AMERICAN EAGLE OUTFITTERS INC, 10-Q filed on 8/29/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Aug. 3, 2013
Aug. 26, 2013
Document Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Aug. 03, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
AEO 
 
Entity Registrant Name
AMERICAN EAGLE OUTFITTERS INC 
 
Entity Central Index Key
0000919012 
 
Current Fiscal Year End Date
--02-01 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
192,728,223 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Current assets:
 
 
 
Cash and cash equivalents
$ 345,188 
$ 509,119 
$ 696,077 
Short-term investments
59,678 
121,873 
5,995 
Merchandise inventory
461,080 
332,452 
462,013 
Assets held for sale
4,669 
9,499 
19,850 
Accounts receivable
45,965 
46,321 
40,202 
Prepaid expenses and other
115,595 
73,805 
76,584 
Deferred income taxes
41,807 
58,230 
55,607 
Total current assets
1,073,982 
1,151,299 
1,356,328 
Property and equipment, at cost, net of accumulated depreciation
593,879 
500,134 
534,886 
Intangible assets, at cost, net of accumulated amortization
44,658 
38,136 
38,682 
Goodwill
13,814 
11,484 
11,445 
Non-current deferred income taxes
25,441 
31,282 
22,477 
Other assets
28,311 
23,718 
15,064 
Total assets
1,780,085 
1,756,053 
1,978,882 
Current liabilities:
 
 
 
Accounts payable
292,120 
176,874 
171,655 
Accrued compensation and payroll taxes
20,496 
65,533 
54,168 
Accrued rent
74,052 
77,873 
78,514 
Accrued income and other taxes
9,614 
29,155 
15,822 
Unredeemed gift cards and gift certificates
26,389 
46,458 
24,342 
Current portion of deferred lease credits
14,104 
13,381 
14,679 
Other liabilities and accrued expenses
28,024 
26,628 
26,694 
Total current liabilities
464,799 
435,902 
385,874 
Non-current liabilities:
 
 
 
Deferred lease credits
67,461 
59,571 
69,598 
Non-current accrued income taxes
19,722 
19,011 
26,285 
Other non-current liabilities
24,430 
20,382 
18,711 
Total non-current liabilities
111,613 
98,964 
114,594 
Commitments and contingencies
   
   
   
Stockholders' equity:
 
 
 
Preferred stock, $0.01 par value; 5,000 shares authorized; non issued and outstanding
   
   
   
Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 192,700, 192,604 and 196,264 shares outstanding, respectively
2,496 
2,496 
2,496 
Contributed capital
587,905 
627,065 
574,671 
Accumulated other comprehensive income
24,397 
29,297 
28,073 
Retained earnings
1,588,094 
1,553,058 
1,770,546 
Treasury stock, 56,866, 56,962 and 53,302 shares, respectively
(999,219)
(990,729)
(897,372)
Total stockholders' equity
1,203,673 
1,221,187 
1,478,414 
Total liabilities and stockholders' equity
$ 1,780,085 
$ 1,756,053 
$ 1,978,882 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Preferred stock, par value
$ 0.01 
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
5,000 
5,000 
5,000 
Preferred stock, issued
Preferred stock, outstanding
Common stock, par value
$ 0.01 
$ 0.01 
$ 0.01 
Common stock, shares authorized
600,000 
600,000 
600,000 
Common stock, shares issued
249,566 
249,566 
249,566 
Common stock, shares outstanding
192,700 
192,604 
196,264 
Treasury stock, shares
56,866 
56,962 
53,302 
Consolidated Statements Of Operations And Retained Earnings (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Total net revenue
$ 727,313 
$ 739,680 
$ 1,406,790 
$ 1,448,375 
Cost of sales, including certain buying, occupancy and warehousing expenses
481,818 
463,116 
897,686 
896,898 
Gross profit
245,495 
276,564 
509,104 
551,477 
Selling, general and administrative expenses
186,336 
182,125 
368,589 
360,664 
Depreciation and amortization expense
29,734 
32,643 
65,273 
64,709 
Operating income
29,425 
61,796 
75,242 
126,104 
Other income (expense), net
1,149 
(343)
467 
3,164 
Income before income taxes
30,574 
61,453 
75,709 
129,268 
Provision for income taxes
10,980 
18,607 
28,139 
42,387 
Income from continuing operations
19,594 
42,846 
47,570 
86,881 
Loss from discontinued operations, net of tax
 
