O'Reilly Auto Parts 2009 Annual Report Download - page 17

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Forward Looking Information
We claim the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. You can identify these statements by forward-looking words such as “expect,” “believe,” “anticipate,” “should,”
“plan,” “intend,” “estimate,” “project,” “will” or similar words. In addition, statements contained within this annual report that are not
historical facts are forward-looking statements, such as statements discussing among other things, expected growth, store development
and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on
estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks,
uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in
general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated
with the integration of acquired businesses including the acquisition of CSK Auto Corporation (“CSK”), weather, terrorist activities,
war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking
statements. Please refer to the “Risk Factors” section of this annual report on Form 10-K for the year ended December 31, 2009, for
additional factors that could materially affect our financial performance.
PART I
Item 1. Business
Introduction
O'Reilly Automotive, Inc. and its subsidiaries, collectively “O’Reilly” or the “Company”, is one of the largest specialty retailers of
automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, selling our products to both do-it-
yourself (“DIY”) customers and professional installers. O’Reilly Automotive, Inc. was incorporated in 1957 as a corporation. The
Company was founded by Charles F. O'Reilly and his son, Charles H. ''Chub'' O'Reilly, Sr. and initially operated from a single store in
Springfield, Missouri. The Company’s common stock trades on The NASDAQ Global Select Market under the symbol “ORLY”.
At December 31, 2009, we operated 3,421 stores in 38 states. Our stores carry an extensive product line, including, but not limited to,
the products bulleted below (we do not sell tires or perform automotive repairs or installations):
• new and remanufactured automotive hard parts, such as alternators, starters, fuel pumps, water pumps, brake system
components, batteries, belts, hoses, chassis parts and engine parts;
• maintenance items, such as oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives and appearance products;
• accessories, such as floor mats, seat covers and truck accessories; and
• a complete line of auto body paint and related materials, automotive tools and professional service equipment.
On July 11, 2008, we completed the acquisition of CSK, one of the largest specialty retailers of auto parts and accessories in the
western United States and one of the largest such retailers in the United States, based on store count. Pursuant to the merger
agreement, each share of CSK common stock outstanding immediately prior to the merger was canceled and converted into the right to
receive 0.4285 of a share of O’Reilly common stock and $1.00 in cash. To fund the transaction, we entered into a Credit Agreement
(“ABL Credit Agreement”) for a $1.2 billion asset-based revolving credit facility (“ABL Credit Facility”) arranged by Bank of
America, N.A. (“BA”), which we used to refinance debt, fund the cash portion of the acquisition, pay for other transaction-related
expenses and provide liquidity for the combined company going forward. The results of CSK’s operations have been included in our
consolidated financial statements since the acquisition date.
At the date of the acquisition, CSK had 1,342 stores in 22 states, operating under four brand names: Checker Auto Parts, Schuck’s
Auto Supply, Kragen Auto Parts and Murray’s Discount Auto Parts. This acquisition added stores in twelve new states: Alaska,
Arizona, California, Colorado, Hawaii, Idaho, Michigan, Nevada, New Mexico, Oregon, Utah and Washington, and a number of new
markets in states where O’Reilly had a presence prior to the acquisition. The integration of CSK is focused on the implementation of
our dual market strategy, the ability to effectively serve both DIY customers and professional installers, which requires conversion of
store and distribution information systems, enhancements to the distribution infrastructure, inventory offerings and infusion of the
O’Reilly culture. Conversion of all CSK stores to O’Reilly branded stores began in October of 2008 and will continue into 2011. In
order to implement our proven dual market strategy throughout the CSK store network, we have added a distribution center in Seattle,
Washington, in November of 2009, and Moreno Valley, California, in January of 2010, and will add distribution centers in Denver,
Colorado and Salt Lake City, Utah, in the first half of 2010. As of December 31, 2009, we had converted 405 CSK stores to O’Reilly
systems, merged 41 CSK stores with existing O’Reilly locations, closed 13 CSK stores and opened five new stores in CSK historical
markets.
See "Risk Factors" beginning on page 14 for a description of certain risks relevant to our business. These risk factors include, among
others, risks related to our growth strategy, the integration of CSK, increased debt levels, our acquisition strategies, competition in the