AAP » Topics » 7. Property and Equipment:

This excerpt taken from the AAP 10-K filed Mar 17, 2005.

7. Property and Equipment:

        Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged directly to expense when incurred; major improvements are capitalized. When items are sold or retired, the related cost and accumulated depreciation are removed from the accounts, with any gain or loss reflected in the consolidated statements of operations.

        Depreciation of land improvements, buildings, furniture, fixtures and equipment, and vehicles is provided over the estimated useful lives, which range from 2 to 40 years, of the respective assets using the straight-line method. Amortization of building and leasehold improvements is provided over the shorter of the original useful lives of the respective assets or the term of the lease using the straight-line method. The term of the lease is generally the initial term of the lease unless external economic factors exist such that renewals are reasonably assured in which case, the renewal period would be included in the lease term for purposes of establishing an amortization period. At January 1, 2005, construction in progress primarily consisted of construction related costs for the Company’s new Northeast distribution center. Depreciation and amortization expense was $104,877, $100,737 and $94,090 for the fiscal years ended 2004, 2003 and 2002, respectively.

        Property and equipment consists of the following:

Original   
Useful Lives   
January 1,  
2005  
January 3, 
2004 



        Land and land improvements      0-10 years       $ 187,624   $ 177,088  
        Buildings    40 years       240,447    214,919  
        Building and leasehold improvements    10 - 40 years       133,415    110,974  
        Furniture, fixtures and equipment    3 - 12 years       632,312    553,759  
        Vehicles    2 - 10 years       32,963    36,338  
        Construction in progress        29,936    10,420  
        Other        4,335    4,231  


         1,261,032    1,107,729  
        Less - Accumulated depreciation and amortization        (474,820 )  (395,027 )


        Property and equipment, net       $ 786,212   $ 712,702  


        The Company capitalized approximately $4,625, $5,423 and $2,888 incurred for the development of internal use computer software in accordance with the American Institute of Certified Public Accountant’s Statement of Position 98-1, “Accounting for the Cost of Computer Software Developed or Obtained for Internal Use” during fiscal 2004, fiscal 2003 and fiscal 2002, respectively. These costs are included in the furniture, fixtures and equipment category above and are depreciated on the straight-line method over three to seven years.

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