(23,819)
 
(28,157)
Net income
19,594 
19,027 
47,570 
58,724 
Basic income per common share:
 
 
 
 
Income from continuing operations
$ 0.10 
$ 0.22 
$ 0.25 
$ 0.44 
Loss from discontinued operations
 
$ (0.12)
 
$ (0.14)
Net income per basic share
$ 0.10 
$ 0.10 
$ 0.25 
$ 0.30 
Diluted income per common share:
 
 
 
 
Income from continuing operations
$ 0.10 
$ 0.21 
$ 0.24 
$ 0.44 
Loss from discontinued operations
 
$ (0.12)
 
$ (0.14)
Net income per diluted share
$ 0.10 
$ 0.09 
$ 0.24 
$ 0.30 
Cash dividends per common share
$ 0.125 
$ 0.110 
$ 0.125 
$ 0.220 
Weighted average common shares outstanding - basic
192,731 
196,160 
192,720 
195,525 
Weighted average common shares outstanding - diluted
195,951 
199,807 
196,451 
198,329 
Retained earnings, beginning
1,592,706 
1,774,205 
1,553,058 
1,771,464 
Net income
19,594 
19,027 
47,570 
58,724 
Cash dividends and dividend equivalents
(24,574)
(22,117)
(24,574)
(44,062)
Reissuance of treasury stock
368 
(569)
12,040 
(15,580)
Retained earnings, ending
$ 1,588,094 
$ 1,770,546 
$ 1,588,094 
$ 1,770,546 
Consolidated Statements Of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Net income
$ 19,594 
$ 19,027 
$ 47,570 
$ 58,724 
Other comprehensive loss:
 
 
 
 
Foreign currency translation loss
(4,398)
(2,459)
(4,900)
(586)
Other comprehensive loss
(4,398)
(2,459)
(4,900)
(586)
Comprehensive income
$ 15,196 
$ 16,568 
$ 42,670 
$ 58,138 
Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Operating activities:
 
 
Net income
$ 47,570 
$ 58,724 
Loss from discontinued operations, net of tax
 
28,157 
Income from continuing operations
47,570 
86,881 
Adjustments to reconcile net income to net cash from operating activities:
 
 
Depreciation and amortization
66,343 
65,761 
Share-based compensation
9,661 
28,029 
Provision for deferred income taxes
23,683 
(16,556)
Tax benefit from share-based payments
8,067 
4,396 
Excess tax benefit from share-based payments
(8,179)
(2,894)
Foreign currency transaction loss
936 
472 
Loss on impairment of assets
 
514 
Changes in assets and liabilities:
 
 
Merchandise inventory
(127,459)
(94,762)
Accounts receivable
296 
(532)
Prepaid expenses and other
(40,627)
(739)
Other assets
(8,654)
808 
Accounts payable
96,578 
(5,519)
Unredeemed gift cards and gift certificates
(19,916)
(20,620)
Deferred lease credits
8,871 
(2,592)
Accrued compensation and payroll taxes
(45,155)
10,871 
Accrued income and other taxes
(20,328)
(15,028)
Accrued liabilities
(1,173)
9,256 
Total adjustments
(61,852)
(39,135)
Net cash (used for) provided by operating activities
(9,486)
47,746 
Investing activities:
 
 
Capital expenditures for property and equipment
(123,865)
(48,240)
Purchase of assets in acquisition
(20,751)
 
Acquisition of intangible assets
(700)
(674)
Purchase of available-for-sale securities
(7,571)
(570)
Sale of available-for-sale securities
69,173 
20,592 
Net cash used for investing activities
(83,714)
(28,892)
Financing activities:
 
 
Payments on capital leases
(260)
(1,666)
Repurchase of common stock as part of publicly announced programs
(33,051)
 
Repurchase of common stock from employees
(23,343)
(4,108)
Net proceeds from stock options exercised
2,632 
18,495 
Excess tax benefit from share-based payments
8,179 
2,894 
Cash dividends paid
(24,085)
(43,108)
Net cash used for financing activities
(69,928)
(27,493)
Effect of exchange rates changes on cash
(803)
(517)
Cash flows of discontinued operations
 
 
Net cash used for operating activities
 
(13,544)
Net cash used for investing activities
 
(768)
Net cash used for financing activities
   
   
Effect of exchange rates changes on cash
   
   
Net cash used for discontinued operations
 
(14,312)
Net decrease in cash and cash equivalents
(163,931)
(23,468)
Cash and cash equivalents - beginning of period
509,119 
719,545 
Cash and cash equivalents - end of period
345,188 
696,077 
Supplemental disclosure of cash flow information:
 
