O REILLY AUTOMOTIVE INC

Previous wording

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest U.S. automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of June 30, 2024, we operated 6,152 stores in 48 U.S. states and Puerto Rico, 69 stores in Mexico, and 23 stores in Canada.

Current wording

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest U.S. automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of September 30, 2024, we operated 6,187 stores in 48 U.S. states and Puerto Rico, 78 stores in Mexico, and 26 stores in Canada.

Previous wording

See Note 2 “Business Combination” to the Condensed Consolidated Financial Statements for further information concerning the Canada stores acquired through the recent Vast Auto acquisition.

Current wording

See Note 2 “Business Combination” to the Condensed Consolidated Financial Statements for further information concerning the recent acquisition of Vast Auto.

Previous wording

The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 0.9% and 2.1% in 2022 and 2023, respectively, and year-to-date through May of 2024, miles driven have increased 1.1%. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

Current wording

The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 0.9% and 2.1% in 2022 and 2023, respectively, and year-to-date through August of 2024, miles driven have increased 0.9%. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

Previous wording

The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by the Auto Care Association, the total number of registered vehicles increased 14.2% from 2013 to 2023, bringing the number of light vehicles on the road to 284 million by the end of 2023. For the year ended December 31, 2023, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 15.8 million vehicles, and for 2024, the SAAR is estimated to be approximately 15.3 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road. From 2013 to 2023, vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.7% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing 10.6%, from 11.3 years in 2013 to 12.5 years in 2023. While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from the current environment of elevated new and used vehicle prices, as consumers are more willing to continue to invest in their current vehicle.

Current wording

The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by the Auto Care Association, the total number of registered vehicles increased 14.2% from 2013 to 2023, bringing the number of light vehicles on the road to 284 million by the end of 2023. For the year ended December 31, 2023, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 15.8 million vehicles, and for 2024, the SAAR is estimated to be approximately 15.8 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road. From 2013 to 2023, vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.7% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing 10.6%, from 11.3 years in 2013 to 12.5 years in 2023. While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from the current environment of elevated new and used vehicle prices, as consumers are more willing to continue to invest in their current vehicle.

Previous wording

Sales for the three months ended June 30, 2024, increased $203 million, or 5%, to $4.27 billion from $4.07 billion for the same period one year ago. Sales for the six months ended June 30, 2024, increased $472 million or 6% to $8.25 billion from $7.78 billion for the same period one year ago. Comparable store sales for stores open at least one year increased 2.3% and 9.0% for the three months ended June 30, 2024 and 2023, respectively. Comparable store sales for stores open at least one year increased 2.8% and 9.8% for the six months ended June 30, 2024 and 2023, respectively. Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members, as well as sales from Leap Day in the six months ended June 30, 2024. Online sales for ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 27 and 64 net, new stores during the three and six months ended June 30, 2024, respectively, compared to opening 42 and 100 net, new stores during the three and six months ended June 30, 2023, respectively. Additionally, we began operating 23 stores in Canada from the Vast Auto acquisition during the six months ended June 30, 2024. We anticipate total new store growth to be 190 to 200 net, new store openings in 2024.

Current wording

Sales for the three months ended September 30, 2024, increased $161 million, or 4%, to $4.36 billion from $4.20 billion for the same period one year ago. Sales for the nine months ended September 30, 2024, increased $633 million or 5% to $12.61 billion from $11.98 billion for the same period one year ago. Comparable store sales for stores open at least one year increased 1.5% and 8.7% for the three months ended September 30, 2024 and 2023, respectively. Comparable store sales for stores open at least one year increased 2.4% and 9.4% for the nine months ended September 30, 2024 and 2023, respectively. Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members, as well as sales from Leap Day in the nine months ended September 30, 2024. Online sales for ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 47 and 111 net, new stores during the three and nine months ended September 30, 2024, respectively, compared to opening 40 and 140 net, new stores during the three and nine months ended September 30, 2023, respectively. Additionally, we began operating 23 stores in Canada from the Vast Auto acquisition during the nine months ended September 30, 2024. We anticipate total new store growth to be 190 to 200 net, new store openings in 2024. We anticipate total new store growth to be 200 to 210 net, new store openings in 2025.

