Napa Auto Parts 2008 Annual Report Download - page 33

amount of goodwill. In accordance with the provisions of SFAS No.
142, the Company reviews its goodwill annually in the fourth quarter,
or sooner if circumstances indicate that the carrying amount may ex-
ceed fair value. No goodwill impairments have been recorded in 2008,
2007, or 2006. e impairment-only approach required by SFAS No.
142 may have the effect of increasing the volatility of the Company’s
earnings if goodwill impairment occurs at a future date.
Other Assets
Other assets are comprised of the following:
(in thousands) December 31, 2008 2007
Retirement benefit assets $ 7,229 $ 45,680
Investment accounted for
under the cost method 21,400 21,400
Cash surrender value of
life insurance policies 47,873 55,937
Other 37,835 53,820
Total other assets $ 114,337 $ 176,837
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Buildings include
certain leases capitalized at December 31, 2008 and 2007. Deprecia-
tion and amortization is primarily determined on a straight-line basis
over the following estimated useful life of each asset: buildings and im-
provements, 10 to 40 years; machinery and equipment, 5 to 15 years.
Long-Lived Assets Other an Goodwill
e Company assesses its long-lived assets other than goodwill for
impairment whenever facts and circumstances indicate that the car-
rying amount may not be fully recoverable. To analyze recoverability,
the Company projects undiscounted net future cash flows over the
remaining life of such assets. If these projected cash flows 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 dif-
ference between the carrying amount and the fair value of the assets.
Other Long-Term Liabilities
Other long-term liabilities are comprised of the following:
(in thousands) December 31, 2008 2007
Post-employment
benefit liabilities $ 9,300 $ 8,901
Obligations under capital
and other leases 12,708 13,707
Insurance liabilities 43,019 36,723
Deferred gain on sale-leaseback 18,477 19,458
Other 19,760 23,199
Total other long-term liabilities $ 103,264 $ 101,988
e Company’s post-employment benefit liabilities consist primarily
of actuarially determined obligations. See Note 4 for further
discussion of the Company’s obligations under capital leases and
the sale-leaseback transaction.
Insurance liabilities consist primarily of reserves for the workers’
compensation program. e Company carries various large risk
deductible workers’ compensation policies for the majority of
workers’ compensation liabilities. e Company records the workers’
compensation reserves based on an analysis performed by an
independent actuary. e analysis calculates development factors,
which are applied to total reserves as provided by the various insur-
ance companies who underwrite the program. While the Company
believes that the assumptions used to calculate these liabilities are
appropriate, significant differences in actual experience or signifi-
cant changes in these assumptions may materially affect workers’
compensation costs.
Self-Insurance
e 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,
significant differences from historical trends may materially impact
financial results. ese 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, 2008 2007
Foreign currency translation $ 17,550 $ 129,700
Unrecognized net actuarial
loss, net of tax (533,562) (250,846)
Unrecognized prior service
credit (cost), net of tax 37,450 (2,569)
Total accumulated other
comprehensive loss $ (478,562) $ (123,715)
Fair Value of Financial Instruments
e carrying amounts reflected in the consolidated balance sheets
for cash and cash equivalents, trade accounts receivable and trade
accounts payable approximate their respective fair values based
on the short-term nature of these instruments. At December 31,
2008 and 2007, the fair value of fixed rate debt was approximately
$491,000,000 and $529,000,000, respectively, based primarily on
quoted prices for similar instruments. e fair value of fixed rate
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