 
Cash paid during the period for income taxes
58,555 
61,606 
Cash paid during the period for interest
$ 209 
$ 132 
Interim Financial Statements
Interim Financial Statements

1. Interim Financial Statements

The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the “Company”) at August 3, 2013 and July 28, 2012 and for the 13 and 26 week periods ended August 3, 2013 and July 28, 2012 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company’s Fiscal 2012 Annual Report. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and those described in the footnotes that follow) considered necessary for a fair presentation have been included. The existence of subsequent events has been evaluated through the filing date of this Quarterly Report on Form 10-Q.

As used in this report, all references to “we,” “our” and the “Company” refer to American Eagle Outfitters, Inc. and its wholly owned subsidiaries. “American Eagle Outfitters,” “American Eagle,” “AEO” and the “AE Brand” refer to our American Eagle Outfitters stores. “aerie” refers to our aerie® by American Eagle® stores. “AEO Direct” refers to our e-commerce operations, ae.com and aerie.com. “77kids” refers to the 77kids by american eagle® stores and related e-commerce operations which the Company exited in Fiscal 2012.

The Company’s business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 3, 2013, the Company operated in one reportable segment.

In Fiscal 2012, the Company announced plans to exit the 77kids business, which included all 22 stores and related e-commerce operations. These Consolidated Financial Statements reflect the results of 77kids as a discontinued operation for all periods presented. Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the discontinued operations of 77kids.

Fiscal Year

The Company’s financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2013” refers to the 52 week period ending February 1, 2014. “Fiscal 2012” refers to the 53 week period ended February 2, 2013. “Fiscal 2011” and “Fiscal 2010” refer to the 52 week periods ended January 28, 2012 and January 29, 2011, respectively.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of our contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide additional information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income. Because the standard only affects the presentation of comprehensive income and does not impact what is included in comprehensive income, ASU 2013-02 did not have an impact on the Company’s Consolidated Financial Statements.

Foreign Currency Translation

In accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, assets and liabilities denominated in foreign currencies were translated into United States dollars (“USD”) (the reporting currency) at the exchange rate prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into USD at the monthly average exchange rate for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation adjustments are reported as an element of other comprehensive income in accordance with ASC 220, Comprehensive Income.

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the estimated customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets.

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages.

Revenue is not recorded on the purchase of gift cards. A current liability is recorded upon purchase, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below.

The Company recognizes royalty revenue generated from its franchise agreements based on a percentage of merchandise sales by the franchisee. This revenue is recorded as a component of total net revenue when earned.

Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses

Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively “merchandise costs”) and buying, occupancy and warehousing costs. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales.

 

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses.

Other-than-Temporary Impairment

The Company evaluates its investments for impairment in accordance with ASC 320, InvestmentsDebt and Equity Securities (“ASC 320”). ASC 320 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the Consolidated Statement of Operations equal to the difference between the investment’s cost and its fair value. Additionally, ASC 320 requires additional disclosures relating to debt and equity securities both in the interim and annual periods as well as requires the Company to present total other-than-temporary impairment (“OTTI”) with an offsetting reduction for any non-credit loss impairment amount recognized in other comprehensive income (“OCI”). There was no net impairment loss for investment securities recognized in earnings during the 13 and 26 weeks ended August 3, 2013 or July 28, 2012.

Cash and Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

As of August 3, 2013, short-term investments include treasury bills and term-deposits with a maturity of greater than three months, but less than one year.

Unrealized gains and losses on the Company’s available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity, within accumulated other comprehensive income, until realized. When available-for-sale securities are sold, the cost of the securities is specifically identified and is used to determine any realized gain or loss.

Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments.

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or market, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts at the time at which title and risk of loss for the merchandise transfers to the Company.

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits may materially impact the Company’s effective income tax rate.

 

The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits.

The calculation of the deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance require management to make estimates and assumptions. The Company believes that its assumptions and estimates are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income.

Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes.

Property and Equipment

Property and equipment is recorded on the basis of cost, including costs to prepare the asset for use, with depreciation computed utilizing the straight-line method over the assets’ estimated useful lives. The useful lives of our major classes of assets are as follows:

 

Buildings    25 years
Leasehold improvements    Lesser of 10 years or the term of the lease
Fixtures and equipment    5 years

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified, for stores that have been open for a period of time sufficient to reach maturity. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded.

