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Restructuring, Asset Impairment and Other Charges | 12 Months Ended
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Jan. 01, 2022
Restructuring And Related Activities [Abstract] |
Restructuring, Asset Impairment and Other Charges | Note 5 – Restructuring, Asset Impairment and Other Charges The following table provides the activity of reserves for closed properties for 2021, 2020 and 2019. Reserves for closed properties recorded in the consolidated balance sheets are included in “Other accrued expenses” in Current liabilities and “Other long-term liabilities” in Long-term liabilities based on when the obligations are expected to be paid.
| Lease and |  |  |  |  |  |  |
(In thousands) | Ancillary Costs |  | Severance |  | Total |
Balance at December 29, 2018 | $ | 16,386 |  | $ | - |  | $ | 16,386 |
Provision for closing charges |  | 1,299 |  |  | 447 |  |  | 1,746 |
Reclassification of lease liabilities |  | (8,177 | ) |  | — |  |  | (8,177 | )
Lease termination adjustments |  | (62 | ) |  | — |  |  | (62 | )
Changes in estimates |  | (635 | ) |  | — |  |  | (635 | )
Accretion expense |  | 271 |  |  | — |  |  | 271 |
Payments |  | (4,111 | ) |  | (430 | ) |  | (4,541 | )
Balance at December 28, 2019 |  | 4,971 |  |  | 17 |  |  | 4,988 |
Provision for closing charges |  | 325 |  |  | 2,205 |  |  | 2,530 |
Changes in estimates |  | 26 |  |  | (228 | ) |  | (202 | )
Accretion expense |  | 121 |  |  | — |  |  | 121 |
Payments |  | (2,094 | ) |  | (1,880 | ) |  | (3,974 | )
Balance at January 2, 2021 |  | 3,349 |  |  | 114 |  |  | 3,463 |
Provision for closing charges |  | 1,509 |  |  | — |  |  | 1,509 |
Provision for severance |  | — |  |  | 362 |  |  | 362 |
Lease termination adjustments |  | (220 | ) |  | — |  |  | (220 | )
Changes in estimates |  | 2 |  |  | — |  |  | 2 |
Accretion expense |  | 91 |  |  | — |  |  | 91 |
Payments |  | (1,607 | ) |  | (476 | ) |  | (2,083 | )
Balance at January 1, 2022 | $ | 3,124 |  | $ | - |  | $ | 3,124 |
Included in the liability are lease-related ancillary costs from the date of site closure to the end of the remaining lease term. Prior to the adoption of ASC 842 (Note 1), the liability also included lease obligations recorded at the present value of future minimum lease payments, calculated using a risk-free interest rate, net of estimated sublease income. Upon the adoption of ASC 842, these liabilities were reclassified to operating lease liabilities within the consolidated balance sheets. Restructuring, asset impairment and other charges included in the consolidated statements of earnings consisted of the following:
| 2021 |  |  | 2020 |  |  | 2019 |
(In thousands) | (52 Weeks) |  |  | (53 Weeks) |  |  | (52 Weeks) |
Asset impairment charges (a) | $ |  | 3,783 |  |  | $ |  | 20,148 |  |  | $ |  | 17,925 |
Charge on customer advance (b) |  |  | — |  |  |  |  | — |  |  |  |  | 2,351 |
Provision for closing charges |  |  | 1,509 |  |  |  |  | 325 |  |  |  |  | 1,299 |
Gain on sales of assets related to closed facilities (c) |  |  | (2,607 | ) |  |  |  | (31 | ) |  |  |  | (8,532 | )
Provision for severance for closed sites (d) |  |  | 362 |  |  |  |  | 2,205 |  |  |  |  | 447 |
Other costs associated with distribution center and store closings (e) |  |  | 636 |  |  |  |  | 1,953 |  |  |  |  | 2,135 |
Changes in estimates (f) |  |  | 2 |  |  |  |  | (202 | ) |  |  |  | (635 | )
Lease termination adjustments (g) |  |  | (799 | ) |  |  |  | — |  |  |  |  | (1,940 | )
Total | $ |  | 2,886 |  |  | $ |  | 24,398 |  |  | $ |  | 13,050 |
(a) | Asset impairment charges in the current year were incurred primarily in the Retail segment and relate to current year store closures and previously closed locations, as well as site closures in connection with the Company’s supply chain transformation initiatives within the Food Distribution segment. In 2020, asset impairment charges of $9.1 million were incurred in the Food Distribution segment related to the evaluation of the expected net proceeds from the Fresh Kitchen facility, the exit of the Fresh Cut business, and the sale of equipment related to both Fresh Cut and Fresh Kitchen. Charges of $8.6 million primarily relate to the abandonment of a tradename related to the integration of the Company’s transportation operations. Additionally, certain of the Company’s Retail assets were determined not to be recoverable based on management’s intention to close stores or sell assets related to previously closed stores, resulting in impairment charges totaling $2.1 million. In 2019, asset impairment charges primarily related to the Food Distribution segment, including the Caito trade name.
