x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
54-2049910
(I.R.S.
Employer
Identification No.)
|
ITEM 1. |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
ADVANCE AUTO PARTS, INC. AND
SUBSIDIARIES
|
July
14,
|
December
30,
|
|||||||
Assets
|
2007
|
2006
|
||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
82,647
|
$ |
11,128
|
||||
Receivables,
net
|
90,689
|
97,046
|
||||||
Inventories,
net
|
1,560,507
|
1,463,340
|
||||||
Other
current assets
|
45,128
|
40,459
|
||||||
Total
current assets
|
1,778,971
|
1,611,973
|
||||||
Property
and equipment, net of accumulated depreciation of
|
||||||||
$727,145
and $670,571
|
1,019,252
|
994,977
|
||||||
Assets
held for sale
|
2,796
|
1,548
|
||||||
Goodwill
|
33,718
|
33,718
|
||||||
Intangible
assets, net
|
27,345
|
27,926
|
||||||
Other
assets, net
|
13,307
|
12,539
|
||||||
$ |
2,875,389
|
$ |
2,682,681
|
|||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Bank
overdrafts
|
$ |
15,771
|
$ |
34,206
|
||||
Current
portion of long-term debt
|
68
|
67
|
||||||
Financed
vendor accounts payable
|
154,695
|
127,543
|
||||||
Accounts
payable
|
736,563
|
651,587
|
||||||
Accrued
expenses
|
298,097
|
252,975
|
||||||
Other
current liabilities
|
44,420
|
47,042
|
||||||
Total
current liabilities
|
1,249,614
|
1,113,420
|
||||||
Long-term
debt
|
350,332
|
477,173
|
||||||
Other
long-term liabilities
|
63,418
|
61,234
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, nonvoting, $0.0001 par value,
|
||||||||
10,000
shares authorized; no shares issued or outstanding
|
-
|
-
|
||||||
Common
stock, voting, $0.0001 par value, 200,000
|
||||||||
shares
authorized; 107,057 shares issued and 106,962 outstanding
|
||||||||
in
2007 and 105,351 issued and outstanding in 2006
|
11
|
11
|
||||||
Additional
paid-in capital
|
467,782
|
414,153
|
||||||
Treasury
stock, at cost, 95 shares
|
(3,898 | ) |
-
|
|||||
Accumulated
other comprehensive income
|
5,435
|
3,472
|
||||||
Retained
earnings
|
742,695
|
613,218
|
||||||
Total
stockholders' equity
|
1,212,025
|
1,030,854
|
||||||
$ |
2,875,389
|
$ |
2,682,681
|
|||||
Twelve
Week Periods Ended
|
Twenty-Eight
Week Periods Ended
|
|||||||||||||||
July
14,
|
July
15,
|
July
14,
|
July
15,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
sales
|
$ |
1,169,859
|
$ |
1,107,857
|
$ |
2,637,979
|
$ |
2,500,867
|
||||||||
Cost
of sales, including purchasing and warehousing
costs
|
606,998
|
580,498
|
1,365,715
|
1,308,340
|
||||||||||||
Gross
profit
|
562,861
|
527,359
|
1,272,264
|
1,192,527
|
||||||||||||
Selling,
general and administrative expenses
|
445,051
|
416,913
|
1,019,761
|
955,783
|
||||||||||||
Operating
income
|
117,810
|
110,446
|
252,503
|
236,744
|
||||||||||||
Other,
net:
|
||||||||||||||||
Interest
expense
|
(7,392 | ) | (8,752 | ) | (18,666 | ) | (18,915 | ) | ||||||||
Other
income (expense), net
|
508
|
(21 | ) |
850
|
599
|
|||||||||||
Total
other, net
|
(6,884 | ) | (8,773 | ) | (17,816 | ) | (18,316 | ) | ||||||||
Income
before provision for income taxes
|
110,926
|
101,673
|
234,687
|
218,428
|
||||||||||||
Provision
for income taxes
|
42,502
|
38,737
|
90,162
|
81,411
|
||||||||||||
Net
income
|
$ |
68,424
|
$ |
62,936
|
$ |
144,525
|
$ |
137,017
|
||||||||
Basic
earnings per share
|
$ |
0.64
|
$ |
0.60
|
$ |
1.36
|
$ |
1.28
|
||||||||
Diluted
earnings per share
|
$ |
0.64
|
$ |
0.59
|
$ |
1.35
|
$ |
1.27
|
||||||||
Average
common shares outstanding
|
106,486
|
105,650
|
106,034
|
106,923
|
||||||||||||
Dilutive
effect of share-based compensation
|
984
|
1,143
|
965
|
1,277
|
||||||||||||
Average
common shares outstanding - assuming dilution
|
107,470
|
106,793
|
106,999
|
108,200
|
||||||||||||
Twenty-Eight
Week Periods Ended
|
||||||||
July
14,
|
July
15,
|
|||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
144,525
|
$ |
137,017
|
||||
Adjustments
to reconcile net income to net cash provided by
|
||||||||
operating
activities:
|
||||||||
