RSTO » Topics » Accounting for Costs Associated with Exit or Disposal Activities,

This excerpt taken from the RSTO 10-K filed Apr 12, 2006.
“Accounting for Costs Associated with Exit or Disposal Activities,” requires that for exit or disposal activities initiated after December 31, 2002, the Company recognizes a liability for costs associated with closing a store when the liability is incurred. The Company records the present value of expected future lease costs and other closure costs when the store is closed. The Company records severance and other employee-related costs in the period in which it communicates the closure and related severance packages to the affected employees. Costs incurred in connection with closure of two underperforming stores were fully recognized during fiscal 2004 and no amounts remained accrued as of January 28, 2006 and January 29, 2005, respectively.

While the Company does not currently have any reserves established for store closures, it periodically makes judgments about which stores it should close and which stores it should continue to operate. All stores are subject to regular monitoring of their financial performance and cash flows, and many stores are

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subject to “kick out clauses” which allow the Company to terminate the store lease without further obligation if certain contractually specified sales levels are not achieved.

This excerpt taken from the RSTO 10-K filed Apr 14, 2005.
“Accounting for Costs Associated with Exit or Disposal Activities,” requires that for exit or disposal activity, initiated after December 31, 2002, the Company recognizes a liability for costs associated with closing a store when the liability is incurred. The Company records the present value of expected future lease costs and other closure costs when the store is closed. The Company records severance and other employee-related costs in the period in which it communicates the closure and related severance packages to the affected employees. Costs incurred in connection with closure of two underperforming stores were fully recognized during fiscal 2004 and no amounts remained accrued as of January 29, 2005 and January 31, 2004.

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While the Company does not currently have any reserves established for store closures, it periodically makes judgments about which stores it should close and which stores it should continue to operate. All stores are subject to regular monitoring of their financial performance and cash flows, and many stores are subject to “kick out clauses” which allow the Company to terminate the store lease without further obligation if certain contractually specified sales levels are not achieved. If the Company decides to close a number of its underperforming stores, the Company may incur significant store closure costs for which store closure reserves have not currently been established.

EXCERPTS ON THIS PAGE:

10-K
Apr 12, 2006
10-K
Apr 14, 2005

"Accounting for Costs Associated with Exit or Disposal Activities," elsewhere:

Haverty Furniture Companies (HVT)
Patrick Industries (PATK)
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