Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 02, 2016 | |
Document and Entity Information | ||
Document type | 10-Q | |
Amendment flag | false | |
Document period end date | Mar. 31, 2016 | |
Document fiscal year focus | 2,016 | |
Current fiscal year end date | --12-31 | |
Document fiscal period focus | Q1 | |
Entity registrant name | O REILLY AUTOMOTIVE INC | |
Entity central index key | 898,173 | |
Entity filer category | Large Accelerated Filer | |
Entity common stock, shares outstanding | 96,455,859 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | [1] |
Assets | |||
Cash and cash equivalents | $ 716,008 | $ 116,301 | |
Accounts receivable, net | 178,282 | 161,078 | |
Amounts receivable from suppliers | 68,486 | 72,609 | |
Inventory | 2,701,760 | 2,631,015 | |
Other current assets | 36,927 | 29,023 | |
Total current assets | 3,701,463 | 3,010,026 | |
Property and equipment, at cost | 4,473,747 | 4,372,250 | |
Less: accumulated depreciation and amortization | 1,559,820 | 1,510,694 | |
Net property and equipment | 2,913,927 | 2,861,556 | |
Notes receivable, less current portion | 12,172 | 13,219 | |
Goodwill | 757,130 | 757,142 | |
Other assets, net | 35,081 | 34,741 | |
Total assets | 7,419,773 | 6,676,684 | |
Liabilities and shareholders' equity | |||
Accounts payable | 2,782,609 | 2,608,231 | |
Self-insurance reserves | 71,069 | 72,741 | |
Accrued payroll | 66,842 | 59,101 | |
Accrued benefits and withholdings | 49,175 | 72,203 | |
Income taxes payable | 114,321 | 1,444 | |
Other current liabilities | 231,661 | 232,678 | |
Total current liabilities | 3,315,677 | 3,046,398 | |
Long-term debt | 1,885,877 | 1,390,018 | |
Deferred income taxes | 76,450 | 79,772 | |
Other liabilities | 201,928 | 199,182 | |
Shareholders' equity: | |||
Common stock, $0.01 par value: Authorized shares - 245,000,000; Issued and outstanding shares - 96,726,677 as of March 31, 2016, and 97,737,171 as of December 31, 2015 | 967 | 977 | |
Additional paid-in capital | 1,301,057 | 1,281,497 | |
Retained earnings | 637,817 | 678,840 | |
Total shareholders' equity | 1,939,841 | 1,961,314 | |
Total liabilities and shareholders' equity | $ 7,419,773 | $ 6,676,684 | |
[1] | The balance sheet at December 31, 2015, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 96,726,677 | 97,737,171 |
Common stock, shares outstanding | 96,726,677 | 97,737,171 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Sales | $ 2,096,150 | $ 1,901,903 |
Cost of goods sold, including warehouse and distribution expenses | 998,571 | 914,944 |
Gross profit | 1,097,579 | 986,959 |
Selling, general and administrative expenses | 678,953 | 636,586 |
Operating income | 418,626 | 350,373 |
Other income (expense): | ||
Interest expense | (14,821) | (14,402) |
Interest income | 752 | 580 |
Other, net | 1,017 | 1,113 |
Total other expense | (13,052) | (12,709) |
Income before income taxes | 405,574 | 337,664 |
Provision for income taxes | 150,200 | 124,800 |
Net income | $ 255,374 | $ 212,864 |
Earnings per share-basic: | ||
Earnings per share - basic | $ 2.63 | $ 2.09 |
Weighted-average common shares outstanding - basic | 97,140 | 101,612 |
Earnings per share-assuming dilution: | ||
Earnings per share - assuming dilution | $ 2.59 | $ 2.06 |
Weighted-average common shares outstanding - assuming dilution | 98,537 | 103,257 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Operating activities: | |||
Net income | $ 255,374 | $ 212,864 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization of property, equipment and intangibles | 52,778 | 54,950 | |
Amortization of debt discount and issuance costs | 546 | 525 | |
Excess tax benefit from share-based compensation | (14,762) | (21,188) | |
Deferred income taxes | (3,322) | (4,441) | |
Share-based compensation programs | 5,178 | 5,890 | |
Other | 1,481 | 1,355 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (19,206) | (19,867) | |
Inventory | (70,745) | 26,807 | |
Accounts payable | 174,378 | 53,582 | |
Income taxes payable | 127,638 | 117,221 | |
Other | (21,183) | (21,673) | |
Net cash provided by operating activities | 488,155 | 406,025 | |
Investing activities: | |||
Purchases of property and equipment | (103,974) | (91,140) | |
Proceeds from sale of property and equipment | 864 | 658 | |
Payments received on notes receivable | 1,047 | 935 | |
Net cash used in investing activities | (102,063) | (89,547) | |
Financing activities: | |||
Proceeds from the issuance of long-term debt | 499,160 | 0 | |
Payments of debt issuance costs | (3,725) | 0 | |
Principal payments on capital leases | 0 | (19) | |
Repurchases of common stock | (312,656) | (134,813) | |
Excess tax benefit from share-based compensation | 14,762 | 21,188 | |
Net proceeds from issuance of common stock | 16,074 | 20,252 | |
Net cash provided by (used in) financing activities | 213,615 | (93,392) | |
Net increase in cash and cash equivalents | 599,707 | 223,086 | |
Cash and cash equivalents at beginning of the period | 116,301 | [1] | 250,560 |
Cash and cash equivalents at end of the period | 716,008 | 473,646 | |
Supplemental disclosures of cash flow information: | |||
Income taxes paid | 23,765 | 8,675 | |
Interest paid, net of capitalized interest | $ 23,063 | $ 23,435 | |
[1] | The balance sheet at December 31, 2015, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of O’Reilly Automotive, Inc. and its subsidiaries (the “Company” or “O’Reilly”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 , are not necessarily indicative of the results that may be expected for the year ended December 31, 2016 . For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |
Fair value measurements | NOTE 2 – FAIR VALUE MEASUREMENTS The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company uses the income and market approaches to determine the fair value of its assets and liabilities. The three levels of the fair value hierarchy are set forth below: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs for the asset or liability. Financial assets and liabilities measured at fair value on a recurring basis: The carrying amount of the Company’s marketable securities is included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2016 , and December 31, 2015 . The Company recorded an increase in fair value related to its marketable securities in the amounts of $0.1 million and $0.4 million for the three months ended March 31, 2016 and 2015 , respectively, which were included in “Other income (expense)” on the accompanying Condensed Consolidated Statements of Income. The tables below identify the estimated fair value of the Company’s marketable securities, determined by reference to quoted market prices (Level 1), as of March 31, 2016 , and December 31, 2015 (in thousands): March 31, 2016 Quoted Prices in Active Markets for Identical Instruments Significant Other Observable Inputs Significant Unobservable Inputs Total Marketable securities $ 17,933 $ — $ — $ 17,933 December 31, 2015 Quoted Prices in Active Markets for Identical Instruments Significant Other Observable Inputs Significant Unobservable Inputs Total Marketable securities $ 16,895 $ — $ — $ 16,895 Non-financial assets and liabilities measured at fair value on a nonrecurring basis: Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired in a business combination or property and equipment that are determined to be impaired. As of March 31, 2016 , and December 31, 2015 , the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition. Fair value of financial instruments: The carrying amounts of the Company’s senior notes are included in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2016 , and December 31, 2015 . See Note 3 for further discussion on the Company’s senior notes. