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Property and Equipment, Net | 6 Months Ended
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Jun. 28, 2014
Property Plant And Equipment [Abstract] |
Property and Equipment, Net | Note 4 – Property and Equipment, Net The Company’s fixed assets are stated at cost less accumulated depreciation, amortization and impairment. Depreciation and amortization expense are provided for in amounts sufficient to relate the cost of depreciable and amortizable assets to operations over their estimated service lives. Depreciation and amortization expense for the thirteen weeks ended June 28, 2014 and June 29, 2013 was $2,252 and $3,626, respectively, including amortization expense of $119 and $79 for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively, for capital leased assets related to the LaSalle, Illinois facility (see sale-leaseback discussion below for details). Depreciation and amortization expense for the twenty-six weeks ended June 28, 2014 and June 29, 2013 was $4,620 and $7,264, respectively, including amortization expense of $238 and $79 for the twenty-six weeks ended June 28, 2014 and June 29, 2013, respectively, for capital leased assets related to the LaSalle, Illinois facility. 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. The Company accounts for the impairment of property and equipment in accordance with ASC 360 – Property, Plant and Equipment (“ASC 360’). During the second quarter of 2013, the Company identified adverse events related to the Company’s overall financial performance, including accelerating downward trend in the Company’s revenues and gross margin, which indicated that the carrying amount of certain property and equipment may not be recoverable. Given the indicators of impairment, the Company utilized the royalty savings method in determining the fair values, using a discount rate of 14.5% and royalty rate of 1.0%. Based on its analysis, the Company recognized an impairment loss on internally developed software of $4,832. Subsequent to the second quarter of 2013, there have not been events or circumstances that have resulted in an assessment by management of any indicators of further impairment. However, any future decline in the fair value of an asset group could result in future impairments. Property and equipment consisted of the following at June 28, 2014 and December 28, 2013 (in thousands):
|  | June 28, 2014 |  |  | December 28, 2013 |
Land |  | $ | 630 |  |  | $ | 630 |
Building |  |  | 8,877 |  |  |  | 8,877 |
Machinery and equipment |  |  | 12,442 |  |  |  | 12,163 |
Computer software (purchased and developed) and equipment |  |  | 58,519 |  |  |  | 55,383 |
Vehicles |  |  | 260 |  |  |  | 264 |
Leasehold improvements |  |  | 1,778 |  |  |  | 1,767 |
Furniture and fixtures |  |  | 1,097 |  |  |  | 1,057 |
Construction in process |  |  | 1,470 |  |  |  | 2,066 |
|  |  | 85,073 |  |  |  | 82,207 |
Less accumulated depreciation, amortization and impairment |  |  | (67,137 | ) |  |  | (62,544 | )
Property and equipment, net |  | $ | 17,936 |  |  | $ | 19,663 |
On April 17, 2013, the Company’s wholly-owned subsidiary, Whitney Automotive Group, Inc. (“WAG”) sold its facility in LaSalle, Illinois for $9,750 pursuant to a purchase and sale agreement dated April 17, 2013 between WAG and STORE Capital Acquisitions, LLC. The Company used the net proceeds of $9,507 from this sale to reduce its revolving loan payable. Under the terms of the purchase and sale agreement, concurrently with the execution of the purchase and sale agreement and the closing of the sale of the property, the Company entered into a lease agreement with STORE Master Funding III, LLC (“STORE”) whereby the Company leased back the property for the continued use as an office, retail and warehouse facility for storage, sale and distribution of automotive parts, accessories and related items for 20 years commencing upon the execution of the lease and terminating on April 30, 2033. The related assets represent the amounts included in land and building in the summary above. The Company’s initial base annual rent is $853 for the first year (“Base Rent Amount”), after which the rental amount will increase annually on May 1 by the lesser of 1.5% or 1.25 times the change in the Consumer Price Index as published by the U.S. Department of Labor’s Bureau of Labor Statistics, except that in no event will the adjusted annual rental amount fall below the Base Rent Amount. The Company was not required to pay any security deposit. Under the terms of the lease, the Company is required to pay all taxes and required maintenance related to the LaSalle property, maintain certain levels of insurance and indemnify STORE for losses incurred that are related to the Company’s use or occupancy of the property. The lease was accounted for as a capital lease and the $376 excess of the net proceeds over the net carrying amount of the property is amortized in interest expense on a straight-line basis over the lease term of 20 years. As of June 28, 2014, the gross carrying value, the accumulated depreciation and the net carrying value of all capital leased assets included in property and equipment were $9,507, $554 and $8,953, respectively. Construction in process primarily relates to the Company’s internally developed software (refer to caption “Website and Software Development Costs” in “Note 1 – Summary of Significant Accounting Policies and Nature of Operations”). Certain of the Company’s net property and equipment were located in the Philippines as of June 28, 2014 and December 28, 2013, in the amount of $349 and $508, respectively. 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 |
Facility subject to capital lease |  |  | 20 |
Machinery and equipment |  |  | 2 - 5 |
Computer software (purchased and developed) |  |  | 2 - 3 |
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.

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- Definition The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2921-110230 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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