Napa Auto Parts 2010 Annual Report Download - page 22

Table of Contents
Net Income
Net income was $476 million in 2010, an increase of 19% from $400 million in 2009. On a per share diluted basis, net income was
$3.00 in 2010 compared to $2.50 in 2009, up 20%. Net income in 2010 was 4.2% of net sales compared to 4.0% of net sales in 2009.
Net income of $400 million in 2009 was down 16% from $475 million in 2008. On a per share diluted basis, net income of $2.50
in 2009 was down 14% compared to $2.92 in 2008. Net income in 2009 was 4.0% of net sales compared to 4.3% of net sales in 2008.
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Our cash balance of $530 million at December 31, 2010 was up $193 million or 57% from December 31, 2009, due primarily to
the increase in net income in 2010 and an improved working capital position relative to 2009. The Company’s accounts receivable
balance at December 31, 2010 increased by approximately 15% from the prior year, which reflects the Company’s 14% sales increase for
the fourth quarter of 2010. Inventory at December 31, 2010 was up slightly from December 31, 2009, which is well below the Company’s
increase in sales and primarily attributable to acquisitions. Accounts payable increased $281 million or approximately 26% from
December 31, 2009 due primarily to increased inventory purchases related to the Company’s sales increase, improved payment terms
with certain suppliers and other payables initiatives such as the ongoing expansion of our procurement card program. Goodwill and other
intangible assets increased by $38 million or 22% from December 31, 2009 due to the Company’s acquisitions during the year. The
change in our December 31, 2010 balance for the pension and other post-retirement benefits liabilities, down $41 million or approximately
14% from December 31, 2009, is primarily due to a change in funded status of the Company’s pension and other post-retirement plans in
2010 and a $91 million pension contribution during the year.
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The Company’s sources of capital consist primarily of cash flows from operations, supplemented as necessary by private
issuances of debt and bank borrowings. We have $500 million of total debt outstanding at December 31, 2010, of which $250 million
matures in November 2011 and is accounted for as current debt at December 31, 2010. The remaining $250 million matures in
November 2013. In addition, the Company has available a $350 million unsecured revolving line of credit. No amounts were outstanding
under the line of credit at December 31, 2010 and 2009. The capital and credit markets were volatile over the last few years, although
these conditions did not materially impact our access to these markets. Currently, we believe that our cash on hand and available short-
term and long-term sources of capital are sufficient to fund the Company’s operations, including working capital requirements, scheduled
debt payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations, dividends, share repurchases
and contemplated acquisitions.
The ratio of current assets to current liabilities was 2.2 to 1 at December 31, 2010, and before consideration of current debt, was 2.6
to 1. This compares to 2.9 to 1 at December 31, 2009. Our liquidity position remains solid. The Company’s $500 million in total debt
outstanding at December 31, 2010 is unchanged from 2009.
Sources and Uses of Net Cash
A summary of the Company’s consolidated statements of cash flows is as follows:
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     
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Operating Activities  $ 845,298 $ 530,309 (20)% 59%
Investing Activities  (264,420) (214,334) (35)% 23%
Financing Activities  (330,383) (472,573) (3)% (30)%
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