Acquisition Of Boston Proper

12 Months Ended

Jan. 28, 2012

Acquisition Of Boston Proper [Abstract]

Acquisition Of Boston Proper

3. ACQUISITION OF BOSTON PROPER:

     On September 19, 2011, we acquired all of the outstanding equity of Boston Proper, Inc. ("Boston Proper"), a privately held direct-to-consumer retailer of distinctive women's apparel and accessories. Total cash consideration was approximately $214 million, $205 million for the common stock, stock options and certain transaction related expenses and approximately $9 million for incremental working capital generated after the signing of the merger agreement and prior to closing of the transaction. The cash paid at closing was funded by available cash balances. An escrow in the aggregate amount of $15 million of the merger consideration was established at the closing to secure the indemnification and other obligations of Boston Proper shareholders and certain covenants under the merger agreement. Subsequent to year-end, $2 million of the escrow was released in accordance with the terms of the merger agreement.

     We incurred certain pre-tax acquisition and integration costs totaling approximately $5.1 million, consisting of professional service fees and employee-related benefit costs, which are reflected as a separate line item on the accompanying consolidated statements of income. We expect to incur additional acquisition and integration costs in future periods as we integrate the Boston Proper business into our corporate structure but expect such costs will be immaterial.

     We allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. None of the goodwill acquired is deductible for tax purposes.

     Intangible assets not subject to amortization consist of $51.2 million related to the Boston Proper tradename. Intangible assets subject to amortization consist of $43.6 million in customer relationships and are being amortized, on a straight-line basis, over a period of 10 years. Amortization expense for the year ended January 28, 2012 was approximately $1.6 million. For fiscal years 2012 through 2016, we expect to record annual amortization expense of approximately $4.4 million in each fiscal year.

The purchase price was allocated as follows as of September 19, 2011:

Current assets	$	23,489
Current liabilities		(12,648	)
Non-current assets
Goodwill		141,919
Intangibles- tradename		51,200
Intangibles-customer relationships		43,580
Other		1,762
Non-current deferred tax liabilities		(35,741	)
Total purchase price	$	213,561

     The allocation of the purchase price to assets acquired and liabilities assumed is preliminary pending finalization of management's analysis.

     Boston Proper's results of operations are included in our consolidated results from the date of acquisition, and were not material to our consolidated results for the year ended January 28, 2012.