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair values as of March 31, 2016 , and December 31, 2015 , were determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands): March 31, 2016 December 31, 2015 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value $500 million, 4.875% Senior Notes due 2021 $ 496,153 $ 545,237 $ 495,951 $ 542,078 $300 million, 4.625% Senior Notes due 2021 298,466 325,027 298,396 319,620 $300 million, 3.800% Senior Notes due 2022 297,617 315,934 297,535 303,595 $300 million, 3.850% Senior Notes due 2023 298,190 314,925 $ 298,136 $ 302,468 $500 million, 3.550% Senior Notes due 2026 $ 495,451 $ 517,907 The accompanying Condensed Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts receivable, amounts receivable from suppliers and accounts payable. Due to the short-term nature of these financial instruments, the Company believes that the carrying values of these instruments approximate their fair values. |
Financing
Financing | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Financing | NOTE 3 – FINANCING The following table identifies the amounts included in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2016 , and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Revolving Credit Facility $ — $ — $500 million, 4.875% Senior Notes due 2021 (1) , effective interest rate of 4.962% 496,153 495,951 $300 million, 4.625% Senior Notes due 2021 (2) , effective interest rate of 4.647% 298,466 298,396 $300 million, 3.800% Senior Notes due 2022 (3) , effective interest rate of 3.845% 297,617 297,535 $300 million, 3.850% Senior Notes due 2023 (4) , effective interest rate of 3.851% 298,190 298,136 $500 million, 3.550% Senior Notes due 2026 (5) , effective interest rate of 3.570% 495,451 — Long-term debt $ 1,885,877 $ 1,390,018 (1) Net of unamortized discount of $1.7 million as of March 31, 2016 , and $1.8 million as of December 31, 2015 , and debt issuance costs of $2.2 million as of March 31, 2016 , and $2.3 million as of December 31, 2015 . (2) Net of unamortized discount of $0.3 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.2 million as of March 31, 2016 , and $1.3 million as of December 31, 2015 . (3) Net of unamortized discount of $0.8 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.6 million as of March 31, 2016 , and $1.7 million as of December 31, 2015 . (4) Net of unamortized discount of less than $0.1 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.8 million as of March 31, 2016 , and December 31, 2015 . (5) Net of unamortized discount of $0.8 million as of March 31, 2016 , and debt issuance costs of $3.7 million as of March 31, 2016 . Unsecured revolving credit facility: On January 14, 2011, the Company entered into a credit agreement, as amended by Amendment No. 1 dated as of September 9, 2011, and as further amended by Amendment No. 2 dated as of July 2, 2013, and as further amended by Amendment No. 3 dated as of June 18, 2015 (the “Credit Agreement”). The Credit Agreement provides for a $600 million unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by Bank of America, N.A., which is scheduled to mature in July 2018. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $200 million. As of March 31, 2016 , and December 31, 2015 , the Company had outstanding letters of credit, primarily to support obligations related to workers’ compensation, general liability and other insurance policies, in the amounts of $38.9 million and $37.5 million , respectively, reducing the aggregate availability under the Revolving Credit Facility by those amounts. As of March 31, 2016 , and December 31, 2015 , the Company had no outstanding borrowings under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at the Base Rate or Eurodollar Rate (both as defined in the Credit Agreement) plus an applicable margin. Swing line loans made under the Revolving Credit Facility bear interest at the Base Rate plus the applicable margin for Base Rate loans. In addition, the Company pays a facility fee on the aggregate amount of the commitments in an amount equal to a percentage of such commitments. The interest rate margins and facility fee are based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s Ratings Services, subject to limited exceptions. As of March 31, 2016 , based upon the Company’s credit ratings, its margin for Base Rate loans was 0.000% , its margin for Eurodollar Rate loans was 0.875% and its facility fee was 0.125% . The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50 times, and a maximum consolidated leverage ratio of 3.00 times. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, six-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. As of March 31, 2016, the Company remained in compliance with all covenants under the Credit Agreement. Senior notes: On March 8, 2016 , the Company issued $500 million aggregate principal amount of unsecured 3.550% Senior Notes due 2026 (“3.550% Senior Notes due 2026”) at a price to the public of 99.832% of their face value under its shelf registration statement with United Missouri Bank, N.A. (“UMB”) as trustee. Interest on the 3.550% Senior Notes due 2026 is payable on March 15 and September 15 of each year, beginning on September 15, 2016, and is computed on the basis of a 360 -day year. The Company has issued a cumulative $1.9 billion aggregate principal amount of unsecured senior notes, which are due between January 2021 and March 2026 with UMB as trustee. Interest on the senior notes, ranging from 3.550% to 4.875%, is payable semi-annually and is computed on the basis of a 360-day year. The senior notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries (“Subsidiary Guarantors”) that incurs or guarantees obligations under the Company’s Credit Agreement or under other credit facility or capital markets debt of the Company’s or any of the Company’s Subsidiary Guarantors. The guarantees are joint and several and full and unconditional, subject to certain customary automatic release provisions, including release of the Subsidiary Guarantor’s guarantee under the Company’s Credit Agreement and certain other debt, or, in certain circumstances, the sale or other disposition of a majority of the voting power of the capital interest in, or of all or substantially all of the property of, the Subsidiary Guarantor. Each of the Subsidiary Guarantors is 100% owned, directly or indirectly, by the Company, and the Company has no independent assets or operations other than those of its subsidiaries. The only direct or indirect subsidiaries of the Company that would not be Subsidiary Guarantors would be minor subsidiaries. Neither the Company, nor any of its Subsidiary Guarantors, is subject to any material or significant restrictions on the Company’s ability to obtain funds from its subsidiaries by dividend or loan or to transfer assets from such subsidiaries, except as provided by applicable law. Each of the senior notes is subject to certain customary covenants, with which the Company complied as of March 31, 2016. |
Warranties
Warranties | 3 Months Ended |
