In August 2002, the Company announced its decision to sell its Australian
operations. Accordingly, the Australian portion of the Company's business
is reported as a discontinued operation in the International segment disclosure
and the consolidated financial statements. Prior periods presented
have been restated to reflect this classification. The sale was completed
in January 2003 with no significant impact on net earnings.
Australia's sales and pre-tax profit (loss), respectively, were $80.9 million
and $(1.0) million for 2002; $72.0 million and $0.2 million for 2001; and
$74.2 million and $2.2 million for 2000. Diluted earnings per share was
not affected by discontinued operations in the three years presented.
Basic (loss) per share amounts were $(0.01) and $(0.01), for 2002 and
2001, respectively. Australia's assets and liabilities have been classified
as held for sale and at December 28, 2002 and December 29, 2001,
respectively, $33.0 million and $29.6 million are included in prepaid
expenses and other current assets and $7.0 million and $6.9 million are
included in accrued expenses and other current liabilities in the accompanying
Consolidated Balance Sheets.
NOTE C—2000 COMPREHENSIVE BUSINESS REVIEW
During the second half of 2000, the Company performed a comprehensive
review of the business. As a result of this review, a significant number
of facilities were closed, assets were written down and employees
were severed. Separate from this review, other charges and credits were
recorded so that the net charge recorded for the year 2000 totaled
$260.6 million. Activity relating to the business review included facility
closure costs of $110.0 million; asset impairments of $63.0 million;
inventory write-downs of $38.4 million; write-off of corporate assets
of $11.2 million; goodwill impairment of $11.1 million; and severance
costs of $35.6 million. Additionally, the Company recorded a $10.5 million
net charge to establish a reserve for sales returns and allowances, a
$45.5 million charge to recognize declines in the value of investments,
realized a $57.9 million gain on the sale of investments, and recorded
a $6.8 million net credit to adjust prior period accrued merger costs.
The accrual for lease termination costs identified above was based on
the future commitments under contract, adjusted for anticipated sublease
and termination benefits. During 2002 and 2001, additional net charges
of $6.7 million and $8.4 million, respectively, were recorded because of
lower than anticipated recoveries resulting from a softening in the market
for sublease space. Future changes in the market for real estate subleases
may cause our current estimates to change, therefore resulting in
additional charges or credits to our future results. The accrued balance
relating to our future commitments under operating leases of our closed
stores was $60.4 million and $76.7 million at December 28, 2002 and
December 29, 2001, respectively.
