Advance Auto Parts 2009 Annual Report Download

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Our SERVICE gets you on your way,
Our RELATIONSHIPS bring you back.

Table of contents

  • Page 1
    Our SERVICE gets you on your way, Our RELATIONSHIPS bring you back.

  • Page 2
    .... Darren R. Jackson Chief Executive Officer Letter to our Stockholders | 2009 Annual Report On behalf of our approximately 49,000 Advance Auto Parts Team Members, it is my honor and privilege to present our 2009 Annual Report. First, I would like to thank all of our Team Members and acknowledge...

  • Page 3
    My entire business is based on how fast I can perform repairs. From parts availability to the actual transaction, they go out of their way for me so I can get back to my job. Sam Perez, owner of The Mobile Mechanic; Tony Cosentino, Advance General Manager | St Petersburg, Florida " " 1

  • Page 4
    " 2 The people at Advance are just really cool. We just walk in the door and they say, 'Welcome Mr. Pope, what do you need today?' Robert Pope, owner of Pope's Automotive & Edward Pope, owner of Steve's Automotive; Kenneth Mitchell, Advance General Manager | Port Royal, South Carolina "

  • Page 5
    ... Team Members, customers and vendor foundation for guiding our Company. partners raised an astonishing $3.8 million We remain focused on meeting our customers' needs and executing our four key strategies. in 2009! Working together can truly make an impact on the lives of other people. Commercial...

  • Page 6
    ...underperforming locations and departments. These decisions and investments are focused on both catching up and building industry leading capabilities to compete and win in the future. Our customers, Team Members and external market share data validate dedicated Customer Care Center now supports that...

  • Page 7
    " Some days our customers come in just to talk. It's like the song from 'Cheers': we're the place 'where everybody knows your name.' Chip Planz, Louis Jackson & Frank Lobraico, Loyal Advance Customers; Barbara Ferris, Advance General Manager | New Milford, Connecticut " 5

  • Page 8
    ... largest automotive aftermarket retailers of parts, accessories, batteries and maintenance items measured by store count as of December 31, 2009. (5) SG&A - Selling, General and Administrative Sales Per Square Foot SG&A Per Store (5) Op Income Per Team Member ROIC% (6) expenses. (6) Return...

  • Page 9
    ... for our customers. Everything about our business from our values to our business strategies is designed to build on the culture of service Advance was founded upon 78 years ago. We will ensure that our Team has the necessary leadership, processes, technology, training and development to deliver...

  • Page 10
    ... Diluted Share (1)Our fiscal year sales results reported in the referenced charts have been reported on a comparable operating basis to exclude the 53rd week results in fiscal 2008. Refer to "Selected Consolidated Financial Data" on page 17 of our 2009 Form 10-K included in this Annual Report for...

  • Page 11
    ...Virginia (Address of Principal Executive Offices) 24012 (Zip Code) (540) 362-4911 (Registrant's telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock New York ($0.0001 par value...

  • Page 12
    ...fiscal quarter, the aggregate market value of the 95,058,600 shares of Common Stock held by non-affiliates of the registrant was $4,289,994,618, based on the last sales price of the Common Stock on July 17, 2009, as reported by the New York Stock Exchange. As of February 26, 2010, the registrant had...

  • Page 13
    ... and Financial Disclosure ...37 Item 9A. Controls and Procedures ...38 Item 9B. Other Information ...38 Part III. Item 10. Item 11. Item 12. Directors, Executive Officers and Corporate Governance ...39 Executive Compensation...39 Security Ownership of Certain Beneficial Owners and Management and...

  • Page 14
    ...our business, including locating available and suitable real estate for new store locations and the integration of any acquired businesses; competitive pricing and other competitive pressures; our relationships with our vendors; our ability to attract and retain qualified employees , or Team Members...

