Express 2013 Annual Report Download - page 46

Table of Contents
Company recognizes a loss equal to the difference between the carrying value and the estimated fair value, usually determined by the estimated discounted
cash flows 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 impairment charges related to store leasehold improvements in
2013, 2012, and 2011 were minimal and were recorded in cost of goods sold, buying, and occupancy costs in the Consolidated Statements of Income and
Comprehensive Income.
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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 and may
be reviewed more frequently if indicators of impairment are present. The impairment review is performed by assessing qualitative factors to determine whether
it is more likely than not that the fair value of the asset is less than its carrying amount. The consideration of indefinite lived intangible assets for impairment
requires judgments surrounding future operating performance, economic conditions, and business plans, among other factors.
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 2013, 2012, or 2011.
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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 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 recorded as deferred lease credits on the Consolidated Balance Sheets. The landlord allowance is amortized on a straight-line basis as a
reduction of 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 Company has leasehold improvements which are depreciated over the shorter of the initial lease term, including renewal periods if reasonably assured, or
their estimated useful lives.
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 and Comprehensive Income when specified levels have been achieved or when
management determines that achieving the specified levels during the year is probable.
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Fees incurred in connection with the Company's borrowings, referred to as debt issuance costs, 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 February 1, 2014 and February 2, 2013, debt issuance costs totaled
$6.2 million and $7.6 million, respectively. The Company recorded normal amortization expense related to debt issuance costs of $1.4 million, $1.3 million,
and $2.5 million in 2013, 2012, and 2011, respectively. The Company recorded normal amortization expense for debt discounts of $0.3 million in 2013,
2012, and 2011.
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The Company accounts for income taxes using the asset and liability method. Under this method, the amount of taxes currently payable or refundable are
accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences that currently exist between the
tax basis and financial reporting basis of the Company's
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