Express 2014 Annual Report Download - page 54

Property and Equipment, Net
Property and equipment are stated at cost. Depreciation of property and equipment is computed on a straight-line
basis, using the following useful lives:
Category Depreciable Life
Software, including software developed for internal use 3 - 7 years
Store related assets and other property and equipment 3 - 10 years
Furniture, fixtures and equipment 5 - 7 years
Leasehold improvements Shorter of lease term or useful
life of the asset, typically no
longer than 15 years
Building improvements 6 - 30 years
When a decision is made to dispose of property and equipment prior to the end of its previously estimated useful
life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life. The
cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any
resulting gain or loss included in other operating expense (income), net, in the Consolidated Statements of
Income and Comprehensive Income. Maintenance and repairs are charged to expense as incurred. Major
renewals and betterments that extend useful lives are capitalized.
Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. The reviews are conducted at the store level, the lowest
identifiable level of cash flow. The impairment test requires the Company to estimate the fair value of the assets
and compare this to their carrying value. If the fair value of the assets are less than the carrying value, then an
impairment charge is recognized and the non-financial assets are recorded at fair value. The Company estimates
the fair value using a discounted cash flow model. Factors used in the evaluation include, but are not limited to,
management’s plans for future operations, recent operating results, and projected cash flows. In 2014, as a result
of decreased performance in certain stores, the Company recognized impairment charges of $10.5 million related
to 14 stores. The impairment charges related to store leasehold improvements in 2013 and 2012 were minimal.
Impairment charges are recorded in cost of goods sold, buying, and occupancy costs in the Consolidated
Statements of Income and Comprehensive Income.
Intangible Assets
The Company has intangible assets, which consist primarily of the Express and related tradenames and its
Internet domain names. Intangible assets with indefinite lives are reviewed for impairment annually in the fourth
quarter and may be reviewed more frequently if indicators of impairment are present. The impairment review is
performed by assessing qualitative factors to determine whether it is more likely than not that the fair value of the
asset is less than its carrying amount. The consideration of indefinite lived intangible assets for impairment
requires judgments surrounding future operating performance, economic conditions, and business plans, among
other factors.
Intangible assets with finite lives are amortized on a basis reflecting when the economic benefits of the assets are
consumed or otherwise used up over their respective estimated useful lives. Intangible assets with finite lives are
reviewed for impairment when events or changes in circumstances indicate the carrying amount of the asset may
not be recoverable. If the estimated undiscounted future cash flows related to the asset are less than the carrying
value, the Company recognizes a loss equal to the difference between the carrying value and the estimated fair
value, usually determined by the estimated discounted future cash flows of the asset.
The Company did not incur any impairment charges on intangible assets in 2014, 2013, or 2012.
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