O'Reilly Auto Parts 2015 Annual Report Download - page 22

FORM 10-K
14
institutions that are counterparties to our credit facilities. Furthermore, the ability of these third parties to overcome these difficulties
may increase. If third parties, on whom we rely for merchandise, are unable to overcome difficulties resulting from the deterioration in
economic conditions and provide us with the merchandise we need, or if counterparties to our credit facilities do not perform their
obligations, our business, results of operations, financial condition and cash flows could be adversely affected.
The automotive aftermarket business is highly competitive, and we may have to risk our capital to remain competitive.
Both the do-it-yourself ("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.
We are sensitive to regional economic and weather conditions that could impact our costs and sales.
Our business is sensitive to national and regional economic and weather conditions, and natural disasters. 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. Extreme weather conditions,
such as extreme heat and extreme cold temperatures, may enhance demand for our products due to increased failure rates of our customers'
automotive parts, while temperate weather conditions may have a lesser impact on failure rates of automotive parts. In addition, our
stores and distribution centers ("DCs") located in coastal regions may be subject to increased insurance claims resulting from regional
weather conditions and our results of operations, financial condition and cash flows could be adversely affected.
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 2016 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.
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,
results of operations and cash flows 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.
A change in the relationship with any of our key suppliers 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 suppliers and on our suppliers' 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 suppliers to sell us products on favorable terms. For example, financial or operational difficulties that our
suppliers 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 toward 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 suppliers 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.
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.