Advance Auto Parts 2008 Annual Report Download - page 44

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Liquidity and Capital Resources
Overview of Liquidity
Our primary cash requirements to maintain our current operations include payroll and benefits, the purchase of
inventory, contractual obligations, capital expenditures as well as the payment of quarterly cash dividends. In
addition, we have used available funds to repurchase shares of common stock under our stock repurchase program
and to repay borrowings under our credit facility. We have funded these requirements primarily through cash
generated from operations, supplemented by borrowings under our credit facilities as needed. We believe funds
generated from our expected results of operations, available cash and cash equivalents, and available borrowings
under our revolving credit facility will be sufficient to fund our primary obligations for the next fiscal year.
At January 3, 2009, our cash and cash equivalents balance was $37.4 million, an increase of $22.7 million
compared to fiscal year-end 2007. This increase resulted from additional cash flows from operating activities
(including higher comparable store sales) and lower capital expenditures, partially offset by an increase in
expenditures for financing activities (including the return of capital to our shareholders through the payment of
dividends and the repurchase of common stock during fiscal 2008). Additional discussion of our cash flow results is
set forth in the Analysis of Cash Flows section.
At January 3, 2009, our outstanding indebtedness was $49.5 million lower when compared to December 29,
2007 and consisted of borrowings of $251.5 million under our revolving credit facility, $200.0 million under our
term loan, $4.0 million outstanding on an economic development note and $0.7 outstanding under other financing
arrangements. Additionally, we had $101.3 million in letters of credit outstanding, which reduced our total
availability under the revolving credit facility to $397.2 million.
In light of the uncertainty in the credit markets, it is possible that one or more of the banks in our revolving
credit facility syndicate may be unable to provide our remaining available credit. We have 15 lenders participating
in our revolving credit facility, each with a commitment of not more than 15% of the total $750 million
commitment. Furthermore, all of these lenders have met their contractual funding commitments to us through
January 3, 2009. An inability to obtain sufficient financing at cost-effective rates could have a materially adverse
impact on our business, financial condition, results of operations and cash flows.
Capital Expenditures
Our primary capital requirements have been the funding of our continued store expansion program, including
new store openings and store acquisitions, store relocations, store remodels prior to fiscal 2008, maintenance of
existing stores, the construction and upgrading of distribution centers, and the development of proprietary
information systems and purchased information systems. Our capital expenditures were $185.0 million in fiscal
2008, or $25.6 million less than fiscal 2007, primarily due to a reduction in store development. During fiscal 2008,
we opened 109 AAP and 18 AI stores, remodeled five AAP stores and relocated 10 AAP stores.
Our future capital requirements will depend in large part on the number of and timing for new stores we open or
acquire within a given year and the investments we make in information technology and logistics networks. During
fiscal 2009, we anticipate adding 75 new AAP and 30 new AI stores. We will relocate and remodel only in the
normal course of business. We retired the 2010 store format and related remodel program during fiscal 2008.
We also plan to make continued investments in the maintenance of our existing stores and logistics network as
well as investing in new information systems to support our turnaround strategies, including the implementation of
an Oracle merchandising system over a multi-year timeframe. In 2009, we anticipate that our capital expenditures
will be approximately $180.0 million to $200.0 million.