The Company had $4.7 million, $9.5 million and $19.9 million of long-lived assets held-for-sale as of August 3, 2013, February 2, 2013 and July 28, 2012, respectively. The $19.9 million of long-lived assets held for sale as of July 28, 2012 include merchandise inventory related to 77kids in addition to other corporate assets. These long-lived corporate assets held-for-sale, which the Company believes will be sold within one year, are recorded at their estimated net realizable value, less disposal costs. Refer to Note 13 for additional information regarding 77kids as a discontinued operation.

Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property, plant and equipment.

Goodwill

The Company’s goodwill is primarily related to the acquisition of its importing operations, Canadian business and recently acquired operations in Hong Kong and China. In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment on at least an annual basis and last performed an annual impairment test as of February 2, 2013. As a result of the Company’s annual goodwill impairment test, the Company concluded that its goodwill was not impaired.

Refer to Note 12 to the Consolidated Financial Statements for additional information on the Company’s acquisition of its Hong Kong and China operations.

 

Intangible Assets

Intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s intangible assets, which primarily include trademark assets, are generally amortized over 15 to 25 years.

The Company evaluates intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows are less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No intangible asset impairment charges were recorded in the 13 and 26 weeks ended August 3, 2013 or July 28, 2012.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets.

Gift Cards

The value of a gift card is recorded as a current liability upon purchase, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded $1.3 million and $1.4 million of revenue related to gift card breakage during the 13 weeks ended August 3, 2013 and July 28, 2012, respectively. During the 26 weeks ended August 3, 2013 and July 28, 2012, the Company recorded $3.2 million and $3.3 million, respectively, of revenue related to gift card breakage.

Deferred Lease Credits

Deferred lease credits represent the unamortized portion of construction allowances received from landlords related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its landlords as part of the negotiated lease terms. The Company records a receivable and a deferred lease credit liability at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized on a straight-line basis as a reduction of rent expense over the term of the original lease (including the pre-opening build-out period) and any subsequent renewal terms. The receivable is reduced as amounts are received from the landlord.

Co-branded Credit Card and Customer Loyalty Program

The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”). These credit cards are issued by a third-party bank (the “Bank”), and the Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. Once a customer is approved to receive the AEO Visa Card or the AEO Credit Card and the card is activated, the customer is eligible to participate in the credit card rewards program. Customers who make purchases earn discounts in the form of savings certificates when certain purchase levels are reached. Also, AEO Visa Card customers who make purchases at other retailers where the card is accepted earn additional discounts. Savings certificates are valid for 90 days from issuance.

Points earned under the credit card rewards program on purchases are accounted for by analogy to ASC 605-25, Revenue Recognition, Multiple Element Arrangements (“ASC 605-25”). The Company believes that points earned under its point and loyalty programs represent deliverables in a multiple element arrangement rather than a rebate or refund of cash. Accordingly, the portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire. Additionally, credit card reward points earned on non-AE or aerie purchases are accounted for in accordance with ASC 605-25. As the points are earned, a current liability is recorded for the estimated cost of the award, and the impact of adjustments is recorded in cost of sales.

The Company offers its customers the AEREWARD$sm loyalty program (the “Program”). Under the Program, customers accumulate points based on purchase activity and earn rewards by reaching certain point thresholds during three-month earning periods. Rewards earned during these periods are valid through the stated expiration date, which is approximately one month from the mailing date of the reward. These rewards can be redeemed for a discount on a purchase of merchandise. Rewards not redeemed during the one-month redemption period are forfeited. The Company determined that rewards earned using the Program should be accounted for in accordance with ASC 605-25. Accordingly, the portion of the sales revenue attributed to the award credits is deferred and recognized when the awards are redeemed or expire.

 

Segment Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified three operating segments (American Eagle Brand retail stores, aerie retail stores and AEO Direct) that reflect the basis used internally to review performance and allocate resources. All of the operating segments have been aggregated and are presented as one reportable segment, as permitted by ASC 280.

Reclassification

Certain reclassifications have been made to the Consolidated Financial Statements for prior periods in order to conform to the current period presentation.

