Pep Boys 2012 Annual Report Download - page 88

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2013, January 28, 2012 and January 29, 2011
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
not have a material impact on the Company’s consolidated results of operations and financial
condition.
NOTE 2—ACQUISITIONS
During fiscal 2011, the Company made three separate acquisitions. The Company acquired the
assets related to seven service and tire centers located in the Seattle-Tacoma area, the assets related to
seven service and tire centers located in the Houston, Texas area and all outstanding shares of capital
stock of Tire Stores Group Holding Corporation which operated an 85-store chain in Florida, Georgia
and Alabama under the name Big 10. Collectively, the acquired stores produced approximately
$94.7 million (unaudited) in sales annually based on pre-acquisition historical information. The total
purchase price of these stores was approximately $42.6 million in cash and the assumption of certain
liabilities. The acquisitions were financed through cash flows provided by operations. The results of
operations of these acquired stores are included in the Company’s results from their respective
acquisition dates.
The Company has recorded its initial accounting for these acquisitions in accordance with
accounting guidance on business combinations. The acquisitions resulted in goodwill related to, among
other things, growth opportunities and assembled workforces. A portion of the goodwill is expected to
be deductible for tax purposes. The Company has recorded finite-lived intangible assets at their
estimated fair value related to trade names, favorable and unfavorable leases.
The Company expensed all costs related to these acquisitions during fiscal 2011. The total costs
related to these acquisitions were $1.5 million and are included in the consolidated statement of
operations within selling, general and administrative expenses.
The purchase price of the acquisitions has been allocated to the net tangible and intangible assets
acquired, with the remainder recorded as goodwill on the basis of estimated fair values. The allocation
is as follows:
As of
Acquisition
Dates
(dollar amounts in thousands)
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
49