XML 40 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Valuation Of Long-Lived Assets
9 Months Ended
Dec. 03, 2011
Valuation Of Long-Lived Assets [Abstract]  
Valuation Of Long-Lived Assets

5. Valuation of Long-Lived Assets

We review the carrying values of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable.

Impairments due to closure or conversion in the normal course of business

We review assets in stores planned for closure or conversion for impairment upon determination that such assets will not be used for their intended useful life. During the 12 and 40 weeks ended December 3, 2011, we recorded impairment charges on long-lived assets of $3.6 million and $5.1 million, respectively, related to locations that were closed or converted in the normal course of business, as compared to nil and $1.1 million in impairment losses recorded during the 12 and 40 weeks ended December 4, 2010, respectively. These amounts were recorded within "Store operating, general and administrative expense" in our Consolidated Statements of Operations.

Impairments due to store closures

In January 2012, our Company filed a motion with the Bankruptcy Court seeking approval to close 14 stores in four states as our Company prepares to emerge from chapter 11. These store closures are expected to be completed in our Company's first quarter of fiscal 2012. As a result, we recorded an impairment charge of $6.8 million during the 12 weeks ended December 3, 2011, of which $4.1 million and $2.7 million related to our Fresh and Pathmark reporting segments, respectively.

In April and May 2011, our Company obtained approval from the Bankruptcy Court to sell, or alternatively, to close, an additional 25 stores located in Maryland, Delaware and the District of Columbia (the "Southern Stores"). During the first quarter of fiscal 2011, our Company held an auction whereby we agreed to sell our interests in 12 of our existing stores based in Maryland and the District of Columbia, all of which were a part of our Fresh reportable segment, for $38.3 million in cash which relates to fixed assets. The transactions closed during June and July 2011 resulting in a gain of $29.1 million, which was recorded within "Store operating, general and administrative expense" in our Consolidated Statements of Operations. As a result, we recorded a total impairment charge of $3.0 million during the 40 weeks ended December 3, 2011, all of which pertained to our Fresh reporting segment. These store closures and sales were completed by July 9, 2011.

In February 2011, our Company obtained authority from the Bankruptcy Court to close 32 stores in six states as we continue to fully implement our comprehensive financial and operational restructuring. As a result, we recorded an impairment charge of $31.4 million during fiscal 2010, of which $19.4 million, $9.0 million and $3.0 million related to our Fresh, Pathmark, and Other reporting segments, respectively. These store closures were completed on April 16, 2011. We recorded an additional impairment charge of $0.4 million during the first quarter of fiscal 2011, of which $0.3 million and $0.1 million were attributed to our Pathmark and Fresh reporting segments, respectively.

In the second quarter of fiscal 2010, our Company announced the closure of 25 stores in five states as we began the implementation and execution phase of our comprehensive financial and operational restructuring. These store closures were completed in the third quarter of fiscal 2010. We recorded an impairment charge of $1.1 million and $24.8 million during the 12 and 40 weeks ended December 4, 2010.

These impairment amounts noted above were recorded within "Goodwill, trademark and long-lived asset impairment" in our Consolidated Statements of Operations.

Impairments due to unrecoverable assets

As part of the ongoing development of our Plan of Reorganization, during our third quarter of fiscal 2011, we refined our projected cash flows of baseline operations, before any potential cash flows that might result from capital improvements, for all locations. For those locations where the projected undiscounted cash flows did not exceed the net carrying value of the long-lived assets, we determined the fair value of the long-lived assets and recorded an impairment charge of $18.3 million and $94.4 million during the 12 and 40 weeks ended December 3, 2011, respectively, which related primarily to favorable leases and which also included capital leases and land and buildings, with a carrying amount of $32.3 million to their fair value of $14.0 million for the 12 weeks ended December 3, 2011. The impairment charge of $18.3 million and $94.4 million recorded during the 12 weeks and 40 weeks ended December 3, 2011, respectively, all related to our Pathmark reportable segment.

We recorded an impairment charge of $28.2 million and $40.2 million during the 12 and 40 weeks ended December 4, 2010, respectively, to partially write down stores' long-lived assets, which primarily consist of favorable leases and which also included capital leases and land and buildings, with a carrying amount of $63.0 million to their fair value of $34.8 million for the 12 weeks ended December 4, 2010. The impairment charge of $28.2 million during the 12 weeks ended December 4, 2010 all related to Pathmark. The impairment charge of $40.2 million recorded during the 40 weeks ended December 4, 2010 all related to Pathmark, with the exception of $0.9 million which related to SuperFresh.

These impairment amounts noted above were recorded within "Goodwill, trademark, and long-lived asset impairment" in our Consolidated Statements of Operations.

The effects of changes in estimates of useful lives were not material to ongoing depreciation expense. Our projected cash flows of baseline operations include an estimate for expected savings from the recently negotiated C&S supply agreement and the recently Modified CBAs. If current operating levels do not improve or the expected cost savings from Modified CBAs are not realized, there may be a need to take further actions which may result in additional future impairments on long-lived assets, including the potential for impairment of assets that are held and used.