Impairment, Store Lease Termination And Closure Costs And Workforce Reduction

12 Months Ended

Jan. 03, 2012

Impairment, Store Lease Termination And Closure Costs And Workforce Reduction [Abstract]

Impairment, Store Lease Termination And Closure Costs And Workforce Reduction

7. IMPAIRMENT, STORE LEASE TERMINATION AND CLOSURE COSTS AND WORKFORCE REDUCTION

Long-lived asset impairment

The Company evaluates long-lived assets for impairment when facts and circumstances indicate that the carrying values of long-lived assets may not be recoverable. The evaluation includes consideration of factors such as historical and current operating performance and projected future results at store level. Impairment charges include the write-down of long-lived assets at stores that were assessed for impairment because of management's intention to close the store or because of changes in circumstances that indicate the carrying value of an asset may not be recoverable. The Company recorded impairment charges of $1.3 million, $2.8 million and $12.3 million for fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

Store lease termination and closure costs and workforce reduction

As a result of the Company's revitalization efforts and revised development goals, the Company evaluated the infrastructure needed to support its evolving business model and restructured its Support Center to eliminate certain administrative positions. During fiscal 2011, 2010 and 2009, the Company incurred $0.7 million, $4.3 million and $1.2 million, respectively, in charges related to asset write-offs for lease termination and closure costs.

Lease termination costs consist primarily of the costs of future obligations related to closed store locations. Discounted liabilities for future lease costs and the fair value of related subleases of closed locations are recorded when the stores are closed. These amounts are subject to adjustments as liabilities are settled. In assessing the discounted liabilities for future costs of obligations related to closed stores, the Company made assumptions regarding amounts of future subleases. If these assumptions or their related estimates change in the future, the Company may be required to record additional exit costs or reduce exit costs previously recorded. Exit costs recorded for each of the periods presented include the effect of such changes in estimates. Severance accruals were paid during fiscal 2010 and 2009. Lease obligations are payable through 2019, less sublease amounts. The following is a reconciliation of the store closure and severance accrual and is included in Other current liabilities and Other long-term liabilities (in thousands):

Balance as of December 29, 2009	$	2,478
Provision for noncancellable lease payments of closed stores		2,443
Severance payments		(144	)
Payments on lease liabilities		(1,889	)
Adjustment		130
Balance as of December 28, 2010	$	3,018
Provision for noncancellable lease payments of closed stores		154
Payments on lease liability		(2,834	)
Adjustments		235
Balance as of January 3, 2012	$	573

Gain/loss on Disposal of Other Assets—The Company recognized a loss on disposal of fixed assets of $2.1 million and $0.3 million in fiscal 2011 and 2010, respectively, and a gain on disposal of assets of $2.0 million in fiscal 2009. The loss on disposal in fiscal 2011 includes a net loss of $0.3 million on sale of fixed assets of refranchised stores pursuant to our refranchising initiative which ended in April 2011. The loss on disposal in fiscal 2010 is net of a $1.5 million dollar gain on refranchising of Company Stores.