Abercrombie & Fitch 2014 Annual Report Download - page 50

ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
50
LEASED FACILITIES
The Company leases property for its stores under operating leases. Lease agreements may contain construction allowances, rent
escalation clauses and/or contingent rent provisions.
Annual store rent is comprised of a fixed minimum amount and/or contingent rent based on a percentage of sales. For construction
allowances, the Company records a deferred lease credit on the Consolidated Balance Sheets and amortizes the deferred lease
credit as a reduction of rent expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income over the
term of the lease. For scheduled rent escalation clauses during the lease term, the Company records minimum rental expense on
a straight-line basis over the term of the lease on the Consolidated Statements of Operations and Comprehensive (Loss) Income.
The difference between rent expense and the amounts paid under the lease, less amounts attributable to the repayment of construction
allowances recorded as deferred rent, is included in Accrued Expenses and Other Liabilities on the Consolidated Balance Sheets.
The term over which the Company amortizes construction allowances and minimum rental expenses on a straight-line basis begins
on the date of initial possession, which is generally when the Company enters the space and begins construction.
Certain leases provide for contingent rents, which are determined as a percentage of gross sales. The Company records a contingent
rent liability in Accrued Expenses on the Consolidated Balance Sheets, and the corresponding rent expense on the Consolidated
Statements of Operations and Comprehensive (Loss) Income on a ratable basis over the measurement period when it is determined
that achieving the specified levels during the fiscal year is probable. In addition, most leases require payment of real estate taxes,
insurance and certain common area maintenance costs in addition to future minimum lease payments.
A summary of rent expense follows (in thousands):
2014 2013 2012
Store rent:
Fixed minimum(1) $ 432,794 $ 464,937 $ 414,061
Contingent 8,886 8,624 16,828
Deferred lease credits amortization (38,437) (45,899) (45,926)
Total store rent expense 403,243 427,662 384,963
Buildings, equipment and other 4,619 4,987 6,259
Total rent expense $ 407,862 $ 432,649 $ 391,222
(1) Includes lease termination fees of $12.4 million, $39.2 million and $3.4 million for Fiscal 2014, Fiscal 2013 and Fiscal 2012, respectively. For Fiscal 2014 and
Fiscal 2013, lease termination fees of $6.8 million and $39.1 million, respectively, related to the Gilly Hicks restructuring.
At January 31, 2015, the Company was committed to non-cancelable leases with remaining terms of one to 16 years. Excluded
from the obligations below are portions of lease terms that are currently cancelable at the Company's discretion without condition.
While included in the obligations below, in many instances the Company has options to terminate certain leases if stated sales
volume levels are not met or the Company ceases operations in a given country, which may be subject to lease termination policies.
A summary of operating lease commitments, including leasehold financing obligations, under non-cancelable leases follows (in
thousands):
Fiscal 2015 $ 409,046
Fiscal 2016 $ 366,909
Fiscal 2017 $ 279,960
Fiscal 2018 $ 210,674
Fiscal 2019 $ 165,307
Thereafter $ 525,286