Previous wording

The increase in sales for the three months ended June 30, 2024, was primarily the result of the 2.3% increase in domestic comparable store sales, a $70 million increase in sales from new stores opened in 2023 and 2024 that are not considered comparable stores, and sales from the acquired Vast Auto stores. The increase in sales for the six months ended June 30, 2024, was primarily the result of 2.8% increase in domestic comparable store sales, a $144 million increase in sales from new stores opened in 2023 and 2024 that are not considered comparable stores, sales from the acquired Vast Auto stores, and sales from one additional day due to Leap Day. Our comparable store sales increases for the three and six months ended June 30, 2024, were driven by increases in average ticket values for both professional service provider and DIY customers and positive transaction counts from professional service provider customers, partially offset by negative transaction counts from DIY customers. Average ticket values benefited from inflationary increases in average selling prices, as compared to the same periods in 2023. Average ticket values also continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles. These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values. The decreases in DIY customer transaction counts were driven by pressured consumer spending on discretionary categories and broader industry pressure in certain repair related hard part categories.

Current wording

The increase in sales for the three months ended September 30, 2024, was primarily the result of the 1.5% increase in domestic comparable store sales, a $66 million increase in sales from new stores opened in 2023 and 2024 that are not considered comparable stores, and sales from the acquired Vast Auto stores. The increase in sales for the nine months ended September 30, 2024, was primarily the result of 2.4% increase in domestic comparable store sales, a $210 million increase in sales from new stores opened in 2023 and 2024 that are not considered comparable stores, sales from the acquired Vast Auto stores, and sales from one additional day due to Leap Day. Our comparable store sales increases for the three and nine months ended September 30, 2024, were driven by increases in average ticket values for both professional service provider and DIY customers and positive transaction counts from professional service provider customers, partially offset by negative transaction counts from DIY customers. Average ticket values benefited from inflationary increases in average selling prices, as compared to the same periods in 2023. Average ticket values also continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles. These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values. The decreases in DIY customer transaction counts were driven by pressured consumer spending on discretionary categories and broader industry pressure in certain repair related hard part categories.

Previous wording

See Note 2 “Business Combination” to the Condensed Consolidated Financial Statements for further information concerning the acquired Vast Auto stores. See Note 11 “Revenue” to the Condensed Consolidated Financial Statements for further information concerning the Company’s sales.

Current wording

See Note 2 “Business Combination” to the Condensed Consolidated Financial Statements for further information concerning the recent acquisition of Vast Auto. See Note 11 “Revenue” to the Condensed Consolidated Financial Statements for further information concerning the Company’s sales.

Previous wording

Gross profit for the three months ended June 30, 2024, increased 4% to $2.17 billion (or 50.7% of sales) from $2.09 billion (or 51.3% of sales) for the same period one year ago. Gross profit for the six months ended June 30, 2024, increased 6% to $4.20 billion (or 50.9% of sales) from $3.98 billion (or 51.1% of sales) for the same period one year ago. The increase in gross profit dollars for the three months ended June 30, 2024, was primarily the result of the increase in comparable store sales at existing stores and sales from new and acquired stores. The increase in gross profit dollars for the six months ended June 30, 2024, was primarily the result of the increase in comparable store sales at existing stores, sales from new and acquired stores, and one additional day due to Leap Day. The decreases in gross profit as a percentage of sales for the three and six months ended June 30, 2024, were primarily due to a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin than DIY sales, and the inclusion of the lower gross margin sales from the acquired Vast Auto business, partially offset by improved acquisition costs.

Current wording

Gross profit for the three months ended September 30, 2024, increased 4% to $2.25 billion (or 51.6% of sales) from $2.16 billion (or 51.4% of sales) for the same period one year ago. Gross profit for the nine months ended September 30, 2024, increased 5% to $6.45 billion (or 51.2% of sales) from $6.14 billion (or 51.2% of sales) for the same period one year ago. The increase in gross profit dollars for the three months ended September 30, 2024, was primarily the result of the increase in comparable store sales at existing stores and sales from new and acquired stores. The increase in gross profit dollars for the nine months ended September 30, 2024, was primarily the result of the increase in comparable store sales at existing stores, sales from new and acquired stores, and one additional day due to Leap Day. The increase in gross profit as a percentage of sales for the three months ended September 30, 2024, was primarily due to improved acquisition costs, partially offset by a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin than DIY sales, and the inclusion of the lower gross margin sales from the acquired Vast Auto business. Gross profit as a percentage of sales for the nine months ended September 30, 2024, was flat.

