O'Reilly Auto Parts 2008 Annual Report Download - page 50

PG.48 O’REILLY AUTOMOTIVE 2008 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
e fair value O’Reilly shares exchanged for CSK’s unvested restricted stock outstanding at July 11, 2008, of $1.1 million was based on the fair
value per share of $25.37 on the June 9, 2008 measurement date. Direct costs of the acquisition include investment-banking fees, legal and
accounting fees, and other external costs directly related to the acquisition.
e preliminary purchase price allocations, adjusted from its initial purchase price allocation, as discussed above, as of the date of acquisition are as follows:
(In thousands)
Inventory $ 546,052
Other current assets 77,307
Property and equipment 126,670
Goodwill 670,508
Deferred income taxes 134,074
Other intangible assets 65,270
Other assets 9,241
Total assets acquired $ 1,629,122
Senior credit facility $ 343,921
Term loan facility 86,700
Capital lease obligations 15,212
Other current liabilities 467,773
6 ¾% senior exchangeable notes 103,920
Other liabilities 69,602
Total liabilities assumed 1,087,128
Net assets acquired $ 541,994
Preliminary estimated fair values of intangible assets acquired as of the date of acquisition are as follows:
Weighted-Average
(In thousands) Intangible assets Useful Lives (In years)
Trademarks and trade names $ 13,000 1.4
Favorable property leases 52,270 10.7
Total intangible assets $ 65,270
e estimated values of operating leases with unfavorable terms compared with current market conditions totaled approximately $49.9 million. ese
liabilities have an estimated weighted-average useful life of approximately 7.7 years and are included in other liabilities. Favorable and unfavorable lease
assets and liabilities will be amortized to rent expense over their expected lives which approximates the period of time that the favorable or unfavorable
lease terms will be in eect. Trademarks and trade names have preliminary useful lives of one to three years and will be amortized coinciding with the
anticipated conversion of CSK store brands to the O’Reilly brand over that period. See Note 3 “Goodwill and Other Intangible Assets.”
e allocation of the purchase price includes $35.8 million of accrued liabilities for estimated costs to exit certain activities of CSK, including
$27.6 million of employee separation costs, $4.1 million of exit costs associated with the planned closure of 33 CSK stores, and $4.1 million
of exit costs associated with the planned closure of other administrative oce and distribution facilities. ese activities have been accounted
for in acordance with EITF No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination. Management began to
formulate its exit plans prior to the completion of the acquisition. e employee separation costs include anticipated payments, as required
under various pre-existing employment arrangements with CSK employees at the time of acquisition, related to the planned involuntarily
termination of employees performing overlapping or duplicative functions which the Company expects to occur within the rst two years
aer the acquisition date. Evaluation of involuntary team member terminations is substantially complete.
As of December 31, 2008, management of the Company had not nalized all exit plans associated with store closures and other facilities related
to the CSK acquisition. e store closure plans are preliminary pending the completion of evaluations of the physical and market condition of