Napa Auto Parts 2015 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 2015 Napa Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 91

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, finan-
cial condition, results of operations or the trading price of our securities.
We may not be able to successfully implement our business initiatives in each of our four business segments
to grow our sales and earnings, which could adversely affect our business, financial condition, results of
operations and cash flows.
We have implemented numerous initiatives in each of our four business segments to grow sales and earn-
ings, including the introduction of new and expanded product lines, strategic acquisitions, geographic expansion
(including through acquisitions), sales to new markets, enhanced customer marketing programs and a variety of
gross margin and cost savings initiatives. If we are unable to implement these initiatives efficiently and effec-
tively, or if these initiatives are unsuccessful, our business, financial condition, results of operations and cash
flows could be adversely affected.
Successful implementation of these initiatives also depends on factors specific to the automotive parts
industry and the other industries in which we operate and numerous other factors that may be beyond our control.
In addition to the other risk factors contained in this “Item 1A. Risk Factors”, adverse changes in the following
factors could undermine our business initiatives and have a material adverse effect on our business, financial
condition, results of operations and cash flows:
• the competitive environment in our end markets may force us to reduce prices below our desired pricing
level or to increase promotional spending;
• our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in
a timely manner;
• our ability to successfully enter new markets, including by successfully identifying and acquiring suitable
acquisition targets in these new markets;
• our ability to effectively manage our costs;
• our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our
existing operations;
• our ability to identify and successfully implement appropriate technological improvements; and
• the economy in general.
Our business will be adversely affected if demand for our products slows.
Our business depends on customer demand for the products that we distribute. Demand for these products
depends on many factors.
With respect to our automotive group, the primary factors are:
• the number of miles vehicles are driven annually, as higher vehicle mileage increases the need for main-
tenance and repair;
• the number of vehicles in the automotive fleet, a function of new vehicle sales and vehicle scrappage
rates, as a steady or growing total vehicle population supports the continued demand for maintenance and
repair;
• the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the war-
ranty or maintenance offered on new vehicles;
• the number of vehicles in current service that are six years old and older, as these vehicles are typically no
longer under the original vehicle manufacturers’ warranty and will need more maintenance and repair
than newer vehicles;
• gas prices, as increases in gas prices may deter consumers from using their vehicles;
10