(b) | The charge on customer advance relates to an advance to an independent retailer customer which was not fully recoverable.
(c) | In 2021, gain on sales of assets primarily relate to sales of pharmacy customer lists, equipment, and real estate associated with the store closings in the Retail segment, in addition to gains on sale of vacant land in the Military segment. 2019 activity primarily related to the sale of a closed Food Distribution warehouse.
(d) | Severance in the current year relates to closures in the Food Distribution segment as well as Retail store closings. In 2020, severance was related to the exit of the Fresh Cut business within the Food Distribution segment.
(e) | Other costs associated with distribution center and store closings represent additional costs, including labor, inventory transfer and other administrative costs, incurred in connection with restructuring operations in the Food Distribution and Retail segments.
(f) | Changes in estimates primarily relate to revised estimates for turnover and other lease ancillary costs associated with previously closed locations, which were generally lower than the initial estimates at certain properties in all years presented.
(g) | Lease termination adjustments represent the benefits recognized in connection with early lease buyouts for previously closed sites. Payments made in connection with lease buyouts were applied to reserves for closed properties and lease liabilities, as applicable. In the current year, adjustments include gains of $0.8 million and $0.2 million from write-offs of the lease liability and lease ancillary costs, offset by the cost of a $0.2 million early termination fee.
In the second quarter of 2019 the Company announced a plan to reposition the Caito fresh production operations and to close the Fresh Kitchen. As a result of this plan, the Company evaluated the Caito indefinite-lived trade name and long-lived assets for potential impairment. The indefinite-lived trade names with a book value of $35.5 million were measured at a fair value of $21.5 million, resulting in an impairment charge of $14.0 million related to the Caito tradename. During this test, the Company concluded the long-lived assets were not impaired. During the third quarter of 2020, the Company made the decision to abandon a tradename within the Food Distribution segment to better integrate with the Company’s overall transportation operations. Indefinite lived intangible assets are tested for impairment at least annually, and as needed if an indicator of potential impairment exists. A qualitative assessment was performed to determine whether it is more likely than not that an indefinite lived intangible asset is impaired. If the qualitative assessment supports that it is more likely than not that the fair value of the indefinite lived intangible asset exceeds its carrying value, a quantitative impairment test is not required. If the qualitative assessment does not support the fair value of the indefinite lived intangible asset, then a quantitative assessment is performed. Indefinite lived intangible assets are measured at fair value using Level 3 inputs under the fair value hierarchy, as further described in Note 7. The fair value of indefinite lived intangible assets is determined by estimating the amount and timing of net future cash flows generated from the use of the asset, generally using estimated revenue growth rates and profitability rates and, in the case of the relief-from-royalty methodology, royalty rates. Future cash flows are discounted based on the WACC of the reporting unit in which the asset resides, determined using current interest rates, equity risk premiums, and other market-based expectations regarding expected investment returns, as well as estimates of industry specific equity and debt rates of return. Long-lived assets which are not recoverable are measured at fair value on a nonrecurring basis using Level 3 inputs under the fair value hierarchy, as further described in Note 7. Assets consisting of property and equipment with a book value of $27.5 million were measured at a fair value of $23.7 million, resulting in impairment charge s of $3.8 million in 20 2 1. The f air value of long-lived assets is determined by estimating the amount and timing of net future cash flows, discounted using a risk-adjusted rate of interest. The Company estimates future cash flows based on historical results of operations, external factors expected to impact future performance, experience and knowledge of the geographic area in which the assets are located, and when necessary, uses real estate brokers. Assets classified as held for sale in the condensed consolidated balance sheet are valued at the expected net proceeds. The Fresh Kitchen facility, which w as classified as held for sale as of January 2, 2021, was sold in the first quarter of 2021 for proceeds of $20.5 million.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4(e)) -URI http://asc.fasb.org/extlink&oid=115931487&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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