  • Page 15
    ... aftermarket parts, accessories, batteries and maintenance items primarily operating within the United States. Our stores carry an extensive product line for cars, vans, sport utility vehicles and light trucks. We serve both "do-it-yourself," or DIY, and "do-it-for-me," or Commercial, customers...

  • Page 16
    ... parts and accessories. Our new website was launched in October 2009 and is operated by our dedicated e-commerce team. Our online website allows our customers to pick up merchandise at a conveniently located store or have their purchases shipped directly to their home or business. AAP Stores Store...

  • Page 17
    ... of services free of charge to our customers including Battery & wiper installation Battery charging Check engine light reading where allowed by law Electrical system testing, including batteries, starters, alternators and sensors "How-To" Video Clinics & Project Brochures Oil and battery recycling...

  • Page 18
    ... and enables our store Team Members to assist our customers in their parts selection and ordering based on year, make, model and engine type of their vehicles. Our centrally-based EPC data management system enables us to reduce the time needed to (i) exchange data with our vendors and (ii) catalog...

  • Page 19
    ... locations Store support center in Roanoke, Virginia, Regional office in Minneapolis, Minnesota; and Global sourcing office in Taipei, Taiwan beginning in 2009. Our Roanoke team is primarily responsible for the parts categories and our Minnesota team is primarily responsible for accessories, oil...

  • Page 20
    ...." This campaign was developed based on a strategic review of our business as well as extensive research conducted with our customers and Team Members. We believe this campaign, which targets core DIY and Commercial customers, differentiates Advance Auto Parts in our industry by positioning us as...

  • Page 21
    ...Autopart International" trade name in the following states: Number of Location Stores Location Number of Stores Location Number of Stores Connecticut Delaware Florida Maine Maryland 17 1 3 4 13 Massachusetts New Hampshire New Jersey New York 32 8 16 25 Pennsylvania Rhode Island Vermont Virginia...

  • Page 22
    ...in customer service, marketing, inventory selection, purchasing and distribution as compared to independent retailers and jobbers that are not part of a chain or associated with other retailers or jobbers. The principal methods of competition in our business include store location, product offerings...

  • Page 23
    ...reduce their willingness or ability to pay for accessories, maintenance or repair of their vehicles, which results in lower sales in our stores. Higher fuel costs may also reduce the overall number of miles driven by our customers resulting in less parts failures and elective maintenance required to...

  • Page 24
    ... recognition, location, price, quality, product availability and customer service. We compete in both the DIY and Commercial categories of the automotive aftermarket industry, primarily with: (i) national and regional retail automotive parts chains, (ii) discount stores and mass merchandisers that...

  • Page 25
    ... a material adverse affect on our business, financial condition, results of operations and cash flow the competitive environment in the automotive aftermarket parts and accessories retail sector that may force us to reduce prices below our desired pricing level or increase promotional spending; our...

  • Page 26
    ...Team Members and customers as a result of changes in management. We are unsure whether we will be successful in overcoming these risks or any other problems encountered with any acquisitions, investments, strategic alliances or related efforts. If we fail to successfully open and operate new stores...

  • Page 27
    ...of crude oil, gasoline, diesel fuel and energy costs. Such price increases would increase the cost of doing business for us and our suppliers, and also would negatively impact our customers' disposable income and have an adverse impact on our business, sales, profit margins and results of operations...

  • Page 28
    ..., Florida Brooklyn Heights, Ohio Chicago, Illinois Rochester, New York Leicester, Massachussetts Washington, DC Houston, Texas Denver, Colorado West Deptford, New Jersey Corporate/Administrative Offices: Roanoke, Virginia Roanoke, Virginia Minneapolis, Minnesota AI Properties: Norton, Massachusetts...

  • Page 29
    ... 2009-2010 2011-2015 2016-2020 2021-2030 2031-2040 2041-2057 AAP Stores 22 251 626 739 836 124 2,598 AI Stores 6 67 44 39 - 156 Total 28 318 670 778 836 124 2,754 Item 3. Legal Proceedings. We currently and from time to time are involved in litigation incidental to the conduct of our business...

