Property & Equipment

6 Months Ended

Jun. 30, 2014

3. PROPERTY & EQUIPMENT

The following table summarizes property and equipment by major classification as of June 30, 2014 and December 31, 2013:


	June 30,		December 31,
($ thousands)	2014		2013
Machinery and equipment	$	53,582	$	52,003
Leasehold improvements		102,615		93,235
Furniture, fixtures and other		26,164		23,653
Construction-in-progress		7,879		16,231
Property and equipment, gross (1)		190,240		185,122
Less: Accumulated depreciation (2)		(106,924)		(98,151)
Property and equipment, net	$	83,316	$	86,971

(1)Includes $0.1 million and $0.1 million of certain equipment held under capital leases and classified as equipment as of June 30, 2014 and December 31, 2013, respectively.

(2)Includes $0.1 million and $0.1 million of accumulated depreciation related to certain equipment held under capital leases as of June 30, 2014 and December 31, 2013, respectively, which are depreciated using the straight-line method over the lease term.

During the three months ended June 30, 2014 and 2013, we recorded $6.3 million and $5.9 million, respectively, in depreciation expense of which $0.4 million and $0.8 million, respectively, was recorded in ‘Cost of sales’, with the remaining amounts recorded in ‘Selling, general and administrative expenses’ in the condensed consolidated statements of income.

During the six months ended June 30, 2014 and 2013, we recorded $11.7 million and $12.0 million, respectively, in depreciation expense of which $0.9 million and $1.6 million, respectively, was recorded in ‘Cost of sales’, with the remaining amounts recorded in ‘Selling, general and administrative expenses’ in the condensed consolidated statements of income.

Asset Impairments

We periodically evaluate all of our long-lived assets for impairment when events or circumstances would indicate the carrying value of a long-lived asset may not be fully recoverable. The following table summarizes retail asset impairment charges by reportable operating segment for the three and six months ended June 30, 2014 and 2013 related to certain underperforming stores that were unlikely to generate sufficient cash flows to fully recover the carrying value of the stores’ assets over the remaining economic life of those assets:


	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
($ thousands, except store count data)	Impairment charge		Number of stores	Impairment charge		Number of stores	Impairment charge		Number of stores	Impairment charge		Number of stores
Americas	$	1,247	16	$	202	1	$	1,247	16	$	202	1
Asia Pacific		444	12		-	-		444	12		-	-
Japan		-	-		-	-		-	-		-	-
Europe		1,539	9		-	-		1,539	9		-	-
Asset impairment charges	$	3,230	37	$	202	1	$	3,230	37	$	202	1

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

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