CarParts.com, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Property And Equipment, Net

Property And Equipment, Net

12 Months Ended

Dec. 31, 2011

Property And Equipment, Net [Abstract]

Note 4 – Property and Equipment, Net

The Company's fixed assets consisted of computer software (internally developed and purchased), machinery and equipment, furniture and fixtures, and vehicles, and are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable and amortizable assets to operations over their estimated service lives. Depreciation expense for fiscal 2009, 2010 and 2011 was $2.0 million, $3.4 million and $4.7 million, respectively. Software amortization expense for the same periods was $2.9 million, $6.1 million and $8.0 million, respectively. The cost and related accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings.

Property and equipment consisted of the following at January 1, 2011 and December 31, 2011:


	January 1, 2011			December 31, 2011
	(in thousands)

Land	$	630		$	630
Building		10,680			10,680
Machinery and equipment		12,216			13,429
Computer software (purchased and developed) and equipment		22,566			37,880
Vehicles		173			221
Leasehold improvements		1,961			2,122
Furniture and fixtures		1,133			1,244
Construction in process		5,241			2,467

		54,600			68,673
Less accumulated depreciation and amortization		(21,460	)		(34,046	)

Property and equipment, net	$	33,140		$	34,627

At January 1, 2011 and December 31, 2011, $2.1 million and $1.6 million, respectively, of the Company's net property and equipment was located in the Philippines. Additionally, gross property and equipment includes $0.3 million and $0.4 million, respectively, of equipment under capital lease arrangements and the related accumulated depreciation of $0.2 million and $0.2 million, respectively, as of January 1, 2011 and December 31, 2011.

Depreciation of property and equipment is provided using the straight-line method for financial reporting purposes, at rates based on the following estimated useful lives:


		Years
Building		21
Machinery and equipment		2 - 5
Computer software (purchased and developed)		2 - 5
Computer equipment		2 - 5
Vehicles		3 - 5
Leasehold improvements*		3 - 5
Furniture and fixtures		3 - 7

*	The estimated useful life is the lesser of 3-5 years or the lease term.

Included above, in connection with the acquisition of WAG, the Company allocated $16.4 million of the purchase price to the following property and equipment:


	Weighted-Average Useful Life		Gross Carrying Amount
			(in thousands)
Land		Indefinite life	$	630
Building		21 years		10,680
Furniture and fixtures		3 years		403
Machinery and equipment		2-3 years		3,843
Leasehold improvements		5 years		561
Construction in process				313

Total			$	16,430

The acquired property and equipment are being depreciated on a straight line basis in accordance with their estimated useful life. See "Note 5 – Business Combination" below for further details on the acquisition.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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