Advance Auto Parts 2008 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2008 Advance Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
January 3, 2009, December 29, 2007 and December 30, 2006
(in thousands, except per share data)
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
F-34
Time-Based Share Awards
Stock Appreciation Rights and Stock Options
The fair value of each SAR and stock option was estimated on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions:
Black-Scholes Option Valuation Assumptions
(1)
2008 2007 2006
Risk-free interest rate
(2)
2.5% 4.8% 4.6%
Expected dividend yield 0.8% 0.6% 0.6%
Expected stock price volatility
(3)
32.3% 29.0% 28.0%
Expected life of awards (in months)
(4)
50 51 44
(1) Forfeitures are based on historical experience.
(2) The risk-free interest rate is based on a U.S. Treasury constant maturity interest rate whose term is consistent
with the expected life of the Company’s awards.
(3) Expected volatility is based on the historical volatility of the Company’s common stock for the period
consistent with the expected life of the Company’s awards.
(4) The expected life of the Company’s awards represents the estimated period of time until exercise and is based
on historical experience of previously granted awards.
The following table summarizes the time-vested fixed stock option and time-vested SARs activity for the fiscal
year ended January 3, 2009:
Number of
Awards
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term (in years) Aggregate
Intrinsic Value
Outstanding at December 29, 2007 5,939 32.68$
Granted 2,331 31.66
Exercised (1,421) 22.98
Forfeited (595) 38.43
Outstanding at January 3, 2009 6,254 33.95$ 4.81 15,338$
Vested and expected to ves
t
6,070 34.19$ 4.47 14,154$
Outstanding and exercisable 2,973 33.89$ 3.44 8,067$
The weighted average fair value of SARs and stock options granted during the fiscal years ended January 3,
2009, December 29, 2007 and December 30, 2006, was $8.66, $11.39 and $10.68 per share, respectively. The
aggregate intrinsic value reflected in the table is based on the Company’s closing stock price of $34.14 as of the last
trading day of the period ended January 3, 2009. The aggregate intrinsic value of options and SARs (the amount by
which the market price of the stock on the date of exercise exceeded the exercise price) exercised during the fiscal
years ended January 3, 2009, December 29, 2007 and December 30, 2006, was $25,890, $33,179 and $14,001,
respectively.