Advance Auto Parts 2006 Annual Report Download - page 97

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)
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 payable to the participants at a future date or over a specified time period as elected by the participants in
accordance with the DSU Plan.
A total of 8,620 of shares were originally authorized under the LTIP. At December 30, 2006, there are 4,565
shares currently available for future issuance under the LTIP. The Company issues new shares of common stock
upon exercise of stock options. Subsequent to December 30, 2006, the Company granted 1,440 stock appreciation
rights to be settled in the Company’s common stock at a conversion price of $38.03 and 143 shares of restricted
stock at a price of $38.03.
The Company also offers an employee stock purchase plan, or ESPP. Through 2005 all eligible employees, or
team members, could elect to have a portion of compensation paid in the form of Company stock in lieu of cash
calculated at 85% of fair market value at the beginning or end of the quarterly purchase period whichever was lower.
Effective January 1, 2006, the ESPP was amended such that eligible team members may purchase common stock at
95% of fair market value at the date of purchase. There are annual limitations on team member elections of either
$25 per team member or ten percent of compensation, whichever is less. Under the plan, team members acquired
90, 110 and 177 shares in fiscal years 2006, 2005 and 2004, respectively. At December 30, 2006, there were 1,461
shares available to be issued under the plan.
19. 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 Company’s interest rate swaps are presented at fair value as stated in its accounting
policy on hedge activities (Note 2).
20. Segment and Related Information:
The Company has the following two reportable segments: Advance Auto Parts, or AAP, and AI. The AAP
segment is comprised of store operations within the United States, Puerto Rico and the Virgin Islands which operate
under the trade names “Advance Auto Parts,” “Discount Advance Auto Parts” and “Western Auto.” These stores
offer a broad selection of brand name and proprietary automotive replacement parts, accessories and maintenance
items for domestic and imported cars and light trucks, with no significant concentration in any specific product area.
The AI segment consists solely of the operations of Autopart International, which continues to operate as an
independent, wholly-owned subsidiary. AI’s business serves the growing commercial market in addition to
warehouse distributors and jobbers located throughout the Northeastern region of the United States. The Company
acquired AI in September 2005.
The Company evaluates each of its segment’s financial performance based on net sales and operating profit for
purposes of making decisions and allocating resources. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies in Note 2.
The following table summarizes financial information for each of the Company's business segments for the
years ended December 30, 2006 and December 31, 2005, respectively.
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