Depreciation
and amortization
|
79,436
|
70,860
|
||||||
Amortization
of deferred debt issuance costs
|
120
|
338
|
||||||
Share-based
compensation
|
10,412
|
9,892
|
||||||
Loss
on disposal of property and equipment, net
|
3,990
|
453
|
||||||
Benefit
for deferred income taxes
|
(13,385 | ) | (7,425 | ) | ||||
Excess
tax benefit from share-based compensation
|
(10,618 | ) | (3,427 | ) | ||||
Net
decrease (increase) in:
|
||||||||
Receivables,
net
|
3,101
|
7,395
|
||||||
Inventories,
net
|
(97,167 | ) | (66,027 | ) | ||||
Other
assets
|
(626 | ) |
5,391
|
|||||
Net
increase (decrease) in:
|
||||||||
Accounts
payable
|
84,976
|
59,479
|
||||||
Accrued
expenses
|
69,978
|
44,339
|
||||||
Other
liabilities
|
5,242
|
(861 | ) | |||||
Net
cash provided by operating activities
|
279,984
|
257,424
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(115,652 | ) | (132,015 | ) | ||||
Insurance
proceeds related to damaged property
|
3,251
|
-
|
||||||
Business
acquisitions, net of cash acquired
|
-
|
(12,500 | ) | |||||
Proceeds
from sales of property and equipment
|
1,150
|
6,788
|
||||||
Net
cash used in investing activities
|
(111,251 | ) | (137,727 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Decrease
in bank overdrafts
|
(18,435 | ) | (11,873 | ) | ||||
Increase
in financed vendor accounts payable
|
27,152
|
9,160
|
||||||
Dividends
paid
|
(19,093 | ) | (12,839 | ) | ||||
Borrowings
under credit facilities
|
136,800
|
8,000
|
||||||
Payments
on credit facilities
|
(263,600 | ) | (16,350 | ) | ||||
Proceeds
from the issuance of common stock, primarily exercise
|
||||||||
of
stock options
|
32,599
|
10,586
|
||||||
Excess
tax benefit from share-based compensation
|
10,618
|
3,427
|
||||||
Repurchase
of common stock
|
(3,426 | ) | (137,560 | ) | ||||
Other
|
171
|
97
|
||||||
Net
cash used in financing activities
|
(97,214 | ) | (147,352 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
71,519
|
(27,655 | ) | |||||
Cash
and cash equivalents, beginning of period
|
11,128
|
40,783
|
||||||
Cash
and cash equivalents, end of period
|
$ |
82,647
|
$ |
13,128
|
||||
Supplemental
cash flow information:
|
||||||||
Interest
paid
|
$ |
18,164
|
$ |
14,245
|
||||
Income
tax payments, net
|
74,431
|
54,134
|
||||||
Non-cash
transactions:
|
||||||||
Accrued
purchases of property and equipment
|
19,183
|
37,423
|
||||||
Repurchases
of common stock not settled
|
472
|
-
|
||||||
Retirement
of common stock
|
-
|
79,177
|
||||||
Reclassification
of other comprehensive income
|
1,963
|
1,913
|
||||||
Adoption
of FIN No. 48, net of tax
|
2,275
|
-
|
||||||
1. |
Basis
of Presentation:
|
Cost
of Sales
|
SG&A
|
||||
●
|
Total
cost of merchandise sold including:
|
●
|
Payroll
and benefit costs for retail and corporate team
|
||
–
|
Freight
expenses associated with moving
|
members,
including share-based compensation;
|
|||
merchandise
inventories from our vendors to our
|
●
|
Occupancy
costs of retail and corporate facilities;
|
|||
distribution center; |
●
|
Depreciation
related to retail and corporate assets;
|
|||
–
|
Vendor
incentives;
|
●
|
Advertising;
|
||
–
|
Cash
discounts on payments to vendors;
|
●
|
Costs
associated with our commercial delivery
|
||
●
|
Inventory
shrinkage;
|
|
program,
including payroll and benefit costs,
|
||
●
|
Warranty
costs;
|
|
and
transportation expenses associated with
moving
|
||
●
|
Costs
associated with operating our distribution
|
merchandise
inventories from our retail stores to
|
|||
network, including payroll and benefit costs (and |
our
customer locations;
|
||||
including share-based compensation), occupancy costs |
●
|
Freight
expenses associated with moving merchandise
|
|||
|
and
depreciation; and
|
inventories
from our Local Area Warehouses, or LAWs,
|
|||
●
|
Freight
expenses associated with moving merchandise
|
and
Parts Delivered Quickly warehouses, or PDQs,
|
|||
inventories
from our distribution center to our retail stores.
