Advance Auto Parts 2008 Annual Report Download - page 98

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ADVANCE AUTO PARTS, INC.
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
Notes to the Condensed Parent Company Statements
December 29, 2007 and December 30, 2006
(in thousands, except per share data)
See Notes to the Consolidated Financial Statements for Additional Disclosures.
F-44
1. Presentation
These condensed financial statements have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures normally included in annual financial
statements prepared in accordance with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to those rules and regulations, although management believes that the
disclosures made are adequate to make the information presented not misleading.
2. Organization
Advance Auto Parts, Inc. (“the Company”) is a holding company, which is the 100% shareholder of Advance
Stores Company, Incorporated and its subsidiaries ("Stores") during the periods presented. The parent/subsidiary
relationship between the Company and Stores includes certain related party transactions. These transactions consist
primarily of interest on intercompany advances, dividends, capital contributions and allocations of certain costs.
Deferred income taxes have not been provided for financial reporting and tax basis differences on the undistributed
earnings of the subsidiaries. Effective fiscal 2008, the Company and its subsidiaries realigned duties and
responsibilities within its overall organization that resulted in certain operating expenses being included in and
recognized at the parent company level.
The Company fully and unconditionally guarantees the term loan and revolving credit facility of Stores. These
debt agreements do not contain restrictions on the payment of dividends, loans or advances between the Company
and Stores and Stores’ subsidiaries. Therefore, there are no such restrictions as of January 3, 2009 and December 29,
2007.
3. Summary of Significant Accounting Policies
Accounting Period
The Company's fiscal year ends on the Saturday nearest the end of December, which results in an extra week
every several years. Accordingly, fiscal 2008 includes 53 weeks of operations. All other fiscal years presented
included 52 weeks of operations.
New Accounting Pronouncements
In June 2008, the Financial Accounting Standards Board, or FASB, issued FASB Staff Position, or FSP, EITF
03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.” FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be included in the earnings allocation in computing
earnings per share under the two-class method as described in Statement of Financial Accounting Standards, or
SFAS, No. 128, “Earnings per Share.” Under the guidance of FSP EITF 03-6-1, nonvested share-based payment
awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class
method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after
December 15, 2008 and all prior-period earnings per share data presented shall be adjusted retrospectively.
Early application is not permitted. The Company does not anticipate the adoption of FSP EITF 03-6-1 will have an
impact on its earnings per share.
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, “Determination of the Useful Life of
Intangible Assets”, which amends the factors that must be considered in developing renewal or extension
assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under
SFAS 142, “Goodwill and Other Intangible Assets.” The FSP requires an entity to consider its own assumptions
about renewal or extension of the term of the arrangement, consistent with its expected use of the asset, and is an