Express 2010 Annual Report Download - page 82

Intangible Assets
The Company has intangible assets, primarily its tradename resulting from the Golden Gate Acquisition in 2007,
and internet domain name purchased during 2008 prior to the launch of its e-commerce website. Intangible assets
with indefinite lives are reviewed for impairment annually in the fourth quarter, or more frequently if indicators
of impairment are present, by comparing the carrying value to the estimated fair value, usually determined using
a relief from royalty methodology. Factors used in the valuation of all intangible assets include, but are not
limited to, management’s plans for future operations, brand initiatives, recent operating results, and projected
future cash flows.
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 2010, 2009, or 2008.
Leases and Leasehold Improvements
The Company has leases that contain pre-determined fixed escalations of minimum rentals and/or rent
abatements subsequent to taking possession of the leased property. The related rent expense is recognized on a
straight-line basis commencing upon possession date. The Company records the difference between the
recognized rent expense and amounts payable under the leases as deferred lease credits. The obligations for
pre-determined fixed escalations of minimum rent and/or rent abatements were $15.4 million and $11.8 million
as of January 29, 2011 and January 30, 2010, respectively, and are included in other long-term liabilities on the
Consolidated Balance Sheets.
The Company receives allowances from landlords related to its retail stores. These allowances are generally
comprised of cash amounts received from landlords as part of negotiated lease terms. The Company records a
receivable and a landlord allowance upon execution of the corresponding lease. The landlord allowance is
amortized on a straight-line basis as a reduction to rent expense over the term of the lease (including the
pre-opening build-out period). The receivable is reduced as allowance amounts are received from landlords. The
unamortized portion of landlord allowances totaled $31.6 million and $14.0 million as of January 29, 2011 and
January 30, 2010, respectively, and is included in other long-term liabilities on the Consolidated Balance Sheets.
The Company also has leasehold improvements which are depreciated over the shorter of their estimated useful
lives or the period from the date the assets are placed in service to the end of the initial lease term, including
renewal periods, if reasonably assured.
Debt Issuance Costs and Discount
Fees and costs, or debt issuance costs, incurred in connection with the Company’s borrowings are capitalized and
included in other assets on the Consolidated Balance Sheets. Debt discounts are reflected as a reduction of debt
on the Consolidated Balance Sheets. Debt issuance costs and debt discounts are amortized to interest expense
over the term of the respective loan agreements. As of January 29, 2011 and January 30, 2010, debt issuance
costs totaled $14.8 million and $10.1 million, respectively. The Company recorded amortization expense related
to debt issuance costs of $3.1 million, $2.2 million, and $2.0 million in 2010, 2009, and 2008, respectively. The
Company recorded amortization expense for debt discounts of $0.4 million, $0.6 million, and $0.3 million in
2010, 2009, and 2008, respectively.
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