Banana Republic 2012 Annual Report Download - page 64

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Lease Incentives and Other Long-Term Liabilities
Lease incentives and other long-term liabilities consist of the following:
($ in millions) February 2,
2013 January 28, 2012
Long-term deferred rent, tenant allowances, and unfavorable lease liabilities $ 750 $ 705
Long-term income tax-related liabilities 132 129
Long-term asset retirement obligations 49 47
Deferred compensation plan liabilities 27 22
Long-term lease loss reserve 1 4
Other 27 26
Lease incentives and other long-term liabilities $ 986 $ 933
The activity related to long-term asset retirement obligations includes adjustments to the asset retirement obligation
balance and fluctuations in foreign currency exchange rates. The activity was not material for fiscal 2012 or 2011.
In connection with our acquisition of Intermix, we assumed unfavorable lease liabilities of $20 million as a result of leases
with terms that were considered unfavorable relative to market terms for similar leases as of the date of acquisition. The
unfavorable lease liabilities will be recognized as a reduction of rent expense in cost of goods sold and occupancy
expenses in the Consolidated Statements of Income over the remaining term of the leases. There was no material amount
recognized in cost of goods sold and occupancy expenses related to the unfavorable lease liabilities in fiscal 2012.
Accumulated Other Comprehensive Income
Accumulated OCI consists of the following:
($ in millions) February 2,
2013 January 28, 2012
Foreign currency translation, net of tax $ 158 $ 229
Accumulated changes in fair value of derivative financial instruments, net of tax 23 —
Accumulated other comprehensive income $ 181 $ 229
Sales Return Allowance
A summary of activity in the sales return allowance account is as follows:
($ in millions) February 2,
2013 January 28, 2012 January 29, 2011
Balance at beginning of fiscal year $ 21 $ 22 $ 22
Additions 845 720 712
Returns (839) (721) (712)
Balance at end of fiscal year $ 27 $ 21 $ 22
The amount of additions and returns for fiscal 2011 have been corrected in the table above to $720 million and $721
million, respectively, to appropriately reflect sales return allowance activities during fiscal 2011. This correction did not
have any impact on the Consolidated Financial Statements for any period reported.
Note 3. Acquisition
On December 31, 2012, we acquired all of the outstanding capital stock of Intermix, a multi-brand retailer of luxury and
contemporary women's apparel and accessories based in New York, New York, for an aggregate purchase price of $129
million in cash. The acquisition will allow us to extend our portfolio of brands and further penetrate the higher-end apparel
market with an established brand.
The results of operations for Intermix since the date of acquisition are not material to the Consolidated Statements of
Income. In addition, the impact of the acquisition on the Company's results of operations, as if the acquisition had been
completed on the first day of fiscal 2011, is not significant.
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