RESTRUCTURING ACTIVITIES

2014 Restructuring Activities

On July 9, 2014, the Board of Directors of the Company approved a realignment of the Company’s consumer-direct operations. As a part of the 2014 Plan, the Company intends to close up to 140 retail stores by the end of fiscal 2015, consolidate certain consumer-direct support functions and implement certain other organizational changes. The Company estimates pretax charges related to the 2014 Plan will range from $26.6 million to $32.0 million. The Company will record the remaining charges in fiscal 2015 as it executes specific components of the 2014 Plan. Approximately $9.6 million to $11.6 million of this estimate represents non-cash charges. Once fully implemented, the Company expects annual pretax benefits of approximately $11.0 million as a result of the 2014 Plan.

The Company closed 58 retail stores in connection with the 2014 Plan during fiscal 2014. The balance of the estimated 140 total store closures are expected to occur in fiscal 2015, with the majority of closures occurring during the fourth quarter of fiscal 2015.

The following is a summary of the activity with respect to a reserve established by the Company in connection with the 2014 Plan, by category of costs.



(In millions)	Severance and employee related			Impairment of property and equipment			Costs associated with exit or disposal activities			Total
Balance at December 28, 2013	$	—		$	—		$	—		$	—
Restructuring costs	2.6			5.5			13.1			21.2
Amounts paid	(1.6		)	—			(3.4		)	(5.0		)
Charges against assets	—			(5.5		)	(3.2		)	(8.7		)
Balance at January 3, 2015	$	1.0		$	—		$	6.5		$	7.5

As part of the 2014 Plan, property and equipment related to retail stores was measured at fair value on a nonrecurring basis using significant unobservable inputs. The following is a summary of the fair value of the assets and the impairment recognized during fiscal 2014.



(In millions)	Fair Value		Impairment
Property and equipment	$	0.6	$	5.5

The property and equipment was valued using an income approach based on the discounted cash flows of the associated retail store locations (Level 3). See Note 10 to the consolidated financial statements for additional information on Level 3 fair value measurements.

In addition to the amounts recorded under the 2014 Plan, the Company recorded an other-than-temporary impairment of an equity method investment, reserved certain receivables within the Company’s international operations and recorded other exit costs totaling $4.8 million during fiscal 2014, of which $1.4 million was a cash cost.

The Company recorded the costs related to the 2014 restructuring activities within its Corporate category in the restructuring costs line item as a component of selling, general and administrative expenses in the consolidated statements of operations.

2013 Restructuring Activities

On October 4, 2013, the Board of Directors of the Company approved a plan to restructure the Company’s Dominican Republic manufacturing operations in a manner intended to lower the Company’s cost of goods sold, as described below (“the 2013 Plan”). During the fourth quarter of fiscal 2013, the Company sold a manufacturing facility in the Dominican Republic and closed a second manufacturing facility. The Company no longer maintains any Company-owned manufacturing operations in the Dominican Republic. The Company recognized $7.6 million of restructuring costs in fiscal 2013 and restructuring costs of $1.0 million during fiscal 2014. The Company considers the 2013 Plan complete and all costs incurred have been recognized in the Company’s Corporate category and are included in the restructuring costs line item as a component of cost of goods sold in the consolidated statements of operations.

The following is a summary of the activity with respect to a reserve established by the Company in connection with the 2013 Plan, by category of costs.



(In millions)	Severance and employee related			Costs associated with exit or disposal activities			Total
Balance at December 29, 2012	$	—		$	—		$	—
Restructuring costs	1.4			6.2			7.6
Amounts paid	(1.4		)	—			(1.4		)
Charges against assets	—			(5.7		)	(5.7		)
Balance at December 28, 2013	$	—		$	0.5		$	0.5
Restructuring costs	0.1			0.9			1.0
Amounts paid	(0.1		)	(1.2		)	(1.3		)
Charges against assets	—			(0.2		)	(0.2		)
Balance at January 3, 2015	$	—		$	—		$	—

In addition to the amounts recorded under the 2013 Plan, the Company recorded an impairment of $0.7 million during fiscal 2013 related to certain consumer-direct store assets where the estimated future cash flows did not support the net book value of the store assets.