Advance Auto Parts 2004 Annual Report Download - page 52

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50
Notes฀to฀Consolidated฀Financial฀Statements฀(continued)
For฀the฀Years฀Ended฀January฀1,฀2005,฀January฀3,฀2004,฀and฀December฀28,฀2002฀(in฀thousands,฀except฀per฀share฀data)
฀ 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,฀“Account-
ing฀for฀Stock฀Issued฀to฀Employees,”฀or฀APB฀No.฀25.฀Under฀
APB฀No.฀25,฀compensation฀cost฀for฀stock฀options฀is฀mea-
sured฀ 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฀rec-
ognized฀compensation฀expense฀on฀the฀issuance฀of฀its฀stock฀
options฀because฀the฀exercise฀price฀equaled฀the฀fair฀market฀
value฀of฀the฀ underlying฀stock฀on฀the฀ grant฀date.฀No฀com-
pensation฀expense฀was฀required฀for฀the฀fiscal฀years฀ended฀
January฀1,฀2005,฀January฀3,฀2004฀and฀December฀28,฀2002.
฀ During฀ fiscal฀ 2002,฀ the฀ Company฀ established฀ an฀
employee฀ stock฀ purchase฀ plan.฀ The฀ plan฀ is฀ intended฀ to฀
qualify฀as฀an฀employee฀stock฀purchase฀plan฀under฀Section฀
423฀ of฀ the฀ Internal฀ Revenue฀ Code฀ of฀ 1986,฀ as฀ amended.฀฀
In฀ May฀ 2002,฀ the฀ Company฀ registered฀ 700฀ shares฀ with฀฀
the฀ Securities฀ and฀ Exchange฀ Commission฀ to฀ be฀ issued฀
under฀ the฀ plan.฀ 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฀ 10%฀ of฀ compensation,฀ whichever฀฀
is฀ less.฀ Under฀ the฀ plan,฀ team฀ members฀ purchased฀ 118,฀฀
147฀ and฀ 28฀ shares฀ in฀ fiscal฀ years฀ 2004,฀ 2003฀ and฀ 2002,฀
respectively.
20.฀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.฀There฀was฀no฀fixed฀rate฀long-term฀
debt฀outstanding฀at฀January฀1,฀2005฀or฀January฀3,฀2004.
21.฀Quarterly฀Financial฀Data฀(unaudited)
฀The฀following฀table฀summarizes฀quarterly฀financial฀data฀for฀fiscal฀years฀2004฀and฀2003:
2004(1) First Second Third Fourth
(16฀weeks) (12฀weeks) (12฀weeks) (12฀weeks)
Net฀sales฀.................................................................................................................................... $1,122,918 $908,412 $890,161 $848,806
Gross฀profit฀............................................................................................................................... 520,898 422,302 416,515 393,656
Income฀from฀continuing฀operations฀......................................................................................... 51,343 53,229 51,399 32,056
(Loss)฀income฀on฀discontinued฀operations฀.............................................................................. (52) 6 (6) 13
Net฀income฀................................................................................................................................ 51,291 53,235 51,393 32,069
Basic฀income฀per฀share:
฀ Net฀income฀............................................................................................................................ 0.69 0.71 0.69 0.44
Diluted฀income฀per฀share:
฀ Net฀income฀............................................................................................................................ 0.68 0.70 0.68 0.43
2003(1) First Second Third Fourth
(16฀weeks) (12฀weeks) (12฀weeks) (13฀weeks)
Net฀sales฀.................................................................................................................................... $฀1,005,968 $฀827,348 $฀839,101 $฀821,279
Gross฀profit฀............................................................................................................................... 463,989 379,474 386,928 374,127
Income฀from฀continuing฀operations฀......................................................................................... 3,968 43,291 44,745 33,283
Income฀(loss)฀on฀discontinued฀operations฀............................................................................... 1,073 167 419 (2,011)
Net฀income฀................................................................................................................................ 5,041 43,458 45,164 31,272
Basic฀income฀per฀share:
฀ Net฀income฀............................................................................................................................ 0.07 0.60 0.61 0.42
Diluted฀income฀per฀share:
฀ Net฀income฀............................................................................................................................ 0.07 0.58 0.60 0.41
Note:฀Quarterly฀and฀year-to-date฀computations฀of฀per฀share฀amounts฀are฀made฀independently.฀Therefore,฀the฀sum฀of฀per฀share฀amounts฀for฀the฀quarters฀may฀not฀agree฀
with฀per฀share฀amounts฀for฀the฀year.
(1)฀฀The฀ results฀ of฀ operations฀ for฀ the฀ four฀ quarters฀ of฀ fiscal฀ 2004฀ and฀ fiscal฀ 2003฀ reflect฀ the฀ reclassification฀ of฀ the฀ Wholesale฀ operating฀ results฀ as฀ discontinued฀฀
operations.