Restructuring Costs Restructuring Costs

3 Months Ended

May 03, 2014

On April 30 2014, following an assessment of changing consumer patterns, management and the Board of Directors approved a comprehensive plan to both restructure the P.S. from Aéropostale business and to reduce costs. We plan to close approximately 125 mall-based P.S. from Aéropostale stores and streamline and improve the Company's expense structure. We plan to focus on sales channels with higher expectations for growth, including off-mall locations (including outlets), e-commerce and international licensing. We anticipate that substantially all of the planned store closures will be completed by the end of fiscal 2014. As of May 3, 2014, one store had been closed. The cost reduction program will also target both direct and indirect spending across the organization. This included the reduction of corporate headcount by eliminating approximately 100 open or occupied positions to align with our current business strategies.

We estimate that we will incur pre-tax restructuring and impairment charges related to these actions totaling approximately $40.0 million to $65.0 million throughout fiscal 2014, of which approximately $25.0 million to $40.0 million are estimated to be cash expenses. Included in the estimate of total pre-tax charges are approximately:


•	$4.0 million of consulting and severance expenses resulting from the announced corporate cost reduction initiatives, of which $2.9 million were recorded during the first quarter of 2014.


•	$30.5 million of store asset impairments resulting primarily from the expected closures of the P.S. from Aéropostale stores, all of which were recorded during the first quarter of 2014.


•	$3.0 million of additional severance resulting from the store closures, which are expected to be recorded over the remainder of fiscal 2014.


•	The remainder of the charges relate to estimated lease costs in conjunction with the store closures, which are expected to be recorded during the remainder of fiscal 2014. We cannot yet estimate when the lease charges will be paid.

The charges will be recognized in restructuring charges in the statement of operations.

The following is a summary of expenses incurred during the first quarter of 2014 associated with the above ongoing actions:



	13 weeks ended
	May 3, 2014
	(In thousands)
Store asset impairment charges	$	30,497
Severance	1,060
Lease costs	1,046
Other exit costs	1,886
Total	$	34,489

The Company accrued liabilities for the above mentioned restructuring charges as of May 3, 2014, which are expected to be paid during fiscal 2014 as follows:



	Impairments			Severance		Lease Costs		Other Exit Costs			Total

	(In thousands)
Liability/Charge at Program Inception	$	30,497		$	1,060	$	1,046	$	1,886		$	34,489
Paid or utilized	(30,497		)	—		—		(1,815		)	(32,312		)
Adjustments	—			—		—		—			—
Liability as of May 3, 2014	$	—		$	1,060	$	1,046	$	71		$	2,177

Of the above liabilities, $1.5 million is recorded in accrued expenses and other current liabilities and the balance is included in non-current liabilities.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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