O'Reilly Auto Parts 2011 Annual Report Download - page 27

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17
We are sensitive to regional economic and weather conditions that could reduce our costs and sales.
Approximately 28% of our stores are located in Texas and California. Therefore, our business is sensitive to the economic and
weather conditions of those regions. Unusually inclement weather, such as significant rain, snow, sleet, freezing rain, flooding,
seismic activity and hurricanes, has historically discouraged our customers from visiting our stores during the affected period and
reduced our sales, particularly to DIY customers. In addition, our stores located in coastal regions may be subject to increased
insurance claims resulting from regional weather conditions and our results of operations and financial condition could be adversely
affected.
Sales of shares of our common stock eligible for future sale could adversely affect our share price.
All of the shares of common stock currently held by our affiliates may be sold in reliance upon the exemptive provisions of Rule 144
of the Securities Act of 1933, as amended, subject to certain volume and other conditions imposed by such rule. We cannot predict
the effect, if any, which future sales of shares of common stock or the availability of such shares for sale will have on the market price
of the common stock prevailing from time to time. We believe sales of substantial amounts of common stock, or the perception that
such sales might occur, could adversely affect the prevailing market price of the common stock.
Risks related to us and unanticipated fluctuations in our quarterly operating results, could affect our stock price.
We believe that quarter-to-quarter comparisons of our financial results are not necessarily meaningful indicators of our future
operating results and should not be relied on as an indication of future performance. If our quarterly operating results fail to meet the
expectations of analysts, the trading price of our common stock could be negatively affected. We cannot be certain that our business
strategy and our plans to integrate the operations of CSK will be successful or that they will successfully meet the expectations of
these analysts. If we fail to adequately address any of these risks or difficulties, our business would likely suffer.
The market price of our common stock may be volatile and could expose us to securities class action litigation.
The stock market and the price of our common stock may be subject to wide fluctuations based upon general economic and market
conditions. The market price for our common stock may also be affected by our ability to meet analysts’ expectations. Failure to
meet such expectations, even slightly, could have an adverse effect on the market price of our common stock.
In addition, stock market volatility has had a significant effect on the market prices of securities issued by many companies for reasons
unrelated to the operating performance of these companies. Downturns in the stock market may cause the price of our common stock
to decline. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation
has often been instituted against such companies. If similar litigation were instituted against us, it could result in substantial costs and
a diversion of our management’s attention and resources, which could have an adverse effect on our business.
A change in the relationship with any of our key vendors or the unavailability of our key products at competitive prices could affect
our financial health.
Our business depends on developing and maintaining close relationships with our vendors and on our vendors' ability or willingness to
sell quality products to us at favorable prices and terms. Many factors outside of our control may harm these relationships and the
ability or willingness of these vendors to sell us products on favorable terms. For example, financial or operational difficulties that
our vendors may face could increase the cost of the products we purchase from them or our ability to source product from them. In
addition, the trend towards consolidation among automotive parts suppliers as well as the off-shoring of manufacturing capacity to
foreign countries may disrupt or end our relationship with some vendors, and could lead to less competition and result in higher prices.
We could also be negatively impacted by suppliers who might experience work stoppages, labor strikes or other interruptions to or
difficulties in the manufacture or supply of the products we purchase from them.
Business interruptions in our distribution centers or other facilities may affect our store hours, operability of our computer
systems, and/or availability and distribution of merchandise, which may affect our business.
Weather, terrorist activities, war or other disasters or the threat of them, may result in the closure of our distribution centers (―DC‖s)
or other facilities or may adversely affect our ability to deliver inventory to our stores on a nightly basis. This may affect our ability
to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty. Some of our merchandise is
imported from other countries and these goods could become difficult or impossible to bring into the United States, and we may not be
able to obtain such merchandise from other sources at similar prices. Such a disruption in revenue could potentially have a negative
impact on our results of operations and financial condition.
We rely extensively on our computer systems to manage inventory, process transactions and timely provide products to our customers.
Our systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses, security
breaches or other catastrophic events. If our systems are damaged or fail to function properly, we may experience loss of critical data
FORM 10-K