Mar. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Warranties | NOTE 4 – WARRANTIES The Company provides warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company in lieu of warranty obligations and estimated warranty expense are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2016 , and December 31, 2015 . The following table identifies the changes in the Company’s aggregate product warranty liabilities for the three months ended March 31, 2016 (in thousands): Warranty liabilities, balance at December 31, 2015 $ 35,223 Warranty claims (16,230 ) Warranty accruals 16,742 Warranty liabilities, balance at March 31, 2016 $ 35,735 |
Share Repurchase Program
Share Repurchase Program | 3 Months Ended |
Mar. 31, 2016 | |
Proceeds from (Repurchase of) Equity [Abstract] | |
Share repurchase program | NOTE 5 – SHARE REPURCHASE PROGRAM In January of 2011, the Company’s Board of Directors approved a share repurchase program. Under the program, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall market conditions. The Company’s Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on February 10, 2016 , the Company’s Board of Directors approved a resolution to increase the authorization amount under the share repurchase program by an additional $750 million , resulting in a cumulative authorization amount of $6.3 billion . The additional authorization is effective for a three -year period, beginning on its announcement date. The following table identifies shares of the Company’s common stock that have been repurchased as part of the Company’s publicly announced share repurchase program (in thousands, except per share data): For the Three Months Ended 2016 2015 Shares repurchased 1,231 650 Average price per share $ 254.02 $ 207.50 Total investment $ 312,637 $ 134,803 As of March 31, 2016 , the Company had $580.6 million remaining under its share repurchase program. Subsequent to the end of the first quarter and through May 9, 2016 , the Company repurchased an additional 1.7 million shares of its common stock under its share repurchase program, at an average price of $258.04 , for a total investment of $436.8 million . The Company has repurchased a total of 52.9 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through May 9, 2016 , at an average price of $109.43 , for a total aggregate investment of $5.8 billion . |
Share-Based Compensation and Be
Share-Based Compensation and Benefit Plans | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based compensation and benefit plans | NOTE 6 – SHARE-BASED COMPENSATION AND BENEFIT PLANS The Company recognizes share-based compensation expense based on the fair value of the grants, awards or shares at the time of the grant, award or issuance. Share-based compensation includes stock option awards issued under the Company’s employee incentive plans and director stock plan, restricted stock awarded under the Company’s employee incentive plans, performance incentive plan and director stock plan, stock issued through the Company’s employee stock purchase plan and stock awarded to employees through other benefit programs. Stock options: The Company’s stock-based incentive plans provide for the granting of stock options for the purchase of common stock of the Company to directors and certain key employees of the Company. Options are granted at an exercise price that is equal to the closing market price of the Company’s common stock on the date of the grant. Director options granted under the plans expire after seven years and are fully vested after six months. Employee options granted under the plans expire after ten years and typically vest 25% per year, over four years. The Company records compensation expense for the grant date fair value of the option awards, adjusted for estimated forfeitures, evenly over the minimum required service period. The table below identifies stock option activity under these plans during the three months ended March 31, 2016 (in thousands, except per share data): Shares Weighted-Average Exercise Price Outstanding at December 31, 2015 3,308 $ 80.86 Granted 192 263.18 Exercised (206 ) 63.65 Forfeited (14 ) 112.13 Outstanding at March 31, 2016 3,280 $ 92.50 Exercisable at March 31, 2016 2,357 $ 58.75 The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes model requires the use of assumptions, including the risk free rate, expected life, expected volatility and expected dividend yield. • Risk-free interest rate – The United States Treasury rates in effect at the time the options are granted for the options’ expected life. • • Expected life – Represents the period of time that options granted are expected to be outstanding. The Company uses historical experience to estimate the expected life of options granted. • Expected volatility – Measure of the amount by which the Company’s stock price is expected to fluctuate, based on a historical trend. • Expected dividend yield – The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends. The table below identifies the weighted-average assumptions used for grants awarded during the three months ended March 31, 2016 and 2015 : For the Three Months Ended 2016 2015 Risk free interest rate 1.59 % 1.57 % Expected life 5.9 Years 6.1 Years Expected volatility 22.4 % 22.4 % Expected dividend yield — % — % The Company’s forfeiture rate is the estimated percentage of options awarded that are expected to be forfeited or canceled prior to becoming fully vested. The Company’s estimate is evaluated periodically and is based upon historical experience at the time of evaluation and reduces expense ratably over the vesting period or the minimum required service period. The following table summarizes activity related to stock options awarded by the Company for the three months ended March 31, 2016 and 2015 (in thousands, except per share data): For the Three Months Ended 2016 2015 Compensation expense for stock options awarded $ 4,336 $ 4,997 Income tax benefit from compensation expense related to stock options 1,620 1,847 Weighted-average grant-date fair value of options awarded $ 66.27 $ 51.57 The remaining unrecognized compensation expense related to unvested stock option awards at March 31, 2016 , was $32.3 million and the weighted-average period of time over which this cost will be recognized is 2.9 years . Other share-based compensation plans: The Company sponsors other share-based compensation plans: an employee stock purchase plan (the “ESPP”), which permits all eligible employees to purchase shares of the Company’s common stock at 85% of the fair market value ; a performance incentive plan, which provides for the award of shares of restricted stock to its corporate and senior management that vest evenly over a three-year period and are held in escrow until such vesting has occurred ; and a director stock plan, which provides for the award of shares of restricted stock to the Company’s independent directors that vest evenly over a three-year period and are held in escrow until such vesting has occurred . The fair value of shares issued under the ESPP is based on the average of the high and low market prices of the Company’s common stock during the offering periods, and compensation expense is recognized based on the discount between the fair value and the employee purchase price for the shares sold to employees. The fair value of shares awarded under restricted stock plans is based on the closing market price of the Company’s common stock on the date of the award, and compensation expense is recorded evenly over the minimum required service period. The table below summarizes activity related to the Company’s other share-based compensation plans for the three months ended March 31, 2016 and 2015 (in thousands): For the Three Months Ended 2016 2015 Compensation expense for shares issued under the ESPP $ 523 $ 489 Income