Pep Boys 2013 Annual Report Download - page 122
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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 1, 2014, February 2, 2013 and January 28, 2012
NOTE 2—ACQUISITIONS (Continued)
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
(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 include 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 four 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 from acquisition date through
January 28, 2012. 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 fifty-two week periods ended January 28, 2012 and January 29, 2011, pro
forma results for the fifty-two week period 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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