth quarter and year ended December 31, 2007, respectively, representing 59 quarters of positive comparable store sales results since O’Reilly became a public company in April 1993.

“We would like to thank every member of Team O’Reilly for their hard work and dedication in 2007. We generated an 11.3% increase in gross profit through our continued focus on providing unparalleled service to all of our customers,” stated CEO and Co-President Greg Henslee. “In spite of a very challenging economic environment in 2007, we were able to increase net income by 8.9%. Our focus remains on customer service and gaining market share in new and existing markets. We look forward to all of the opportunities 2008 will present.”

Ted Wise, COO and Co-President, stated, "We added 56 new stores in the fourth quarter bringing us to a total of 190 for the year. We are very pleased with our marketing efforts during the year and will continue to build the O’Reilly brand through regional and local events during 2008. Team O’Reilly is more focused than ever on providing outstanding service to both Do-It-Yourself and Do-It-For-Me customers, and we will expand the O’Reilly culture to every market we enter in 2008.”

O’Reilly Automotive, Inc. is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional installer markets. Founded in 1957 by the O’Reilly family, the Company operated 1,830 stores in the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of December 31, 2007.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
	December 31, 2007			December 31, 2006
		(Unaudited)			(Note)
Assets
Current assets:
Cash and cash equivalents	$	47,555		$	29,903
Accounts receivable, net		84,242			81,048
Amounts receivable from vendors		48,263			47,790
Inventory		881,761			812,938
Other current assets		40,483			28,997
Total current assets		1,102,304			1,000,676
Property and equipment, at cost		1,479,779			1,214,854
Accumulated depreciation and amortization		389,619			331,759
Net property and equipment		1,090,160			883,095
Notes receivable, less current portion		25,437			30,288
Goodwill		50,447			49,065
Other assets		11,389			14,372
Total assets	$	2,279,737		$	1,977,496
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	380,683		$	318,404
Self insurance reserve		29,967			31,084
Accrued payroll		23,739			21,171
Accrued benefits and withholdings		13,496			12,948
Deferred income taxes		6,235			5,779
Other current liabilities		49,536			44,089
Current portion of long-term debt		25,320			309
Total current liabilities		528,976			433,784
Long-term debt, less current portion		75,149			110,170
Deferred income taxes		27,241			38,171
Other liabilities		55,894			31,275
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares – 115,260,564 at December 31, 2007, and 113,929,327 at December 31, 2006		1,153			1,139
Additional paid-in capital		441,731			400,552
Retained earnings		1,156,393			962,405
Accumulated other comprehensive loss		(6,800)			--
Total shareholders’ equity		1,592,477			1,364,096
Total liabilities and shareholders’ equity	$	2,279,737		$	1,977,496
Note: The balance sheet at December 31, 2006, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
	Three Months Ended							Year Ended
	December 31,							December 31,
	2007			2006				2007			2006
	(Unaudited)			(Note)				(Unaudited)			(Note)
Sales	$	604,288		$	558,332			$	2,522,319		$	2,283,222
Cost of goods sold, including warehouse and distribution expenses		333,995			309,303				1,401,859			1,276,511
Gross profit		270,293			249,029				1,120,460			1,006,711
Operating, selling, general and administrative expenses		206,608			185,000				815,309			724,396
Operating income		63,685			64,029				305,151			282,315
Other income (expense), net		810			(32	)			2,337			(50	)
Income before income taxes		64,495			63,997				307,488			282,265
Provision for income taxes		23,900			23,645				113,500			104,180
Net income	$	40,595		$	40,352			$	193,988		$	178,085
Net income per common share	$	0.35		$	0.35			$	1.69		$	1.57
Net income per common share – assuming dilution	$	0.35		$	0.35			$	1.67		$	1.55
Weighted-average common shares outstanding		115,147			113,755				114,667			113,253
Adjusted weighted-average common shares outstanding – assuming dilution		116,349			115,430				116,080			115,119
Note: The income statement for the year ended December 31, 2006, has been derived from the audited consolidated financial statements but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)

	December 31,
	2007					2006
Inventory turnover (1)	1.6					1.6
Inventory turnover, net of payables (2)	3.0					2.8
AP to inventory (3)	43.2	%				39.2	%
Debt-to-capital (4)	5.9	%				7.5	%
Return on equity (5)	12.8	%				13.8	%
Return on assets (6)	8.8	%				9.3	%

	Three Months Ended December 31,						Year Ended December 31,
	2007			2006			2007			2006
Other Information (in thousands):
Capital Expenditures	$	63,025		$	54,004		$	282,655		$	228,871
Depreciation and Amortization	$	22,127		$	17,563		$	78,943		$	64,938
Interest Expense	$	1,154		$	970		$	3,723		$	4,322
Lease and Rental Expense	$	14,341		$	13,331		$	56,130		$	50,138
							$			$
Sales per weighted-average square foot (7)	$	48.64		$	50.30		$	212.03		$	215.30
Sales per weighted-average store (in thousands) (8)	$	330		$	337		$	1,430		$	1,439
Square footage (in thousands)								12,439			11,004
Store count:
New stores, net (9)		56			44			190			170
Total stores								1,830			1,640
Total employment								23,576			21,920
(1) Calculated as cost of sales for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the numerator.
(2) Calculated as cost of sales for the last 12 months divided by average net inventory. Average net inventory is calculated as the average of inventory less accounts payable for the trailing four quarters used in determining the numerator.
(3) Accounts payable divided by inventory.
(4) The sum of long-term debt and current portion of long-term debt, divided by the sum of long-term debt, current portion of long-term debt and total shareholders' equity.
(5) Last 12 months net income divided by average shareholders' equity. Average shareholders' equity is calculated as the average of shareholders' equity for the trailing four quarters used in determining the numerator.
(6) Last 12 months net income divided by average total assets. Average total assets is calculated as the average total assets for the trailing four quarters used in determining the numerator.
(7) Total sales less jobber sales, divided by weighted-average square feet. Weighted-average sales per square foot is weighted to consider the approximate dates of store openings or expansions.
(8) Total sales less jobber sales, divided by weighted-average stores. Weighted-average sales per store is weighted to consider the approximate dates of store openings or expansions.
(9) New stores, net for the year ended December 31, 2007 reflects the closing of 2 stores during the second quarter of 2007. There were no store closings in 2006.