tax benefit from compensation expense related to shares issued under the ESPP 195 181 Compensation expense for restricted shares awarded 319 404 Income tax benefit from compensation expense related to restricted awards $ 119 $ 149 Profit sharing and savings plan: The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age and have at least six months of service. The Company makes matching contributions equal to 100% of the first 2% of each employee’s wages that are contributed and 25% of the next 4% of each employee’s wages that are contributed. An employee must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. The Company may also make additional discretionary profit sharing contributions to the plan on an annual basis as determined by the Board of Directors. The Company did not make any discretionary contributions to the 401(k) Plan during the three months ended March 31, 2016 or 2015 . The Company expensed matching contributions under the 401(k) Plan in the amounts of $5.0 million and $4.2 million for the three months ended March 31, 2016 and 2015 , respectively. Nonqualified deferred compensation plan: The Company sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitations under the Internal Revenue Code. The Deferred Compensation Plan provides these employees with the opportunity to defer the full 6% of matched compensation, including salary and incentive based compensation, that was precluded under the Company’s 401(k) Plan due to the annual limitations, which is then matched by the Company using the same formula as the 401(k) Plan. An employee must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The Company has an unsecured obligation to pay, in the future, the value of the deferred compensation and Company match adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. The liability for compensation deferred under the Deferred Compensation Plan was $17.9 million and $16.9 million as of March 31, 2016 , and December 31, 2015 , respectively, and was included within “Other liabilities” on the Condensed Consolidated Balance Sheets. The Company expensed matching contributions under the Deferred Compensation Plan in the amount of less than $0.1 million for each of the three months ended March 31, 2016 and 2015 . |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per share | NOTE 7 – EARNINGS PER SHARE The following table illustrates the computation of basic and diluted earnings per share for the three months ended March 31, 2016 and 2015 (in thousands, except per share data): For the Three Months Ended 2016 2015 Numerator (basic and diluted): Net income $ 255,374 $ 212,864 Denominator: Weighted-average common shares outstanding – basic 97,140 101,612 Effect of stock options (1) 1,397 1,645 Weighted-average common shares outstanding – assuming dilution 98,537 103,257 Earnings per share: Earnings per share-basic $ 2.63 $ 2.09 Earnings per share-assuming dilution $ 2.59 $ 2.06 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 268 278 Weighted-average exercise price per share of antidilutive stock options (1) $ 256.19 $ 195.90 (1) See Note 6 for further information concerning the terms of the Company’s share-based compensation plans. For the three months ended March 31, 2016 and 2015 , the computation of diluted earnings per share did not include certain securities. These securities represent underlying stock options not included in the computation of diluted earnings per share, because the inclusion of such equity awards would have been antidilutive. Subsequent to the end of the first quarter and through May 9, 2016 , the Company repurchased 1.7 million shares of its common stock, at an average price of $258.04 , for a total investment of $436.8 million . |
Legal Matters
Legal Matters | 3 Months Ended |
Mar. 31, 2016 | |
Loss Contingency [Abstract] | |
Legal matters | NOTE 8 – LEGAL MATTERS O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company records reserves for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably estimate the probable loss. The Company reserves for an estimate of material legal costs to be incurred in pending litigation matters. 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, these matters, taking into account applicable insurance and reserves, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period. As previously reported, the Company received a subpoena from the District Attorney of the County of Alameda, along with other environmental prosecutorial offices in the state of California, seeking documents and information related to the handling, storage and disposal of hazardous waste. The Company expects the District Attorney will seek injunctive and monetary relief. Management has an ongoing and open dialogue with these agencies regarding this matter and is cooperating fully with the request; however, at this time a prediction of the ultimate outcome of these efforts cannot be determined although the Company has accrued all amounts that it believes to be probable and reasonably estimable and does not believe that the ultimate resolution of this matter will have a material adverse effect on its consolidated financial position, results of operations or cash flows. As previously reported, on June 18, 2015, a jury in Greene County, Missouri returned an unfavorable verdict in a litigated contract dispute in the matter Meridian Creative Alliance vs. O’Reilly Automotive Stores, Inc. et. al. in the amount of $12.5 million . The Company strongly believes that the verdict was unjust and unsupported by the law and the underlying facts and, further, that there are several potential bases for reversal on appeal. The Company is vigorously challenging the verdict in the Court of Appeals. As of March 31, 2016 , the Company had reserved $18.7 million with respect to this matter. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent accounting pronouncements | NOTE 9 - RECENT ACCOUNTING PRONOUNCEMENTS In May of 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). Under ASU 2014-09, an entity is required to follow a five-step process to determine the amount of revenue to recognize when promised goods or services are transferred to customers. ASU 2014-09 offers specific accounting guidance for costs to obtain or fulfill a contract with a customer. In addition, an entity is required to disclose sufficient information to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August of 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), to defer the effective date of ASU 2014-09 by one year. For public companies, ASU 2015-14 changes ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including periods within that reporting period. These ASUs can be adopted retrospectively or as a cumulative-effective adjustment at the date of adoption, with early adoption allowed, but not before December 15, 2016. The Company will adopt this guidance beginning with its first quarter ending March 31, 2018. The Company is in the process of evaluating the potential future impact, if any, of ASU 2014-09 on its consolidated financial position, results of operations and cash flows, and which method of adoption is most appropriate for the Company. In February of 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2019. The Company is in the process of evaluating the future impact of ASU 2016-02 on its consolidated financial position, results of operations and cash flows. In March of 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments” (“ASU 2016-06”). ASU 2016-06 clarifies the requirements for assessing