|
to
our retail stores after the customer has special
|
||||
|
ordered
the merchandise;
|
||||
●
|
Self-insurance
costs;
|
||||
●
|
Professional
services; and
|
||||
●
|
Other
administrative costs, such as credit card service
|
||||
fees,
supplies, travel and lodging.
|
July
14,
2007
|
December
30,
2006
|
|||||||
(28
weeks ended)
|
(52
weeks ended)
|
|||||||
Warranty
reserve, beginning of period
|
$ |
13,069
|
$ |
11,352
|
||||
Reserves
established
|
11,062
|
17,352
|
||||||
Reserves
utilized
|
(9,436 | ) | (15,635 | ) | ||||
Warranty
reserve, end of period
|
$ |
14,695
|
$ |
13,069
|
2.
|
Income
Taxes:
|
3. |
Share-Based
Compensation:
|
Black-Scholes
Option Valuation Assumptions (1)
|
July
14, 2007
|
July
15, 2006
|
||||||
Risk-free
interest rate (2)
|
4.8% | 4.6% | ||||||
Expected
dividend yield (3)
|
0.6% | 0.6% | ||||||
Expected
stock price volatility (4)
|
29.0% | 28.0% | ||||||
Expected
life of stock options and SARs (in months) (5)
|
51
|
44
|
(1) |
Forfeitures
are based on historical experience.
|
(2) |
The
risk-free interest rate is based on a U.S. Treasury constant maturity
interest rate whose term is consistent with the expected life of
the
Company’s stock options.
|
(3) |
The
Company declared its first ever cash dividend beginning in its first
quarter of 2006.
|
(4) |
Expected
volatility is based on the historical volatility of the Company’s common
stock for the period consistent with the expected life of the Company’s
stock options and SARs.
|
(5) |
The
expected life of the Company’s stock options and SARs represents the
estimated period of time until exercise and is based on the Company’s
historical experience of such stock
options.
|
4.
|
Goodwill
and Intangible
Assets:
|
As
of July 14, 2007
|
||||||||||||
|
|
|
|
|||||||||
Acquired
intangible assets
subject
to amortization:
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Book
Value
|
|||||||||
Customer
relationships
|
$ |
9,600
|
$ | (1,694 | ) | $ |
7,906
|
|||||
Other
|
885
|
(246 | ) |
639
|
||||||||
Total
|
$ |
10,485
|
$ | (1,940 | ) | $ |
8,545
|
|||||
Acquired
intangible assets
not
subject to amortization:
|
||||||||||||
Trademark
and tradenames
|
$ |
18,800
|
$ |
-
|
$ |
18,800
|
||||||
Intangible
assets, net
|
$ |
29,285
|
$ | (1,940 | ) | $ |
27,345
|
2007
|
$ |
506
|
||
2008
|
$ |
1,087
|
||
2009
|
$ |
1,087
|
||
2010
|
$ |
1,059
|
||
2011
|
$ |
967
|
AAP
Segment
|
AI
Segment
|
Total
|
||||||||||
Balance
at December 30, 2006
|
$ |
16,093
|
$ |
17,625
|
$ |
33,718
|
||||||
Fiscal
2007 activity
|
-
|
-
|
-
|
|||||||||
Balance
at July 14, 2007
|
$ |
16,093
|
$ |
17,625
|
$ |
33,718
|
5.
