Advance Auto Parts 2005 Annual Report Download - page 41

Fiscal Years Ended
2005 2004 2003
Supplemental cash flow information:
Interest paid..................................................................................................................................................................... $ 23,455 $15,616 $33,904
Income tax payments, net ............................................................................................................................................... 115,408 86,051 10,126
Non-cash transactions:
Accrued purchases of property and equipment .............................................................................................................. 39,105 21,479 9,324
Repurchases of common stock not settled...................................................................................................................... 889 ——
Retirement of common stock.......................................................................................................................................... 193,185 ——
Unrealized gain on hedge arrangements......................................................................................................................... 2,276 1,343 63
Contingent payment accrued on acquisition................................................................................................................... 12,500 ——
Accounts and note receivable upon disposal of property and equipment ...................................................................... $ 2,714 $ 1,225 $ —
The accompanying notes to consolidated financial statements are an integral part of these statements.
Advance Auto Parts I Annual Report 2005 I 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, January 1, 2005 and January 3, 2004 (in thousands, except per share data)
1. ORGANIZATION
AND DESCRIPTION OF BUSINESS:
Advance Auto Parts, Inc. (“Advance”) conducts all
of its operations through its wholly owned subsidiary,
Advance Stores Company, Incorporated and its sub-
sidiaries (“Stores”). Advance and Stores (collectively,
the “Company”) operate 2,872 stores within the
United States, Puerto Rico and the Virgin Islands. The
Company operates 2,774 stores throughout 40 states
in the Northeastern, Southeastern and Midwestern
regions of the United States. These stores operate
under the “Advance Auto Parts” trade name except for
certain stores in the State of Florida which operate
under the “Advance Discount Auto Parts” trade name.
These stores offer a broad selection of brand name
and proprietary automotive replacement parts, acces-
sories and maintenance items for domestic and
imported cars and light trucks, with no significant
concentration in any specific area. In addition, the
Company operates 36 stores under the “Western
Auto” and “Advance Auto Parts” trade names, located
primarily in Puerto Rico and the Virgin Islands. The
Company also operates 62 stores under the “Autopart
International” trade name throughout the North-
eastern region of the United States.
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
Accounting Period
The Company’s fiscal year ends on the Saturday
nearest the end of December, which results in an
extra week every six years. Accordingly, fiscal 2003
includes 53 weeks of operations. All other fiscal
years presented include 52 weeks of operations.
Principles of Consolidation
The consolidated financial statements include the
accounts of the Company and its wholly owned sub-
sidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conform-
ity with accounting principles generally accepted in
the United States of America requires management to
make estimates and assumptions that affect the report-
ed amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the
financial statements and the reported amounts of rev-
enues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash, Cash Equivalents and Bank Overdrafts
Cash and cash equivalents consist of cash in banks
and money market funds with original maturities of
three months or less. Bank overdrafts consist of net
outstanding checks not yet presented to a bank for
settlement.
Vendor Incentives
The Company receives incentives in the form of
reductions to amounts owed and/or payments from