O'Reilly Auto Parts 2009 Annual Report Download - page 30

16
We are sensitive to regional economic and weather conditions that could reduce our costs and sales.
Approximately 30% of our stores are located in Texas and California. Therefore, our business is sensitive to the economic and
weather conditions of those regions. 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. In addition, our stores located in these coastal regions may be subject to increased insurance
claims resulting from regional weather conditions and our results of operations and financial condition could be adversely affected.
Legal proceedings and related matters arising from CSK could adversely affect us.
As discussed in Item 3, “Legal Proceedings” and Note 14 “Legal Matters” of the consolidated financial statements, several of CSK’s
former officers and employees have been charged by the Department of Justice (“DOJ”) and named in civil actions by the Securities
and Exchange Commission (“SEC”). O’Reilly has resolved CSK’s pre-acquisition issues with the SEC, but as set forth in Item 3 and
Note 14 “Legal Matters”, the DOJ investigation continues and could result in criminal charges being filed against CSK. We are
involved in working toward resolution of these matters. Under Delaware law, the charter documents of the CSK entities and certain
indemnification agreements, CSK has certain obligations to indemnify these persons and O’Reilly is currently incurring legal fees on
the behalf of these persons in relation to pending matters. There can be no assurance that the expenses incurred in connection with the
resolution of these matters will be covered by CSK’s directors’ and officers’ insurance policies. If we incur significant uninsured
expenses in connection with the resolution of the matters described above, this could have a material adverse effect on our business,
results of operations, financial condition and cash flows.
Sales of shares of our common stock eligible for future sale could adversely affect our share price.
All of the shares of common stock currently held by our affiliates may be sold in reliance upon the exemptive provisions of Rule 144
of the Securities Act of 1933, as amended, subject to certain volume and other conditions imposed by such rule. We cannot predict the
effect, if any, which future sales of shares of common stock or the availability of such shares for sale will have on the market price of
the common stock prevailing from time to time. We believe sales of substantial amounts of common stock, or the perception that such
sales might occur, could adversely affect the prevailing market price of the common stock.
Risks related to the Company and unanticipated fluctuations in our quarterly operating results could affect the Company’s stock
price.
We believe that quarter-to-quarter comparisons of our financial results are not necessarily meaningful indicators of the future operating
results of the Company and should not be relied on as an indication of future performance. If our quarterly operating results fail to
meet the expectations of analysts, the trading price of our common stock could be negatively affected. We cannot be certain that our
business strategy and our plans to integrate the operations of CSK will be successful or that they will successfully meet the
expectations of these analysts. If we fail to adequately address any of these risks or difficulties, our business would likely suffer.
The market price of our common stock may be volatile and could expose us to securities class action litigation.
The stock market and the price of our common stock may be subject to wide fluctuations based upon general economic and market
conditions. The market price for our common stock may also be affected by our ability to meet analysts’ expectations. Failure to meet
such expectations, even slightly, could have an adverse effect on the market price of our common stock.
In addition, stock market volatility has had a significant effect on the market prices of securities issued by many companies for reasons
unrelated to the operating performance of these companies. Downturns in the stock market may cause the price of our common stock
to decline. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has
often been instituted against such companies. If similar litigation were instituted against us, it could result in substantial costs and a
diversion of our management’s attention and resources, which could have an adverse effect on our business.
A change in the relationship with any of our key vendors 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 vendors and on our vendors' 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 vendors to sell us products on favorable terms. For example, financial or operational difficulties that
some of our vendors 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 towards 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 vendors, and could lead to less competition and result in