This excerpt taken from the EBHI 10-Q filed Nov 6, 2008.
(6) Investment in Eddie Bauer Germany
The Company had a 40% interest in Eddie Bauer GmbH & Co. (Eddie Bauer Germany), a joint venture established to sell Eddie Bauer merchandise in Germany. The remaining 60% was held by Heinrich Heine GmbH and Sport-Scheck GmbH (both former Spiegel affiliates and subsidiaries of Otto KG). In February 2008, the Company received a required one-year notice from its joint venture partners in Eddie Bauer Germany of their decision to terminate the joint venture arrangement, and as a result, the joint venture, together with a companion license arrangement, would have terminated in February 2009. Due to the receipt of the termination notice, the Company performed an impairment review of its investment in Eddie Bauer Germany during the first quarter of 2008 and determined that an other-than-temporary impairment existed. Accordingly, the Company recognized an impairment charge of $3.9 million during the first quarter of 2008, which was reflected within equity in losses of foreign joint ventures. The impairment charge reduced the Companys investment in Eddie Bauer Germany to zero and also reflected the Companys legal obligation to fund its proportionate share of Eddie Bauer Germanys losses for its fiscal year ending February 29, 2008.
In June 2008, the Company and the other joint venture partners completed the transfer, effective March 1, 2008, of their interests in the joint venture to a third party in return for a release of past and future liabilities. As part of the transfer of the joint venture interest, the Company terminated the prior licensing agreement with Eddie Bauer Germany and entered into a new licensing arrangement to license the use of its tradename and trademarks to Eddie Bauer Germany for a five-year period in exchange for specified royalties. As a result of the transfer of the joint venture interest during the second quarter of 2008, the Company recorded a loss of $606 associated with the write-off of the receivable from Eddie Bauer Germany during the second quarter within selling, general and administrative expenses.