Cash and Cash Equivalents and Short-term Investments
Cash and Cash Equivalents and Short-term Investments

3. Cash and Cash Equivalents and Short-term Investments

The following table summarizes the fair market values for the Company’s cash and marketable securities, which are recorded on the Consolidated Balance Sheets:

 

(In thousands)    August 3,
2013
     February 2,
2013
     July 28,
2012
 

Cash and cash equivalents:

        

Cash

   $ 289,444       $ 257,191       $ 623,277   

Money-market

     46,912         221,929         44,789   

Treasury bills

     8,832         —           23,011   

Commercial paper

     —           29,999         5,000   
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 345,188       $ 509,119       $ 696,077   

Short-term investments:

        

Treasury bills

   $ 50,035       $ 109,305       $ 5,995   

Term-deposits

     9,643         12,568         —     
  

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 59,678       $ 121,873       $ 5,995   
  

 

 

    

 

 

    

 

 

 

Total

   $ 404,866       $ 630,992       $ 702,072   
  

 

 

    

 

 

    

 

 

 

Proceeds from the sale of investments were $69.2 million and $20.6 million for the 26 weeks ended August 3, 2013 and July 28, 2012, respectively. The purchase of investments was $7.6 million and $0.6 million for the 26 weeks ended August 3, 2013 and July 28, 2012, respectively.

Fair Value Measurements
Fair Value Measurements

4. Fair Value Measurements

ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.

Financial Instruments

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

 

   

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

   

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

   

Level 3 — Unobservable inputs (i.e., projections, estimates, interpretations, etc.) that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

As of August 3, 2013 and July 28, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis. These include cash equivalents and short-term investments.

In accordance with ASC 820, the following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of August 3, 2013 and July 28, 2012:

 

     Fair Value Measurements at August 3, 2013  
(In thousands)    Carrying
Amount
     Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
     Significant Other
Observable
Inputs (Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash and cash equivalents:

           

Cash

   $ 289,444       $ 289,444       $ —         $ —     

Money-market

     46,912         46,912         —           —     

Treasury bills

     8,832         8,832         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 345,188       $ 345,188       $ —         $ —     

Short-term investments:

           

Treasury bills

   $ 50,035       $ 50,035       $ —         $ —     

Term-deposits

     9,643         9,643         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 59,678       $ 59,678       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 404,866       $ 404,866       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value Measurements at July 28, 2012  
(In thousands)    Carrying
Amount
     Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
     Significant Other
Observable
Inputs (Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash and cash equivalents:

           

Cash

   $ 623,277       $ 623,277       $ —         $ —     

Money-market

     44,789         44,789         —           —     

Treasury bills

     23,011         23,011         —           —     

Commercial paper

     5,000         5,000         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 696,077       $ 696,077       $ —         $ —     

Short-term investments:

           

Treasury bills

   $ 5,995       $ 5,995       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 5,995       $ 5,995       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 702,072       $ 702,072       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

In the event the Company holds Level 3 investments, a discounted cash flow model is used to value those investments. There were no Level 3 investments at August 3, 2013 or July 28, 2012.

Non-Financial Assets

The Company’s non-financial assets, which include goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate the non-financial instrument for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the estimated fair value. As a result of the Company’s annual goodwill impairment test performed as of February 2, 2013, the Company concluded that its goodwill was not impaired.

Earnings per Share
Earnings per Share

5. Earnings per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding:

 

     13 Weeks Ended      26 Weeks Ended  
(In thousands)    August 3,
2013
     July 28,
2012
     August 3,
2013
     July 28,
2012
 

Weighted average common shares outstanding:

           

Basic number of common shares outstanding

     192,731         196,160         192,720         195,525   

Dilutive effect of stock options and non-vested restricted stock

     3,220         3,647         3,731         2,804   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted number of common shares outstanding

     195,951         199,807         196,451         198,329   
  

 

 

    

 

 

    

 

 

    

 

 

 

Equity awards to purchase approximately 1.8 million and 1.0 million shares of common stock during the 13 and 26 weeks ended August 3, 2013 and approximately 2.9 million and 3.4 million shares of common stock during the 13 and 26 weeks ended July 28, 2012, respectively, were outstanding, but were not included in the computation of weighted average diluted common share amounts as the effect of doing so would be anti-dilutive.

There were no shares and 0.8 million shares for the 13 and 26 weeks ended August 3, 2013, respectively, and approximately 30,000 shares for both the 13 and 26 weeks ended July 28, 2012 of restricted stock units that were outstanding but not included in the computation of weighted average diluted common share amounts as the effect of doing so would be anti-dilutive. Additionally, approximately 0.6 million shares of restricted stock units for both the 13 and 26 weeks ended August 3, 2013 were not included in the computation of weighted average diluted common share amounts because the number of shares ultimately issued is contingent on the Company’s performance compared to pre-established annual performance goals.