Previous wording

Selling, general and administrative expenses (“SG&A”) for the three months ended June 30, 2024, increased 6% to $1.30 billion (or 30.5% of sales) from $1.23 billion (or 30.3% of sales) for the same period one year ago. SG&A for the six months ended June 30, 2024, increased 7% to $2.59 billion (or 31.4% of sales) from $2.41 billion (or 30.9% of sales) for the same period one year ago. The increase in total SG&A dollars for the three months ended June 30, 2024, was primarily the result of additional Team Members and vehicles to support our increased sales and store count and SG&A associated with the Vast Auto acquisition and operations. The increase in total SG&A dollars for the six months ended June 30, 2024, was primarily the result of additional Team Members and vehicles to support our increased sales and store count, SG&A associated with the Vast Auto acquisition and operations, and one additional day due to Leap

Current wording

Selling, general and administrative expenses (“SG&A”) for the three months ended September 30, 2024, increased 7% to $1.35 billion (or 31.0% of sales) from $1.26 billion (or 30.1% of sales) for the same period one year ago. SG&A for the nine months ended September 30, 2024, increased 7% to $3.94 billion (or 31.2% of sales) from $3.67 billion (or 30.6% of sales) for the same period one year ago. The increase in total SG&A dollars for the three months ended September 30, 2024, was primarily the result of additional Team Members and vehicles to support our increased sales and store count and SG&A associated with the Vast Auto operations. The

Previous wording

As a result of the impacts discussed above, operating income for the three months ended June 30, 2024, increased 1% to $863 million (or 20.2% of sales) from $854 million (or 21.0% of sales) for the same period one year ago. As a result of the impacts discussed above, operating income for the six months ended June 30, 2024, increased 3% to $1.62 billion (or 19.6% of sales) from $1.57 billion (or 20.2% of sales) for the same period one year ago.

Current wording

As a result of the impacts discussed above, operating income for the three months ended September 30, 2024, was $897 million (or 20.5% of sales), which was flat compared to $897 million (or 21.3% of sales) for the same period one year ago. As a result of the impacts discussed above, operating income for the nine months ended September 30, 2024, increased 2% to $2.51 billion (or 19.9% of sales) from $2.47 billion (or 20.6% of sales) for the same period one year ago.

Previous wording

Total other expense for the three months ended June 30, 2024, increased 16% to $52 million (or 1.2% of sales) from $45 million (or 1.1% of sales) for the same period one year ago. Total other expense for the six months ended June 30, 2024, increased 24% to $104 million (or 1.3% of sales) from $84 million (or 1.1% of sales) for the same period one year ago. The increases in total other expense for the three and six months ended June 30, 2024, were the result of increased interest expense on higher average outstanding borrowings. See Note 7 “Financing” to the Condensed Consolidated Financial Statements for further information concerning the Company’s borrowings.

Current wording

Total other expense for the three months ended September 30, 2024, decreased 3% to $49 million (or 1.1% of sales) from $51 million (or 1.2% of sales) for the same period one year ago. Total other expense for the nine months ended September 30, 2024, increased 14% to $153 million (or 1.2% of sales) from $134 million (or 1.1% of sales) for the same period one year ago. The decrease in total other expense for the three months ended September 30, 2024, was the result of an increase in the value of our trading securities, as compared to a decrease in the same period in 2023, partially offset by increased interest expense on higher average outstanding borrowings. The increase in total other expense for the nine months ended September 30, 2024, was the result of increased interest expense on higher average outstanding borrowings. See Note 4 “Fair Value Measurements” to the Condensed Consolidated Financial Statements for further information concerning the Company’s trading securities. See Note 7 “Financing” to the Condensed Consolidated Financial Statements for further information concerning the Company’s borrowings.

Previous wording

Our provision for income taxes for the three months ended June 30, 2024, increased 4% to $189 million (23.3% effective tax rate) from $182 million (22.5% effective tax rate) for the same period one year ago. Our provision for income taxes for the six months ended June 30, 2024, was flat at $342 million compared to the same period one year ago. Our effective tax rate for the six months ended June 30, 2024, decreased to 22.6% from 23.0% for the same period one year ago. The increases in our provision for income taxes and our effective tax rate for the three months ended June 30, 2024, were the result of lower excess tax benefits from share-based compensation in the current period, as compared to the same period one year ago. The decrease in our effective tax rate for the six months ended June 30, 2024, was the result of higher excess tax benefits from share-based compensation in the current period, as compared to the same period one year ago.

Current wording

Our provision for income taxes for the three months ended September 30, 2024, decreased 7% to $182 million (21.5% effective tax rate) from $197 million (23.2% effective tax rate) for the same period one year ago. Our provision for income taxes for the nine months ended September 30, 2024, decreased 3% to $524 million (22.2% effective tax rate) from $539 million (23.1% effective tax rate) for the same period one year ago. The decreases in our provision for income taxes and our effective tax rate for the three and nine months ended September 30, 2024, were the result of higher excess tax benefits from share-based compensation in the current period, as compared to the same period one year ago.

