Advance Auto Parts 2006 Annual Report Download - page 83

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
December 30, 2006, December 31, 2005 and January 1, 2005
(in thousands, except per share data)
intangible assets recorded as of December 30, 2006:
2007 1,087
2008 1,087
2009 1,087
2010 1,059
2011 967
The changes in the carrying amount of goodwill for the years ended December 30, 2006 and December 31, 2005,
respectively, are as follows:
AAP Segment AI Segment Total
Balance at January 1, 2005 2,720$ -$ 2,720$
Recognition of goodwill associated with
acquisitions 13,934 50,440 64,374
Balance at December 31, 2005 16,654$ 50,440$ 67,094$
Reclassification to intangible assets among
other purchase accounting adjustments (561) (32,815) (33,376)
Balance at December 30, 2006 16,093$ 17,625$ 33,718$
The carrying amount of goodwill decreased from $67,094 at December 31, 2005 to $33,718 at December 30,
2006 as a result of the completion of certain purchase accounting adjustments associated with the AI acquisition
(Note 3).
5. Catastrophic Losses and Insurance Recoveries:
During the second half of fiscal 2005, the Company suffered losses resulting from Hurricanes Katrina, Rita and
Wilma as well as two stores damaged by fire. The Company estimated and recognized the fixed costs of these
events including the write-off of damaged merchandise at cost, damaged capital assets at net book value and
required repair costs. Moreover, these hurricanes caused significant sales disruptions primarily from store closures,
stores operating on limited hours and lower sales trends due to evacuations. The Company also incurred and
recognized incremental expenses associated with compensating team members for scheduled work hours for which
stores were closed and food and supplies provided to team members and their families. While these costs and sales
disruptions were not recoverable from the Company’s insurance carrier, the Company did maintain property
insurance against the fixed costs of the related physical damage including the recovery of damaged merchandise at
retail values and damaged capital assets at replacement cost. Prior to December 31, 2005, the Company and the
insurance carrier settled in full a claim for the retail value of certain merchandise inventory damaged by Hurricanes
Katrina and Wilma. The Company evaluated and recognized a receivable for the recovery of these fixed costs, net of
deductibles. The following table represents the net impact of certain insured fixed costs less recoveries as reflected
in the selling, general and administrative line of the accompanying consolidated statement of operations for the
fiscal year ended December 31, 2005. At December 30, 2006 and December 31, 2005, two and seven stores,
respectively remain closed as a result of these events.
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