  • Page 30
    .... Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol "AAP." The table below sets forth, for the fiscal periods indicated, the high and low sale prices per share for our common stock, as reported by the NYSE. High Low Fiscal Year Ended January 2, 2010 Fourth Quarter...

  • Page 31
    ... of Cumulative Five Year Total Return $200 $150 $100 $50 $0 Jan 1, 2005 Dec 31, 2005 Dec 30, 2006 Dec 29, 2007 Jan 3, 2009 Jan 2, 2010 Advance Auto Parts S&P 500 Index S&P 500 Specialty Retail Index Company / Index Advance Auto Parts S&P 500 Index S&P 500 Specialty Retail Index Jan 1, 2005...

  • Page 32
    ...New stores Closed stores Number of stores, end of period Relocated stores Stores with commercial delivery program, end of period Total commercial sales, as a percentage of total sales SG&A expenses per store (in 000s) (9)(10)(15) Operating income per team member (in 000s) (11)(15) Total store square...

  • Page 33
    ... and ending total store square footage for the respective period. Excluding the net sales impact of the 53rd week of Fiscal 2008 of approximately $88.8 million, average net sales per square foot in Fiscal 2008 was $208. This measure is presented in whole dollars. Gross margin return on inventory...

  • Page 34
    ... product line for cars, vans, sport utility vehicles and light trucks. We serve both DIY and Commercial customers. At January 2, 2010, we operated 3,420 stores throughout 39 states, Puerto Rico and the Virgin Islands. We operate in two reportable segments: Advance Auto Parts, or AAP, and Autopart...

  • Page 35
    .... Our Commercial sales, as a percentage of total sales, increased 25 basis points to 32.0% for Fiscal 2009 as compared to Fiscal 2008. We believe our consistent growth in Commercial sales and market share is being driven in part by the investments we have made over the last year and continue to make...

  • Page 36
    ... serve both Commercial and DIY customers, providing sales development and coaching and driving gross profit improvements through new battery warranty procedures, better pricing decisions and improved shrink control. Store Divestiture Plan For Fiscal 2009, we divested a total of 45 stores that were...

  • Page 37
    ...as we strive to become the industry leader. Store Development by Segment The following table sets forth the total number of new, closed and relocated stores and stores with Commercial delivery programs during Fiscal 2009, 2008 and 2007. We lease approximately 81% of our stores. AAP 2009 3,243 75 (54...

  • Page 38
    ... analysis of product sales and (iii) current market conditions. We also provide reserves when less than full credit is expected from a vendor or when liquidating product will result in retail prices below recorded costs. At the end of Fiscal 2008, we reviewed our inventory productivity and changed...

  • Page 39
    ...relieved at the same rate as additional reserves are added each year. We have experienced an increase in overall claims during the last three years which is generally reflective of our overall growth, including an increase in total stores, team members and Commercial delivery vehicles. While we have...

  • Page 40
    ...the fiscal year ended January 2, 2010. Components of Statement of Operations Net Sales Net sales consist primarily of merchandise sales from our retail store locations to both our DIY and Commercial customers. Our total sales growth is comprised of both comparable store sales and new store sales. We...

  • Page 41
    ... expenses, including salaries and related benefits of store support center Team Members, share-based compensation expense, store support center administrative office expenses, data processing, professional expenses, self-insurance costs, closed store expense, impairment charges, if any, and other...

  • Page 42
    ... the 53rd week in Fiscal 2008, the increase in gross profit rate was 149 basis points. This increase in gross profit as a percentage of net sales was primarily due to continued investments in pricing and merchandising capabilities (including global sourcing), increased parts availability resulting...

  • Page 43
    ....5 million in sales from the 53rd week and sales from the 90 net new stores opened within Fiscal 2008. The AAP comparable store sales increase was driven by (i) an increase in average ticket sales and customer traffic in our Commercial business and (ii) an increase in average ticket sales by our DIY...

