ACQUISITIONS

6 Months Ended

Jul. 30, 2011

ACQUISITIONS

ACQUISITIONS

NOTE 3—ACQUISITIONS

During the current fiscal year, the Company acquired the assets related to seven service and tire centers located in the Seattle-Tacoma area, the assets related to seven service and tire centers located in the Houston, Texas area and all outstanding shares of capital stock of Tire Stores Group Holding Corporation which operated an 85-store chain in Florida, Georgia and Alabama under the name Big 10. Collectively, the acquired stores produced approximately $94.7 million in sales annually based on audited and unaudited pre-acquisition historical information. The total purchase price of these stores was approximately $42.6 million in cash and the assumption of certain liabilities. The acquisitions were financed through cash flows provided by operations. The results of operations of these acquired stores are included in the Company’s results from their respective acquisition dates.

The Company has recorded its initial accounting for these acquisitions in accordance with accounting guidance on business combinations. The acquisitions resulted in goodwill related to, among other things, growth opportunities and assembled workforces. A portion of the goodwill is expected to be deductible for tax purposes. The Company has recorded finite-lived intangible assets at their estimated fair value related to trade name, favorable and unfavorable leases.

The Company expensed all costs related to these acquisitions during fiscal 2011. The total costs related to these acquisitions were $1.3 million and are included in the consolidated statement of operations within selling, general and administrative expenses.

The purchase price of the acquisitions have been preliminarily allocated to the net tangible and intangible assets acquired, with the remainder recorded as goodwill on the basis of estimated fair values, as follows:

	As of
	Acquisition
(dollar amounts in thousands)	Dates
Current assets	$	11,498
Intangible assets	830
Other non-current assets	7,177
Current liabilities	(13,468		)
Long-term liabilities	(9,458		)
Total net identifiable assets acquired	$	(3,421	)
Total consideration transferred, net of cash acquired	$	42,614
Less: total net identifiable assets acquired	(3,421		)
Goodwill	$	46,035

Intangible assets consist of trade names ($0.6 million) and favorable leases ($0.2 million). Long-term liabilities includes unfavorable leases ($9.1 million). The trade names are being amortized over their estimated useful life of 3 years. The favorable and unfavorable lease intangible assets and liabilities are being amortized to rent expense over their respective lease terms, ranging from 2 to 16 years.

Sales and net earnings for the fiscal 2011 acquired stores totaled $21.9 million and $0.7 million, respectively for the period from acquisition date through July 30, 2011.

The purchase price allocation remains preliminary for some of the acquired stores due to the finalization of certain valuation adjustments. The Company believes that this will be finalized by the fourth quarter of fiscal 2011 and that any adjustments to the purchase price allocation will not be material.

As our acquisitions (including Big 10) were immaterial to our operating results both individually and in aggregate for the thirteen and twenty six week periods ended July 30, 2011 and July 31, 2010, pro forma results of operations are not disclosed.