Property and Equipment, Net

12 Months Ended

Feb. 02, 2013

Property, Plant and Equipment [Abstract]

Property and equipment, net, consisted of (in thousands):



	February 2, 2013			January 28, 2012
Land	$	36,890		$	36,890
Buildings	297,243			267,566
Furniture, fixtures and equipment	707,061			614,641
Information technology	289,656			237,245
Leasehold improvements	1,449,568			1,340,487
Construction in progress	90,573			113,663
Other	44,081			44,727
Total	$	2,915,072		$	2,655,219
Less: Accumulated depreciation and amortization	(1,606,840		)	(1,457,948		)
Property and equipment, net	$	1,308,232		$	1,197,271

Long-lived assets, primarily comprised of property and equipment, are reviewed periodically for impairment or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Factors used in the evaluation include, but are not limited to, management’s plans for future operations, recent operating results, and projected cash flows.

In the fourth quarter of Fiscal 2012, as a result of the fiscal year-end review of long-lived store-related assets, the Company incurred store-related asset impairment charges of $7.4 million included in Stores and Distribution Expense on the Consolidated Statement of Operations and Comprehensive Income for Fiscal 2012. The asset impairment charge was primarily related to one Abercrombie & Fitch, three abercrombie kids, 12 Hollister, and one Gilly Hicks store.

In the fourth quarter of Fiscal 2011, as a result of the fiscal year-end review of long-lived store-related assets, the Company incurred store-related asset impairment charges of $68.0 million, included in Stores and Distribution Expense on the Consolidated Statement of Operations and Comprehensive Income for Fiscal 2011. The asset impairment charge was related to 14 Abercrombie & Fitch, 21 abercrombie kids, 42 Hollister, and two Gilly Hicks stores.

In Fiscal 2010, as a result of the review of long-lived store-related assets, the Company incurred store-related asset impairment charges of $50.6 million, included in Stores and Distribution Expense on the Consolidated Statement of Operations and Comprehensive Income for Fiscal 2010. The asset impairment charge was primarily related to 13 Gilly Hicks stores. The charge also included two Abercrombie & Fitch, two abercrombie kids and nine Hollister stores.

Store-related assets are considered level 3 assets in the fair value hierarchy and the fair values were determined at the individual store level, primarily using a discounted cash flow model. The estimation of future cash flows from operating activities requires significant estimates of factors that include future sales, gross margin performance and operating expenses. In instances where the discounted cash flow analysis indicated a negative value at the store level, the market exit price based on historical experience was used to determine the fair value by asset type. Included in property and equipment, net, are store-related assets previously impaired and measured at a fair value of $10.2 million and $13.1 million, net of accumulated depreciation, as of February 2, 2013 and January 28, 2012, respectively.

The following table presents quantitative information related to the unobservable inputs used in the Company's level 3 fair value measurements for the impairment loss incurred in Fiscal 2012.



UNOBSERVABLE INPUT	VALUE
Weighted average cost of capital ⁽¹⁾	12%
Annual revenue growth rates ⁽²⁾	2%


⁽¹⁾	The Company utilized the year-end weighted average cost of capital in the discounted cash flow model.


⁽²⁾	The Company utilized an annual revenue growth rate in the discounted cash flow model.

In certain lease arrangements, the Company is involved with the construction of the building. If the Company determines that it has substantially all of the risks of ownership during construction of the leased property and therefore is deemed to be the owner of the construction project, the Company records an asset for the amount of the total project costs and an amount related to the value attributed to the pre-existing leased building in Property and Equipment, Net and the related financing obligation in Leasehold Financing Obligations on the Consolidated Balance Sheets. Once construction is complete, the Company determines if the asset qualifies for sale-leaseback accounting treatment. If the arrangement does not qualify for sale-lease back treatment, the Company continues to depreciate the asset over its useful life. The Company had $55.2 million and $47.5 million of construction project assets in Property and Equipment, Net at February 2, 2013 and January 28, 2012, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References+ Details