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STORE CLOSINGS AND REALIGNMENT COST
3 Months Ended
Apr. 30, 2014
Restructuring and Related Activities [Abstract]  
STORE CLOSINGS AND REALIGNMENT COSTS
STORE CLOSINGS AND REALIGNMENT COSTS
 To better align its Construction business in certain markets, in April 2014, the Company reduced its Construction-related headcount by approximately 12% primarily through the closing of seven underperforming Construction stores, staff reductions at other dealerships and reductions in support staff at its Shared Resource Center. The closed stores were located in Bozeman, Big Sky and Helena, Montana; Cheyenne, Wyoming; Clear Lake, Iowa; Flagstaff, Arizona; and Rosemount, Minnesota. The Company also closed its Agriculture store in Oskaloosa, Iowa and merged it with the nearby Agriculture store in Pella, Iowa. The Company's remaining stores in each of the respective areas assumed the majority of the distribution rights for the CNH brand previously held by the stores which have closed. The majority of the assets of the closed stores have been redeployed to other store locations. Certain inventory items which are not sold by any of our remaining stores will be sold at auction. The inventory markdown attributable to such items are included in the exit cost summary below. The majority of the exit costs were recognized during the three months ended April 30, 2014; however the remaining costs, which primarily relate to asset relocation and other closing costs, are expected to be incurred during the three months ended July 31, 2014. The following summarizes the exit costs associated with the store closings and realignment that occurred in April 2014:
 
Total Amount Expected to be Incurred
 
Amount Incurred During Three Months Ended April 30, 2014
 
Income Statement Classification
 
(in thousands)
 
 
Construction Segment
 
 
 
 
 
Lease termination costs
$
1,518

 
$
1,518

 
Realignment Costs
Employee severance costs
451

 
451

 
Realignment Costs
Impairment of fixed assets
152

 
152

 
Realignment Costs
Asset relocation and other closing costs
728

 
165

 
Realignment Costs
 
$
2,849

 
$
2,286

 
 
Agriculture Segment
 
 
 
 
 
Lease termination costs
$
114

 
$
114

 
Realignment Costs
Employee severance costs
71

 
71

 
Realignment Costs
Impairment of fixed assets
85

 
85

 
Realignment Costs
Asset relocation and other closing costs
72

 
32

 
Realignment Costs
Inventory cost adjustments
404

 
404

 
Equipment Cost of Sales
 
$
746

 
$
706

 
 
Shared Resource Center
 
 
 
 
 
Employee severance costs
$
213

 
$
213

 
Realignment Costs
 
$
213

 
$
213

 
 
Total
 
 
 
 
 
Lease termination costs
$
1,632

 
$
1,632

 
Realignment Costs
Employee severance costs
735

 
735

 
Realignment Costs
Impairment of fixed assets
237

 
237

 
Realignment Costs
Asset relocation and other closing costs
800

 
197

 
Realignment Costs
Inventory cost adjustments
404

 
404

 
Equipment Cost of Sales
 
$
3,808

 
$
3,205

 
 


The Company accrued for lease termination and employee severance costs in April 2014, but exit costs related to impairment, asset relocation and other closing costs and inventory cost adjustments were not accrued but recognized as incurred. A reconciliation of the beginning and ending exit cost liability balance, which is included in accrued expenses in the consolidated balance sheets, follows:
 
Amount
 
(in thousands)
Balance, January 31, 2014
$
548

Exit costs incurred and charged to expense
 
Lease termination costs
1,598

Employee severance costs
735

Exit costs paid
 
Lease termination costs
(51
)
Employee severance costs
(544
)
Adjustments
 
Lease termination costs
76

Balance, April 30, 2014
$
2,362