Advance Auto Parts 2004 Annual Report Download - page 4

We฀ are฀ serving฀ our฀ do-it-yourself฀ and฀ commercial฀ customers฀
through฀ Category฀ Management,฀ expansion฀ of฀ our฀ store฀ brands,฀
additional฀ commercial฀ programs,฀ and฀ improved฀ supply฀ chain฀
efficiencies.฀Our฀new฀stores฀are฀providing฀our฀customers฀with฀more฀
modern,฀ convenient฀ locations.฀ Our฀ Consumer฀ Education฀ program฀
and฀ investments฀ in฀ the฀ latest฀ technologies฀ are฀ complementing฀ the฀
expert฀ advice฀ of฀ our฀ well-trained฀ team฀ by฀ putting฀ information฀ and฀
state-of-the-art฀tools฀at฀their฀fingertips.
In฀2004,฀we:
฀฀Completed฀more฀than฀210฀million฀customer฀transactions,฀growing฀our฀
sales฀to฀$3.8฀billion.
฀Opened฀125฀new฀stores,฀ending฀the฀year฀with฀a฀total฀of฀2,652.
฀฀Expanded฀our฀comparable฀operating฀margin฀to฀8.7%฀from฀8.4%฀last฀year.*
฀฀Raised฀our฀GAAP฀earnings฀per฀share฀49%฀to฀$2.49฀from฀$1.67฀last฀year.
฀ ฀Grew฀comparable฀earnings฀per฀share฀from฀continuing฀operations฀20%฀to฀
$2.49฀from฀$2.08฀last฀year.*
฀ We฀produced฀solid฀results฀in฀2004,฀and฀as฀we฀begin฀2005฀we฀are฀
committed฀to฀getting฀good฀at฀getting฀better.฀Our฀growth฀is฀supported฀
by฀strong฀industry฀dynamics,฀including฀an฀aging฀vehicle฀population,฀
a฀rising฀trend฀in฀average฀miles฀driven,฀and฀a฀growing฀percentage฀of฀
SUVs฀and฀light฀trucks฀that฀typically฀require฀more฀expensive฀replace-
ment฀parts.฀In฀addition฀to฀these฀favorable฀fundamentals,฀we฀expect฀to฀
grow฀our฀bottom฀line฀and฀expand฀our฀profitability฀by฀remaining฀focused฀
on฀our฀objectives,฀as฀we฀continue฀providing฀our฀customers฀with:฀
Clean,฀well-run฀stores—Our฀exciting,฀customer-friendly฀2010฀format฀
is฀helping฀us฀to฀grow฀the฀most฀modern฀store฀base฀in฀the฀industry.฀In฀
2005,฀ we฀will฀continue฀converting฀stores฀to฀this฀format฀market-by-
market฀and฀plan฀to฀open฀between฀150฀and฀175฀new฀stores.฀By฀the฀end฀of฀
2005,฀more฀than฀50%฀of฀our฀stores฀will฀be฀operating฀with฀this฀format.
The฀ right฀ parts฀ right฀ now—Our฀ customers฀ know฀ that฀ they฀ can฀
count฀on฀us฀to฀have฀the฀parts฀they฀need฀when฀they฀need฀them.฀We฀
will฀continue฀to฀enhance฀our฀supply฀chain฀efficiency฀with฀the฀open-
ing฀ of฀ our฀ new฀ distribution฀ center฀ located฀ outside฀ of฀ Allentown,฀
Pennsylvania฀in฀the฀spring.฀
Prices฀that฀can’t฀be฀beat—Advance฀is฀proud฀to฀be฀a฀value฀leader฀
and฀ we฀ will฀ continue฀ to฀ look฀ for฀ new฀ ways฀ to฀ offer฀ our฀ customers฀
“ready-to-go”฀low฀prices฀on฀our฀wide฀selection฀of฀parts,฀accessories฀
and฀maintenance฀items.
