Express 2010 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2010 Express annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

3. Property and Equipment, Net
Property and equipment, net, consisted of:
January 29, 2011 January 30, 2010
(in thousands)
Building improvements .................. $ 2,816 $ 2,816
Furniture, fixtures and equipment, software . . 218,091 183,981
Leaseholds and improvements ............. 224,914 198,425
Construction in process .................. 2,288 10,729
Total ................................. 448,109 395,951
Less: accumulated depreciation ............ (236,790) (180,714)
Property and equipment, net ............... $211,319 $ 215,237
Depreciation expense totaled $61.4 million, $64.7 million, and $73.1 million in 2010, 2009, and 2008,
respectively.
4. Leased Facilities and Commitments
On October 5, 2009, the Company and Limited Brands entered into a lease agreement for the corporate home
office and distribution center facility in Columbus, Ohio. The lease is for a 75 month period that commenced
February 1, 2010 and expires on April 30, 2016 and requires annual minimum market rent payments of
approximately $1.3 million for the first five years and $1.4 million thereafter. The lease contains a renewal
option for one period of five years by written notice 365 days prior to the expiration of the lease term and a
construction allowance of $8.0 million. As of January 29, 2011, approximately $5.7 million of costs have been
incurred against the $8.0 million construction allowance. The construction allowance and related leasehold
improvements have been recorded on the Consolidated Balance Sheets and are considered non-cash transactions
for purposes of the Consolidated Statements of Cash Flows.
Annual store rent consists of a fixed minimum amount and/or contingent rent based on a percentage of sales
exceeding a stipulated amount. The Company records a contingent rent liability in accrued expenses on the
Consolidated Balance Sheets and the corresponding rent expense in cost of goods sold, buying and occupancy
costs in the Consolidated Statements of Income when specified levels have been achieved or when management
determines that achieving the specified levels during the fiscal year is probable.
Rent expense is summarized as follows:
2010 2009 2008
(in thousands)
Store rent:
Fixed minimum .......................... $163,577 $152,868 $151,381
Contingent .............................. 6,995 6,805 6,832
Total store rent ............................... 170,572 159,673 158,213
Home office, distribution center, and other ..... 7,279 8,551 8,965
Total rent expense ............................ $177,851 $168,224 $167,178
As of January 29, 2011, the Company was committed to noncancelable leases with remaining terms generally
from one to ten years. A substantial portion of these commitments consist of store leases generally with an initial
term of ten years. Store lease terms generally require additional payments covering real estate taxes, common
area maintenance costs, and certain other expenses. The obligations for these additional payments are excluded
from the table that follows.
70