Old COPPER Company, Inc. - 10-K filing on 2015-03-23

Restructuring and Management Transition

12 Months Ended

Jan. 31, 2015

Restructuring and Related Activities [Abstract]

The composition of restructuring and management transition charges was as follows:



							Cumulative Amount From Program Inception Through
($ in millions)	2014		2013		2012		2014
Supply chain	$	—	$	—	$	19	$	60
Home office and stores	45		48		109		247
Software and systems	—		—		36		36
Store fixtures	—		55		78		133
Management transition	16		37		41		224
Other	26		75		15		149
Total	$	87	$	215	$	298	$	849

Supply chain

As a result of consolidating and streamlining our supply chain organization as part of a restructuring program that began in 2011, we recorded charges of $19 million in 2012 related to increased depreciation, termination benefits and unit closing costs. Increased depreciation resulted from shortening the useful lives of assets related to the closing and consolidating of selected facilities. This restructuring activity was completed during the third quarter of 2012.

Home office and stores

During 2014, 2013 and 2012, we recorded $45 million, $48 million and $109 million, respectively, of costs to reduce our store and home office expenses. During the nine months ended November 1, 2014, we recorded $15 million of charges for actions taken to reduce our home office and store expenses. In January 2015, we announced the closing of 40 department stores, and as a result, during the fourth quarter of 2014, we incurred charges of $20 million related to asset impairments and $1 million of employee termination benefit costs. Additionally, we incurred $9 million of other miscellaneous store restructuring costs during 2014.

During the first three quarters of 2013, we recorded $26 million of employee termination benefits for both store and home office associates. In addition, in January 2014, we announced a strategic initiative to close 33 underperforming stores as part of our turnaround efforts. In conjunction with this initiative, during the fourth quarter of 2013, we incurred charges of $21 million related to asset impairments and $1 million of employee termination benefit costs.

In 2012, charges of $116 million associated with employee termination benefits for both store and home office associates were offset by a net curtailment gain of $7 million (Note 14) related to our retirement benefit plans, which was incurred during the third quarter of 2012 when substantially all employee exits related to 2012 were completed, for a net charge of $109 million.

Software and systems

During 2012, we recorded a charge of $36 million related to the disposal of software and systems that based on our evaluation no longer supported our operations. This amount included $3 million of consulting fees related to that evaluation.

Store fixtures

During 2013, we recorded a total charge of $55 million related to store fixtures which consisted of $37 million of increased depreciation as a result of shortening the useful lives of department store fixtures that were replaced throughout 2013, $11 million of charges for the impairment of certain store fixtures related to our former shops strategy that had been used in our prototype department store and a $7 million asset write down of store fixtures related to the renovations in our home department.

During 2012, we recorded a total charge of $78 million related to store fixtures which consisted of a $53 million asset write-off related to the removal of store fixtures in our department stores and $25 million of increased depreciation as a result of shortening the useful lives of department store fixtures that were replaced throughout 2013 with the build out of additional shops.

Management transition

During 2014, 2013 and 2012, we implemented several changes within our management leadership team that resulted in management transition costs of $16 million, $37 million and $41 million, respectively, for both incoming and outgoing members of management.

Other

During 2014, 2013 and 2012, we recorded miscellaneous restructuring charges of $26 million, $75 million and $15 million, respectively. The charges during 2014 and 2013 were primarily related to contract termination costs and other costs associated with our previous marketing and shops strategy, including a non-cash charge of $36 million during the third quarter of 2013 related to the return of shares of Martha Stewart Living Omnimedia, Inc. (MSLO) previously acquired by the Company, which was accounted for as a cost investment. The 2012 charges were primarily related to the exit of our specialty websites CLAD™ and Gifting Grace™ and the closure of our Pittsburgh, Pennsylvania customer call center.

Activity for the restructuring and management transition liability for 2014 and 2013 was as follows:



($ in millions)	Supply Chain			Home Office and Stores			Store Fixtures			Management Transition			Other			Total
February 2, 2013	$	2		$	4		$	—		$	—		$	12		$	18
Charges	—			48			55			37			75			215
Cash payments	(2		)	(29		)	—			(18		)	(19		)	(68		)
Non-cash	—			(23		)	(55		)	(16		)	(38		)	(132		)
February 1, 2014	—			—			—			3			30			33
Charges	—			45			—			16			26			87
Cash payments	—			(8		)	—			(16		)	(38		)	(62		)
Non-cash	—			(28		)	—			(3		)	(1		)	(32		)
January 31, 2015	$	—		$	9		$	—		$	—		$	17		$	26

Non-cash amounts represent charges that do not result in cash expenditures including increased depreciation and write-off of store fixtures and IT software and systems, stock-based compensation and a non-cash charge for the return of shares of MSLO.