Napa Auto Parts 2007 Annual Report Download - page 38

36
notes฀to฀consolidated฀financial฀statements฀(continued)
december฀31,฀2007
5. Stock Options and Restricted Stock Awards (continued)
A summary of the Company’s stock option activity and related
information is as follows:
2007
Weighted
Average
Shares Exercise
(000’s) Price
Outstanding at beginning of year 6,084 $ 35
Granted (1) 1,367 49
Exercised (986) 34
Forfeited (150) 43
Outstanding at end of year (2) 6,315 $ 38
Exercisable at end of year 3,506 $ 36
Shares available for future grants 6,636
(1) Total includes 95,000 Restricted Stock Units (RSUs). e weighted average
exercise price excludes RSUs.
(2) e exercise prices for options outstanding as of December 31, 2007 ranged
from approximately $21 to $49. e weighted-average remaining contractual
life of all options outstanding is approximately seven years.
e weighted-average grant date fair value of options granted
during the years 2007, 2006, and 2005 was $9.64, $9.14, and
$8.58, respectively. e aggregate intrinsic value of options exer-
cised during the years ended December 31, 2007, 2006, and 2005
was $15.6 million, $10.7 million, and $19.6 million.
In 2007, the Company granted approximately 1,272,000 SARs
and 95,000 RSUs. In 2006, the Company granted approximately
1,246,000 SARs and 94,000 RSUs. In 2005, the Company
granted approximately 1,169,000 SARs and 91,000 RSUs. SARs
represent a right to receive the excess, if any, of the fair market
value of one share of common stock on the date of exercise over
the grant price. RSUs represent a contingent right to receive one
share of the Company’s common stock at a future date provided
certain pre-tax profit targets are achieved. e majority of awards
vest on a pro-rata basis for periods ranging from one to five years
and are expensed accordingly on a straight-line basis.
A summary of the Company’s nonvested share awards (RSUs)
activity is as follows:
Weighted
Average
Shares Grant Date
Nonvested Share Awards (RSUs) (000’s) Fair Value
Nonvested at January 1, 2007 255 $ 41
Granted 95 49
Vested (15) 49
Forfeited or Expired (23) 42
Nonvested at December 31, 2007 312 $ 43
Prior to the adoption of SFAS No. 123(R), the Company pre-
sented all tax benefits for deductions resulting from the exercise
of stock options as operating cash flows in the consolidated
statements of cash flows. SFAS No. 123(R) requires the cash
flows resulting from the tax benefits related to tax deductions
in excess of the compensation cost recognized for those options
(excess tax benefits) to be classified as financing cash inflow. For
the years ended December 31, 2007 and 2006, approximately
$4.4 million and $3.0 million, respectively, of excess tax benefits
was classified as a financing cash inflow.
6. 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. Undistributed earnings of the Company’s foreign sub-
sidiaries are considered to be indefinitely reinvested. As such, no
U.S. federal and state income taxes have been provided thereon,
and it is not practicable to determine the amount of the related
unrecognized deferred income tax liability. Significant compo-
nents of the Company’s deferred tax assets and liabilities are
as follows:
(in thousands) December 31, 2007 2006
Deferred tax assets related to:
Expenses not yet deducted
for tax purposes $ 136,432 $ 114,146
Pension liability not yet
deducted for tax purposes 160,521 193,194
296,953 307,340
Deferred tax liabilities related to:
Employee and retiree benefits 164,909 160,798
Inventory 98,196 88,672
Property and equipment 19,849 24,787
Other 6,918 9,605
289,872 283,862
Net deferred tax asset (7,081) (23,478)
Current portion of
deferred tax liability 28,697 15,361
Non-current deferred tax asset $ (35,778) $ (38,839)
e current portion of the deferred tax liability is included in
income taxes payable and the non-current deferred tax asset is
included in other assets in the consolidated balance sheets.