O'Reilly Auto Parts 2009 Annual Report Download - page 45

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31
LIQUIDITY AND CAPITAL RESOURCES
The following table highlights our liquidity and related ratios for the years ended December 31, 2009 and 2008, as well as our cash
flows from operating, investing and financing activities for the fiscal years ended December 31, 2009, 2008 and 2007 ($ in thousands):
Year Ended
Liquidity and Related Ratios December 31, 2009 December 31, 2008 Percentage Change
Current assets $
2,227 $
1,875
18.8%
Quick assets
(1)
198 197
0.5%
Current liabilities 1,231 1,054
16.8%
Working capital
(2)
995 822
21.0%
Total debt 791 733
7.9%
Total equity 2,686 2,282
17.7%
Current ratio
(3)
1.81:1 1.78:1
1.7%
Quick ratio
(4)
0.25:1 0.29:1
(13.8%)
Debt to equity
(5)
0.29 0.32 (9.4%)
Year Ended
Liquidity December 31, 2009 December 31, 2008 December 31, 2007
Total cash provided by (used in):
Operating activities $
285,200 $
298,542
$
299,418
Investing activities (410,661) (367,597) (300,318)
Financing activities 121,095 52,801
18,552
Increase (decrease) in cash and cash equivalents $
(4,366) $
(16,254) $
17,652
(1)
Quick assets includes cash, cash equivalents and receivables.
(2)
Working capital is calculated as current assets less current liabilities.
(3)
Current ratio is calculated as current assets divided by current liabilities.
(4)
Quick ratio is calculated as current assets, less inventories, divided by current liabilities.
(5)
Debt to equity is calculated as total debt divided by total shareholders’ equity.
Liquidity and Related Ratios
Current assets increased 19% from 2008 to 2009, primarily driven by increased investment in inventory as part of the process to
properly align the acquired CSK stores with O’Reilly branded stores’ inventory levels and selection. Current liabilities increased 17%
from 2008 to 2009, primarily attributable to the presentation of our acquired 6 ¾% Exchangeable Notes as short-term debt, due to the
Noteholders’ right to require our repurchase of the Notes in 2010, and an increase in accounts payable stemming from our increased
inventory investment. Total working capital increased 21% from 2008 to 2009, principally as a result of our investment in inventory,
offset by the related increase in accounts payable as discussed above. Total debt increased 8% and total equity increased 18% from
2008 to 2009. The increase in debt is primarily attributable to increased borrowing levels under our ABL Facility to support the
integration and conversion of CSK. The increase in total equity is principally due to a 23% increase in retained earnings resulting from
net income in 2009 and an increase in additional paid-in capital of 10% primarily from the issuance of common stock upon the
exercise of stock options.
Operating Activities
Net cash provided by operating activities was $285 million in 2009, $299 million in 2008 and $299 million in 2007. The decrease in
net cash provided by operating activities in 2009 compared to 2008 was principally due to an increase in net inventory investment in
2009, which was slightly offset by an increase in operating income adjusted for non-cash depreciation and amortization expenses. Net
cash provided by operating activities in 2008 was flat with the cash provided by operating activities in 2007 principally because an
increase in net inventory investment in 2008 was offset by an increase in operating income adjusted for non-cash depreciation and
amortization expenses, and a one-time non-cash charge of $9.6 million to align, where possible, CSK’s vacation policy with the
Company’s policy. Net inventory investment reflects our investment in inventory net of the amount of accounts payable to vendors.
The increases in net inventory investment in 2008 and 2009 were the result of investments made to improve the inventory availability
in the stores acquired in the acquisition of CSK. The average per-store inventory for core O’Reilly stores increased to $498,000 as of
December 31, 2009, from $489,000 as of December 31, 2008. Nonconverted CSK store’s average per-store inventory increased to
$595,000 as of December 31, 2009, from $461,000 as of December 31, 2008.
Investing Activities
Net cash used in investing activities was $411 million in 2009, $368 million in 2008 and $300 million in 2007. Increases in cash used
in investing activities in both 2009 and 2008 was primarily due to an increase in capital expenditures related to conversions of acquired
CSK stores to the O’Reilly Brand and additional distribution centers. Capital expenditures were $415 million in 2009, $342 million in