Express 2011 Annual Report Download - page 68

are issued a certificate, which they may redeem for purchases at the Company’s stores or on their website. In
addition to the certificates, the Company also offers exclusive member mailings that provide additional
incentives to purchase. Generally, certificates earned must be redeemed within 60 days from the date of issuance.
The Company accrues the anticipated redemptions of the discount earned. To calculate this expense, the
Company estimates margin rates and makes assumptions related to card holder redemption rates, which are both
based on historical experience. The accrued liability is included in accrued expenses on the Consolidated Balance
Sheets.
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 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 10 years
When a decision is made to dispose of property and equipment prior to the end of the 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, 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 asset level, the
lowest identifiable level of cash flow. If the estimated undiscounted future cash flows related to the property and
equipment 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 cash flow analysis of
the asset. Factors used to assess the fair value of property and equipment include, but are not limited to,
management’s plans for future operations, brand initiatives, recent operating results, and projected future cash
flows. The Company recorded impairment charges related to store leasehold improvements of $0.1 million, $0.5
million and $2.6 million in 2011, 2010, and 2009, respectively. Impairment charges are included 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, 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.
60