  • Page 44
    ... of $0.10. Quarterly Consolidated Financial Results (in thousands, except per share data) 16-Weeks Ended 4/19/2008 $ 1,526,132 724,854 82,086 12-Weeks Ended 7/12/2008 $ 1,235,783 586,282 75,386 12-Weeks Ended 10/4/2008 $ 1,187,952 562,175 56,155 13-Weeks Ended 1/3/2009 $ 1,192,388 525,813 24,411...

  • Page 45
    ...common stock on the open market or in privately negotiated transactions from time to time in accordance with the requirements of the Securities and Exchange Commission. During Fiscal 2009, we repurchased 2.5 million shares of common stock at an aggregate cost of $99.6 million, or an average price of...

  • Page 46
    ... in the form of pricing, payment terms or vendor funding, created by facilitating our suppliers' ability to finance payment obligations at more favorable discount rates, while providing them with greater working capital flexibility. Any deterioration in the credit markets could adversely impact our...

  • Page 47
    ...of $78.6 million in net borrowings primarily under our credit facilities; and a $7.3 million decrease in additional tax benefits associated with the decreased number of stock options exercised. Off-Balance-Sheet Arrangements As of January 2, 2010, we had no off-balance-sheet arrangements as defined...

  • Page 48
    ... primarily the principal amounts due under our term loan and revolving credit facility, which become due in October 2011. We lease certain store locations, distribution centers, office space, equipment and vehicles. Our property leases generally contain renewal and escalation clauses and other...

  • Page 49
    ...addition, if our credit ratings decline, our access to financing may become more limited. Recent Accounting Developments We adopted several new accounting pronouncements as of the beginning of Fiscal 2009. Earnings per Share Earnings per share is determined using the two-class method and is computed...

  • Page 50
    ... 2010. Amounts presented may not be outstanding for the entire year. Item 8. Financial Statements and Supplementary Data. See financial statements included in Item 15 "Exhibits, Financial Statement Schedules" of this annual report. Item 9. Changes in and Disagreements with Accountants on Accounting...

  • Page 51
    ... that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions...

  • Page 52
    ... No. 1 - Election of Directors," "Corporate Governance," "Meetings and Committees of the Board," "Information Concerning Our Executive Officers," "Audit Committee Report," and "Section 16(a) Beneficial Ownership Reporting Compliance" in our proxy statement for the 2010 annual meeting of stockholders...

  • Page 53
    ... Audited Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries for the years ended January 2, 2010, January 3, 2009 and December 29, 2007: Management's Report on Internal Control over Financial Reporting ...F-1 Reports of Independent Registered Public Accounting Firm...

  • Page 54
    ... the Securities Exchange Act of 1934, as amended. The Company's internal control over financial reporting is a process designed under the supervision of the Company's principal executive officer and principal financial officer, and effected by the Company's Board of Directors, management and other...

  • Page 55
    ... To the Board of Directors and Stockholders of Advance Auto Parts, Inc. and Subsidiaries Roanoke, Virginia We have audited the accompanying consolidated balance sheets of Advance Auto Parts, Inc. and subsidiaries (the "Company") as of January 2, 2010 and January 3, 2009, and the related consolidated...

  • Page 56
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Advance Auto Parts, Inc. and Subsidiaries Roanoke, Virginia We have audited the internal control over financial reporting of Advance Auto Parts, Inc. and subsidiaries (the "Company") as of January 2, 2010 based on...

  • Page 57
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS January 2, 2010 and January 3, 2009 (in thousands, except per share data) January 2, 2010 $ 100,018 92,560 1,631,867 63,173 1,887,618 1,100,338 1,492 34,387 26,419 22,709 3,072,963 $ January 3, 2009 37,358 97,203 1,623,088 49,977 ...

  • Page 58
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) 2009 (52 weeks) Fiscal Years 2008 (53 weeks) 2007 (52 weeks) Net sales Cost of sales, including ...

