Goodwill and Other Intangibles

6 Months Ended

Jun. 30, 2013

Goodwill And Other Intangible Assets Abstract

NOTE 3 – GOODWILL AND OTHER INTANGIBLES

Goodwill:

Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in business conditions indicate that impairment may exist. Goodwill is not amortizable for financial statement purposes. During the three months ended June 30, 2013, the Company recorded a decrease in goodwill of $0.1 million, resulting from adjustments to purchase price allocations related to small acquisitions. During the six months ended June 30, 2013, the Company recorded an increase in goodwill of $0.1 million, resulting from adjustments to purchase price allocations related to small acquisitions. The Company did not record any goodwill impairment during the three or six months ended June 30, 2013.

As of June 30, 2013, and December 31, 2012, other than goodwill, the Company did not have any unamortizable intangible assets.

Intangibles other than goodwill:

The following table identifies the components of the Company’s amortizable intangibles as of June 30, 2013, and December 31, 2012 (in thousands):



	Cost of Amortizable Intangibles				Accumulated Amortization (Expense) Benefit				Net Amortizable Intangibles
	June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012
Amortizable intangible assets:
Favorable leases	$	50,910	$	50,910	$	(30,650)	$	(28,566)	$	20,260	$	22,344
Non-compete agreements		622		717		(377)		(447)		245		270
Total amortizable intangible assets	$	51,532	$	51,627	$	(31,027)	$	(29,013)	$	20,505	$	22,614

Unfavorable leases	$	49,380	$	49,380	$	34,629	$	32,210	$	14,751	$	17,170

The Company recorded favorable lease assets in conjunction with the acquisition of CSK Auto Corporation (“CSK”); these favorable lease assets represent the values of operating leases acquired with favorable terms. These favorable leases had an estimated weighted-average remaining useful life of approximately 10.1 years as of June 30, 2013. For the three months ended June 30, 2013 and 2012, the Company recorded amortization expense of $1.0 million, and $1.3 million, respectively, related to its amortizable intangible assets. For the six months ended June 30, 2013 and 2012, the Company recorded amortization expense of $2.1 million, and $2.6 million, respectively, related to its amortizable intangible assets. The carrying amounts, net of accumulated amortization, of these amortizable intangible assets are included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets.

The Company recorded unfavorable lease liabilities in conjunction with the acquisition of CSK; these unfavorable lease liabilities represent the values of operating leases acquired with unfavorable terms. These unfavorable leases had an estimated weighted-average remaining useful life of approximately 5.1 years as of June 30, 2013. For the three months ended June 30, 2013 and 2012, the Company recognized an amortization benefit of $1.2 million, and $1.4 million, respectively, related to these unfavorable operating leases. For the six months ended June 30, 2013 and 2012, the Company recognized an amortization benefit of $2.4 million, and $2.9 million, respectively, related to these unfavorable operating leases. The carrying amounts, net of accumulated amortization, of these unfavorable lease liabilities are included in “Other liabilities” on the accompanying Condensed Consolidated Balance Sheets. These unfavorable lease liabilities are not included as a component of the Company’s closed store reserves, which are discussed in Note 5.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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