whether contingent call or put options that can accelerate the payment of principal on debt instruments are clearly and closely related to the economic characteristics and risks of the debt hosts and requires entities to solely use the four-step decision sequence, which is already in existence, when assessing the embedded call or put options. For public companies, ASU 2016-06 is effective for annual reporting periods beginning after December 15, 2016, including periods within that reporting period, and can be adopted on a modified retrospective basis, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2017. The application of this guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In March of 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). Under ASU 2016-09, several aspects of the accounting for share-based payment transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows, were simplified. For public companies, ASU 2016-09 is effective for annual reporting beginning after December 15, 2016, including interim periods within that reporting period, with early adoption permitted. ASU 2016-09 includes various adoption methods, depending on the guidance being adopted; amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements and forfeitures should be applied using a modified retrospective transition method, while the amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively, the amendments requiring recognition of excess tax benefits and deficiencies in the income statement should be applied prospectively, and amendments related to the presentation of excess tax benefits on the statement of cash flows should be applied either prospectively or retrospectively. The Company will adopt this guidance beginning with its first quarter ending March 31, 2017. The Company is in the process of evaluating the future impact of ASU 2016-09 on its consolidated financial position, results of operations and cash flows. |
Fair Value Measurements (Polici
Fair Value Measurements (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |
Fair value of financial instruments, policy | The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company uses the income and market approaches to determine the fair value of its assets and liabilities. The three levels of the fair value hierarchy are set forth below: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs for the asset or liability. |
Warranties (Policies)
Warranties (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Warranties, policy | The Company provides warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company in lieu of warranty obligations and estimated warranty expense are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. |
Recent Accounting Pronounceme17
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent accounting pronouncements, policy | In May of 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). Under ASU 2014-09, an entity is required to follow a five-step process to determine the amount of revenue to recognize when promised goods or services are transferred to customers. ASU 2014-09 offers specific accounting guidance for costs to obtain or fulfill a contract with a customer. In addition, an entity is required to disclose sufficient information to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August of 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), to defer the effective date of ASU 2014-09 by one year. For public companies, ASU 2015-14 changes ASU 2014-09 to be effective for annual reporting periods beginning after December 15, 2017, including periods within that reporting period. These ASUs can be adopted retrospectively or as a cumulative-effective adjustment at the date of adoption, with early adoption allowed, but not before December 15, 2016. The Company will adopt this guidance beginning with its first quarter ending March 31, 2018. The Company is in the process of evaluating the potential future impact, if any, of ASU 2014-09 on its consolidated financial position, results of operations and cash flows, and which method of adoption is most appropriate for the Company. In February of 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2019. The Company is in the process of evaluating the future impact of ASU 2016-02 on its consolidated financial position, results of operations and cash flows. In March of 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments” (“ASU 2016-06”). ASU 2016-06 clarifies the requirements for assessing whether contingent call or put options that can accelerate the payment of principal on debt instruments are clearly and closely related to the economic characteristics and risks of the debt hosts and requires entities to solely use the four-step decision sequence, which is already in existence, when assessing the embedded call or put options. For public companies, ASU 2016-06 is effective for annual reporting periods beginning after December 15, 2016, including periods within that reporting period, and can be adopted on a modified retrospective basis, with early adoption permitted. The Company will adopt this guidance beginning with its first quarter ending March 31, 2017. The application of this guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows. In March of 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). Under ASU 2016-09, several aspects of the accounting for share-based payment transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows, were simplified. For public companies, ASU 2016-09 is effective for annual reporting beginning after December 15, 2016, including interim periods within that reporting period, with early adoption permitted. ASU 2016-09 includes various adoption methods, depending on the guidance being adopted; amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements and forfeitures should be applied using a modified retrospective transition method, while the amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively, the amendments requiring recognition of excess tax benefits and deficiencies in the income statement should be applied prospectively, and amendments related to the presentation of excess tax benefits on the statement of cash flows should be applied either prospectively or retrospectively. The Company will adopt this guidance beginning with its first quarter ending March 31, 2017. The Company is in the process of evaluating the future impact of ASU 2016-09 on its consolidated financial position, results of operations and cash flows. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |
Valuation of marketable securities | March 31, 2016 Quoted Prices in Active Markets for Identical Instruments Significant Other Observable Inputs Significant Unobservable Inputs Total Marketable securities $ 17,933 $ — $ — $ 17,933 December 31, 2015 Quoted Prices in Active Markets for Identical Instruments Significant Other Observable Inputs Significant Unobservable Inputs Total Marketable securities $ 16,895 $ — $ — $ 16,895 |
Valuation of senior notes | March 31, 2016 December 31, 2015 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value $500 million, 4.875% Senior Notes due 2021 $ 496,153 $ 545,237 $ 495,951 $ 542,078 $300 million, 4.625% Senior Notes due 2021 298,466 325,027 298,396 319,620 $300 million, 3.800% Senior Notes due 2022 297,617 315,934 297,535 303,595 $300 million, 3.850% Senior Notes due 2023 298,190 314,925 $ 298,136 $ 302,468 $500 million, 3.550% Senior Notes due 2026 $ 495,451 $ 517,907 |
Financing (Tables)
