Note N – Goodwill and Intangibles
The changes in the carrying amount of goodwill are as follows:
|
(in thousands) |
Auto Parts Stores |
Other | Total | |||||||||
|
Net balance as of August 26, 2012 |
$ | 302,645 | $ | — | $ | 302,645 | ||||||
|
Goodwill added through acquisition (1) |
— | 83,440 | 83,440 | |||||||||
|
Goodwill adjustments (2) |
— | (18,256 | ) | (18,256 | ) | |||||||
|
|
|
|
|
|
|
|||||||
|
Net balance as of August 31, 2013 |
$ | 302,645 | $ | 65,184 | $ | 367,829 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | See Note M for discussion of the acquisition completed during the second quarter of fiscal 2013 |
| (2) | Total accumulated goodwill impairment as of August 31, 2013 is $18.3 million |
The Company performed its annual impairment testing in the fourth quarter of fiscal 2013 for the recorded goodwill and indefinite-lived intangible asset related to the acquisition of AutoAnything. Based on an analysis of AutoAnything’s revised planned financial results compared to the initial projections, the Company determined it was more likely than not that the goodwill attributed to AutoAnything was impaired. Accordingly, the Company performed a goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The Company uses the discounted cash flow methodology to determine fair value as it is considered to be the most reliable indicator of the fair values of the business. Because the fair value of the reporting unit was lower than its carrying value, the Company recorded a goodwill impairment charge of $18.3 million during the fourth quarter of fiscal 2013.
The carrying amounts of intangible assets, which all relate to the AutoAnything acquisition, are included in Other long-term assets as follows:
|
(in thousands) |
Estimated Useful Life |
Gross Carrying Amount |
Accumulated Amortization |
Impairment | Net Carrying Amount |
|||||||||||||||
|
Technology |
5 years | $ | 9,700 | $ | (1,365 | ) | $ | — | $ | 8,335 | ||||||||||
|
Noncompete agreement |
5 years | 1,300 | (183 | ) | — | 1,117 | ||||||||||||||
|
Customer relationships |
10 years | 19,000 | (1,336 | ) | — | 17,664 | ||||||||||||||
|
Trade name |
Indefinite | 28,700 | — | (4,100 | ) | 24,600 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| $ | 58,700 | $ | (2,884 | ) | $ | (4,100 | ) | $ | 51,716 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
As part of its annual impairment test, the Company evaluated the AutoAnything trade name for impairment. Based on the Company’s evaluation of the future discounted cash flows of AutoAnything’s trade name as compared to its carrying value, it was determined that AutoAnything’s trade name was impaired. The Company recorded an impairment charge of $4.1 million during the fourth quarter of fiscal 2013 related to the trade name.
Amortization expense of intangible assets for the year ended August 31, 2013, was $2.9 million.
Total future amortization expense for intangible assets that have finite lives, based on the existing intangible assets and their current estimated useful lives as of August 31, 2013, is estimated as follows:
|
(in thousands) |
Total | |||
|
2014 |
$ | 4,100 | ||
|
2015 |
4,100 | |||
|
2016 |
4,100 | |||
|
2017 |
4,100 | |||
|
2018 |
2,553 | |||
|
Thereafter |
8,163 | |||
|
|
|
|||
| $ | 27,116 | |||