North Face 2001 Annual Report Download - page 63

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Activity in the 2001 restructuring accrual is summarized as follows:
Facilities Other Lease and
Exit Asset Contract
In thousands Severance Costs Write-downs Termination Total
Total restructuring costs $87,921 $ 59,386 $ 72,953 $16,562 $236,822
Noncash charges:
Inventories – – (15,236) – (15,236)
Intangible assets – – (37,427) – (37,427)
Pension plan partial curtailment – – (15,970) – (15,970)
Other – (54,173) (4,320) – (58,493)
Cash payments (9,522) (35) – – (9,557)
Balance December 29, 2001 $78,399 $ 5,178 $ – $16,562 $100,139
Substantially all of the remaining severance and other cash payments will be made during 2002.
In the fourth quarter of 2000, the Company recorded a total of $119.9 million of restructuring charges to exit
certain unprofitable businesses and to reduce its overall cost structure. Details of these actions follow:
• Exit underperforming businesses–$69.7 million: The Company transferred its Wrangler business in
Japan to a licensee and recorded a loss on disposition of $26.8 million, of w hich $23.8 million related to the
write-off of intangible assets. The Company discontinued certain small occupational apparel business units
and unprofitable product lines arising from companies acquired in 1998 and 1999 and certain intimate apparel
product lines having limited profit and grow th potential. Sales of these businesses included in the consoli-
dated operating results w ere $101 million in 2000 and $138 million in 1999.
• Close manufacturing facilities–$18.5 million: Charges were incurred to close six higher cost North
American manufacturing facilities.
• Consolidate distribution and administrative functions–$31.7 million: The Company incurred charges to
close distribution centers and consolidate administrative offices and functions in the United States, Europe
and Latin America.
For the 2000 restructuring, $22.4 million of the above costs relate to personnel reductions. These actions
affected approximately 2,700 of the Company’s employees, all of whom were terminated in late 2000 or in 2001.
Activity in the 2000 restructuring accrual is summarized as follows:
Facilities Other Lease and
Exit Asset Contract
In thousands Severance Costs Write-downs Termination Total
Total restructuring costs $ 22,367 $ 21,850 $ 59,996 $15,695 $119,908
Noncash charges:
Inventories – – (22,392) – (22,392)
Intangible assets – – (23,819) – (23,819)
Other – (20,381) (13,785) – (34,166)
Cash payments (1,976) (8) – (154) (2,138)
Balance December 30, 2000 20,391 1,461 – 15,541 37,393
Reduction of accrual (2,573) – – (4,495) (7,068)
Cash payments (16,174) (1,012) – (4,182) (21,368)
Balance December 29, 2001 $ 1,644 $ 449 $ – $ 6,864 $ 8,957
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