|
Receivables:
|
July
14,
2007
|
December
30,
2006
|
|||||||
Trade
|
$ |
15,774
|
$ |
13,149
|
||||
Vendor
|
72,700
|
73,724
|
||||||
Installment
|
215
|
2,336
|
||||||
Insurance
recovery
|
4,204
|
9,676
|
||||||
Other
|
2,729
|
2,801
|
||||||
Total
receivables
|
95,622
|
101,686
|
||||||
Less:
Allowance for doubtful accounts
|
(4,933 | ) | (4,640 | ) | ||||
Receivables,
net
|
$ |
90,689
|
$ |
97,046
|
6.
|
Inventories,
net:
|
July
14,
2007
|
December
30,
2006
|
|||||||
Inventories
at FIFO
|
$ |
1,464,128
|
$ |
1,380,573
|
||||
Adjustments
to state inventories at LIFO
|
96,379
|
82,767
|
||||||
Inventories
at LIFO
|
$ |
1,560,507
|
$ |
1,463,340
|
7.
|
Long-term
Debt:
|
July
14,
2007
|
December
30,
2006
|
|||||||
Senior
Debt:
|
||||||||
Revolving
facility at variable interest rates (6.13%
and 6.13% at July 14, 2007 and December 30, 2006, respectively)
due October 2011
|
$ |
350,000
|
$ |
476,800
|
||||
Other
|
400
|
440
|
||||||
350,400
|
477,240
|
|||||||
Less:
Current portion of long-term debt
|
(68 | ) | (67 | ) | ||||
Long-term
debt, excluding current portion
|
$ |
350,332
|
$ |
477,173
|
8.
|
Comprehensive
Income:
|
Twelve
Weeks Ended
|
Twenty-Eight
Weeks Ended
|
|||||||||||||||
July
14,
2007
|
July
15,
2006
|
July
14,
2007
|
July
15,
2006
|
|||||||||||||
Net
income
|
$ |
68,424
|
$ |
62,936
|
$ |
144,525
|
$ |
137,017
|
||||||||
Unrealized
gain on hedge arrangements, net of tax
|
2,671 |
473
|
2,155
|
1,913
|
||||||||||||
Amortization
of negative prior service cost, net of tax
|
(82 | ) |
-
|
(192 | ) |
-
|
||||||||||
Comprehensive
income
|
$ |
71,013
|
$ |
63,409
|
$ |
146,488
|
$ |
138,930
|
9.
|
Stock
Repurchase
Program:
|
10.
|
Postretirement
Plan:
|
Twelve
Weeks Ended
|
Twenty-Eight
Weeks Ended
|
|||||||||||||||
July
14, 2007
|
July
15, 2006
|
July
14, 2007
|
July
15, 2006
|
|||||||||||||
Interest
cost
|
$ |
127
|
$ |
168
|
$ |
296
|
$ |
391
|
||||||||
Amortization
of negative prior service cost
|
(134 | ) | (135 | ) | (313 | ) | (313 | ) | ||||||||
Amortization
of unrecognized net losses
|
-
|
49
|
-
|
113
|
||||||||||||
$ | (7 | ) | $ |
82
|
$ | (17 | ) | $ |
191
|
11.
|
Segment
and Related
Information:
|
Twelve
Week Periods Ended
|
||||||||||||||||
July
14, 2007
|
AAP
|
AI
|
Eliminations
|
Totals
|
||||||||||||
Net
sales
|
$ |
1,135,986
|
$ |
33,873
|
$ |
-
|
$ |
1,169,859
|
||||||||
Operating
income
|
116,741
|
1,069
|
-
|
117,810
|
||||||||||||
Segment
assets
|
2,735,565
|
139,824
|
-
|
2,875,389
|
||||||||||||
July
15, 2006
|
AAP
|
AI
|
Eliminations
|
Totals
|
||||||||||||
Net
sales
|
$ |
1,081,349
|
$ |
26,508
|
$ |
-
|
$ |
1,107,857
|
||||||||
Operating
income
|
109,030
|
1,416
|
-
|
110,446
|
||||||||||||
Segment
assets
|
2,516,667
|
106,053
|
-
|
2,622,720
|
||||||||||||
Twenty-Eight
Week Periods Ended
|
||||||||||||||||
July
14, 2007
|
AAP
|
AI
|
Eliminations
|
Totals
|
||||||||||||
Net
sales
|
$ |
2,568,099
|
$ |
69,880
|
$ |
-
|
$ |
2,637,979
|
||||||||
Operating
income (loss)
|
253,104
|
(601 | ) |
-
|
252,503
|
|||||||||||
Segment
assets
|
2,735,565
|
139,824
|
-
|
2,875,389
|
||||||||||||
July
15, 2006
|
AAP
|
AI
|
Eliminations
|
Totals
|
||||||||||||
Net
sales
|
$ |
2,442,994
|
$ |
57,873
|
$ |
-
|
$ |
2,500,867
|
||||||||
Operating
income
|
234,670
|
2,074
|
-
|
236,744
|
||||||||||||
Segment
assets
|
2,516,667
|
106,053
|
-
|
2,622,720
|
||||||||||||
1. |
Drive
sales to both “do-it-yourself,” or DIY, and “do-it-for-me,” or DIFM,
customers;
|
|
2. |
Accelerate
plans to reduce selling, general and administrative expenses, some
of
which are already underway;
|
|
3. |
Re-examine
all capital projects; and
|
|
4. |
Begin
implementation of certain initiatives identified in our strategy
review.
