O'Reilly Auto Parts 2009 Annual Report Download - page 39

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
In Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results
of operations, liquidity and certain other factors that may affect our future results, including:
• an overview of the key drivers of the automotive aftermarket;
• key events and recent developments within our company;
• our results of operations for the years ended 2009, 2008 and 2007;
• our liquidity and capital resources;
• any off balance sheet arrangements we utilize;
• any contractual obligations to which we are committed;
• our critical accounting estimates;
• the inflation and seasonality of our business;
• our quarterly results for the fourth quarter of 2009; and
• new accounting standards that affect our company.
The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements,
related notes and other financial information included elsewhere in this annual report.
FORWARD-LOOKING STATEMENTS
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 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.
OVERVIEW
O’Reilly Automotive, Inc. is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the
United States. We are one of the largest automotive aftermarket specialty retailers, selling our products to both do-it-yourself (DIY)
customers and professional installers. Our stores carry an extensive product line consisting of new and remanufactured automotive
hard parts, maintenance items and accessories and a complete line of auto body paint and related materials, automotive tools and
professional installer service equipment. As of December 31, 2009, we operated 3,421 stores in 38 states.
Operating within the retail industry, we, along with other retail companies, are influenced by a number of general macroeconomic
factors including, but not limited to, fuel costs, unemployment rates, consumer preferences and spending habits and competition. The
difficult conditions that affected the overall macroeconomic environment in recent years continue to impact our company and the retail
sector in general. We cannot predict whether, when, or the manner in which, these economic conditions will change.
We believe that the number of U.S. miles driven, number of U.S. registered vehicles, average vehicle age, new light vehicle sales,
unperformed maintenance and product quality differentiation are key drivers of current and future demand of products sold within the
automotive aftermarket.
Number of U.S. miles driven and number of U.S. registered vehicles:
Total miles driven in the U.S. heavily influences the demand for the repair and maintenance products we sell. The long-term trend in
the number of vehicles on the road and the total miles driven in the U.S. has exhibited steady growth over the past decade. Between
1999 and 2007, the total number of miles driven in the United States increased at an annual rate of approximately 1.6%. According to
the Department of Transportation, estimated total number of miles driven declined by 3.6% in 2008 and increased slightly in 2009.
The relatively flat number of miles driven during 2009 as compared to 2008 is due to lower fuel costs compared to those in 2008, but
the overall decrease in miles driven in recent years is a result of challenging macroeconomic conditions. The total number of
registered vehicles on the road increased from 201 million light vehicles in 1999 to 242 million in 2008. We believe that the decrease
in miles driven in 2008 and the relatively flat number of miles driven in 2009 is a short-term trend, and that long-term miles driven will
increase in the future because of the increasing number of vehicles on the road.