Advance Auto Parts 2003 Annual Report Download - page 46

For each of the Company’s option grants during fiscal years 2003, 2002 and 2001, the Company granted options at
prices consistent with the market price of its stock on each respective grant date. Information related to the Company’s
options by range of exercise prices is as follows:
Weighted-Average
Number Weighted-Average Remaining Contractual Number Weighted Price of
of Shares Exercise Price of Life of Outstanding of Shares Exercise Price of
Outstanding Outstanding Shares Shares (in Years) Exercisable Exercisable Shares
$ 5.00–$ 9.99 ..................................................... 1,144 $ 8.35 3.0 1,140 $ 8.35
$10.00–$19.99 ..................................................... 2,016 11.39 4.4 1,776 11.38
$20.00–$29.99 ..................................................... 2,141 20.94 5.6 348 22.48
$30.00–$39.99 ..................................................... 110 37.00 6.7 — —
5,411 $15.05 4.7 3,264 $11.51
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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As permitted under SFAS No. 123, “Accounting for
Stock-Based Compensation,” the Company accounts for its
stock options using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, “Accounting
for Stock Issued to Employees,” or APB No. 25. Under
APB No. 25, compensation cost for stock options is meas-
ured as the excess, if any, of the market price of the
Company’s common stock at the measurement date over
the exercise price. Accordingly, the Company has not
recognized compensation expense on the issuance of its
Fixed Options because the exercise price equaled the fair
market value of the underlying stock on the grant date.
The excess of the fair market value per share over the
exercise price per share for the Performance Options and
Variable Options, up to the above-mentioned amendment in
December 2001, was recorded as outstanding stock options
in additional paid-in capital. The Company recorded
compensation expense related to the Performance Options
and Variable Options of $11,735 (including the charge
discussed above) in non-cash stock option compensation
expense in the accompanying consolidated statements of
operations for the fiscal year ended December 29, 2001. No
compensation expense was required for the fiscal years
ended January 3, 2004 and December 28, 2002.
During fiscal 2002, the Company established an
employee stock purchase plan under which all eligible team
members may purchase common stock at 85% of fair market
value (determined quarterly) through payroll deductions.
There are annual limitations on team member purchases of
either $25,000 per team member or ten percent of compen-
sation, whichever is less. Under the plan, team members
purchased 147 and 28 shares in fiscal years 2003 and 2002,
respectively. In May 2002, the Company registered 1,400
shares with the Securities and Exchange Commission to be
issued under the plan.
21—Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents,
receivables, bank overdrafts, accounts payable, borrowings
secured by receivables and current portion of long-term
debt approximates fair value because of the short maturity
of those instruments. The carrying amount for variable rate
long-term debt approximates fair value for similar issues
available to the Company. The fair value of all fixed rate
long-term debt was determined based on current market
prices, which approximated $435,240 (carrying value of
$402,733) at December 28, 2002. There was no fixed rate
long-term debt outstanding at January 3, 2004 as a result of
the redemption completed in April 2003.