Pep Boys 2011 Annual Report Download - page 96
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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 2—ACQUISITIONS (Continued)
establishment of a valuation allowance related to the deferred tax assets acquired which is included
within other non-current assets. The allocation is a follows:
As of
Acquisition
(dollar amounts in thousands) Dates
Current assets ............................................ $11,421
Intangible assets .......................................... 950
Other non-current assets .................................... 9,149
Current liabilities ......................................... (13,817)
Long-term liabilities ....................................... (9,458)
Total net identifiable assets acquired ........................... $ (1,755)
Total consideration transferred, net of cash acquired ................ $42,614
Less: total net identifiable assets acquired ....................... (1,755)
Goodwill ............................................... $44,369
Intangible assets consist of trade names ($0.6 million) and favorable leases ($0.3 million).
Long-term liabilities includes unfavorable leases ($9.1 million). The trade names are being amortized
over their estimated useful life of 3 years. The favorable and unfavorable lease intangible assets and
liabilities are being amortized to rent expense over their respective lease terms, ranging from 2 to
16 years. Amortization expense for the favorable and unfavorable leases over the next five years is
approximately $0.6 million per year. Deferred tax assets in the amount of $6.8 million are primarily
recorded in other non-current liabilities.
Sales for the fiscal 2011 acquired stores totaled $63.9 million. The net loss for the acquired stores
for the period from acquisition date through January 28, 2012 was $2.0 million, excluding transition
related expenses.
As the acquisitions (including Big 10) were immaterial to the operating results both individually
and in aggregate for the thirteen and fifty-two week periods ended January 28, 2012 and January 29,
2011, pro forma results for the thirteen and fifty-two week periods ended January 28, 2012 are not
presented.
In 2011, the Company recorded a reduction to the contingent consideration of $0.7 million related
to one of the Company’s acquisitions. The reversal of contingent consideration was recorded to selling,
general and administrative expenses in the consolidated statements of operations.
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