9.  Restructuring and Management Transition

 

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

 

 

   

Supply chain

As a result of consolidating and streamlining our supply chain organization as part of a restructuring program that began in 2011, during the three and six months ended July 28, 2012 we recorded charges of $10 million and $16 million, respectively, related to increased depreciation, termination benefits and unit closing costs. This restructuring activity was completed during the third quarter of 2012.

 

Home office and stores

During the three months ended August 3, 2013 and July 28, 2012, we recorded $4 million and $56 million, respectively, of charges associated with employee termination benefits for actions to reduce our store and home office expenses.  During the six months ended August 3, 2013 and July 28, 2012, we recorded charges of $32 million and $101 million, respectively.

     

Software and systems 

During the three and six months ended July 28, 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 then current strategy.  Included in this amount is $3 million of consulting fees related to that evaluation.

    

Store fixtures

During the three months ended August 3, 2013, we recorded $1 million of charges for the write-off of store fixtures related to the renovations in our home department and $16 million of increased depreciation as a result of shortening the useful lives of fixtures in our department stores that were replaced during the first half of 2013 or are expected to be replaced during 2013. 

   

During the six months ended August 3, 2013, we recorded $7 million of charges for the write-off of store fixtures related to the renovations in our home department and $29 million of increased depreciation as a result of shortening the useful lives of fixtures in our department stores that were replaced during the first half of 2013 or are expected to be replaced during 2013.  In addition, during the six months ended August 3, 2013, we recorded $9 million of charges for the impairment of certain store fixtures related to our former shops strategy that were used in our prototype department store.

   

During the three and six months ended July 28, 2012, we recorded $42 million of charges related to the replacement of store fixtures in connection with the launch of our first 10 attractions in August and September of 2012.   

 

Management transition

During the three months ended August 3, 2013 and July 28, 2012, we implemented several changes within our management leadership team that resulted in management transition costs of $13 million and $10 million, respectively, for both incoming and outgoing members of management.  During the six months ended August 3, 2013 and July 28, 2012, we recorded management transition charges of $29 million and $30 million, respectively.

    

Other

During the three months ended August 3, 2013 and July 28, 2012, we recorded $13 million and $5 million, respectively, of miscellaneous restructuring charges.  During the six months ended August 3, 2013 and July 28, 2012, we recorded $13 million and $10 million, respectively, of miscellaneous restructuring charges.  The charges during the second quarter of 2013 were related to contract termination costs associated with our previous marketing and shops strategy.  The charges in the first quarter of 2012 were primarily related to the exit of our specialty websites CLAD^TM and Gifting Grace^TM and the charges in the second quarter of 2012 were primarily related to costs associated with the closing of our Pittsburgh, Pennsylvania customer call center.  

 

Activity for the restructuring and management transition liability for the six months ended August 3, 2013 was as follows:

 

Non-cash amounts represent charges that do not result in cash expenditures including increased depreciation, write-off of store fixtures and stock-based compensation expense for accelerated vesting related to terminations.