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F-15
2. Asset Impairments and Restructuring Charges
Fiscal 2013
We recognized impairment charges of $9.0 million in fiscal 2013 related to our evaluation of store property, equipment and
other assets in situations where the asset’s carrying value was not expected to be recovered by its future cash flows over its
remaining useful life. We used a discounted cash flow method to estimate the present value of net cash flows that the fixed asset
or fixed asset group is expected to generate in determining its fair value. The key inputs to the discounted cash flow model generally
included our forecasts of net cash generated from revenue, expenses and other significant cash outflows, such as capital
expenditures, as well as an appropriate discount rate.
Additionally, we made a decision during the fourth quarter of fiscal 2013 to abandon our Spawn Labs business and related
technology assets. As a result of this decision, we recorded impairment charges of $2.1 million related to other intangible assets
and $7.4 million related to certain technology assets in connection with the exit of the Spawn Labs business, which are reflected
in the asset impairments and restructuring charges line item in our consolidated statements of operations. Additionally, because
we never integrated Spawn Labs into our United States Video Game Brands reporting unit, our decision to exit this business
triggered an interim impairment test that resulted in a goodwill impairment charge of $10.2 million, which is reflected in the
goodwill impairments line item in our consolidated statements of operations.
A summary of our asset impairment charges, by reportable segment, for the 52 weeks ended February 1, 2014 is as follows:
United States Video
Game Brands
Europe Video Game
Brands Total
(In millions)
Goodwill impairments .............................................. $ 10.2 $ — $ 10.2
Impairment of intangible assets ................................ 2.1 — 2.1
Impairment of technology assets .............................. 7.4 — 7.4
Impairments of property, equipment and other
assets - store impairments......................................... 4.3 4.7 9.0
Total.......................................................................... $ 24.0 $ 4.7 $ 28.7
There were no restructuring charges for the 52 weeks ended February 1, 2014, and we did not have any amounts accrued
for termination benefits as of February 1, 2014. An immaterial amount of termination benefits related to our restructuring initiatives
was recorded within accrued liabilities in our consolidated balance sheet as of February 2, 2013, all of which was paid during
fiscal 2013.
Fiscal 2012
During the third quarter of fiscal 2012, we recorded a $44.9 million impairment charge as a result of our interim impairment
test of our Micromania trade name, which is described more fully in Note 9. The fair value of the Micromania trade name was
calculated using a relief-from-royalty approach, which assumes the fair value of the trade name is the discounted cash flows of
the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the
trade name from another company.
In fiscal 2012, we also recorded impairments of finite-lived assets of $8.8 million consisting primarily of the remaining net
book value of assets for stores we are in the process of closing or that we have determined will not have sufficient cash flow on
an undiscounted basis to cover the remaining net book value of assets recorded for that store.
A summary of our asset impairment charges, by reportable segment, for the 53 weeks ended February 2, 2013 is as follows:
United States
Video Game
Brands
Canada Video
Game Brands
Australia
Video Game
Brands
Europe Video
Game Brands Total
(In millions)
Goodwill impairments ...................................... $ — $ 100.3 $ 107.1 $ 419.6 $ 627.0
Impairment of intangible assets ........................ — — — 44.9 44.9
Impairments of property, equipment and other
assets - store impairments................................. 5.7 0.4 0.2 2.5 8.8
Total.................................................................. $ 5.7 $ 100.7 $ 107.3 $ 467.0 $ 680.7
There were no restructuring charges during the fiscal year ended February 2, 2013.