Advance Auto Parts 2003 Annual Report Download - page 34

interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest
after that date. The interpretation applies in the first fiscal
year or interim period beginning after June 15, 2003, to
variable interest entities in which an enterprise holds a vari-
able interest that it acquired before February 1, 2003. The
Company does not have interests in variable interest
entities; therefore, the adoption of Interpretation No. 46 had
no impact on its financial position or results of operations.
In December 2002, the FASB issued SFAS No. 148,
“Accounting for Stock-Based Compensation—Transition and
Disclosure an Amendment of FASB Statement No. 123.”
This statement amends SFAS 123, “Accounting for Stock-
Based Compensation” to allow for alternative methods of
transition for a voluntary change to the fair value based
method of accounting for stock issued to employees, who
the Company refers to as team members. This statement
also amends FASB No. 123 to require disclosure of the
accounting method used for valuation in both annual and
interim financial statements. This statement permits an
entity to recognize compensation expense under the
prospective method, modified prospective method or the
retroactive restatement method. If an entity elects to adopt
this statement, fiscal years beginning after December 15,
2003 must include this change in accounting for employee
stock-based compensation. The Company has adopted the
enhanced disclosure requirements of SFAS No. 148 and
accordingly included the related disclosures in these footnotes.
The Company has concluded that it will continue to account
for employee stock-based compensation in accordance with
Accounting Principles Board No. 25, “Accounting for Stock
Issued to Employees.”
In July 2003 (as subsequently updated in November 2003),
the FASB released EITF Issue No. 03-10, “Application of
Issue No. 02-16 by Resellers to Sales Incentives Offered to
Customers by Manufacturers.” This EITF addresses
whether a reseller should account for consideration received
from a vendor that is a reimbursement by the vendor for
honoring the vendor’s sales incentives offered directly to
consumers in accordance with the guidance in EITF Issue
No. 02-16. For purposes of this Issue, the “vendor’s sales
incentive offered directly to consumers” is limited to a ven-
dor’s incentive (i) that can be tendered by a consumer at
resellers that accept manufacturer’s incentives in partial (or
full) of the price charged by the reseller for the vendor’s
product, (ii) for which the reseller receives a direct reim-
bursement from the vendor (or a clearinghouse authorized
by the vendor) based on the face amount of the incentive,
(iii) for which the terms of reimbursement to the reseller for
the vendor’s sales incentive offered to the consumer must
not be influenced by or negotiated in conjunction with any
other incentive arrangements between the vendor and the
reseller but, rather may only be determined by the terms
of the incentive offered to consumers and (iv) whereby
the reseller is subject to an agency relationship with the
vendor, whether expressed or implied, in the sales incentive
transaction between the vendor and the consumer. The
consensus is that sales incentives that meet all of such
criteria are not subject to the guidance in Issue No. 02-16.
The release is effective for fiscal periods beginning after
November 25, 2003. The Company is currently evaluating the
effect of this release and does not expect that the adoption
will have a material impact on its financial position or
results of operations.
In December 2003, the FASB issued SFAS No. 132R,
“Employers’ Disclosures about Pensions and Other Post-
retirement Benefits.” SFAS No. 132R amends the disclosure
requirements of SFAS No. 132 to require additional disclo-
sures about assets, obligations, cash flow and net periodic
benefit cost of defined benefit pension plans and other
defined postretirement plans. This statement is effective for
fiscal periods ending after December 15, 2003 and for
interim periods beginning after December 15, 2003. The
Company adopted this statement during the fourth quarter of
fiscal 2003 and accordingly included the related disclosures
in the other benefits footnote.
Reclassifications
Certain items in the fiscal 2002 financial statements have
been reclassified to conform with the fiscal 2003 presentation.
3—Discontinued Operations
On December 19, 2003, the Company discontinued the
supply of merchandise to its Wholesale Distribution
Network, or Wholesale. Wholesale consisted of independ-
ently owned and operated dealer locations, for which the
Company supplied merchandise inventory. This component
of the Company’s business operated in the Company’s
previously reported wholesale segment. The Company has
accounted for the discontinuance of the wholesale segment
in accordance with SFAS No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets.” The
Company has classified these operating results as discontin-
ued operations in the accompanying consolidated statements
of operations for the fiscal years ended January 3, 2004,
December 28, 2002 and December 29, 2001. For the fiscal
years ended January 3, 2004, December 28, 2002 and
December 29, 2001, the Wholesale Distribution Network
had revenues of $52,486, $83,743 and $97,893, respectively.
At January 3, 2004, the Wholesale Distribution Network
assets were not significant to the accompanying consoli-
dated balance sheet.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 3, 2004, December 28, 2002 and December 29, 2001
(in thousands, except per share data)
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