Express 2015 Annual Report Download - page 42

Table of Contents
Financial Assets
The following table presents the Company's financial assets measured at fair value on a recurring basis as of January 30, 2016 and January 31, 2015,
aggregated by the level in the fair value hierarchy within which those measurements fall.

  

Money market funds $ 152,069 $ — $ —

  

Money market funds $ 166,602 $ — $ —
Non-Financial Assets
The Company's non-financial assets, which include fixtures, equipment, improvements, and intangible assets, are not required to be measured at fair value on
a recurring basis. However, the Company tests for impairment, if certain triggering events occur indicating the carrying value of these assets may not be
recoverable or annually in the case of indefinite lived intangibles. See additional discussion under the heading "Property and Equipment, Net" in this note
below.
The carrying amounts reflected on the Consolidated Balance Sheets for cash, cash equivalents, receivables, prepaid expenses, and payables as of January 30,
2016 and January 31, 2015 approximated their fair values.

Receivables, net consist primarily of construction allowances, receivables from our franchisees and third-party resellers of our gift cards, and other
miscellaneous receivables. Outstanding receivables are continuously reviewed for collectability. The Company's allowance for doubtful accounts was not
significant as of January 30, 2016 or January 31, 2015.

Inventories are principally valued at the lower of cost or market on a weighted-average cost basis. The Company writes down inventory, the impact of which
is reflected in cost of goods sold, buying and occupancy costs in the Consolidated Statements of Income and Comprehensive Income, if the cost of specific
inventory items on hand exceeds the amount the Company expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on
management's judgment regarding future demand and market conditions and analysis of historical experience. The lower of cost or market adjustment to
inventory as of January 30, 2016 and January 31, 2015 was $9.9 million and $11.4 million, respectively.
The Company also records an inventory shrinkage reserve calculated as a percentage of cost of goods sold for estimated merchandise inventory losses for the
period between the last physical inventory count and the balance sheet date. This estimate is based on management's analysis of historical results.

Advertising production costs are expensed at the time the promotion first appears in media, stores, or on the website. Total advertising expense totaled
$110.5 million, $104.6 million, and $85.9 million in 2015, 2014, and 2013, respectively. Advertising costs are included in selling, general, and
administrative expenses in the Consolidated Statements of Income and Comprehensive Income.

The Company has an agreement with a third party to provide customers with private label credit cards (the “Card Agreement”). Each private label credit card
bears the logo of the Express brand and can only be used at the Company's retail store locations and website. A third-party financing company is the sole
owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders
and a portion of any fraudulent usage of the accounts. Pursuant to the Card Agreement, the Company receives reimbursement funds from the third-party
42