Advance Auto Parts 2014 Annual Report Download - page 66

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 3, 2015, December 28, 2013 and December 29, 2012
(in thousands, except per share data)
F-19
The Company recorded an asset associated with favorable leases of $56,465 and a liability associated with unfavorable
leases of $48,604, which are included in intangible assets and other long-term liabilities, respectively. Favorable and
unfavorable lease assets and liabilities will be amortized to rent expense over their expected lives, which approximates the
period of time that the favorable or unfavorable lease terms will be in effect. The fair value of financial assets acquired included
receivables of $255,997 primarily from Commercial customers and vendors. The gross amount due was $269,006, of which
$13,009 was expected to be uncollectible.
Unaudited Pro Forma Financial Information
The following unaudited consolidated pro forma financial information combines the respective measure of the Company
for Fiscal 2013 and GPI for the twelve months ended December 31, 2013. The pro forma financial information has been
prepared by adjusting the historical data to give effect to the acquisition as if it had occurred on December 30, 2012 (the first
day of the Company's fiscal 2013).
December 28,
2013
(52 weeks)
Pro forma:
Net sales $ 9,456,405
Net income $ 428,562
Basic earnings per share $ 5.88
Diluted earnings per share $ 5.84
The unaudited consolidated pro forma financial information was prepared in accordance with the acquisition method of
accounting under existing standards and is not necessarily indicative of the results of operations that would have occurred if the
acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company.
The unaudited pro forma results have been adjusted with respect to certain aspects of the acquisition to reflect:
• additional amortization expense that would have been recognized assuming fair value adjustments to the existing
GPI assets acquired and liabilities assumed, including favorable and unfavorable lease values and other intangible
assets;
• adjustment of interest expense to reflect the additional borrowings of the Company in conjunction with the
acquisition and removal of GPI historical debt;
• elimination of the GPI recognition of a deferred gain in 2013 of $6,385 for the twelve months ended December
31, 2013 from a sale leaseback transaction as the deferred values were subsequently removed in purchase
accounting; and
• elimination of acquisition-related transaction fees incurred by the Company of $26,970 for the fifty-two weeks
ended December 28, 2013.
The unaudited pro forma results do not reflect future events that either have occurred or may occur after the acquisition,
including, but not limited to, the anticipated realization of ongoing savings from operating synergies in subsequent periods.
They also do not give effect to certain charges that the Company expects to incur in connection with the integration of GPI,
including, but not limited to, additional professional fees, employee integration costs, potential asset impairments, and
accelerated depreciation and amortization.