Napa Auto Parts 2010 Annual Report Download - page 27
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Table of Contents
The following is a summary of the quarterly results of operations for the years ended December 31, 2010 and 2009:
Net Sales
Gross Profit
Net Income
Earnings Per Share:
Basic
Diluted
2009
Net Sales $2,444,496 $2,535,045 $2,606,757 $2,471,214
Gross Profit 732,201 744,855 765,246 767,460
Net Income 89,159 103,610 107,639 99,167
Earnings Per Share:
Basic .56 .65 .67 .62
Diluted .56 .65 .67 .62
We recorded the quarterly earnings per share amounts as if each quarter was a discrete period. As a result, the sum of the basic and
diluted earnings per share will not necessarily total the annual basic and diluted earnings per share.
The 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 estimates and
assumptions in its interim consolidated financial statements for the accrual of bad debts, inventory adjustments and discount and
volume incentives earned, among others. 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. The methodology and practices used in deriving estimates
and assumptions for interim reporting typically results in adjustments upon accurate determination at year-end. The effect of these
adjustments in 2010 and 2009 was not significant.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Although the Company does not face material risks related to interest rates and commodity prices, the Company is exposed to
changes in foreign currency rates with respect to foreign currency denominated operating revenues and expenses.
The Company has translation gains or losses that result from translation of the results of operations of an operating unit’s foreign
functional currency into U.S. dollars for consolidated financial statement purposes. The Company’s principal foreign currency exchange
exposure is the Canadian dollar, which is the functional currency of our Canadian operations. Foreign currency exchange exposure
particularly in regard to the Canadian dollar and, to a lesser extent, the Mexican peso, positively impacted our results for the year ended
December 31, 2010.
During 2010 and 2009, it was estimated that a 10% shift in exchange rates between those foreign functional currencies and the
U.S. dollar would have impacted translated net sales by approximately $140 million and $104 million, respectively.
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