O'Reilly Auto Parts 2009 Annual Report Download - page 20

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of 118,000 SKUs and will give these stores an important tool to provide industry-leading customer service to the professional installer,
as well as the DIY customer. Our expanded distribution network will provide access to the breadth of SKUs needed to succeed in the
professional installer side of the business and will be a very meaningful service enhancement for our retail customers as well.
Management Structure
Each of our stores is staffed with a store manager and one or more assistant managers, in addition to parts specialists, retail and/or
installer service specialists and other positions required to meet the specific needs of that store. Each of our 311 district managers has
general supervisory responsibility for an average of 11 stores, which provides our stores with the appropriate amount of operational
support.
Each district manager receives continuous comprehensive training throughout their management tenure through training sessions and
meetings with their regional managers. These training sessions and meetings focus on management techniques, new product
announcements, advanced automotive systems training and our policies and procedures. In turn, the information presented at such
training sessions and meetings is covered by the district managers at monthly meetings with their store managers. All store managers
are required to successfully complete a six-month manager-training program, which includes classroom and field training. This
program covers all facets of store operations, as well as principles of successful management. In addition, all new or prospective
managers attend a manager development program, at the corporate headquarters in Springfield, Missouri, which includes 40 hours of
classroom training. Upon returning to the stores, managers are given continuous field training throughout their management tenure.
We provide financial incentives to our district managers and all store team members through incentive compensation programs.
Under our incentive compensation programs, base salary is augmented by incentive compensation based upon their individual and/or
store’s sales and profitability. In addition, each of our district and store managers participates in the Company’s stock option program.
We believe that our incentive compensation programs significantly increase the motivation and overall performance of our district and
store team members and enhance our ability to attract and retain qualified management and other personnel.
Most of our current senior management, district managers and store managers were promoted to their positions from within the
Company. Our senior management team averages 16 years of service, corporate management team averages over 13 years of service
and district management team have an average length of service of over 10 years.
Team Members
As of January 31, 2010, we employed 44,822 total team members (30,379 full-time team members and 14,443 part-time team
members), of whom 37,517 were employed at our stores, 5,756 were employed at our distribution centers and 1,549 were employed at
our corporate and regional offices. A union represents 53 stores’ team members in the Greater Bay Area in California, and has for
many years – except for these team members, our team members are not represented by a labor union. Our tradition of 53 years has
been to treat all of our team members with honesty and respect and to commit significant resources to instill in them our “Live Green”
Culture, which emphasizes the importance of every team member’s contribution to the success of O’Reilly. This focus on
professionalism and fairness has created an industry-leading team and we consider our relations with our team members to be
excellent.
Inflation and Seasonality
We have been successful, in many cases, in reducing the effects of merchandise cost increases principally by taking advantage of
vendor incentive programs, economies of scale resulting from increased volume of purchases and selective forward buying. To the
extent our acquisition cost increases due to base commodity price increases industry-wide, we have typically been able to pass along
these increased costs through higher retail prices for the affected products. As a result, we do not believe our operations have been
materially, adversely affected by inflation.
To some extent, our business is seasonal primarily as a result of the impact of weather conditions on customer buying patterns. Store
sales and profits have historically been higher in the second and third quarters (April through September) than in the first and fourth
quarters of the year.
Regulations
We are subject to various federal, state and local laws and governmental regulations relating to our business, including those related to
the handling, storage and disposal of hazardous substances, the recycling of batteries and used lubricants, and the ownership and
operation of real property.