|
Twelve
Weeks Ended
|
Twenty-Eight
Weeks Ended
|
|||||||||||||||
July
14, 2007
|
July
15, 2006
|
July
14, 2007
|
July
15, 2006
|
|||||||||||||
Total
net
sales (in thousands)
|
$ |
1,169,859
|
$ |
1,107,857
|
$ |
2,637,979
|
$ |
2,500,867
|
||||||||
Total
commercial net
sales (in thousands)
|
$ |
305,153
|
$ |
273,739
|
$ |
688,446
|
$ |
622,589
|
||||||||
Comparable
store net sales growth
|
1.3%
|
1.2% | 1.2% | 2.7% | ||||||||||||
DIY
comparable store net sales growth
|
(0.1%) | (1.0%) | (0.1%) | (0.1%) | ||||||||||||
DIFM
comparable store net sales growth
|
5.8% | 9.1% | 5.4% | 13.1% | ||||||||||||
Average
net sales per store
(in thousands)
|
$ |
1,547
|
$ |
1,568
|
$ |
1,547
|
$ |
1,568
|
||||||||
Inventory
per store
(in thousands)
|
$ |
490
|
$ |
482
|
$ |
490
|
$ |
482
|
||||||||
Selling,
general and
administrative expenses per store (in
thousands)
|
$ |
140
|
$ |
140
|
$ |
320
|
$ |
322
|
||||||||
Inventory
turnover
|
1.65
|
1.71
|
1.65
|
1.71
|
||||||||||||
Gross
margin
|
48.1% | 47.6% | 48.2% | 47.7% | ||||||||||||
Operating
margin
|
10.1% | 10.0% | 9.6% | 9.5% |
Twelve
Weeks
Ended
July
14, 2007
|
Twenty-Eight
Weeks Ended
July
14, 2007
|
|||||||
Number
of stores at beginning of period
|
3,055
|
2,995
|
||||||
New
stores
|
38
|
100
|
||||||
Closed
stores
|
(6 | ) | (8 | ) | ||||
Number
of stores, end of period
|
3,087
|
3,087
|
||||||
Relocated
stores
|
11
|
19
|
||||||
Stores
with commercial programs
|
2,525
|
2,525
|
Twelve
Weeks
Ended
July
14, 2007
|
Twenty-Eight
Weeks Ended July 14, 2007
|
|||||||
Number
of stores at beginning of period
|
95
|
87
|
||||||
New
stores
|
5
|
13
|
||||||
Closed
stores
|
-
|
-
|
||||||
Number
of stores, end of period
|
100
|
100
|
||||||
Stores
with commercial programs
|
100
|
100
|
Twelve
Week Periods Ended
|
Twenty-Eight
Week Periods Ended
|
|||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
July
14, 2007
|
July
15, 2006
|
July
14, 2007
|
July
15, 2006
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales, including purchasing and
|
||||||||||||||||
warehousing
costs
|
51.9
|
52.4
|
51.8
|
52.3
|
||||||||||||
Gross
profit
|
48.1
|
47.6
|
48.2
|
47.7
|
||||||||||||
Selling,
general and administrative expenses
|
38.0
|
37.6
|
38.7
|
38.2
|
||||||||||||
Operating
income
|
10.1
|
10.0
|
9.6
|
9.5
|
||||||||||||
Interest
expense
|
(0.7 | ) | (0.8 | ) | (0.7 | ) | (0.8 | ) | ||||||||
Other
income (expense), net
|
0.0
|
(0.0 | ) |
0.0
|
0.0
|
|||||||||||
Provision
for income taxes
|
3.6
|
3.5
|
3.4
|
3.2
|
||||||||||||
Net
income
|
5.8 | % | 5.7 | % | 5.5 | % | 5.5 | % |
Twenty-Eight
Week Periods Ended
|
||||||||
July
14, 2007
|
July
15, 2006
|
|||||||
(in
millions)
|
||||||||
Cash
flows from operating activities
|
$ |
280.0
|
$ |
257.4
|
||||
Cash
flows from investing activities
|
(111.3 | ) | (137.7 | ) | ||||
Cash
flows from financing activities
|
(97.2 | ) | (147.4 | ) | ||||
Net
increase (decrease) in cash and
|
||||||||
cash
equivalents
|
$ |
71.5
|
$ | (27.7 | ) |
·
|
a
$7.2 million decrease in cash flows from
excess tax benefits realized from
the increase in exercise of stock options
and reclassified to financing as
