O'Reilly Auto Parts 2010 Annual Report Download - page 25

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Thomas G. McFall, age 40, Executive Vice President of Finance and Chief Financial Officer, has been an O’Reilly team member
since 2006 and has held his position as Chief Financial Officer during this time. Mr. McFall’s primary areas of responsibility are
Finance, Accounting, Risk Management and Human Resources. Prior to joining O’Reilly, Mr. McFall held the position of Chief
Financial Officer – Midwest Operation for CSK, following CSK’s acquisition of Murray’s Discount Auto Stores (“Murray’s”). Mr.
McFall served Murray’s for eight years as Controller, Vice President of Finance, and Chief Financial Officer, with direct
responsibility for finance and accounting, distribution and logistics operations. Prior to joining Murray’s, Mr. McFall was an Audit
Manager with Ernst & Young, LLP in Detroit, Michigan.
Gregory D. Johnson, age 45, Senior Vice President of Distribution Operations, has been an O’Reilly team member for 28 years. Mr.
Johnson’s primary area of responsibility is Distribution and Logistics. He began his O’Reilly career as a part-time stocker in the
Nashville DC in 1982 and advanced with O’Reilly as Retail Systems Manager, WMS Systems Development Manager, Director of
Distribution and Vice President of Distribution. He has been in his current position as Senior Vice President since September 2007.
Randy Johnson, age 55, Senior Vice President of Inventory Management, has been an O’Reilly team member for 37 years. Mr.
Johnson’s primary area of responsibility is Inventory Management, Purchasing, Logistics, and Store Design. He began his career in a
DC in 1973, working in the stocking, shipping and will call counter departments, and was promoted to customer service manager in
1976. He continued to progress with the development of the inventory control department as Inventory Control Manager and Vice
President of Store Inventory Management. He has been in his current position as Senior Vice President of Inventory Management
since October 2010.
Jeff M. Shaw, age 48, Senior Vice President of Sales and Operations, has been an O'Reilly team member for 22 years. Mr. Shaw's
primary areas of responsibility are Store Operations and Sales. His O'Reilly career started as a parts specialist, and has progressed
through the roles of store manager, district manager, regional manager and Vice President of the Southern division. He advanced to
Vice President of Sales and Operations in 2003 and to his current position as Senior Vice President of Sales and Operations in 2004.
Michael D. Swearengin, age 50, Senior Vice President of Merchandise, has been an O'Reilly team member for 17 years. Mr.
Swearengin's primary areas of responsibility are Merchandise, Pricing and Advertising. His O'Reilly career started as an employee in
a store later acquired by O’Reilly, he then became Product Manager, a position he held for four years. From there he advanced to
Senior Product Manager, Director of Merchandise and Vice President of Merchandise with responsibility for product mix and
replenishment. He has been in his current position as Senior Vice President since 2004.
Service Marks and Trademarks
We have registered, acquired and/or been assigned the following service marks and trademarks: BESTEST®, BETTER PARTS.
BETTER PRICES.®, BRAKEBEST®, CERTIFIED AUTO REPAIR®, CUSTOMIZE YOUR RIDE®, FIRST CALL®, FROM OUR
STORE TO YOUR DOOR®, HI-LO®, IMPORT DIRECT®, IPOLITE®, MASTER PRO®, MASTER PRO REFINISHING®,
MICRO-GARD®, MILES AHEAD®, MURRAY®, O®, OMNISPARK®, O’REILLY®, O’REILLY AUTO COLOR
PROFESSIONAL PAINT PEOPLE®, O’REILLY AUTO PARTS®, O’REILLY AUTO PARTS PROFESSIONAL PARTS
PEOPLE®, O’REILLY AUTOMOTIVE®, O’REILLY RACING®, PARTNERSHIP NETWORK®, PARTS CITY®, PARTS CITY
AUTO COLOR PROFESSIONAL PAINT PEOPLE®, PARTS CITY AUTO PARTS®, PARTS CITY TOOL BOX®, PARTS
PAYOFF®, POWER TORQUE®, REAL WORLD TRAINING®, SUPER START®, TOOLBOX®, ULTIMA®, CSK PROSHOP®,
FLAG®, KRAGEN AUTO PARTS®, MURRAY’S AUTO PARTS®, PRIORITY PARTS®, PROXONE®, SCHUCK’S®, WE’RE
THE PLACE WITH ALL THE PARTS®, MURRAY’S VIP PROGRAM®, PAY N $AVE®. Some of the service marks and
trademarks listed above may also have a design associated therewith. Each of the service marks and trademarks are in duration for as
long as we continue to use and seek renewal of such marks – the duration of each of these service marks and trademarks is typically
between five and ten years per renewal. We believe that our business is not otherwise dependent upon any patent, trademark, service
mark or copyright.
