O'Reilly Auto Parts 2012 Annual Report Download - page 26

FORM 10-k
16
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
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 higher prices.
We could also be negatively impacted by suppliers who might experience work stoppages, labor strikes or other interruptions to or
difficulties in the manufacture or supply of the products we purchase from them.
Risks associated with future acquisitions may not lead to expected growth and could result in increased costs and inefficiencies.
We expect to continue to make acquisitions as an element of our growth strategy. Acquisitions involve certain risks that could cause
our actual growth and profitability to differ from our expectations, examples of such risks include the following:
• we may not be able to continue to identify suitable acquisition targets or to acquire additional companies at favorable prices
or on other favorable terms;
• our management’s attention may be distracted;
• we may fail to retain key personnel from acquired businesses;
• we may assume unanticipated legal liabilities and other problems;
• we may not be able to successfully integrate the operations (accounting and billing functions, for example) of businesses we
acquire to realize economic, operational and other benefits; and
• we may fail or be unable to discover liabilities of businesses that we acquire for which we, the subsequent owner or operator,
may be liable.
Business interruptions in our distribution centers or other facilities may affect our store hours, operability of our computer
systems, and/or availability and distribution of merchandise, which may affect our business.
Weather, terrorist activities, war or other disasters or the threat of them, may result in the closure of our distribution centers (“DC”s)
or other facilities or may adversely affect our ability to deliver inventory to our stores on a nightly basis. This may affect our ability
to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty. Some of our merchandise is
imported from other countries and these goods could become difficult or impossible to bring into the United States, and we may not be
able to obtain such merchandise from other sources at similar prices. Such a disruption in revenue could potentially have a negative
impact on our results of operations and financial condition.
We rely extensively on our computer systems to manage inventory, process transactions and timely provide products to our customers.
Our systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses, security
breaches or other catastrophic events. If our systems are damaged or fail to function properly, we may experience loss of critical data
and interruptions or delays in our ability to manage inventories or process customer transactions. Such a disruption of our systems
could negatively impact revenue and potentially have a negative impact on our results of operations and financial condition.
Failure to achieve and maintain a high level of product and service quality may reduce our brand value and negatively impact our
business.
We believe our Company has built an excellent reputation as a leading retailer in the automotive aftermarket industry. We believe our
continued success depends, in part, on our ability to preserve, grow and leverage the value of our brand. Brand value is based in large
part on perceptions of subjective qualities, and even isolated incidents can erode trust and confidence, particularly if they result in
adverse publicity, governmental investigations or litigation, which can negatively impact these perceptions and lead to adverse affects
on our business or Team Members.
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 us and unanticipated fluctuations in our quarterly operating results, could affect our stock price.
We believe that quarter-to-quarter comparisons of our financial results are not necessarily meaningful indicators of our future
operating results 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 acquired businesses 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.
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