Napa Auto Parts 2010 Annual Report Download - page 4

Table of Contents
The Company has a 15% interest in Mitchell Repair Information (“MRIC”), a subsidiary of Snap-on Incorporated. MRIC is a
leading automotive diagnostic and repair information company with over 40,000 North American subscribers linked to its services and
information databases. MRIC’s core product, “Mitchell ON-DEMAND,” is a premier electronic repair information source in the
automotive aftermarket.
The Company’s NAPA automotive parts distribution centers distribute replacement parts (other than body parts) for substantially
all motor vehicle makes and models in service in the United States, including imported vehicles, trucks, SUVs, buses, motorcycles,
recreational vehicles and farm vehicles. In addition, the Company distributes replacement parts for small engines, farm equipment and
heavy duty equipment. The Company’s inventories also include accessory items for such vehicles and equipment, and supply items
used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and
truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform
their own maintenance and parts installation. Although the Company’s domestic automotive operations purchase from approximately 100
different suppliers, approximately 52% of 2010 automotive parts inventories were purchased from 10 major suppliers. Since 1931, the
Company has had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.
Distribution System. In 2010, the Company operated 58 domestic NAPA automotive parts distribution centers located in 39 states
and approximately 1,000 domestic company-owned NAPA AUTO PARTS stores located in 42 states. At December 31, 2010, the
Company owned either a noncontrolling or controlling interest in two corporations, which operated approximately 19 auto parts stores in
three states, and a wholly-owned subsidiary corporation operating three distribution centers in two states.
NAPA Canada/UAP, founded in 1926, is a Canadian leader in the distribution and marketing of replacement parts and accessories
for automobiles and trucks. NAPA Canada/UAP employs approximately 3,500 people and operates a network of 12 distribution centers
supplying approximately 590 NAPA stores and 98 Traction wholesalers. Traction is a supplier of parts to small and large fleet owners
and operators and, together with NAPA stores, is a significant supplier to the mining and forestry industries. The NAPA stores and
Traction in Canada include approximately 189 company owned stores, 30 joint venture or progressive owners in which NAPA
Canada/UAP owns a 50% interest and approximately 469 independently owned stores. NAPA and Traction operations supply bannered
installers and independent installers in all provinces of Canada, as well as networks of service station and repair shops operating under
the banners of national accounts. UAP is a licensee of the NAPA® name in Canada.
In Canada, Altrom Canada Corp. operates 15 import automotive parts distribution centers. In the United States, Altrom America
operates two import automotive parts distribution centers.
In Mexico, Auto Todo owns and operates 10 distribution centers, four auto parts stores and four tire centers. Auto Todo is a licensee
of the NAPA® name in Mexico.
The Company’s domestic distribution centers serve approximately 4,700 independently owned NAPA AUTO PARTS stores located
throughout the United States. NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket.
Collectively, these independent automotive parts stores account for approximately 66% of the Company’s total U.S. Automotive sales and
27% of the Company’s total sales, with no automotive parts store or group of automotive parts stores with individual or common
ownership accounting for more than 0.25% of the total sales of the Company.
Products. Distribution centers have access to over 420,000 different parts and related supply items. Each item is cataloged and
numbered for identification and accessibility. Significant inventories are carried to provide for fast and frequent deliveries to customers.
Most orders are filled and shipped the same day as received. The majority of sales are on terms that require payment within 30 days of the
statement date. The Company does not manufacture any of the products it distributes. The majority of products are distributed under the
NAPA® name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these products. Traction
sales also include products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market.
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