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Item 1A. Risk Factors
Our future performance is subject to a variety of risks and uncertainties. Although the risks described below are the risks that we
believe are material, there may also be risks of which we are currently unaware, or that we currently regard as immaterial based upon
the information available to us that later may prove to be material. Interested parties should be aware that the occurrence of the events
described in these risk factors, elsewhere in this Form 10-K and in our other filings with the Securities and Exchange Commission
could have a material adverse effect on our business, operating results and financial condition. Actual results, therefore, may
materially differ from anticipated results described in these forward-looking statements.
Deteriorating economic conditions may adversely impact demand for our products, reduce access to credit and cause our
customers and others with which we do business to suffer financial hardship, all of which could adversely impact our business,
results of operations, financial condition and cash flows.
In recent years, worldwide economic conditions have deteriorated significantly in many countries and regions, including the United
States, and such conditions may worsen in the foreseeable future. Although demand for many of our products is primarily non-
discretionary in nature and tend to be purchased by consumers out of necessity, rather than on an impulse basis, our sales are impacted
by constraints on the economic health of our customers. The economic health of our customers is affected by many factors, including,
among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency
exchange rates, taxation, fuel prices, unemployment trends and other matters that influence consumer confidence and spending. Many
of these factors are outside of our control. Our customers’ purchases, including purchases of our products, could decline during
periods when income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable
economic conditions. If any of these events occur, or if unfavorable economic conditions challenge the consumer environment, our
business, results of operations, financial condition and cash flows could be adversely affected.
In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings,
bankruptcies, liquidations and other unfavorable events for our customers, suppliers, logistics and other service providers and financial
institutions which are counterparties to our credit facilities and interest rate swap transactions. Also, the ability of these third parties to
overcome these difficulties may increase. If third parties, on whom we rely for merchandise, are unable to overcome difficulties
resulting from the deterioration in economic conditions and provide us with the merchandise we need, or if counterparties to our credit
facilities do not perform their obligations, our business, results of operations, financial condition and cash flows could be adversely
affected.
We cannot assure that the recently integrated CSK stores will perform at the same desired level of profitability as historic O’Reilly
stores.
We expect acquired CSK stores to approximate the profitability levels of our core O’Reilly stores, and believe this to be a significant
factor in achieving our financial goals. The failure of these stores to attain these profitability levels could seriously impact our
forecasted results of operations. Our ability to operate these stores at our expected level will depend, in part, on the successful
preservation of the existing DIY customers already established in these markets, growing the commercial customer base, the adoption
of the O’Reilly culture, along with maintaining employee morale and the retention of key personnel.
We may not be able to obtain these profitability levels in our acquired CSK stores as soon as we expect, or at all. If we fail to address
the challenges of our new markets effectively, our growth strategy and future profitability could be negatively affected, and we may
fail to achieve the intended benefits of the merger.
Our increased debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
We have in place, an unsecured credit facility and unsecured senior notes, which could have important consequences to our financial
health. For example, our level of indebtedness could, among other things:
•make it more difficult to satisfy our financial obligations, including those relating to the notes and our credit facility;
•increase our vulnerability to adverse economic and industry conditions;
•limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a
competitive disadvantage;
•require us to dedicate a substantial portion of our cash flows to service the principal and interest on the debt, reducing the
funds available for other business purposes, such as working capital, capital expenditures or other cash requirements;
•limit our ability to incur additional debt on acceptable terms, if at all; and
•expose us to fluctuations in interest rates.
In addition, the terms of the financing obligations include restrictions, such as affirmative and negative covenants, conditions on
borrowing and subsidiary guarantees. A failure to comply with these restrictions could result in a default under the financing
obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a
FORM 10-K