Financing (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Outstanding financing facilities | March 31, 2016 December 31, 2015 Revolving Credit Facility $ — $ — $500 million, 4.875% Senior Notes due 2021 (1) , effective interest rate of 4.962% 496,153 495,951 $300 million, 4.625% Senior Notes due 2021 (2) , effective interest rate of 4.647% 298,466 298,396 $300 million, 3.800% Senior Notes due 2022 (3) , effective interest rate of 3.845% 297,617 297,535 $300 million, 3.850% Senior Notes due 2023 (4) , effective interest rate of 3.851% 298,190 298,136 $500 million, 3.550% Senior Notes due 2026 (5) , effective interest rate of 3.570% 495,451 — Long-term debt $ 1,885,877 $ 1,390,018 (1) Net of unamortized discount of $1.7 million as of March 31, 2016 , and $1.8 million as of December 31, 2015 , and debt issuance costs of $2.2 million as of March 31, 2016 , and $2.3 million as of December 31, 2015 . (2) Net of unamortized discount of $0.3 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.2 million as of March 31, 2016 , and $1.3 million as of December 31, 2015 . (3) Net of unamortized discount of $0.8 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.6 million as of March 31, 2016 , and $1.7 million as of December 31, 2015 . (4) Net of unamortized discount of less than $0.1 million as of March 31, 2016 , and December 31, 2015 , and debt issuance costs of $1.8 million as of March 31, 2016 , and December 31, 2015 . (5) Net of unamortized discount of $0.8 million as of March 31, 2016 , and debt issuance costs of $3.7 million as of March 31, 2016 . |
Warranties (Tables)
Warranties (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Product warranty liabilities | Warranty liabilities, balance at December 31, 2015 $ 35,223 Warranty claims (16,230 ) Warranty accruals 16,742 Warranty liabilities, balance at March 31, 2016 $ 35,735 |
Share Repurchase Program (Table
Share Repurchase Program (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Proceeds from (Repurchase of) Equity [Abstract] | |
Schedule of shares repurchased | For the Three Months Ended 2016 2015 Shares repurchased 1,231 650 Average price per share $ 254.02 $ 207.50 Total investment $ 312,637 $ 134,803 |
Share-Based Compensation and 22
Share-Based Compensation and Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Restricted stock [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of activity of share-based compensation | For the Three Months Ended 2016 2015 Compensation expense for shares issued under the ESPP $ 523 $ 489 Income tax benefit from compensation expense related to shares issued under the ESPP 195 181 Compensation expense for restricted shares awarded 319 404 Income tax benefit from compensation expense related to restricted awards $ 119 $ 149 |
Stock option [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of stock options | Shares Weighted-Average Exercise Price Outstanding at December 31, 2015 3,308 $ 80.86 Granted 192 263.18 Exercised (206 ) 63.65 Forfeited (14 ) 112.13 Outstanding at March 31, 2016 3,280 $ 92.50 Exercisable at March 31, 2016 2,357 $ 58.75 |
Black-Scholes option pricing model | For the Three Months Ended 2016 2015 Risk free interest rate 1.59 % 1.57 % Expected life 5.9 Years 6.1 Years Expected volatility 22.4 % 22.4 % Expected dividend yield — % — % |
Summary of activity of share-based compensation | For the Three Months Ended 2016 2015 Compensation expense for stock options awarded $ 4,336 $ 4,997 Income tax benefit from compensation expense related to stock options 1,620 1,847 Weighted-average grant-date fair value of options awarded $ 66.27 $ 51.57 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per share | For the Three Months Ended 2016 2015 Numerator (basic and diluted): Net income $ 255,374 $ 212,864 Denominator: Weighted-average common shares outstanding – basic 97,140 101,612 Effect of stock options (1) 1,397 1,645 Weighted-average common shares outstanding – assuming dilution 98,537 103,257 Earnings per share: Earnings per share-basic $ 2.63 $ 2.09 Earnings per share-assuming dilution $ 2.59 $ 2.06 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 268 278 Weighted-average exercise price per share of antidilutive stock options (1) $ 256.19 $ 195.90 (1) See Note 6 for further information concerning the terms of the Company’s share-based compensation plans. |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Non-financial assets and liabilities measured at fair value on a nonrecurring basis | $ 0 | $ 0 | |
Increase in fair value of marketable securities | $ 0.1 | $ 0.4 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Marketable Securities) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 17,933 | $ 16,895 |
Fair value, inputs, Level 1 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | 17,933 | 16,895 |
Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | 0 | 0 |
Fair value, inputs, Level 3 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 0 | $ 0 |
Fair Value Measurements (Fair26
Fair Value Measurements (Fair Value of Senior Notes) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
$500 million, 4.875% Senior Notes due 2021 [Member] | ||
Fair Value Measurements | ||
Carrying amount of senior notes | $ 496,153 | $ 495,951 |
$500 million, 4.875% Senior Notes due 2021 [Member] | Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | 545,237 | 542,078 |
$300 million, 4.625% Senior Notes due 2021 [Member] | ||
Fair Value Measurements | ||
Carrying amount of senior notes | 298,466 | 298,396 |
$300 million, 4.625% Senior Notes due 2021 [Member] | Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | 325,027 | 319,620 |
$300 million, 3.800% Senior Notes due 2022 [Member] | ||
Fair Value Measurements | ||
Carrying amount of senior notes | 297,617 | 297,535 |
$300 million, 3.800% Senior Notes due 2022 [Member] | Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | 315,934 | 303,595 |
$300 million, 3.850% Senior Notes due 2023 [Member] | ||
Fair Value Measurements | ||
Carrying amount of senior notes | 298,190 | 298,136 |
$300 million, 3.850% Senior Notes due 2023 [Member] | Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | 314,925 | $ 302,468 |
$500 million, 3.550% Senior Notes due 2026 [Member] | ||
Fair Value Measurements | ||
Carrying amount of senior notes | 495,451 | |
$500 million, 3.550% Senior Notes due 2026 [Member] | Fair value, inputs, Level 2 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of senior notes | $ 517,907 |
Financing (Unsecured Revolving
Financing (Unsecured Revolving Credit Facility) (Narrative) (Details) - Line of credit facility [Member] - Unsecured debt [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Unsecured Revolving Credit Facility | ||
Credit agreement description | On January 14, 2011, the Company entered into a credit agreement, as amended by Amendment No. 1 dated as of September 9, 2011, and as further amended by Amendment No. 2 dated as of July 2, 2013, and as further amended by Amendment No. 3 dated as of June 18, 2015 (the “Credit Agreement”). The Credit Agreement provides for a $600 million unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by Bank of America, N.A., which is scheduled to mature in July 2018. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $200 million. | |
Credit agreement inception date | Jan. 14, 2011 | |
Current maximum borrowing capacity under credit facility | $ 600 | |
Line of credit facility expiration date | Jul. 2, 2018 | |
Maximum aggregate increase to credit facility allowable | $ 200 | |
Letters of credit | 38.9 | $ 37.5 |