  • Page 59
    ... of stock options T ax benefit from share-based compensation Issuance of restricted stock, net of forfeitures Amortization of restricted stock balance Share-based compensation Stock issued under employee stock purchase plan T reasury stock purchased T reasury stock retired Cash dividends...

  • Page 60
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands) Fiscal Years 2008 (53 weeks) $ 238,038 $ 2009 (52 weeks) Cash flows from operating activities: Net income Adjustments to ...

  • Page 61
    ... the Years Ended January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands) 2009 (52 weeks) Supplemental cash flow information: Interest paid Income tax payments, net Non-cash transactions: Accrued purchases of property and equipment Repurchases of common stock not settled Retirement of...

  • Page 62
    ... with delivery service to Commercial customers' places of business, including independent garages, service stations and auto dealers. In addition, the Company operates 26 stores located in Puerto Rico and the Virgin Islands under the "Western Auto" and "Advance Auto Parts" trade names. Autopart...

  • Page 63
    ... the credit risk of specific customers or vendors, historical payment trends, current economic conditions and other relevant information regarding the debtor's ability to pay. The Company also extends credit to certain Commercial customers through a third-party provider of private label credit cards...

  • Page 64
    ... by the Company primarily includes batteries but may also include other parts such as brakes and shocks. The Company estimates its warranty obligation at the time of sale based on the historical return experience, sales level and cost of the respective product sold. To the extent vendors provide...

  • Page 65
    ...share data) Revenue Recognition The Company recognizes revenue at the time the sale is made, and at which time the Company's walk-in customers take immediate possession of the merchandise or same-day delivery is made to the Company's commercial delivery customers. Sales are recorded net of discounts...

  • Page 66
    ... is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the purchase method. The Company tests goodwill and indefinite-lived intangible assets for impairment annually as of the first day of the fiscal fourth quarter...

  • Page 67
    ... stock options, and stock appreciation rights (collectively "share-based awards"). Diluted earnings per share are calculated by including the effect of dilutive securities. Lease Accounting The Company leases certain store locations, distribution centers, office space, equipment and vehicles...

  • Page 68
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Expenditures for ...

  • Page 69
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Cost of Sales Æ" Total cost of merchandise sold including: - Freight expenses associated with moving merchandise ...

  • Page 70
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Effective July 18, 2009 (the Company's second quarter), the Company adopted FSP No. FAS 157-4, "Determining Fair Value...

  • Page 71
    ... to prepare inventory for sale to the customer and it is consistent with the Company's treatment of other handling costs associated with moving merchandise inventories from our distribution centers to our retail stores. The change in accounting principle has been retrospectively applied to all prior...

  • Page 72
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Fifty-Two week period ended January 2, 2010 Prior to Effect of Accounting Change Adjustments As Reported Cost of sales...

  • Page 73
    ... discounted based on a risk-free rate of return. This impairment charge is included in SG&A of the accompanying consolidated statements of operations. 5. Inventories, net: Merchandise Inventory The Company uses the LIFO method of accounting for approximately 95% of inventories at January 2, 2010...

  • Page 74
    ... of product sales and (iii) current market conditions. The Company provides reserves when less than full credit is expected from a vendor or when liquidating product will result in retail prices below recorded costs. At the end of Fiscal 2008, the Company reviewed its inventory productivity and...

  • Page 75
    ... for $200 in connection with an acquisition of a small retail chain. During the first quarter of Fiscal 2008, the Company acquired from a Kentucky entity for $1,750 the limited territorial rights the Kentucky entity had in the "Advance Auto Parts" trademark, ownership of certain websites and . F-22

  • Page 76
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) access to the Louisville, Kentucky market. This acquisition improved the Company's trademark rights, opened a new ...

  • Page 77
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) The table below presents the fair value of the Company's derivative financial instruments as well as their ...

