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APPENDIX C
STAPLES C-16
STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The Company’s International Operations segment had $1.18 billion of accumulated goodwill impairment charges as of
January 30, 2016 and January 31, 2015.
Long-Lived Assets
The Company recorded total long-lived asset impairment
charges of $50 million and $60 million in 2015 and 2014,
respectively. The components of these charges are
shown below:
For 2015 and 2014, impairment included $6 million and
$37 million, respectively, related to leasehold improvements,
fixtures, equipment and other fixed assets impacted by the
Company’s plans to close at least 225 retail stores in North
America and to generate annualized pre-tax savings of
approximately $500 million by the end of 2015 (see Note
B). All of these charges in 2015 relate to the Company’s
North American Stores & Online segment; for 2014, $36
million related to the Company’s North American Stores &
Online segment and $1 million related to the International
Operations segment.
In addition to impairment related to closures, the Company
determined that leasehold improvements, land and buildings,
fixtures, equipment and other assets, primarily at certain
North American and European retail stores, (locations not
identified for closure) were not recoverable from future
cash flows, primarily due to declining sales. As a result, the
Company recorded impairment charges of $22 million in 2015
and $23 million in 2014. Of the charges recorded in 2015,
$7 million relates to the North American Stores & Online
segment and $15 million relates to the International Operations
segment. Of the charges recorded in 2014, $22 million relates
to the North American Stores & Online segment and $1 million
relates to the International Operations segment.
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 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.
In addition to the charges discussed above, based on a
strategic review the Company performed in 2015 the Company
made a decision to dispose of certain information technology
assets, incurring an impairment charge of $22 million. The
assets were comprised of software for which the Company
concluded the fair value was not material. This charge relates
to the North American Stores & Online segment.
Intangible Assets
The Company’s intangible assets are amortized on a straight-line basis over their estimated useful lives and are summarized below
(in millions):
January 30, 2016 January 31, 2015
Gross
Carrying
Amount Accumulated
Amortization Net
Gross
Carrying
Amount Accumulated
Amortization Net
Customer relationships $628 $(411) $217 $628 $(364) $264
Technology 72 (20) 52 72 (6) 66
Tradenames 9 (4) 5 9 (4) 5
Total $709 $(435) $274 $709 $(374) $335
Estimated future amortization expense associated with the intangible assets at January 30, 2016 is as follows (in millions):
Fiscal Year Total
2016 $66
2017 66
2018 62
2019 39
2020 23
Thereafter 18
$274