Outstanding borrowings under credit facility | $ 0 | $ 0 |
Covenant description for debt instrument | The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50 times, and a maximum consolidated leverage ratio of 3.00 times. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, six-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. | |
Line of credit facility fee percentage | 0.125% | |
Line of credit facility covenant compliance | As of March 31, 2016, the Company remained in compliance with all covenants under the Credit Agreement. | |
Spread over Base rate [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit current interest rate | 0.00% | |
Spread over Eurodollar rate [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit current interest rate | 0.875% | |
Through maturity [Member] | ||
Unsecured Revolving Credit Facility | ||
Minimum debt instrument consolidated fixed charge coverage ratio covenant | 250.00% | |
Maximum debt instrument consolidated leverage ratio covenant | 300.00% | |
Amendment one [Member] | ||
Unsecured Revolving Credit Facility | ||
Credit agreement amendment date | Sep. 9, 2011 | |
Amendment two [Member] | ||
Unsecured Revolving Credit Facility | ||
Credit agreement amendment date | Jul. 2, 2013 | |
Amendment three [Member] | ||
Unsecured Revolving Credit Facility | ||
Credit agreement amendment date | Jun. 18, 2015 | |
Letter of credit [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit facility sublimit | $ 200 | |
Swing line revolver [Member] | ||
Unsecured Revolving Credit Facility | ||
Line of credit facility sublimit | $ 75 |
Financing (Senior Notes) (Narra
Financing (Senior Notes) (Narrative) (Details) $ in Millions | Mar. 08, 2016USD ($)dRate | Mar. 31, 2016USD ($)dRate |
Financing | ||
Unsecured senior notes description | The Company has issued a cumulative $1.9 billion aggregate principal amount of unsecured senior notes, which are due between January 2021 and March 2026 with UMB as trustee. Interest on the senior notes, ranging from 3.550% to 4.875%, is payable semi-annually and is computed on the basis of a 360-day year. | |
Aggregate principle of unsecured senior notes | $ | $ 1,900 | |
Maturity date range, minimum | Jan. 14, 2021 | |
Maturity date range, maximum | Mar. 8, 2026 | |
Interest rate of notes, minimum | 3.55% | |
Interest rate of notes, maximum | 4.875% | |
Number of days in annual interest calculation period | d | 360 | |
Debt instrument covenant description | Each of the senior notes is subject to certain customary covenants, with which the Company complied as of March 31, 2016. | |
$500 million, 3.550% Senior Notes due 2026 [Member] | ||
Financing | ||
Issuance date of senior notes | Mar. 8, 2016 | |
Face amount of senior notes | $ | $ 500 | |
Interest rate of senior notes | 3.55% | |
Percentage of face value of debt instrument | 99.832% | |
Number of days in annual interest calculation period | d | 360 |
Financing (Outstanding Financin
Financing (Outstanding Financing Facilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | |
Financing | |||
Revolving Credit Facility | $ 0 | $ 0 | |
Long-term debt | 1,885,877 | 1,390,018 | [1] |
$500 million, 4.875% Senior Notes due 2021 [Member] | |||
Financing | |||
Senior notes | 496,153 | 495,951 | |
Senior notes, unamortized discount | 1,700 | 1,800 | |
Senior notes, unamortized debt issuance costs | $ 2,200 | 2,300 | |
Senior notes, effective interest rate | 4.962% | ||
$300 million, 4.625% Senior Notes due 2021 [Member] | |||
Financing | |||
Senior notes | $ 298,466 | 298,396 | |
Senior notes, unamortized discount | 300 | 300 | |
Senior notes, unamortized debt issuance costs | $ 1,200 | 1,300 | |
Senior notes, effective interest rate | 4.647% | ||
$300 million, 3.800% Senior Notes due 2022 [Member] | |||
Financing | |||
Senior notes | $ 297,617 | 297,535 | |
Senior notes, unamortized discount | 800 | 800 | |
Senior notes, unamortized debt issuance costs | $ 1,600 | 1,700 | |
Senior notes, effective interest rate | 3.845% | ||
$300 million, 3.850% Senior Notes due 2023 [Member] | |||
Financing | |||
Senior notes | $ 298,190 | 298,136 | |
Senior notes, unamortized discount | 100 | 100 | |
Senior notes, unamortized debt issuance costs | $ 1,800 | $ 1,800 | |
Senior notes, effective interest rate | 3.851% | ||
$500 million, 3.550% Senior Notes due 2026 [Member] | |||
Financing | |||
Senior notes | $ 495,451 | ||
Senior notes, unamortized discount | 800 | ||
Senior notes, unamortized debt issuance costs | $ 3,700 | ||
Senior notes, effective interest rate | 3.57% | ||
[1] | The balance sheet at December 31, 2015, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
Warranties (Product Warranty Li
Warranties (Product Warranty Liabilities) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Product Warranties Disclosures [Abstract] | |
Warranty liabilities, beginning balance | $ 35,223 |
Warranty claims | (16,230) |
Warranty accruals | 16,742 |
Warranty liabilities, ending balance | $ 35,735 |
Share Repurchase Program (Narra
Share Repurchase Program (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Feb. 10, 2016 | May. 09, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | May. 09, 2016 |
Share Repurchase Program | |||||
Increase in authorized amount | $ 750,000 | ||||
Cumulative authorized amount | $ 6,300,000 | ||||
Authorization effective period | 3 years | ||||
Remaining balance under share repurchase program | $ 580,600 | ||||
Common stock repurchased, shares | 1,231 | 650 | |||
Common stock repurchased, average price per share | $ 254.02 | $ 207.50 | |||
Common stock repurchased, value | $ 312,637 | $ 134,803 | |||
Subsequent event [Member] | |||||
Share Repurchase Program | |||||
Common stock repurchased, shares | 1,700 | 52,900 | |||
Common stock repurchased, average price per share | $ 258.04 | $ 109.43 | |||
Common stock repurchased, value | $ 436,800 | $ 5,800,000 |
Share Repurchase Program (Sched
Share Repurchase Program (Schedule Of Shares Repurchased) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Proceeds from (Repurchase of) Equity [Abstract] | ||
Shares repurchased | 1,231 | 650 |
Average price per share | $ 254.02 | $ 207.50 |
Total investment | $ 312,637 | $ 134,803 |
Share-Based Compensation and 33
Share-Based Compensation and Benefit Plans (Stock Options) (Narrative) (Details) - Stock option [Member] $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($)Rate | |
Share-Based Compensation and Benefit Plans | |
Vesting of options, description | The Company’s stock-based incentive plans provide for the granting of stock options for the purchase of common stock of the Company to directors and certain key employees of the Company. Options are granted at an exercise price that is equal to the closing market price of the Company’s common stock on the date of the grant. Director options granted under the plans expire after seven years and are fully vested after six months. Employee options granted under the plans expire after ten years and typically vest 25% per year, over four years. The Company records compensation expense for the grant date fair value of the option awards, adjusted for estimated forfeitures, evenly over the minimum required service period. |
Remaining unrecognized compensation expense | $ | $ 32.3 |
Weighted-average period for cost recognition | 2 years 11 months 6 days |
Employee stock option [Member] | |
Share-Based Compensation and Benefit Plans | |
Options expiration period | 10 years |
Vesting period | 4 years |
Option vesting rate per year | Rate | 25.00% |
Director [Member] | |
