Advance Auto Parts 2014 Annual Report Download - page 83

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 3, 2015, December 28, 2013 and December 29, 2012
(in thousands, except per share data)
F-36
performance RSUs do not have dividend equivalent rights or voting rights until the shares are earned and issued following the
applicable performance period.
Share-Based Compensation Expense & Cash Flows
Total share-based compensation expense and cash received included in the Company’s consolidated statements of
operations and consolidated statements of cash flows, including the related income tax benefits, for 2014, 2013 and 2012 are as
follows:
2014 2013 2012
Share-based compensation expense $ 21,705 $ 13,191 $ 15,236
Deferred income tax benefit 8,013 4,991 5,774
Proceeds from the issuance of common stock,
primarily exercise of stock options 6,578 3,611 8,495
Tax withholdings related to the exercise of stock
appreciation rights (7,102)(21,856)(26,677)
Excess tax benefit from share-based compensation 10,487 16,320 23,099
As of January 3, 2015, there was $43,979 of unrecognized compensation expense related to all share-based awards that was
expected to be recognized over a weighted average period of 1.6 years. Expense related to the issuance of share-based
compensation is included in SG&A in the accompanying consolidated statements of operations. Expense is recognized net of
forfeitures, which are estimated based on historical experience.
The fair value of each SAR 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 2014 2013 2012
Risk-free interest rate (1) 1.2% 1.1% 0.5%
Expected dividend yield 0.2% 0.3% 0.3%
Expected stock price volatility (2) 27.0% 26.9% 33.2%
Expected life of awards (in months) (3) 49 49 49
(1) The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate having term consistent with the
expected life of the award.
(2) Expected volatility is determined using a blend of historical and implied volatility.
(3) 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.
Time-Based Share Awards
Stock Options
At December 28, 2013 the Company had 45 options outstanding with a weighted-average exercise price of $41.64. All of the
outstanding options were exercised during 2014 and had an aggregate intrinsic value on the date of exercise of $3,747.