5. PROPERTY AND EQUIPMENT

The following table summarizes property and equipment by major classification as of December 31, 2015 and 2014:


	December 31,
	2015		2014

	(in thousands)
Machinery and equipment	$	36,864	$	48,989
Leasehold improvements		81,593		91,962
Furniture, fixtures and other		23,576		23,818
Assets held for sale (1)		1,595		-
Construction-in-progress		3,512		3,318
Property and equipment, gross (2)		147,140		168,087
Less: Accumulated depreciation (3)		(97,650)		(99,799)
Property and equipment, net	$	49,490	$	68,288

(1)

This amount represents the South Africa disposal group assets held for sale.

(2)

Includes $0.1 million and $0.2 million of certain equipment held under capital leases and classified as equipment as of December 31, 2015 and 2014, respectively.

(3)

Includes $0.0 million and $0.1 million of accumulated depreciation related to certain equipment held under capital leases as of December 31, 2015 and 2014, which are depreciated using the straight-line method over the lease term. During the year ended December 31, 2015, approximately $11.0 million of accumulated depreciation was related to assets that were written off or disposed.

During the years ended December 31, 2015, 2014, and 2013, Crocs recorded $16.3 million, $23.2 million, and $24.3 million, respectively, of depreciation expense of which $1.8 million, $1.7 million, and $2.9 million, respectively, was recorded in ‘Cost of sales’, with the remaining amounts recorded in ‘Selling, general and administrative expenses’ on the consolidated statements of operations.

The Company recognized a loss on disposals of property and equipment of $1.4 million for the year ended December 31, 2015, and $0.0 million for both years ended December 31, 2014 and 2013, which is included in the ‘other income, net’ line on the consolidated statement of operations.

Property and Equipment Asset Impairments

Crocs evaluates its long-lived assets for impairment when events or circumstances indicate the carrying value of a long-lived asset may not be fully recoverable. During the years ended December 31, 2015, 2014, and 2013, Crocs recorded $9.6 million, $8.8 million, and $10.6 million, respectively, in impairment charges related to underperforming retail locations that were unlikely to generate sufficient cash flows to fully recover the assets’ carrying value over the remaining economic life. During the year ended December 31, 2015, Crocs recorded an additional $5.7 million of impairment charges associated with assets held for sale in South Africa. The following table summarizes these asset impairment charges, by reportable operating segment, for the years ended December 31, 2015, 2014, and 2013:



	Year Ended December 31,
	2015						2014				2013
	Impairment Charge			Number of Stores (1)			Impairment Charge		Number of Stores (1)		Impairment Charge		Number of Stores (1)

	(in thousands, except store count data)
Americas	$	7,237			27		$	4,001		36	$	3,861		23
Asia Pacific		6,450	(2)		36	(2)		2,807		14		185		2
Europe		1,584			21			2,019		27		6,565		35
Total asset impairment	$	15,271			84		$	8,827		77	$	10,611		60

(1)

Represents stores with partially and fully depreciated assets.

(2)

Includes $5.7 million of impairment related to assets held for sale in nine South Africa retail locations.

Long-Lived Assets Held for Sale

As of December 31, 2015, the Company reclassified its operations in South Africa as held for sale as management approved and committed to a formal plan to actively market the disposal group and expects the sale to close within the next twelve months. Upon classifying the South Africa disposal group as held for sale, the Company measured the disposal group at the lower of its carrying value or fair value less any costs to sell, resulting in an impairment loss of $5.7 million during the three months ended December 31, 2015.