Share-Based Compensation and Benefit Plans | |
Options expiration period | 7 years |
Vesting period | 6 months |
Share-Based Compensation and 34
Share-Based Compensation and Benefit Plans (Other Share-Based Compensation) (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2016Rate | |
Restricted stock [Member] | Employee [Member] | |
Share-Based Compensation and Benefit Plans | |
Other employee benefit plan, description | a performance incentive plan, which provides for the award of shares of restricted stock to its corporate and senior management that vest evenly over a three-year period and are held in escrow until such vesting has occurred |
Vesting period | 3 years |
Restricted stock [Member] | Director [Member] | |
Share-Based Compensation and Benefit Plans | |
Other employee benefit plan, description | a director stock plan, which provides for the award of shares of restricted stock to the Company’s independent directors that vest evenly over a three-year period and are held in escrow until such vesting has occurred |
Vesting period | 3 years |
Employee stock purchase plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Other employee benefit plan, description | an employee stock purchase plan (the “ESPP”), which permits all eligible employees to purchase shares of the Company’s common stock at 85% of the fair market value |
Employee stock purchase plan, stock purchase percentage | 85.00% |
Share-Based Compensation and 35
Share-Based Compensation and Benefit Plans (Profit Sharing and Savings Plan) (Narrative) (Details) - Profit sharing and savings plan [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-Based Compensation and Benefit Plans | ||
Profit sharing and savings plan, description | The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age and have at least six months of service. The Company makes matching contributions equal to 100% of the first 2% of each employee’s wages that are contributed and 25% of the next 4% of each employee’s wages that are contributed. | |
Profit sharing and savings plan, employer discretionary contribution | $ 0 | $ 0 |
Profit sharing and savings plan, cost recognized | $ 5 | $ 4.2 |
Employee's first 2% of contributed wages [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Profit sharing and savings plan, Company match | 100.00% | |
Employee's next 4% of contributed wages [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Profit sharing and savings plan, Company match | 25.00% |
Share-Based Compensation and 36
Share-Based Compensation and Benefit Plans (Nonqualified Deferred Compensation Plan) (Narrative) (Details) - Nonqualified deferred compensation plan [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Share-Based Compensation and Benefit Plans | |||
Deferred compensation plan, description | The Company sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitations under the Internal Revenue Code. The Deferred Compensation Plan provides these employees with the opportunity to defer the full 6% of matched compensation, including salary and incentive based compensation, that was precluded under the Company’s 401(k) Plan due to the annual limitations, which is then matched by the Company using the same formula as the 401(k) Plan. | ||
Deferred compensation plan, obligation | $ 17.9 | $ 16.9 | |
Deferred compensation plan, cost recognized | $ 0.1 | $ 0.1 |
Share-Based Compensation and 37
Share-Based Compensation and Benefit Plans (Summary Of Stock Options) (Details) - Stock option [Member] shares in Thousands | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-Based Compensation and Benefit Plans | |
Outstanding at December 31, 2015, shares | shares | 3,308 |
Outstanding at December 31, 2015, weighted-average exercise price | $ / shares | $ 80.86 |
Granted, shares | shares | 192 |
Granted, weighted-average exercise price | $ / shares | $ 263.18 |
Exercised, shares | shares | (206) |
Exercised, weighted-average exercise price | $ / shares | $ 63.65 |
Forfeited, shares | shares | (14) |
Forfeited, weighted-average exercise price | $ / shares | $ 112.13 |
Outstanding at March 31, 2016, shares | shares | 3,280 |
Outstanding at March 31, 2016, weighted-average exercise price | $ / shares | $ 92.50 |
Exercisable at March 31, 2016, shares | shares | 2,357 |
Exercisable at March 31, 2016, weighted-average exercise price | $ / shares | $ 58.75 |
Share-Based Compensation and 38
Share-Based Compensation and Benefit Plans (Black-Scholes Option Pricing Model) (Details) - Stock option [Member] | 3 Months Ended | |
Mar. 31, 2016Rate | Mar. 31, 2015Rate | |
Share-Based Compensation and Benefit Plans | ||
Risk-free interest rate | 1.59% | 1.57% |
Expected life | 5 years 10 months 22 days | 6 years 1 month 6 days |
Expected volatility | 22.40% | 22.40% |
Expected dividend yield | 0.00% | 0.00% |
Share-Based Compensation and 39
Share-Based Compensation and Benefit Plans (Stock Option Activity) (Details) - Stock option [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-Based Compensation and Benefit Plans | ||
Compensation expense for share-based compensation | $ 4,336 | $ 4,997 |
Income tax benefit from compensation expense for share-based compensation | $ 1,620 | $ 1,847 |
Weighted-average grant-date fair value of options awarded | $ 66.27 | $ 51.57 |
Share-Based Compensation and 40
Share-Based Compensation and Benefit Plans (Other Share-Based Compensation Activity) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Employee stock purchase plan [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Compensation expense for share-based compensation | $ 523 | $ 489 |
Income tax benefit from compensation expense for share-based compensation | 195 | 181 |
Restricted stock [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Compensation expense for share-based compensation | 319 | 404 |
Income tax benefit from compensation expense for share-based compensation | $ 119 | $ 149 |
Earnings Per Share (Narrative)
Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 64 Months Ended | |
May. 09, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | May. 09, 2016 | |
Earnings Per Share | ||||
Common stock repurchased, shares | 1,231 | 650 | ||
Common stock repurchased, average price per share | $ 254.02 | $ 207.50 | ||
Common stock repurchased, value | $ 312,637 | $ 134,803 | ||
Subsequent event [Member] | ||||
Earnings Per Share | ||||
Common stock repurchased, shares | 1,700 | 52,900 | ||
Common stock repurchased, average price per share | $ 258.04 | $ 109.43 | ||
Common stock repurchased, value | $ 436,800 | $ 5,800,000 |
Earnings Per Share (Computation
Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Numerator (basic and diluted): | |||
Net income | $ 255,374 | $ 212,864 | |
Denominator: | |||
Weighted-average common shares outstanding - basic | 97,140 | 101,612 | |
Effect of stock options | [1] | 1,397 | 1,645 |
Weighted-average common shares outstanding - assuming dilution | 98,537 | 103,257 | |
Earnings per share - basic | $ 2.63 | $ 2.09 | |
Earnings per share - assuming dilution | $ 2.59 | $ 2.06 | |
Antidilutive stock options | [1] | 268 | 278 |
Weighted-average exercise price | [1] | $ 256.19 | $ 195.90 |
[1] | See Note 6 for further information concerning the terms of the Company’s share-based compensation plans. |
Legal Matters (Narrative) (Deta
Legal Matters (Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Loss Contingency [Abstract] | |
Name of plaintiff | Meridian Creative Alliance |
Awarded to plaintiff | $ 12.5 |
Loss contingency accrual, provision | $ 18.7 |