Advance Auto Parts 2006 Annual Report Download - page 80

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
December 30, 2006, December 31, 2005 and January 1, 2005
(in thousands, except per share data)
accompanying consolidated balance sheets.
New Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items
at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is
currently evaluating the impact of SFAS No. 159.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158
requires recognition of the overfunded or underfunded status of defined benefit postretirement plans as an asset or
liability in the statement of financial position and to recognize changes in that funded status in comprehensive
income in the year in which the changes occur. SFAS No. 158 also requires measurement of the funded status of a
plan as of the date of the statement of financial position. The Company adopted the recognition provisions of SFAS
No. 158 on December 30, 2006 and recorded a reduction to the liability of $5,357 and increase to other
comprehensive income of $3,316, net of tax (see Note 17). SFAS No. 158 is effective for the measurement date
provisions for fiscal years ending after December 15, 2008. The Company is currently evaluating the impact of
adopting the measurement provisions of SFAS No. 158.
In September 2006, the Securities and Exchange Commission, or SEC, staff issued Staff Accounting Bulletin
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements,” or SAB 108. SAB 108 was issued in order to eliminate the diversity in practice surrounding
how public companies quantify financial statement misstatements. SAB 108 requires that registrants quantify errors
using both a balance sheet and income statement approach and evaluate whether either approach results in a
misstated amount that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is
effective for financial statements covering the first fiscal year ending after November 15, 2006. The Company
adopted SAB 108 for the year ended December 30, 2006 with no impact on its consolidated financial condition,
results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 clarifies the
definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value
measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is
currently evaluating the impact of SFAS No. 157.
In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” or
FIN 48. FIN 48 clarifies the accounting and reporting for income taxes recognized in accordance with SFAS No.
109, “Accounting for Income Taxes.” The interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company will adopt the provisions of FIN 48 as of December 31, 2006. Accordingly, the
Company estimates a cumulative effect adjustment will be recorded to reduce its retained earnings by an amount
less than $8,000 upon initial adoption.
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets – an
amendment of FASB Statement No. 140.” SFAS No. 156 amends SFAS No. 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately
recognized servicing assets and servicing liabilities. SFAS No. 156 is effective for fiscal years beginning after
September 15, 2006. The Company does not expect the adoption of SFAS No. 156 to have a material impact on its
financial condition, results of operations or cash flows.
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments - an
amendment of FASB Statements No. 133 and 140.” This statement simplifies accounting for certain hybrid
instruments currently governed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
F-17