Discontinued Operations

3 Months Ended

May 02, 2015

Discontinued Operations

12. Discontinued Operations

In Fiscal 2012, the Company exited the 77kids business. These Consolidated Financial Statements reflect the results of 77kids as a discontinued operation for all periods presented.

In connection with the exit of the 77kids business, the Company became secondarily liable for obligations under lease agreements for 21 store leases assumed by the third party purchaser. In Fiscal 2014, the third party purchaser did not fulfill its obligations under the leases, resulting in the Company becoming primarily liable. The Company was required to make rental and lease termination payments and received reimbursement from the $11.5 million stand-by letter of credit provided by the third party purchaser. The cash outflow for termination costs is expected to be paid in Fiscal 2015.

In accordance with ASC 460, Guarantees (“ASC 460”), as the Company became primarily liable under the leases upon the third party purchaser’s default, the remaining amounts to exit the lease agreements have been accrued in our Consolidated Financial Statements related to these guarantees.

During the 13 weeks ended May 2, 2015 and May 3, 2014, there were no costs associated with discontinued operations incurred on the Consolidated Statement of Operations.

A rollforward of the liabilities recognized in the Consolidated Balance Sheets is as follows:

(In thousands)	May 2, 2015
Accrued liability as of January 31, 2015	$	14,636
Add: Costs incurred		—
Less: Cash payments		(899	)
Accrued liability as of May 2, 2015	$	13,737