Big Lots 2013 Annual Report Download - page 214

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During the fourth quarter of 2013, we closed the leased facilities in which we operated our wholesale business and recorded
contract termination costs of approximately $0.2 million.
The following table summarizes the components of our wind down activities associated with our wholesale business and the
related liabilities for 2013:
(In thousands) Severance
Contract
Termination
Costs Total
Balance at Februar
y
2, 2013 $
—
$
—
$
—
Charges 1,078 212 1,290
Adjustments (302)
—
(302)
Payments (254) (212) (466)
Period change 522
—
522
Balance at Februar
y
1, 2014 $522 $
—
$ 522
We anticipate no additional charges associated with the wind down of the operations of our wholesale business. As the
operations of the wholesale business had ceased as of February 1, 2014, the results of operations of the wholesale business
were reclassified to discontinued operations. Please see the Wholesale Business section of note 14 to the consolidated financial
statements for further information.
Canadian Segment
During the fourth quarter of 2013, we announced our intention to wind down the operations of our Canadian segment. We
conducted detailed evaluations of our long range strategic objectives as well as performed a preliminary review of our 2014
financial plan. As a result of this evaluation and review, we determined the Canadian segment does not fit into our strategic
plan for maximizing long-term shareholder returns based on our expectations of the required investments necessary to improve
the Canadian segment’s financial performance, both in the near and long-term. During the fourth quarter of 2013, we began a
markdown strategy with the intent to liquidate our inventory prior to closing our stores. At February 1, 2014, we re-valued our
inventory at our net realizable value based on estimated cash proceeds prior to closing, which represents our estimate of its
market value. The cost associated with the revaluation of inventory was recorded in our cost of sales. We, also, conducted a
review of our long lived assets. We determined that the elimination of future cash flows from our operations beyond the first
quarter of 2014 resulted in the impairment of our property and equipment and our tradename intangible assets; therefore, we
recorded a $6.5 million impairment charge for property and equipment, in order to reduce its value to estimated salvage value,
and recorded a $0.5 million charge to fully impair our Canadian tradenames. Please see the third paragraph of note 2 to the
consolidated financial statements for further discussion. Additionally, we conducted an impairment review of our goodwill
associated with our Canadian segment, determined that the goodwill had been impaired, and we recorded a $12.7 million
impairment charge. Please see the final paragraph of note 12 to the consolidated financial statements for further discussion.
The wind down of our Canadian operations has been separated into two phases: our distribution centers and our stores. During
the fourth quarter of 2013, we ceased the operations in our distribution centers, as receiving, processing, and distributing
activities were completed. Associated with the closure of our distribution centers and certain administrative activities, we
recorded a severance charge of approximately $2.7 million in our selling and administrative expenses. Additionally, with the
closure of certain leased distribution centers, we recorded contract termination costs of approximately $1.3 million.