Refer to Note 9 to the Consolidated Financial Statements for additional information regarding share-based compensation.

Property and Equipment
Property and Equipment

6. Property and Equipment

Property and equipment consists of the following:

 

(In thousands)    August 3,
2013
    February 2,
2013
    July 28,
2012
 

Property and equipment, at cost

   $ 1,544,477      $ 1,417,933      $ 1,432,517   

Less: Accumulated depreciation

     (950,598     (917,799     (897,631
  

 

 

   

 

 

   

 

 

 

Property and equipment, net

   $ 593,879      $ 500,134      $ 534,886   
  

 

 

   

 

 

   

 

 

 
Intangible Assets
Intangible Assets

7. Intangible Assets

Intangible assets consist of the following:

 

(In thousands)    August 3,
2013
    February 2,
2013
    July 28,
2012
 

Trademarks and other intangibles, at cost

   $ 51,956      $ 44,272      $ 43,844   

Less: Accumulated amortization

     (7,298     (6,136     (5,162
  

 

 

   

 

 

   

 

 

 

Intangible assets, net

   $ 44,658      $ 38,136      $ 38,682   
  

 

 

   

 

 

   

 

 

 
Other Credit Arrangements
Other Credit Arrangements

8. Other Credit Arrangements

In Fiscal 2012, the Company entered into a five-year, $150.0 million syndicated, unsecured, revolving credit agreement (the “Credit Agreement”). The primary purpose of the Credit Agreement is to provide additional access to capital for general corporate purposes, growth initiatives and the issuance of letters of credit.

The Credit Agreement contains financial covenants that require the Company to maintain certain coverage and leverage ratios, and various customary affirmative and negative covenants such as the ability to incur additional debt not otherwise permitted under the Credit Agreement.

 

The Credit Agreement has various borrowing options, including rates of interest that are based on (i) an Adjusted London Interbank Offered Rate (“LIBOR” as defined in the Credit Agreement) plus a margin ranging from 1.00% to 1.75% based on a defined leverage ratio, payable at the end of the applicable interest period; and (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.75% based on a defined leverage ratio, payable quarterly.

Under the Credit Agreement, the Company is also required to pay a commitment fee ranging from 0.175% to 0.30%, based on the defined leverage ratio, on the unused portion of the total lender commitments.

As of August 3, 2013, the Company was in compliance with the terms of the Credit Agreement and had $8.3 million outstanding in letters of credit and no borrowings.

Additionally, the Company has borrowing agreements with two separate financial institutions under which it may borrow an aggregate of $135.0 million USD for the purposes of trade letter of credit issuances. The availability of any future borrowings under the trade letter of credit facilities is subject to acceptance by the respective financial institutions.

As of August 3, 2013, the Company had outstanding trade letters of credit of $88.8 million.

Share-Based Compensation
Share-Based Compensation

9. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”), which requires companies to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 and 26 weeks ended August 3, 2013 was $4.4 million ($2.7 million, net of tax) and $9.7 million ($6.0 million, net of tax), respectively and for the 13 and 26 weeks ended July 28, 2012 was $7.1 million ($4.4 million, net of tax) and $28.0 million ($17.3 million, net of tax), respectively.

Stock Option Grants

The Company grants both time-based and performance-based stock options under its 2005 Stock Award and Incentive Plan. Time-based stock option awards vest over the requisite service period of the award or to an employee’s eligible retirement date, if earlier. Performance-based stock option awards vest over one year and are earned if the Company meets pre-established performance goals.

A summary of the Company’s stock option activity for the 26 weeks ended August 3, 2013 follows:

 

     Options     Weighted-
Average
Exercise Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic Value
 
     (In thousands)            (In years)      (In thousands)  

Outstanding - February 2, 2013

     4,629      $ 15.31         

Granted

     376      $ 22.55         

Exercised (1)

     (180   $ 14.84         

Cancelled

     (42   $ 23.09         
  

 

 

   

 

 

    

 

 

    

 

 

 

Outstanding - August 3, 2013

     4,783      $ 16.78         3.2       $ 20,777   
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested and expected to vest - August 3, 2013

     4,708      $ 16.77         3.1       $ 20,472   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable - August 3, 2013 (2)

     3,294      $ 14.80         2.9       $ 17,306   

 

(1) Options exercised during the 26 weeks ended August 3, 2013 had exercise prices ranging from $4.24 to $19.28.
(2) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price at August 3, 2013.

