O'Reilly Auto Parts 2011 Annual Report Download - page 26

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Our increased debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
We have in place, an unsecured revolving credit facility and unsecured senior notes, which could have important consequences to our
financial health. For example, our level of indebtedness could, among other things:
make it more difficult to satisfy our financial obligations, including those relating to the notes and our credit facility;
increase our vulnerability to adverse economic and industry conditions;
limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a
competitive disadvantage;
require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the
funds available for other business purposes, such as working capital, capital expenditures or other cash requirements;
limit our ability to incur additional debt on acceptable terms, if at all; and
expose us to fluctuations in interest rates.
In addition, the terms of the financing obligations include restrictions, such as affirmative and negative covenants, conditions on
borrowing and subsidiary guarantees. A failure to comply with these restrictions could result in a default under the financing
obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a
default that remains uncured or the inability to secure a necessary consent or waiver could have a material adverse effect on our
business, financial condition or results of operations.
Risks associated with future acquisitions may not lead to expected growth and could result in increased costs and inefficiencies.
We expect to continue to make acquisitions as an element of our growth strategy. Acquisitions involve certain risks that could cause
our actual growth and profitability to differ from our expectations, examples of such risks include the following:
we may not be able to continue to identify suitable acquisition targets or to acquire additional companies at favorable prices
or on other favorable terms;
our management’s attention may be distracted;
we may fail to retain key personnel from acquired businesses;
we may assume unanticipated legal liabilities and other problems;
we may not be able to successfully integrate the operations (accounting and billing functions, for example) of businesses we
acquire to realize economic, operational and other benefits; and
we may fail or be unable to discover liabilities of businesses that we acquire for which we, as a successor owner or operator,
may be liable.
The automotive aftermarket business is highly competitive, and we may have to risk our capital to remain competitive.
Both the DIY and professional service provider portions of our business are highly competitive, particularly in the more densely
populated areas that we serve. Some of our competitors are larger than we are and have greater financial resources. In addition, some
of our competitors are smaller than we are, but have a greater presence than we do in a particular market. We may have to expend
more resources and risk additional capital to remain competitive. For a list of our principal competitors, see the ―Competition‖ section
of Item 1 of this annual report on Form 10-K.
In order to be successful, we will need to retain and motivate key employees.
Our success has been largely dependent on the efforts of certain key personnel. In order to be successful, we will need to retain and
motivate executives and other key employees. Experienced management and technical personnel are in high demand and competition
for their talents is intense. We must also continue to motivate employees and keep them focused on our strategies and goals. Our
business and results of operations could be materially adversely affected by the unexpected loss of the services of one or more of our
key employees. We cannot be sure that we will be able to continue to attract qualified personnel, which could cause us to be less
efficient, and as a result, may adversely impact our sales and profitability. For a discussion of our management, see the ―Business‖
section of Item 1 of this annual report on Form 10-K.
We cannot assure future growth will be achieved.
We believe that our ability to open additional, profitable stores at a high growth rate will be a significant factor in achieving our
growth objectives for the future. Our ability to accomplish our growth objectives is dependent, in part, on matters beyond our control,
such as weather conditions, zoning and other issues related to new store site development, the availability of qualified management
personnel and general business and economic conditions. We cannot be sure that our growth plans for 2012 and beyond will be
achieved. Failure to achieve our growth objectives may negatively impact the trading price of our common stock. For a discussion of
our growth strategies, see the ―Growth Strategy‖ section of Item 1 of this annual report on Form 10-K.
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FORM 10-K