  • Page 78
    .... The following table sets forth the Company's financial liabilities that were measured at fair value on a recurring basis during the 2009 fiscal year, including at January 2, 2010: Fair Value Measurements at Reporting Date Using Level 1 Level 2 Level 3 Quoted Prices in Active Markets for Identical...

  • Page 79
    ...store assets in its store divestiture plan to their estimated fair value of zero. The fair values were determined based on the income approach, in which the Company utilized internal cash flow projections over the life of the underlying lease agreements discounted based on a risk-free rate of return...

  • Page 80
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) The interest rate on the term loan is based, at the Company's option, on an adjusted LIBOR rate, plus a margin, or an...

  • Page 81
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Original Useful Lives Land and land improvements Buildings Building and leasehold improvements Furniture, fixtures and...

  • Page 82
    ... open market or in privately negotiated transactions from time to time in accordance with the requirements of the Securities and Exchange Commission. During Fiscal 2009, the Company repurchased 2,467 shares of its common stock at an aggregate cost of $99,567, or an average price of $40.36 per share...

  • Page 83
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) 2007, respectively, were not included in the calculation of diluted earnings per share because they are anti-dilutive....

  • Page 84
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) The provision (benefit) for income taxes differed from the amount computed by applying the federal statutory income ...

  • Page 85
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) January 2, 2010 Current deferred income tax assets (liabilities): Inventory valuation differences Accrued medical and ...

  • Page 86
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) significantly over the next 12 months. During the next 12 months, it is possible the Company could conclude on ...

  • Page 87
    ... Member benefit plan, which covers substantially all Team Members after one year of service and who have attained the age of 21. The plan allows for Team Member salary deferrals, which are matched at the Company's discretion. Company contributions were $9,277, $9,117 and $8,234 in Fiscal 2009, 2008...

  • Page 88
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Deferred Compensation The Company maintains a non-qualified deferred compensation plan for certain Team Members. This...

  • Page 89
    ...share data) and interest cost would have been a decrease of $10 for Fiscal 2009. The postretirement benefit obligation and net periodic postretirement benefit cost was computed using the following weighted average discount rates as determined by the Company's actuaries for each applicable year: 2009...

  • Page 90
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Officer, or CFO, hired in early Fiscal 2008. The 2008 grants to the Company's CEO and CFO awarded at their initial ...

  • Page 91
    ... stock options granted during the fiscal years ended January 2, 2010, January 3, 2009 and December 29, 2007, was $12.98, $8.66 and $11.39 per share, respectively. The aggregate intrinsic value reflected in the table is based on the Company's closing stock price of $40.48 as of the last trading day...

  • Page 92
    ... stock is determined based on the market price of the Company's common stock on the date of grant. The weighted average fair value of shares granted during Fiscal 2009 and 2008 was $39.53 and $32.21 per share, respectively. The total grant date fair value of shares vested during Fiscal 2009 and 2008...

  • Page 93
    ...Deferred Stock Units The Company grants share-based awards annually to its Board of Directors in connection with its annual meeting of stockholders. The Company grants DSUs as provided for in the Advance Auto Parts, Inc. Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives, or...

  • Page 94
    ... the 2004 Plan. The Company issues new shares of common stock upon exercise of stock options and SARs. Employee Stock Purchase Plan The Company also offers an ESPP. Eligible Team Members may purchase the Company's common stock at 95% of its fair market value on the date of purchase. There are annual...

  • Page 95
    ... financial information for each of the Company's business segments for the years ended January 2, 2010 and January 3, 2009, respectively. 2009 Net Sales AAP AI Eliminations (1) Total net sales Percentage of Sales, by Product Group in AAP Segment Parts and Batteries Accessories Chemicals Oil...

  • Page 96
    ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) (1) For Fiscal 2009, eliminations represent net sales of $3,764 from AAP to AI and $4,505 from AI to AAP. (2) Sales ...

