SPRINGFIELD, Mo. -- O'Reilly Automotive has announced record revenues and earnings for the third quarter ended Sept. 30.

Sales for the third quarter totaled $1.43 billion, up 13 percent from $1.26 billion for the same period a year ago. Gross profit for the third quarter increased to $693 million (or 48.6 percent of sales) from $611 million (or 48.5 percent of sales) for the third quarter of 2009, representing an increase of 14 percent.

Net income for the third quarter of 2010 totaled $117 million, up 34 percent from $87 million for the third quarter of 2009.

The company's third quarter and year-to-date results include charges related to the legacy United States Department of Justice (DOJ) investigation of CSK Auto Corp., which began prior to O'Reilly's acquisition of CSK in July of 2008. O'Reilly and the DOJ have now agreed in principle, subject to final documentation, to resolve the DOJ investigation of CSK's legacy accounting practices. Based upon the agreement in principle for a final settlement, the company has recorded an additional charge of $5.9 million in the third quarter of 2010 to increase its accrual in anticipation of the DOJ, CSK and O'Reilly executing a non-prosecution agreement and the company paying a one-time monetary penalty of $20.9 million to the DOJ.

Adjusted operating income, excluding the impact of the charge related to the CSK DOJ investigation discussed above, increased 37 percent to $205 million (or 14.4 percent of sales) for the third quarter, from $149 million (or 11.9 percent of sales) for the third quarter of 2009. Adjusted diluted earnings per common share, excluding the impact of the charge related to the CSK DOJ investigation discussed above, increased 37 percent to 86 cents for the third quarter, from 63 cents for the third quarter of 2009.

Commenting on the quarterly results, Greg Henslee, O'Reilly's co-president and CEO stated, "We are extremely pleased to announce an exceptionally strong comparable store sales increase of 11.1 percent for the third quarter, which exceeded our expectations. Sales for the quarter were positively influenced by warmer weather conditions across most of our markets as well as the ongoing strong demand for our products. The macro environment remains favorable for our business and our Team Members continue to consistently provide unparalleled levels of customer service. We were able to leverage our strong top-line performance with a continued commitment to the execution of our CSK integration plan and a relentless attention to expense control to deliver a 250 basis point improvement in adjusted operating margin resulting in our seventh consecutive quarter of double-digit earnings per share growth."

Ted Wise, O'Reilly's co-president and COO, stated, "In the third quarter, we began the relocation of our Dixon, Calif., distribution center (DC) to a new, larger facility in Stockton, Calif., and subsequent to the end of the quarter, we successfully completed the conversion of stores serviced by the new DC. In addition, we opened 48 new stores during the quarter, putting us on track to open our projected 150 new stores in 2010. For 2011, our projection is to open approximately 170 new stores. Our strong performance during the quarter was again the result of the hard work and dedication of our Team Members, and we wanted to take this opportunity to thank each of them for their contribution to O'Reilly's continued success."

Sales for the first nine months of 2010 totaled $4.09 billion, up 11 percent from $3.67 billion for the same period a year ago. Gross profit for the first nine months of 2010 increased to $1.98 billion (or 48.6 percent of sales) from $1.76 billion (or 47.8 percent of sales) for the same period a year ago, representing an increase of 13 percent. SG&A expenses increased to $1.41 billion (or 34.6 percent of sales) for the first nine months of 2010 from $1.34 billion (or 36.6 percent of sales) for the same period a year ago, representing an increase of 5 percent. Operating income for the first nine months of 2010 increased to $549 million (or 13.4 percent of sales) from $412 million (or 11.2 percent of sales) for the same period a year ago, representing an increase of 33 percent.

Net income for the first nine months of 2010 totaled $314 million, up 33 percent from $236 million for the same period a year ago. Diluted earnings per common share for the first nine months of 2010 increased 30 percent to $2.23 on 141 million shares compared to $1.71 for the same period a year ago on 137 million shares.

Adjusted operating income, excluding the impact of the charges related to the CSK DOJ investigation discussed above, increased 38 percent to $570 million (or 13.9 percent of sales) for the first nine months of 2010, from $412 million (or 11.2 percent of sales) for the same period a year ago. Adjusted diluted earnings per common share, excluding the impact of the charges related to the CSK DOJ investigation discussed above, increased 39 percent to $2.37 for the first nine months of 2010, from $1.71 for the same period one year ago. The table below outlines the impact of the charges for the nine months ended September 30, 2010, (in thousands, except per share data):
 
Henslee added, "2010 is shaping up to be one of the strongest years in our history. Both the second and third quarters resulted in record adjusted operating margins, and we increased adjusted earnings per share 39 percent through the first nine months. Our strong results have been driven by the dedication and hard work of our Team Members and by our ability to provide a very high level of service and parts availability to both professional installer and retail customers. Our focus remains on our core Culture values of excellent customer service and professionalism as we complete the integration of the acquired CSK stores and continue to build on the solid foundations we have established in our western markets."

Wise added, "The planned conversion of our DC in Phoenix, Ariz., to the O'Reilly systems will occur on the 6th of November along with the systems conversion of the surrounding 151 stores in that area, which will complete the computer system changeover process for all of the acquired CSK stores. With the support of the enhanced distribution model now in place in all of our western markets, we will continue to implement our proven dual market strategy in every market we serve, backed by the excellent customer service and teamwork of our 47,000 team members."

The company estimates diluted earnings per common share for the fourth quarter of 2010 to range from 56 cents to 60 cents and estimates diluted earnings per common share for the year ended Dec. 31, to range from $2.79 to $2.83. Adjusted diluted earnings per common share, which excludes the impact of the charges related to the CSK DOJ investigation of 15 cents per diluted share, is expected to range from $2.94 to $2.98 for the year.