Segment Reporting

12 Months Ended

Jan. 31, 2015

Segment Reporting

14. SEGMENT REPORTING

The Company is organized based on the geographic markets in which it operates. Under this structure, the Company currently has two reportable segments: North America and Europe. The Company accounts for the goods it sells to third parties under franchising and licensing agreements within “Net sales” and “Cost of sales, occupancy and buying expenses” in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) within its North America division. The franchise fees the Company charges under the franchising agreements are reported in “Other income, net” in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) within its Europe division. Substantially all of the interest expense on the Company’s outstanding debt is recorded in the Company’s North America division.

Information about the Company’s operations by segment is as follows (in thousands):

	Fiscal 2014			Fiscal 2013			Fiscal 2012
Net sales:
North America	$	890,446		$	918,687		$	977,310
Europe		603,805			594,490			579,710
Total net sales	$	1,494,251		$	1,513,177		$	1,557,020
Depreciation and amortization:
North America	$	47,972		$	43,159		$	39,829
Europe		25,611			30,812			25,050
Total depreciation and amortization	$	73,583		$	73,971		$	64,879
Segment operating income:
North America	$	98,018		$	120,656		$	173,568
Europe		56,835			56,234			65,428
Total segment operating income	$	154,853		$	176,890		$	238,996
Impairment of assets:
North America	$	135,157		$	—		$	—
Europe		—			—			—
Total impairment charges	$	135,157		$	—		$	—
Interest expense, net:
North America	$	216,799		$	223,345		$	210,224
Europe		380			16			573
Total interest expense, net	$	217,179		$	223,361		$	210,797
Income (loss) before income taxes:
North America	$	(257,380	)	$	(110,587	)	$	(48,554	)
Europe		51,661			54,203			64,218
Total income (loss) before income taxes	$	(205,719	)	$	(56,384	)	$	15,664
Income tax expense (benefit):
North America	$	(3,448	)	$	(563	)	$	874
Europe		9,707			9,486			13,508
Total income tax expense	$	6,259		$	8,923		$	14,382
Net income (loss):
North America	$	(253,933	)	$	(110,024	)	$	(49,428	)
Europe		41,955			44,717			50,710
Net income (loss)	$	(211,978	)	$	(65,307	)	$	1,282
Goodwill:
North America	$	1,112,494		$	1,235,651		$	1,235,651
Europe		314,405			314,405			314,405
Total goodwill	$	1,426,899		$	1,550,056		$	1,550,056
Long-lived assets:
North America	$	144,820		$	165,916		$	140,269
Europe		76,153			97,687			96,458
Total long lived assets	$	220,973		$	263,603		$	236,727
Total assets:
North America	$	1,165,295		$	1,374,772		$	1,448,412
Europe		1,291,282			1,356,860			1,350,860
Total assets	$	2,456,577		$	2,731,632		$	2,799,272
Capital expenditures
North America	$	35,827		$	68,778		$	41,924
Europe		13,157			30,216			31,929
Total capital expenditures	$	48,984		$	98,994		$	73,853

The Company measures segment operating income as gross profit less selling, general and administrative expenses and depreciation and amortization expense, including other operating income and expense, but excluding impairment of assets and severance and transaction-related costs. A reconciliation of total segment operating income to consolidated operating income is as follows (in thousands).

	Fiscal 2014		Fiscal 2013		Fiscal 2012
Total segment operating income	$	154,853	$	176,890	$	238,996
Impairment of assets		135,157		—		—
Severance and transaction-related costs		8,236		5,118		2,828
Consolidated operating income	$	11,460	$	171,772	$	236,168

Excluded from segment operating income are impairment charges of $135.2 million for Fiscal 2014. For Fiscal 2014, Fiscal 2013 and Fiscal 2012, segment operating income also excludes severance and transaction-related costs for North America of $3.4 million, $3.1 million and $2.2 million, respectively, and for Europe of $4.8 million, $2.0 million and $0.6 million, respectively.

Identifiable assets are those assets that are identified with the operations of each segment. Corporate assets consist mainly of cash and cash equivalents, investments in affiliated companies and other assets. These assets are included within North America.

The following table compares the Company’s sales of each product category by segment for the last three fiscal years:

	Percentage of Total
Product Category	Fiscal 2014		Fiscal 2013		Fiscal 2012
Jewelry:
North America		31.0		32.4		32.7
Europe		16.5		17.0		15.2
		47.5		49.4		47.9
Accessories:
North America		27.9		27.7		29.5
Europe		24.6		22.9		22.6
		52.5		50.6		52.1
		100.0		100.0		100.0

The following table provides data for selected geographical areas.

	Percentage of Total Net Sales
Net Sales:	Fiscal 2014		Fiscal 2013		Fiscal 2012
United Kingdom		13.8		12.5		13.0
France		10.4		10.7		9.8

	Percentage of Total Long-lived Assets
Long-lived Assets:	January 31, 2015		February 1, 2014
United Kingdom		6.5		6.6
France		5.3		5.6