Staples 2014 Annual Report Download - page 149

APPENDIX C
STAPLES C-17
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The changes in the carrying amounts of goodwill during fiscal 2013 and 2014 are as follows (in thousands):
Goodwill at
February 2, 2013
2013
Additions
Held
for Sale
2013
Adjustments
Foreign
Exchange
Fluctuations
Goodwill
at February 1,
2014
North American Commercial $1,245,034 $18,377 $(11,163) $(5,462) $— $1,246,786
North American Stores & Online 626,673 15,945 — — (4,593) 638,025
International Operations 1,349,455 — — — (669) 1,348,786
Consolidated $3,221,162 $34,322 $(11,163) $(5,462) $(5,262) $3,233,597
Goodwill at
February 1, 2014
2014
Additions
2014
Disposals
2014
Impairments
Foreign
Exchange
Fluctuations
Goodwill
at January 31,
2015
North American Commercial $1,246,786 $2,045 $(2,199) $— $— $1,246,632
North American Stores & Online 638,025 34,417 — — (10,158) 662,284
International Operations 1,348,786 — (2,058) (409,539) (166,076) 771,113
Consolidated $3,233,597 $36,462 $(4,257) $(409,539) $(176,234) $2,680,029
As of January 31, 2015 and February 1, 2014, the Company’s International Operations segment had $1.18 billion and
$771.5 million of accumulated goodwill impairment charges, respectively.
Long-Lived Assets
2014 Impairment of Long-Lived Assets
The Company recorded a total of $60.1 million of fixed
asset impairment charges in 2014, which includes
$36.9 million related to the 2014 Restructuring Plan (see
Note B - Restructuring Charges). During 2014, the Company
approved the closure of 197 retail stores pursuant to its
plan to close at least 225 retail stores in North America by
the end of 2015 (see Note B - Restructuring Charges), and
as a result recorded impairment charges of $36.0 million. In
addition, the Company determined that the fixed assets at
certain other North American retail stores are not recoverable
from future cash flows, primarily due to declining sales, and
as a result recorded impairment charges of $21.7 million. The
charges related to North American stores primarily pertain
to leasehold improvements, fixtures, equipment and other
assets at the store locations. The Company also recorded
$2.4 million of impairment charges related to its International
Operations segment, $0.9 million of which related to
restructuring initiatives.
These charges were based on measurements of the fair value
of the impaired assets derived using the income approach,
specifically the DCF method, which incorporated Level 3
inputs as defined in ASC Topic 820. The Company considered
the expected net cash flows to be generated by the use of the
assets through the store closure dates, as well as the expected
cash proceeds from the disposition of the assets, if any.
2012 Impairment of Long-Lived Assets
Prior to performing the goodwill impairment tests for Europe
Retail and Europe Catalog in 2012, the Company tested long-
lived assets to be held and used by these reporting units for
impairment on an undiscounted cash flow basis. Based on the
results of this testing, the Company recorded a $4.8 million
impairment charge related to the ongoing operations of Europe
Retail and determined that the long-lived assets associated
with the ongoing operations of Europe Catalog were not
impaired. The impairment charge primarily related to leasehold
improvements at retail stores and was based on estimates of
the fair values of the related assets which were derived using a
DCF valuation analysis.
During 2012, the Company closed 46 retail stores in Europe
and 15 retail stores in the United States and consolidated
several sub-scale delivery businesses in Europe (see Note B -
Restructuring Charges). As a result of these planned actions,
the Company recorded long-lived asset impairment charges
of $29.6 million and $5.1 million related to the Company’s
International Operations and North American Stores and
Online segments, respectively, primarily relating to leasehold
improvements and company-owned facilities.
Intangible Assets
During 2012, the Company rebranded its Australian business
pursuant to which the Company accelerated the transition
from the legacy Corporate Express tradename to the exclusive
use of the Staples brand name. As a result, the Company
accelerated the remaining amortization totaling $20.0 million in
2012. This amount was recorded in Amortization of intangibles
in the consolidated statement of income.