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This excerpt taken from the AEO 10-Q filed May 31, 2006. Accounting for the
Impairment or Disposal of Long-Lived Assets
("SFAS No. 144"), the accompanying Consolidated
Balance Sheets as of January 28, 2006 and April 30, 2005 reflect the assets subject to the Agreement
as held-for-sale. An impairment loss of $0.6 million was recorded in
selling, general and administrative
expenses on the Company's Consolidated Statement of Operations
during Fiscal 2005
to record these assets at their fair value
less costs to sell. This loss was partially offset by
a $0.1 million adjustment to the fair value of the
assets upon final disposition, which was
recorded in selling, general and
administrative expenses during the three months ended April 29, 2006.
During December 2004, the Company completed its disposition of Bluenotes to 6295215 Canada Inc. (the "Bluenotes Purchaser"). The transaction had an effective date of December 5, 2004. The accompanying Consolidated Statements of Operations and Consolidated Statements of Cash Flows reflect Bluenotes' results of operations as discontinued operations for all periods presented. Amounts in the Company's Consolidated Balance Sheets, including total assets of $2.0 million at April 30, 2005, have not been reclassified to reflect Bluenotes as discontinued operations. As of January 28, 2006, there were no remaining assets related to Bluenotes.
The Company received approximately $23 million as consideration for the sale of certain of its Bluenotes assets, including inventory and property and equipment. The transaction resulted in an after−tax loss of $4.8 million, or $0.03 per diluted share, during Fiscal 2004 and was partially offset by net income from the disposition of $0.4 million during Fiscal 2005. Additionally, during Fiscal 2005, the Company recorded a $6.0 million income tax benefit related to the completion of the Bluenotes' disposition. At this time, the realization of the aforementioned income tax benefit is uncertain. As a result, the Company has recorded a valuation reserve for the full amount. 16 |
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