O'Reilly Auto Parts 2011 Annual Report Download - page 44

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34
acquisition of CSK provide meaningful supplemental information to both management and investors, which is indicative of our core
operations. We exclude these items in judging our performance and believe this non-GAAP information is useful to investors as well.
Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for
such limitations by presenting, in the table above, the accompanying reconciliation to the most directly comparable GAAP measures.
LIQUIDITY AND CAPITAL RESOURCES
Our long-term business strategy requires capital to open new stores, fund strategic acquisitions, expand distribution infrastructure,
operate and maintain existing stores and may include the opportunistic repurchase of shares of our common stock through our Board-
approved share repurchase program. The primary sources of our liquidity are funds generated from operations and borrowed under
our Revolving Credit Facility. Decreased demand for our products or changes in customer buying patterns could negatively impact
our ability to generate funds from operations. Additionally, decreased demand or changes in buying patterns could impact our ability
to meet the debt covenants of our credit agreement and, therefore, negatively impact the funds available under our Revolving Credit
Facility. We believe that cash expected to be provided by operating activities and availability under our Revolving Credit Facility will
be sufficient to fund both our short-term and long-term capital and liquidity needs for the foreseeable future. However, there can be
no assurance that we will continue to generate cash flows at or above recent levels.
Liquidity and related ratios:
The following table highlights our liquidity and related ratios as of December 31, 2011 and 2010 (dollars in millions):
(1) Quick assets include cash, cash equivalents and receivables.
(2) Working capital is calculated as current assets less current liabilities.
(3) Current ratio is calculated as current assets divided by current liabilities.
(4) Quick ratio is calculated as current assets, less inventories, divided by current liabilities.
(5) Debt to equity is calculated as total debt divided by shareholders’ equity.
Total debt increased 122% and total equity decreased 11% from 2010 to 2011. The increase in total debt was attributable the issuance
of our senior notes during 2011, partially offset by the repayment of our ABL Credit Facility in January of 2011. The decrease in total
equity resulted from the impact of repurchase activity under our share repurchase program on additional paid-in capital and retained
earnings, offset by an increase in retained earnings from strong net income for the year and an increase in additional paid-in-capital
from the proceeds of stock option exercises, and related excess tax benefits, executed under our director and employee share-based
compensation plans.
The following table identifies cash provided by/(used in) our operating, investing and financing activities for the years ended
December 30, 2011, 2010 and 2009 (in thousands):
Liquidity
Total cash provided by/(used in):
Operating activities $1,118,991 $703,687 $285,200
Investing activities (319,653) (351,277) (410,661)
Financing activities (467,507) (349,624) 121,095
Increase (decrease) in cash and cash equivalents $331,831 $2,786 $ (4,366)
Year Ended
December 31,
2011
December 31,
2010
December 31,
2009
Operating activities:
The increase in cash provided by operating activities in 2011 compared to 2010 is primarily due to strong net income for the year
(adjusted for the effect of non-cash depreciation and amortization charges, the one-time, non-cash charge to write off the balance of
debt issuance costs in conjunction with the retirement of our ABL Credit Facility in January of 2011 and deferred income taxes) and a
significant decrease in net inventory investment, partially offset by a decrease in other current liabilities (driven by the payment of the
one-time penalty to the DOJ for the legacy CSK DOJ investigation). Net inventory investment reflects our investment in inventory,
Liquidity and Related Ratios
Current assets $2,608 $2,301 13 %
Quick assets ( 1) 565 213 165 %
Current liabilities 1,580 1,229 29 %
Working capital (2) 1,028 1,072 (4) %
Total debt 798 359 122 %
Total equity 2,845 3,210 (11) %
Current ratio (3) 1.65:1 1.87:1 (12) %
Quick ratio (4) 0.39:1 0.23:1 70 %
Debt to equity (5) 0.28:1 0.11:1 155 %
Percentage
Change
2011
2010
December 31,
December 31,
FORM 10-K