Advance Auto Parts 2004 Annual Report Download - page 43

Advance฀Auto฀Parts,฀Inc.฀and฀Subsidiaries
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฀ Depreciation฀of฀land฀improvements,฀buildings,฀furniture,฀
fixtures฀and฀equipment,฀ and฀vehicles฀is฀provided฀over฀the฀
estimated฀useful฀lives,฀which฀range฀from฀2฀to฀40฀years,฀of฀
the฀ respective฀ assets฀ using฀ the฀ straight-line฀ method.฀
Amortization฀ of฀ building฀ and฀ leasehold฀ improvements฀ is฀
provided฀over฀the฀shorter฀of฀the฀original฀useful฀lives฀of฀the฀
respective฀assets฀or฀the฀term฀of฀the฀lease฀using฀the฀straight-
line฀method.฀The฀term฀of฀the฀lease฀is฀generally฀the฀initial฀
term฀ of฀ the฀ lease฀ unless฀ external฀ economic฀ factors฀ exist฀
such฀ that฀ renewals฀ are฀ reasonably฀ assured,฀ in฀ which฀ case฀
the฀ renewal฀ period฀ would฀ be฀ included฀ in฀ the฀ lease฀ term฀฀
for฀ purposes฀ of฀ establishing฀ an฀ amortization฀ period.฀ At฀
January฀ 1,฀ 2005,฀ construction฀ in฀ progress฀ primarily฀ con-
sisted฀of฀construction-related฀costs฀for฀the฀Company’s฀new฀
Northeast฀ distribution฀ center.฀ Depreciation฀ and฀ amortiza-
tion฀expense฀was฀$104,877,฀$100,737฀and฀$94,090฀for฀the฀
fiscal฀years฀ended฀2004,฀2003฀and฀2002,฀respectively.
฀ Property฀and฀equipment฀consists฀of฀the฀following:
Original฀฀
Useful฀Lives
January฀1,฀
2005
January฀3,฀
2004
Land฀and฀land฀฀
improvements฀............ 0–10฀years $฀ 187,624 $฀ 177,088
Buildings฀........................ 40฀years 240,447 214,919
Building฀and฀leasehold฀
improvements฀............ 10–40฀years 133,415 110,974
Furniture,฀fixtures฀฀
and฀equipment฀........... 3–12฀years 632,312 553,759
Vehicles฀.......................... 2–10฀years 32,963 36,338
Construction฀฀
in฀progress฀................. 29,936 10,420
Other฀.............................. 4,335 4,231
1,261,032 1,107,729
Less:฀Accumulated฀
depreciation฀and฀฀
amortization฀............... (474,820) (395,027)
Property฀and฀฀
equipment,฀net฀........... $฀ 786,212 $฀ 712,702
฀ The฀Company฀capitalized฀approximately฀$4,625,฀$5,423฀
and฀ $2,888฀ incurred฀ for฀ the฀ development฀ of฀ internal฀ use฀
computer฀ software฀ in฀ accordance฀ with฀ the฀ American฀
Institute฀ of฀ Certified฀ Public฀ Accountant’s฀ Statement฀ of฀
Position฀ 98-1,฀ “Accounting฀ for฀ the฀ Cost฀ of฀ Computer฀
Software฀Developed฀or฀Obtained฀for฀Internal฀Use”฀during฀
fiscal฀ 2004,฀ fiscal฀ 2003฀ and฀ fiscal฀ 2002,฀ respectively.฀
These฀ costs฀ are฀ included฀ in฀ the฀ furniture,฀ fixtures฀ and฀
equipment฀ category฀ above฀ and฀ are฀ depreciated฀ on฀ the฀
straight-line฀method฀over฀three฀to฀seven฀years.
8.฀Assets฀Held฀for฀Sale
฀ The฀ Company฀ applies฀ SFAS฀ No.฀ 144,฀ “Accounting฀ for฀
the฀Impairment฀or฀Disposal฀of฀Long-Lived฀Assets,”฀which฀
requires฀ that฀ long-lived฀ assets฀ and฀ certain฀ identifiable฀
intangible฀assets฀to฀be฀disposed฀of฀be฀reported฀at฀the฀lower฀
of฀the฀ carrying฀amount฀ or฀the฀ fair฀market฀value฀ less฀sel-
ling฀ costs.฀ At฀ January฀ 1,฀ 2005฀ and฀ January฀ 3,฀ 2004,฀ the฀
Company’s฀assets฀held฀for฀sale฀were฀$18,298฀and฀$20,191,฀
respectively,฀ primarily฀ consisting฀ of฀ closed฀ stores฀ as฀ a฀
result฀of฀the฀Discount฀integration฀and฀two฀closed฀distribu-
tion฀centers.
9.฀Other฀Assets
฀ As฀of฀January฀1,฀2005฀and฀January฀3,฀2004,฀other฀assets฀
include฀deferred฀debt฀issuance฀costs฀of฀$3,297฀and฀$3,987,฀
respectively฀ (net฀ of฀ accumulated฀ amortization฀ of฀ $1,935฀
and฀$1,793,฀respectively),฀relating฀to฀the฀Company’s฀senior฀
credit฀ facility.฀ Such฀ costs฀ are฀ being฀ amortized฀ over฀ the฀
term฀of฀the฀related฀debt.฀In฀November฀2004,฀the฀Company฀
wrote฀ off฀$1,090฀ in฀ deferred฀debt฀issuance฀costs฀ included฀
in฀ other฀ assets฀ as฀ a฀ result฀ of฀ refinancing฀ its฀ senior฀ credit฀
facility.฀ In฀ April฀ 2003,฀ the฀ Company฀ redeemed฀ all฀ of฀ its฀
outstanding฀senior฀subordinated฀notes฀and฀senior฀discount฀
debentures.฀Accordingly,฀the฀Company฀wrote฀off฀$9,822฀in฀
deferred฀debt฀issuance฀cost฀included฀in฀other฀assets.
10.฀Accrued฀Expenses
฀ Accrued฀expenses฀consist฀of฀the฀following:
January฀1,฀
2005
January฀3,฀
2004
Payroll฀and฀related฀benefits฀....................... $฀ 81,305 $฀ 67,788
Warranty฀.................................................... 10,960 15,578
Other฀.......................................................... 106,214 90,452
Total฀accrued฀expenses฀............................. $198,479 $173,818
11.฀Other฀Long-term฀Liabilities
฀ Other฀long-term฀liabilities฀consist฀of฀the฀following:
January฀1,฀
2005
January฀3,฀
2004
Employee฀benefits฀..................................... $18,658 $19,162
Restructuring฀and฀closed฀฀
฀ store฀liabilities฀....................................... 3,122 4,684
Deferred฀income฀taxes฀.............................. 43,636 39,525
Other฀.......................................................... 14,806 11,731
Total฀other฀long-term฀liabilities฀................ $80,222 $75,102