Napa Auto Parts 2008 Annual Report Download - page 25

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as of the measurement date. We have matched the timing and dura-
tion of the expected cash flows of our pension obligations to a yield
curve generated from a broad portfolio of high-quality fixed income
debt instruments to select our discount rate. Based upon this cash
flow matching analysis, we selected a weighted average discount rate
for the U.S. plans of 6.50% at December 31, 2008.
Net periodic cost for our defined benefit pension plans was
$46.9 million, $51.2 million and $48.2 million for the years ended
December 31, 2008, 2007 and 2006, respectively. e pension cost
over these periods was influenced by the change in assumptions for
the rate of return on plan assets, the discount rate and the rate of
compensation increases. Refer to Note 7 to the Consolidated Financial
Statements for more information regarding employee benefit plans.
On September 29, 2006, the Financial Accounting Standards Board
issued SFAS No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans. SFAS No. 158 was effec-
tive for public companies for fiscal years ending after December 15,
2006. e Company adopted the balance sheet recognition provi-
sions of SFAS No. 158 at the end of fiscal year 2006.
e Company has evaluated the potential impact of the Pension
Protection Act (“the Act”), which was passed into law on August
17, 2006, on future U.S. pension plan funding requirements based
on current market conditions. e Act is not anticipated to have a
material effect on the Company’s liquidity and capital resources.
quarterly results of operations
e following is a summary of the quarterly results of operations for
the years ended December 31, 2008 and 2007:
We reported the quarterly earnings per share amounts as if each
quarter was a discrete period. As a result, the sum of the basic and
ree Months Ended
March 31, June 30, Sept. 30, Dec. 31,
(in thousands except per share data)
2008
Net Sales $ 2,739,473 $ 2,873,485 $ 2,882,115 $ 2,520,190
Gross Profit 819,483 852,213 849,005 751,789
Net Income 123,543 133,073 131,017 87,784
Earnings
Per Share:
Basic .75 .81 .81 .55
Diluted .75 .81 .81 .55
2007
Net Sales $ 2,648,843 $ 2,769,527 $ 2,797,556 $ 2,627,269
Gross Profit 789,944 824,585 824,488 778,206
Net Income 121,553 130,121 128,580 126,085
Earnings
Per Share:
Basic .71 .76 .76 .76
Diluted .71 .76 .76 .75
diluted earnings per share will not necessarily total the annual basic
and diluted earnings per share.
e preparation of interim consolidated financial statements requires
management to make estimates and assumptions for the amounts
reported in the interim condensed consolidated financial statements.
Specifically, the Company makes certain estimates in its interim con-
solidated financial statements for the accrual of bad debts, inventory
adjustments and discounts and volume incentives earned. Bad debts
are accrued based on a percentage of sales, and volume incentives are
estimated based upon cumulative and projected purchasing levels.
Inventory adjustments are accrued on an interim basis and adjusted in
the fourth quarter based on the annual October 31 book-to-physical
inventory adjustment. e methodology and practices used in deriving
estimates for interim reporting typically results in adjustments upon
accurate determination at year-end. e effect of these adjustments in
2008 and 2007 was not significant.
forward looking statements
Some statements in this report, as well as in other materials we file
with the Securities and Exchange Commission (SEC) or otherwise
release to the public and in materials that we make available on our
website, constitute forward-looking statements that are subject to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Senior officers may also make verbal statements to analysts,
investors, the media and others that are forward-looking.
Forward-looking statements may relate, for example, to future opera-
tions, prospects, strategies, financial condition, economic perfor-
mance (including growth and earnings), industry conditions and
demand for our products and services. e Company cautions that
its forward-looking statements involve risks and uncertainties, and
while we believe that our expectations for the future are reasonable in
view of currently available information, you are cautioned not to place
undue reliance on our forward-looking statements. Actual results or
events may differ materially from those indicated as a result of vari-
ous important factors. Such factors include, but are not limited to,
the ability to maintain favorable supplier arrangements and relation-
ships, changes in general economic conditions, the growth rate of the
market demand for the Company’s products and services, competi-
tive product, service and pricing pressures, including internet related
initiatives, the effectiveness of the Company’s promotional, marketing
and advertising programs, changes in the financial markets, includ-
ing particularly the capital and credit markets, changes in laws and
regulations, including changes in accounting and taxation guidance,
the uncertainties of litigation, as well as other risks and uncertainties
discussed in the Company’s Annual Report on Form 10-K for 2008
and from time to time in the Company’s subsequent filings with the
SEC.
Forward-looking statements are only as of the date they are made,
and the Company undertakes no duty to update its forward-looking
statements except as required by law. You are advised, however, to re-
view any further disclosures we make on related subjects in our Form
10-Q, Form 8-K and other reports to the SEC.