Napa Auto Parts 2003 Annual Report Download - page 32

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Exercise prices for options outstanding as of December 31,
2003 ranged from approximately $21 to $35, except for
39,000 options granted in connection with a 1998 acquisi-
tion for which the exercise price is approximately $18.
The weighted-average remaining contractual life of those
options is approximately 4 years.
In 1999, the Company entered into restricted stock agree-
ments with two officers which provide for the award of
up to 150,000 and 75,000 shares, respectively, during the
period 1999 through 2003 based on the Company achieving
certain increases in net income per common share and
stock price levels. Through December 31, 2003, the two
officers have earned 15,000 and 7,500 shares, respectively.
The Company recognizes compensation expense equal to
the fair market value of the stock on the award date over
the remaining vesting period which expires in 2009.
8. INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and amounts used
for income tax purposes. Significant components of the
Company’s deferred tax assets and liabilities are as follows:
The components of income tax expense are as follows:
The reasons for the difference between total tax expense
and the amount computed by applying the statutory Federal
income tax rate to income before income taxes and the
cumulative effect of accounting changes are as follows:
2003 2002 2001
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
(000’s) Price (000’s) Price (000’s) Price
Outstanding at beginning of year 7,574 $ 29 6,156 $ 28 7,513 $ 26
Granted 20 32 3,131 32 30 33
Exercised (500) 23 (1,412) 29 (1,049) 14
Forfeited (129) 31 (301) 34 (338) 32
Outstanding at end of year 6,965 $ 30 7,574 $ 29 6,156 $ 28
Exercisable at end of year 4,171 $ 29 3,337 $ 28 4,477 $ 29
Weighted-average fair value of options
granted during the year $6.92 $5.72 $ 6.91
Shares available for future grants 4,037 4,080 6,910
A summary of the Company’s stock option activity and related information are as follows:
(In Thousands) 2003 2002
Deferred tax assets related to:
Expenses not yet deducted for tax purposes $101,129 $87,256
Deferred tax liabilities related to:
Employee and retiree benefits 112,164 104,833
Inventory 73,446 52,000
Property and equipment 23,731 18,722
Other 24,896 10,333
234,237 185,888
Net deferred tax liability 133,108 98,632
Current portion of deferred tax liability 18,575 720
Non-current deferred tax liability $114,533 $97,912
(In Thousands) 2003 2002 2001
Current:
Federal $163,878 $165,289 $ 188,040
State 26,869 28,952 32,530
Deferred 27,354 43,995 (21,704)
$218,101 $238,236 $ 198,866
(In Thousands) 2003 2002 2001
Statutory rate applied to income
before the cumulative effect of
an accounting change $200,110 $212,008 $ 173,605
Plus state income taxes, net of
Federal tax benefit 19,969 23,081 19,064
Other (1,978) 3,147 6,197
$218,101 $238,236 $ 198,866