Advance Auto Parts 2006 Annual Report Download - page 95

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)
The Company expects plan contributions to completely offset benefits paid. The following table summarizes the
Company's expected benefit payments (net of retiree contributions) to be paid for each of the following fiscal years:
Amount
2007 1,048$
2008 1,100
2009 1,155
2010 1,138
2011 1,140
2012-2016 4,893
The Company reserves the right to change or terminate the benefits or contributions at any time. The Company
also continues to evaluate ways in which it can better manage these benefits and control costs. Any changes in the
plan or revisions to assumptions that affect the amount of expected future benefits may have a significant impact on
the amount of the reported obligation, annual expense and projected benefit payments.
The Company adopted SFAS No. 158 on December 30, 2006. As a result, the Company recorded an actuarial
gain to accumulated other comprehensive income, net of tax, and recognized previously unamortized prior service
cost that had not yet been included in net periodic postretirement benefit cost as of December 30, 2006. The
adoption of SFAS No. 158 had no impact on net income, but increased comprehensive income by $3,316, net of tax.
The table below shows the incremental effect of applying SFAS No. 158 on individual line items in the Company’s
consolidated balance sheet as of December 30, 2006:
Before Application
of Statement 158 Adjustments
After Application
of Statement 158
Accrued expenses 251,955$ 1,020$ 252,975$
Other long-term liabilities 65,570 (4,336) 61,234
Accumulated other comprehensive income 156 3,316 3,472
Total stockholders' equity 1,027,538 3,316 1,030,854
At December 30, 2006, the net unrealized gain on the postretirement plan consists of an unrealized gain of
$5,951 related to prior service cost and an unrealized net loss of $594 related to actuarial losses. Approximately
$581 of the unrealized gain related to prior service cost is expected to be recognized as a component of net periodic
postretirement benefit cost in fiscal 2007.
18. Share-Based Compensation Plans:
The Company has share-based compensation plans as allowed under its long-term incentive plan, or LTIP,
which includes fixed stock options and deferred stock units, or DSUs. The stock options authorized to be granted are
non-qualified stock options and terminate on the seventh anniversary of the grant date. Additionally, the stock
options vest over a three-year period in equal installments beginning on the first anniversary of the grant date and
contain no post-vesting restrictions other than normal trading black-out periods prescribed by the Company’s
corporate governance policies. The Company grants DSUs annually to its Board of Directors as provided for in the
Advance Auto Parts, Inc. Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives, or the
DSU Plan. Each DSU is equivalent to one share of common stock of the Company. The DSUs are immediately
vested upon issuance but are held on behalf of the director until he or she ceases to be a director. The DSUs are then
distributed to the director following his or her last date of service. Additionally, the DSU Plan provides for the
deferral of compensation as earned in the form of an annual retainer for board members and wages for certain highly
compensated employees of the Company. These deferred stock units are settled in common stock with the
participants at a future date or over a specified time period as elected by the participants in accordance with the DSU
Plan.
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