People฀who฀know฀their฀stuff—Motivated฀by฀pride,฀our฀team’s฀commit-
ment฀to฀our฀Company,฀our฀customers,฀their฀communities,฀and฀each฀
other฀proves฀that฀“The฀Best฀Part฀is฀our฀People.”฀We฀will฀continue฀build-
ing฀ opportunities฀ for฀ our฀ team฀ through฀ additional฀ store฀ openings.฀
Strong฀organizational฀development฀and฀training฀programs฀are฀equip-
ping฀our฀team฀with฀more฀knowledge฀and฀skills฀to฀serve฀our฀customers฀
better.฀Our฀investment฀in฀our฀team฀is฀a฀key฀driver฀of฀our฀future฀success.฀
฀ As฀previously฀announced,฀I฀will฀retire฀ as฀ Chief฀Executive฀Officer฀
for฀ Advance฀ Auto฀ Parts฀ at฀ our฀ Stockholders฀ Meeting฀ on฀ May฀ 18,฀
2005.฀I฀am฀extremely฀grateful฀to฀our฀Team฀Members,฀our฀Board฀of฀
Directors฀and฀our฀stockholders,฀who฀have฀allowed฀me฀the฀privilege฀of฀
representing฀them฀as฀CEO฀for฀ the฀ past฀five฀years.฀I฀am฀honored฀to฀
continue฀on฀as฀Chairman฀of฀the฀Board฀and฀look฀forward฀to฀support-
ing฀the฀management฀team฀in฀the฀future.
฀ We฀ are฀ proud฀ that฀ Mike฀ Coppola,฀ who฀ has฀ served฀ as฀ Executive฀
Vice฀President฀ and฀Chief฀Operating฀Officer,฀will฀assume฀the฀role฀of฀
Chief฀ Executive฀ Officer.฀ Since฀ joining฀ Advance฀ in฀ February฀ 2001,฀฀
Mike฀has฀led฀numerous฀initiatives฀in฀merchandising,฀marketing,฀opera-
tions,฀ and฀ supply฀ chain,฀ including฀ the฀ creation฀ of฀ our฀ Company’s฀
marketing฀ plan.฀ We฀ are฀ confident฀ that฀ Mike’s฀ strong฀ character฀ and฀
many฀years฀of฀experience฀in฀the฀retail฀industry฀will฀serve฀Advance฀well,฀
as฀he฀leads฀our฀team฀to฀the฀next฀level฀of฀performance฀and฀beyond.
฀ Under฀Mike’s฀leadership฀we฀will฀continue฀to฀focus฀on฀raising฀the฀
sales฀productivity฀ of฀our฀ stores,฀expanding฀ our฀ operating฀margins,฀
generating฀ strong฀ free฀ cash฀ flow,฀ and฀ increasing฀ our฀ return฀ on฀
invested฀capital.
฀ In฀ conclusion,฀ we฀ would฀ like฀ to฀ thank฀ our฀ customers฀ for฀ your฀
business฀ and฀ our฀ stockholders฀ for฀ your฀ support.฀ We฀ also฀ want฀ to฀
thank฀our฀winning฀team฀for฀serving฀our฀customers.฀Your฀hard฀work฀is฀
what฀makes฀us฀a฀leader฀in฀the฀automotive฀aftermarket฀industry.฀
฀ Advance฀Auto฀Parts฀is฀built฀on฀a฀strong฀foundation฀of฀integrity฀and฀
commitment฀ to฀ customer฀ service.฀ We฀ believe฀ our฀ future฀ is฀ bright,฀
and฀we฀look฀forward฀to฀an฀exciting฀2005฀and฀beyond.
Advance฀Auto฀Parts฀is฀ready฀with฀results.฀2004฀
was฀ another฀ record฀ year฀ for฀ our฀ Company฀฀
due฀ to฀ our฀ team’s฀ commitment฀ to฀ provide฀฀
our฀ customers฀ with฀ legendary฀ service฀ and฀฀
execute฀on฀our฀initiatives.
Above฀Photo:฀Executive฀Committee,฀pictured฀from฀left฀to฀right:
1.-Bob฀Hedrick฀ 2.-Dave฀Mueller฀ 3.-Larry฀Castellani฀ 4.-Mike฀Coppola฀ ฀
5.-Jim฀Wade฀ 6.-Paul฀Klasing฀ 7.-Jeff฀Gray
*NOTE:฀The฀Company฀uses฀non-GAAP฀measures฀as฀an฀indication฀of฀its฀earnings฀from฀its฀core฀
operations฀and฀believes฀it฀is฀important฀to฀the฀Company’s฀stockholders฀due฀to฀the฀nature฀and฀
significance฀of฀the฀excluded฀expenses.฀Please฀see฀our฀reconciliation฀of฀comparable฀operating฀
income฀and฀comparable฀earnings฀per฀share฀included฀on฀page฀1฀of฀this฀annual฀report.
Letter฀to฀our
stockholders
2
Jim฀Wade
President
Larry฀Castellani
Chairman฀and฀Chief฀Executive฀Officer