  • Page 97
    ... the Board of Directors and Stockholders of Advance Auto Parts, Inc. and Subsidiaries Roanoke, Virginia We have audited the consolidated financial statements of Advance Auto Parts, Inc. and subsidiaries (the "Company") as of January 2, 2010 and January 3, 2009, and for each of the three years in the...

  • Page 98
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Condensed Parent Company Balance Sheets January 2, 2010 and January 3, 2009 (in thousands, except per share data) January 2, 2010 Assets Cash and cash equivalents Other current assets Property and equipment, net ...

  • Page 99
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Condensed Parent Company Statements of Operations For the Years Ended January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands, except per share data) Fiscal Years 2008 (53 Weeks) 2009 (52 Weeks) ...

  • Page 100
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Condensed Parent Company Statements of Cash Flows For the Years Ended January 2, 2010, January 3, 2009 and December 29, 2007 (in thousands) Fiscal Years 2008 (53 Weeks) 2009 (52 Weeks) 2007 (52 Weeks) Cash ...

  • Page 101
    ...3, 2009, or Fiscal 2008, included 53 weeks of operations. All other fiscal years presented included 52 weeks of operations. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make...

  • Page 102
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Notes to the Condensed Parent Company Statements January 2, 2010 and January 3, 2009 (in thousands, except per share data) Accumulated Other Comprehensive Income (Loss) The purpose of reporting Accumulated ...

  • Page 103
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Notes to the Condensed Parent Company Statements January 2, 2010 and January 3, 2009 (in thousands, except per share data) New Accounting Pronouncements In June 2009, the Financial Accounting Standards Board, or ...

  • Page 104
    ADVANCE AUTO PARTS, INC. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT Notes to the Condensed Parent Company Statements January 2, 2010 and January 3, 2009 (in thousands, except per share data) all activity through March 2, 2010 (the issuance date of the financial statements) and ...

  • Page 105
    ... during the period. These amounts did not impact the Company's statement of operations for any year presented. Note: Other valuation and qualifying accounts have not been reported in this schedule because they are either not applicable or because the information has been included elsewhere in this...

  • Page 106
    ... thereunto duly authorized. Dated: March 2, 2010 ADVANCE AUTO PARTS, INC. By: /s/ Michael A. Norona Michael A. Norona Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

  • Page 107
    ...Auto 2001 Stock Option Agreement for holders of Discount Auto Parts, Inc. ("Discount") fully converted options. 10.11(2) Purchase Agreement dated as of October 31, 2001 among Advance Stores, Advance Trucking Corporation, LARALEV, INC., Western Auto Supply Company, J.P. Morgan Securities Inc., Credit...

  • Page 108
    ...November 17, 2008. 10.41 First Amendment to the Advance Auto Parts, Inc. Deferred Compensation Plan (as amended and restated effective as of January 1, 2009). 10.42 First Amendment to the Advance Auto Parts, Inc. Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives (as amended...

  • Page 109
    ... on November 12, 2008 as an exhibit to the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. Filed on November 21, 2008 as an exhibit to Current Report on Form 8-K of Advance Auto Parts, Inc. Filed on June 4, 2009 as an exhibit to the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc.

  • Page 110
    Advance Auto Parts | 2009 Annual Report Stockholder Information Corporate Offices: 5008 Airport Road Roanoke, Virginia 24012 (540) 362-4911 Internet Site: www.AdvanceAutoParts.com Annual Meeting: May 19, 2010 at 8:30 a.m. (EDT) The Hotel Roanoke and Conference Center 110 Shenandoah Avenue, NW ...

  • Page 111
    ... and Marketing, GSI Commerce, Inc. Frances X. Frei (4) UPS Foundation Professor of Service Management, Harvard Business School's Technology and Operations Management Department Darren R. Jackson Chief Executive Officer, Advance Auto Parts, Inc. William S. Oglesby (3*) Senior Managing Director, The...

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    5008 Airport Road Roanoke, Virginia 24012 (540) 362- 4911 AdvanceAutoParts.com