Pep Boys 2011 Annual Report Download - page 56

earnings and cash flow. If these initiatives are unsuccessful, or if we are unable to implement the
initiatives efficiently and effectively, our business, financial condition, results of operations and cash
flows could be adversely affected.
Successful implementation of our business strategy also depends on factors specific to the
automotive aftermarket industry, many of which may be beyond our control (see ‘‘Risks Related to Our
Industry’’).
If we are unable to generate sufficient cash flows from our operations, our liquidity will suffer and we
may be unable to satisfy our obligations.
We require significant capital to fund our business. While we believe we have the ability to
sufficiently fund our planned operations and capital expenditures for the next fiscal year, circumstances
could arise that would materially affect our liquidity. For example, cash flows from our operations
could be affected by changes in consumer spending habits or the failure to maintain favorable vendor
payment terms or our inability to successfully implement sales growth initiatives. We may be
unsuccessful in securing alternative financing when needed, on terms that we consider acceptable, or at
all.
The degree to which we are leveraged could have important consequences to investments in our
securities, including the following risks:
• our ability to obtain additional financing for working capital, capital expenditures, acquisitions or
general corporate purposes may be impaired in the future;
• a substantial portion of our cash flow from operations must be dedicated to the payment of rent
and the principal and interest on our debt, thereby reducing the funds available for other
purposes;
• our failure to comply with financial and operating restrictions placed on us and our subsidiaries
by our credit facilities could result in an event of default that, if not cured or waived, could have
a material adverse effect on our business or our prospects; and
• if we are substantially more leveraged than some of our competitors, we might be at a
competitive disadvantage to those competitors that have lower debt service obligations and
significantly greater operating and financial flexibility than we do.
We depend on our relationships with our vendors and a disruption of these relationships or of our
vendors’ operations could have a material adverse effect on our business and results of operations.
Our business depends on developing and maintaining productive relationships with our vendors.
Many factors outside our control may harm these relationships. For example, financial difficulties that
some of our vendors may face may increase the cost of the products we purchase from them or may
interrupt our source of supply. In addition, our failure to promptly pay, or order sufficient quantities of
inventory from our vendors may increase the cost of products we purchase or may lead to vendors
refusing to sell products to us at all.
A disruption of our vendor relationships or a disruption in our vendors’ operations could have a
material adverse effect on our business and results of operations.
We depend on our senior management team and our other personnel, and we face substantial competition
for qualified personnel.
Our success depends in part on the efforts of our senior management team. Our continued success
will also depend upon our ability to retain existing, and attract additional, qualified field personnel to
meet our needs. We face substantial competition, both from within and outside of the automotive
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