Previous wording

As a result of the impacts discussed above, net income for the three months ended June 30, 2024, decreased 1% to $623 million (or 14.6% of sales) from $627 million (or 15.4% of sales) for the same period one year ago. As results of the impacts discussed above, net income for the six months ended June 30, 2024, increased 2% to $1.17 billion (or 14.2% of sales) from $1.14 billion (or 14.7% of sales) for the same period one year ago.

Current wording

As a result of the impacts discussed above, net income for the three months ended September 30, 2024, increased 2% to $665 million (or 15.2% of sales) from $650 million (or 15.5% of sales) for the same period one year ago. As results of the impacts discussed above, net income for the nine months ended September 30, 2024, increased 2% to $1.84 billion (or 14.6% of sales) from $1.79 billion (or 15.0% of sales) for the same period one year ago.

Previous wording

Our diluted earnings per common share for the three months ended June 30, 2024, increased 3% to $10.55 on 59 million shares from $10.22 on 61 million shares for the same period one year ago. Our diluted earnings per common share for the six months ended June 30, 2024, increased 7% to $19.75 on 59 million shares from $18.49 on 62 million shares for the same period one year ago.

Current wording

Our diluted earnings per common share for the three months ended September 30, 2024, increased 6% to $11.41 on 58 million shares from $10.72 on 61 million shares for the same period one year ago. Our diluted earnings per common share for the nine months ended September 30, 2024, increased 7% to $31.14 on 59 million shares from $29.20 on 61 million shares for the same period one year ago.

Previous wording

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The increase in net cash used in investing activities during the six months ended June 30, 2024, compared to the same period in 2023, was the result of the acquisition of Vast Auto and an increase in capital expenditures. The increase in capital expenditures was primarily due to an increase in distribution enhancement and expansion projects, as well as an increase in the number of owned new store openings.

Current wording

The increase in net cash used in investing activities during the nine months ended September 30, 2024, compared to the same period in 2023, was the result of the acquisition of Vast Auto, partially offset by a decrease in capital expenditures. The decrease in capital expenditures was primarily due to the timing of property acquisitions, closings, construction costs for new stores, partially offset by an increase in the number of owned new store openings in the current period, as compared to the same period in the prior year.

Previous wording

The decrease in net cash used in financing activities during the six months ended June 30, 2024, compared to the same period in 2023, was attributable to a lower level of repurchases of our common stock in the current period and the redemption of $300 million aggregate principal amount of senior notes in the same period in 2023, partially offset by a net paydown on the Company’s commercial paper issuances in the current period versus net borrowings on the Company’s revolving credit facility during the same period in 2023.

Current wording

The decrease in net cash used in financing activities during the nine months ended September 30, 2024, compared to the same period in 2023, was attributable to a lower level of repurchases of our common stock in the current period, the issuance of $500 million aggregate principal amount of senior notes in the current period, and the redemption of $300 million aggregate principal amount of senior notes in the same period in 2023, partially offset by a net paydown on the Company’s commercial paper issuances in the current period versus net borrowings on the Company’s commercial paper program during the same period in 2023.

Previous wording

The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest, and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, and similar instruments, five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that we should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement, and litigation from our lenders.

Current wording

The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest, and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, and similar instruments, five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that we should default

Previous wording

We had a consolidated fixed charge coverage ratio of 6.22 times and 6.55 times as of June 30, 2024 and 2023, respectively, and a consolidated leverage ratio of 1.87 times and 1.81 times as of June 30, 2024 and 2023, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

Current wording

We had a consolidated fixed charge coverage ratio of 6.14 times and 6.56 times as of September 30, 2024 and 2023, respectively, and a consolidated leverage ratio of 1.85 times and 1.83 times as of September 30, 2024 and 2023, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

Previous wording

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

information. We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio, and consolidated leverage ratio provides meaningful supplemental information to both management and investors and reflects the required covenants under the Credit Agreement. We include these items in judging our performance and believe this non-GAAP information is useful to investors as well. Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures.

Current wording

Free cash flow, the consolidated fixed charge coverage ratio, and the consolidated leverage ratio discussed and presented in the tables above are not derived in accordance with United States generally accepted accounting principles (“GAAP”). We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio, and consolidated leverage ratio provides meaningful supplemental information to both management and investors and reflects the required covenants under the Credit Agreement. We include these items in judging our performance and believe this non-GAAP information is useful to investors as well. Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures.