Napa Auto Parts 2006 Annual Report Download - page 33

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SFAS No. 142 also requires that entities discontinue amortization of
all purchased goodwill, including amortization of goodwill recorded
in past business combinations. Accordingly, the Company no longer
amortizes goodwill.
Other Assets
Other assets are comprised of the following:
(in thousands) December 31, 2006 2005
Retirement benefit assets $ 12,951 $ 402,993
Investment accounted for under
the cost method 21,400 21,400
Cash surrender value of life
insurance policies 49,294 42,142
Deferred tax asset 38,839 -
Other 47,859 43,109
Total other assets $ 170,343 $ 509,644
The reduction in other assets is primarily due to adjustments to
retirement benet assets as required by SFAS No. 158,
Employers’
Accounting for Dened Benet Pension and Other Postretirement
Plans
(“SFAS No. 158”), which is discussed further in Note 7.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Buildings include
certain leases capitalized at December 31, 2006 and 2005. Depre-
ciation and amortization is primarily determined on a straight-line
basis over the following estimated useful life of each asset: build-
ings and improvements, 10 to 40 years; machinery and equipment,
5 to 15 years.
Long-Lived Assets Other Than Goodwill
The Company assesses its long-lived assets other than goodwill for
impairment annually or whenever facts and circumstances indicate
that the carrying amount may not be fully recoverable. To analyze
recoverability, the Company projects undiscounted net future cash
ows over the remaining life of such assets. If these projected cash
ows are less than the carrying amount, an impairment would be
recognized, resulting in a write-down of assets with a corresponding
charge to earnings. Impairment losses, if any, are measured based
upon the difference between the carrying amount and the fair value
of the assets.
Other Long-Term Liabilities
Other long-term liabilities is comprised of the following:
(in thousands) December 31, 2006 2005
Retirement and post-employment
benefit liabilities $ 116,374 $ 54,198
Obligations under capital
and other leases 12,248 21,878
Insurance liabilities 39,558 36,145
Other 19,329 2,402
Total other long-term liabilities $ 187,509 $ 114,623
The increase in other long-term liabilities is primarily due to
adjustments to retirement and post-employment benet liabilities
required by SFAS No. 158, which is discussed further in Note 7.
The Company’s retirement and post-employment benet liabilities
consist primarily of actuarially determined obligations related
to certain retiree benets as discussed further in Note 7. See
Note 4 for further discussion of the Company’s obligations under
capital leases.
Insurance liabilities consist primarily of reserves for the workers’
compensation program. The Company carries various large risk
deductible workers’ compensation policies for the majority of
workers’ compensation liabilities. The Company records the workers’
compensation reserves based on an analysis performed by an
independent actuary. The analysis calculates development factors,
which are applied to total reserves as provided by the various
insurance companies who underwrite the program. While the
Company believes that the assumptions used to calculate these
liabilities are appropriate, signicant differences in actual experi-
ence or signicant changes in these assumptions may materially
affect workers’ compensation costs.
Self-Insurance
The Company is self-insured for the majority of group health
insurance costs. A reserve for claims incurred but not reported
is developed by analyzing historical claims data provided by the
Company’s claims administrators. While the Company believes that
the assumptions used to calculate these liabilities are appropriate,
signicant differences from historical trends may materially impact
nancial results. These reserves are included in accrued expenses in
the accompanying consolidated balance sheets as the expenses are
expected to be paid within one year.
Accumulated Other Comprehensive (Loss) Income
Accumulated other comprehensive (loss) income is comprised of
the following:
(in thousands) December 31, 2006 2005
Foreign currency translation $ 50,823 $ 53,164
Net unrealized loss on derivative
instruments, net of taxes (296) (618)
Minimum pension liability,
net of taxes N/A (7,011)
Unrecognized net (loss),
net of tax (290,461) N/A
Unrecognized prior service (cost),
net of tax (2,600) N/A
Total accumulated other
comprehensive (loss) income $ (242,534) $ 45,535
The change in accumulated other comprehensive (loss) income is
primarily due to adjustments required by SFAS No. 158, which is
discussed further in Note 7.