a cash inflow;
|
|
·
|
a
$5.6 million decrease in cash flows from inventory,
net of accounts
payable reflective of added parts availability
in selected stores and the
build up of inventory in the new AI distribution
center;
and
|
|
· |
a
$25.6 million increase in cash flows
comprised of other movements in
working capital, including the payment
of a $6.3 million cash dividend
accrued at December 30, 2006 and $4.8
million of property and equipment
additions resulting from the change
in accrued property and
equipment.
|
·
|
a
decrease in capital expenditures of $16.4 million
resulting primarily from
less spending on capital assets in our store
locations, impact of the
reduced scope in remodels and fewer relocations
as compared to the
comparable periods in prior year;
|
|
·
|
a
$12.5 million business acquisition payment in 2006;
and
|
|
· |
a
$5.6 million decrease in proceeds from sales
of property and equipment and
assets held for
sale.
|
·
|
an
$18.0 million increase in cash inflows under our
vendor financing
program;
|
|
·
|
an
increase of $22.0 million from the issuance of common
stock, primarily
resulting from the increase in exercise of stock
options;
|
·
|
a
$7.2 million cash inflow from excess tax benefits realized
from the
increase in exercise of stock options; and
|
|
·
|
a
decrease of $134.1 million in the repurchases of common
stock.
|
·
|
a
$6.6 million cash outflow resulting from the timing
of bank
overdrafts;
|
|
·
|
a
$118.5 million net cash outflow from an increase in net
payments on credit
facilities; and
|
|
· |
$6.3
million of additional cash dividends paid due primarily
to the timing in
payments.
|
Contractual
Obligations
|
Total
|
Fiscal
2007
|
Fiscal
2008
|
Fiscal
2009
|
Fiscal
2010
|
Fiscal
2011
|
Thereafter
|
|||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
Long-term
debt
|
$ |
350,400
|
$ |
28
|
$ |
75
|
$ |
71
|
$ |
73
|
$ |
350,069
|
$ |
84
|
||||||||||||||
Interest
payments
|
$ |
80,342
|
$ |
9,007
|
$ |
20,423
|
$ |
20,505
|
$ |
20,712
|
$ |
9,695
|
$ |
-
|
||||||||||||||
Letters
of credit
|
$ |
66,756
|
$ |
15,551
|
$ |
51,205
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||||||
Operating
leases (1)
|
$ |
2,100,033
|
$ |
107,766
|
$ |
249,103
|
$ |
222,699
|
$ |
204,147
|
$ |
182,168
|
$ |
1,134,150
|
||||||||||||||
Purchase
obligations (2)
|
$ |
4,651
|
$ |
3,299
|
$ |
1,352
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||||||
Other
long-term liabilities(3)
|
$ |
63,418
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
(1) |
We
lease certain store locations, distribution centers, office
space,
equipment and vehicles. Our property leases generally contain
renewal and
escalation clauses and other lease concessions. These provisions
are
considered in our calculation of our minimum lease payments
which are
recognized as expense on a straight-line basis over the applicable
lease
term. In accordance with SFAS No. 13. “Accounting for Leases,” as amended
by SFAS No. 29, “Determine Contingent Rental,” any lease payments that are
based upon an existing index or rate are included in our
minimum lease
payment calculations.
