Express 2011 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2011 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 112

  • 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

Description of Policy Judgments and Uncertainties
Effect if Actual Results Differ from
Assumptions
Intangible Assets
Intangible assets with indefinite lives,
primarily trade names, 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 comparing the carrying
value of the asset to the estimated fair
value determined using the relief
from royalty method.
Our analysis of indefinite lived
intangible assets for impairment
requires judgments surrounding
the discount rate, expected sales,
and royalty rate. These
assumptions are subjective and
subject to change.
We have not made any material
changes in the accounting
methodology used to evaluate our
indefinite lived intangible assets
over the past 3 years. We have no
reason to believe that there will be
a material change in the future
estimates or assumptions we use
in this evaluation. However, if
actual results are not consistent
with our estimates or assumptions
used to calculate the estimated fair
value of the asset, we may be
exposed to impairment losses that
could be material.
A 100 basis point change in the
royalty rate used and discount rate
would not result in an impairment
in the current year.
Leasehold Improvements
Leasehold improvements are
reviewed for impairment if indicators
of impairment are present. The
impairment review is performed at
the store level by comparing the
carrying value of the asset to the
undiscounted cash flows derived
from the asset. If the undiscounted
cash flows of the asset are less than
the carrying value of the respective
asset, then the carrying value is
compared to the estimated fair value
as determined using the discounted
store cash flows, and a loss is
recognized for the difference.
Our analysis of leasehold
improvements for impairment
requires judgment surrounding
what the appropriate triggering
events should be. This judgment
can be affected by factors such as
future store results, real estate
demand, and economic conditions
that can be difficult to predict.
We have not made any material
changes in the triggering events
used to evaluate our leasehold
improvements for impairment
over the past 3 years.
We have no reason to believe that
there will be a material change in
the future estimates or
assumptions we use in this
evaluation. However, if we
become aware of additional
triggering events or if triggering
events that we are not currently
using are added, there is potential
that additional stores could be
required to be tested for
impairment and could be
impaired.
47