AutoZone 2013 Annual Report Download - page 128

Download and view the complete annual report

Please find page 128 of the 2013 AutoZone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

66
The carrying amounts of intangible assets, which all relate to the AutoAnything acquisition, are included in Other
long-term assets as follows:
(in thousands)
Estimated
Useful
Life
Gross
Carrying
Amount
Accumulated
Amortization
Impairment
Net
Carrying
Amount
Technology ....................... 5 years $ 9,700 $ (1,365) $ – $ 8,335
Noncompete agreement .... 5 years 1,300 (183) – 1,117
Customer relationships ..... 10 years 19,000 (1,336) – 17,664
Trade name ....................... Indefinite 28,700 – (4,100) 24,600
$ 58,700 $ (2,884) $ (4,100) $ 51,716
As part of its annual impairment test, the Company evaluated the AutoAnything trade name for impairment.
Based on the Company’s evaluation of the future discounted cash flows of AutoAnything’s trade name as
compared to its carrying value, it was determined that AutoAnything’s trade name was impaired. The Company
recorded an impairment charge of $4.1 million during the fourth quarter of fiscal 2013 related to the trade name.
Amortization expense of intangible assets for the year ended August 31, 2013, was $2.9 million.
Total future amortization expense for intangible assets that have finite lives, based on the existing intangible
assets and their current estimated useful lives as of August 31, 2013, is estimated as follows:
(in thousands)
Total
2014 ........................................................................................................................................... $ 4,100
2015 ........................................................................................................................................... 4,100
2016 ........................................................................................................................................... 4,100
2017 ........................................................................................................................................... 4,100
2018 ........................................................................................................................................... 2,553
Thereafter .................................................................................................................................. 8,163
$ 27,116
Note O – Leases
The Company leases some of its retail stores, distribution centers, facilities, land and equipment, including
vehicles. Other than vehicle leases, most of the leases are operating leases, which include renewal options made
at the Company’s election, options to purchase and provisions for percentage rent based on sales. Rental expense
was $246.3 million in fiscal 2013, $229.4 million in fiscal 2012, and $213.8 million in fiscal 2011. Percentage
rentals were insignificant.
The Company has a fleet of vehicles used for delivery to its commercial customers and stores and travel for
members of field management. The majority of these vehicles are held under capital lease. At August 31, 2013,
the Company had capital lease assets of $107.5 million, net of accumulated amortization of $44.8 million, and
capital lease obligations of $106.2 million, of which $32.2 million is classified as Accrued expenses and other as
it represents the current portion of these obligations. At August 25, 2012, the Company had capital lease assets of
$104.2 million, net of accumulated amortization of $36.4 million, and capital lease obligations of $102.3 million,
of which $29.8 million was classified as Accrued expenses and other.
The Company records rent for all operating leases on a straight-line basis over the lease term, including any
reasonably assured renewal periods and the period of time prior to the lease term that the Company is in
possession of the leased space for the purpose of installing leasehold improvements. Differences between
recorded rent expense and cash payments are recorded as a liability in Accrued expenses and other and Other
long-term liabilities in the accompanying Consolidated Balance Sheets, based on the terms of the lease. The
deferred rent approximated $96.5 million on August 31, 2013, and $86.9 million on August 25, 2012.
10-K