(Dollar Amounts in Millions except Per Share Information and as Otherwise Noted)  approximately $13 of additional inventory. The  third factor was the combined impact of the  number of store locations opened (new stores)  and the number of existing stores converted to  the CSP format (converted stores). Combined,  the new stores and converted stores resulted in  approximately $19 of additional inventory. The  final factor was expansion of our manufacturer  direct purchasing. Inventory purchased in this  fashion turns slower than if purchased thru other  suppliers, and resulted in approximately $23 of  additional inventory. While the inventory  growth has impacted the Company’s working  capital model, the added depth of inventory  allowed the Company to avoid certain ‘fill in’  buys during the year. These ‘fill in’ buys, while  a necessary component of our supply chain, are  typically at a premium and adversely impact  gross margins. The Company expects the factors  cited above will cause inventory to grow in  2005. During 2002, the Company began its Customer  Service Project (CSP). This project centers on  stocking a broader inventory in each of our  stores and displaying it so our customers can  service themselves. The Company believes the  CSP will shift our inventory-stocking model  from its historical mix of approximately 60%  store and 40% distribution center to approximately 75% store and 25% distribution  center (DC). We believe this can be accomplished by expanding the inventory in the  stores to the CSP format (discussed below), and  then by subsequently reducing the distribution  center inventory. This would allow us to operate  in the future with inventory turns similar to, or  just slightly lower than, the periods before the  CSP, and would have a lower impact on cash  flows from operations in the future.  The mix of inventory stocked at the store versus  the distribution center locations was as follows: Net cash used in investing activities was: The 2004 increase in net cash used in investing  activities resulted primarily from the increase in  purchases of capital equipment and the reduction  in marketable securities. The 2003 decrease in  net cash used in investing activities resulted  primarily from the reduction in marketable securities, which more than offset the absence of  the proceeds from the DIY Business sale which  the Company received in 2002. The Company had future commitments for leased facilities and for leased vehicles at December 31, 2004. The Company had $9.7 and  $6.5 of long-term debt related to an Industrial  Revenue Bond (IRB) at December 31, 2004 and  2003, respectively. The future contractual cash  obligations related to the commitments are as  follows:  We added $74 to the existing inventories in  2004T. The growth was primarily driven by four  factors. The first factor was the growth of the  Company’s sales, and the inventory necessary to  support the business; this resulted in approximately $19 of additional inventory. The  second factor was the aforementioned price  inflation on inbound product; this resulted in  The inventory stocked under the CSP format  consists of a core stocking level of approximately $62 thousand per location. Existing stores which have not yet converted to  the CSP format stock some, but not all, of the  inventory stocked under the CSP format. Existing stores converted to the CSP format have  experienced increases in their inventory levels as  they fill out the product selection. New stores,  prior to commencement of the CSP, opened with  approximately $25 thousand of inventory per  location, and would grow this amount to approximately $50 thousand after operating for  twelve months. The Company currently intends  to convert approximately 40 stores per month to  the CSP format and to continue opening all new  stores with the CSP format.  2004  $ 43.5  2003  $ 39.7  2002  $ 46.8  2004  2003 2002 Store 64% 67% 53% DC  36% 33% 47% Total  100% 100% 100% Total  2005  2006  &  2007  2008  &  2009  After  2009  Facilities 98.9 34.4 45.9 18.6 — Vehicles 17.3 11.0 6.3 — — IRB 9.7 — — — 9.7 Total 125.9 45.4 52.2 18.6 9.7 2004 ANNUAL REPORT – PAGE 14  2004  $_{ }$ Management’s Discussion & Analysis of Financial Condition & Results of Operations