|
(2) |
For
the purposes of this table, purchase obligations are defined
as agreements
that are enforceable and legally binding and that specify
all significant
terms, including: fixed or minimum quantities to be purchased;
fixed,
minimum or variable price provisions; and the approximate
timing of the
transaction. Our open purchase orders are based on current
inventory or
operational needs and are fulfilled by our vendors within
short periods of
time. We currently do not have minimum purchase commitments
under our
vendor supply agreements nor are our open purchase orders
for goods and
services binding agreements. Accordingly, we have excluded
open purchase
orders from this table. The
purchase obligations consist of the amount of fuel required
to be
purchased by us under our fixed price fuel supply agreement
and certain
commitments for training and development. These agreements
expire in
February 2008 and March 2008, respectively.
|
|
(3) | Primarily includes employee benefit accruals, restructuring and closed store liabilities and deferred income taxes for which no contractual payment schedule exists and we expect the payments to occur beyond twelve months from July 14, 2007. Additionally, other long-term liabilities included $16.5 million of unrecognized income tax benefits as a result of our adoption of FIN 48 on December 31, 2006. The amount of unrecognized tax benefits did not materially change from December 31, 2006 to July 14, 2007. During the next 12 months, it is possible that we could conclude on $3 to $4 million of the contingencies associated with these tax uncertainties, a portion of which may be settled in cash. We do not anticipate any significant impact on our liquidity and capital resources due to the conclusion of these tax matters. |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
CONTROLS
AND PROCEDURES
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Period
|
Total
Number of Shares
Purchased
|
Average
Price
Paid
per
Share (1)
|
Total
Number of Shares Purchased as Part of Publicly Announced
Plans or Programs
(2)
|
Maximum
Dollar Value that May Yet
Be
Purchased Under the Plans or
Programs
(2)(3)
|
||||||||||||
April
22, 2007, to May 19, 2007
|
-
|
$ |
-
|
-
|
$ |
103,987
|
||||||||||
May
20, 2007, to June 16, 2007
|
41
|
41.17
|
41
|
102,291
|
||||||||||||
June
17, 2007, to July 14, 2007
|
54
|
40.57
|
54
|
100,092
|
||||||||||||
Total
|
95
|
$ |
40.83
|
95
|
$ |
100,092
|
(1) |
Average
price paid per share excludes related
expenses paid on previous
repurchases.
|
(2) |
All
of the above repurchases were made
on the open market at prevailing
market
rates plus related expenses under
our stock repurchase program, which
was
authorized by our Board of Directors
and publicly announced on August
17,
2005 for a maximum of $300 million
in common
stock.
|
(3) |
The
maximum dollar value yet to be purchased
under our stock repurchase
program excludes related expenses paid
on previous purchases or
anticipated expenses on future
purchases.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
1. |
Election
of nominees to our
board of directors.
All nominees were elected
as
indicated by the following
vote
counts:
|
Nominee
|
Votes
For
|
Votes
Withheld
|
||
John
C. Brouillard
|
91,009,372
|
468,610
|
||
Lawrence
P. Castellani
|
91,282,349
|
195,633
|
||
Michael
N. Coppola
|
90,529,357
|
948,625
|
||
Darren
R. Jackson
|
91,357,252
|
120,730
|
||
Nicholas
J. LaHowchic
|
91,356,955
|
121,027
|
||
William
S. Oglesby
|
91,354,696
|
123,286
|
||
Gilbert
T. Ray
|
90,813,342
|
664,640
|
||
Carlos
A. Saladrigas
|
91,353,945
|
124,037
|
||
William
L. Salter
|
91,077,976
|
400,006
|
||
Francesca
M. Spinelli
|
91,008,466
|
469,516
|
2. |
The
stockholders voted upon and
approved the ratification
of Deloitte &
Touche LLP as our independent
registered public accounting
firm for 2007.
The vote on the proposal
was as
follows:
|
For
|
Against
|
Abstentions
|
||
91,200,006
|
200,839
|
77,137
|
3. |
The
stockholders voted upon and approved
an amendment to our Long-Term
Incentive Plan, which includes authorization
for 5 million additional
shares. The vote on the proposal
was as
follows:
|
Broker
|
||||||
For
|
Against
|
Abstentions
|
Non-Votes
|
|||
69,334,850
|
10,755,093
|
45,774
|
11,342,265
|
4. |
The
stockholders voted upon and approved
the 2007 Executive Incentive
Plan.
The vote on the proposal was
as
follows:
|
For
|
Against
|
Abstentions
|
||
89,757,293
|
1,668,883
|