AUTOZONE INC | 2013 | FY | 3


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  

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