Advance Auto Parts 2014 Annual Report Download - page 67

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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-20
B.W.P. Distributors, Inc.
On December 31, 2012, the Company acquired B.W.P. Distributors, Inc. ("BWP") in an all-cash transaction. BWP,
formerly a privately-held company, supplied, marketed and distributed automotive aftermarket parts and products principally to
Commercial customers. Prior to the acquisition, BWP operated or supplied 216 locations in the northeastern U.S. The Company
believes this acquisition will enable the Company to continue its expansion in the competitive Northeast, which is a strategic
growth area for the Company due to the large population and overall size of the market, and to gain valuable information to
apply to its existing operations as a result of BWP's expertise in Commercial. The amount of acquired goodwill reflects this
strategic importance to the Company.
Concurrent with the closing of the acquisition, the Company transferred one distribution center and BWP's rights to
distribute to 92 independently owned locations to an affiliate of GPI. As a result, the Company began operating the 124 BWP
company-owned stores and two remaining BWP distribution centers as of the closing date. The Company has included the
financial results of BWP in its consolidated financial statements commencing December 31, 2012 (Fiscal 2013). Pro forma
results of operations related to the acquisition of BWP are not presented as BWP's results are not material to the Company's
consolidated statements of operations.
Under the terms of the agreement, the Company acquired the net assets in exchange for a purchase price of $187,109.
Following the closing of the acquisition, the Company sold certain of the acquired assets for $16,798 related to the transfer of
operations to GPI. The Company recognized $123,446 of goodwill upon the acquisition, which is expected to be deductible for
income tax purposes.
Other
The Company also acquired nine stores during 2014 with an aggregate purchase price of $5,155. The results of these stores are
not material to the Company's consolidated financial statements.
5. Exit Activities and Impairment:
Office Consolidations
In June 2014, the Company approved plans to relocate operations from its Minneapolis, Minnesota and Campbell,
California offices to other existing offices of the Company, including its offices in Newark, California, Roanoke, Virginia and
Raleigh, North Carolina, and to close its Minneapolis and Campbell offices. The Company also expects to relocate various
functions between its existing offices in Roanoke and Raleigh. The Company anticipates that the relocations and office closings
will be substantially completed by the end of 2015.
In connection with these relocations and office closings, the Company plans to relocate some employees and terminate the
employment of others. The Board of Directors of the Company approved this action in order to take advantage of synergies
following the acquisition of GPI and to capitalize on the strength of existing locations and organizational experience. The
Company estimates that it will incur restructuring costs of approximately $28,800 under these plans through the end of 2015.
Substantially all of these costs are expected to be cash expenditures. This estimate includes approximately $11,200 of employee
severance costs and $17,600 of relocation costs.
Employees receiving severance/outplacement benefits will be required to render service until they are terminated in order
to receive the benefits. Therefore, the severance/outplacement benefits will be recognized over the related service periods.
During 2014, the Company recognized $6,731 of severance/outplacement benefits under these restructuring plans and other
severance related to the acquisition of GPI. Other restructuring costs, including costs to relocate employees, will be recognized
in the period in which the liability is incurred. During 2014, the Company recognized $7,053 of relocation costs.