The weighted-average grant date fair value of stock options granted during the 26 weeks ended August 3, 2013 and July 28, 2012 was $4.17 and $3.69, respectively. The aggregate intrinsic value of options exercised during the 26 weeks ended August 3, 2013 and July 28, 2012 was $0.9 million and $15.0 million, respectively.

 

Cash received from the exercise of stock options was $2.6 million for the 26 weeks ended August 3, 2013 and $18.5 million for the 26 weeks ended July 28, 2012. The actual tax benefit realized from stock option exercises totaled $8.1 million for the 26 weeks ended August 3, 2013 and $4.4 million for the 26 weeks ended July 28, 2012.

The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

     26 Weeks Ended  

Black-Scholes Option Valuation Assumptions

   August 3,
2013
    July 28,
2012
 

Risk-free interest rate (1)

     0.3     0.6

Dividend yield

     2.0     2.8

Volatility factor (2)

     34.4     41.2

Weighted-average expected term (3)

     2.5 years        4.0 years   

Expected forfeiture rate (4)

     8.0     8.0

 

(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.
(2) Based on a combination of historical volatility of the Company’s common stock and implied volatility.
(3) Represents the period of time options are expected to be outstanding, based on historical experience.
(4) Based upon historical experience.

As of August 3, 2013, there was $1.8 million of unrecognized compensation expense related to non-vested time-based stock option awards that is expected to be recognized over a weighted average period of 1.4 years.

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years; however, they may be accelerated to vest over one year if the Company meets pre-established performance goals in the year of grant. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

The grant date fair value of all restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant.

A summary of the Company’s restricted stock activity is presented in the following tables:

 

    Time-Based Restricted Stock Units     Performance-Based Restricted Stock  Units  
    26 Weeks Ended
August 3, 2013
    26 Weeks Ended
August 3, 2013
 
(Shares in thousands)   Shares     Weighted-Average Grant
Date Fair Value
    Shares     Weighted-Average Grant
Date Fair Value
 

Nonvested - February 2, 2013

    1,386      $ 13.91        2,086      $ 14.91   

Granted

    871      $ 22.36        857      $ 21.80   

Vested

    (972   $ 13.55        (566   $ 17.39   

Cancelled

    (51   $ 18.50        (4   $ 14.65   
 

 

 

   

 

 

   

 

 

   

 

 

 

Nonvested - August 3, 2013

    1,234      $ 19.97        2,373      $ 16.81   

As of August 3, 2013, there was $20.3 million of unrecognized compensation expense related to non-vested time-based restricted stock unit awards that is expected to be recognized over a weighted-average period of 2.3 years. Additionally, there was $20.7 million of unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of performance goals is probable over a one to three year period.

 

As of August 3, 2013, the Company had 17.8 million shares available for all equity grants.

Income Taxes
Income Taxes

10. Income Taxes

The provision for income taxes from continuing operations is based on the current estimate of the annual effective income tax rate and is adjusted as necessary for discrete quarterly events. The effective income tax rate from continuing operations based on actual operating results for the 13 weeks ended August 3, 2013 was 35.9% compared to 30.3% for the 13 weeks ended July 28, 2012. The effective income tax rate from continuing operations based on actual operating results for the 26 weeks ended August 3, 2013 was 37.2% compared to 32.8% for the 26 weeks ended July 28, 2012. The lower effective income tax rate for the 13 and 26 weeks ended July 28, 2012 was primarily due to income tax settlements and other changes in income tax reserves.

The Company records accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with ASC 740 and adjusts these liabilities when its judgment changes as the result of the evaluation of new information not previously available. Unrecognized tax benefits did not change significantly during the 13 weeks ended August 3, 2013. Unrecognized tax benefits decreased by $7.3 million during the 13 weeks ended July 28, 2012 primarily due to income tax settlements and other changes in income tax reserves. Over the next twelve months the Company does not anticipate any significant changes to unrecognized tax benefits.

Legal Proceedings
Legal Proceedings

11. Legal Proceedings

The Company is subject to certain legal proceedings and claims arising out of the conduct of its business. In accordance with ASC 450, Contingencies (“ASC 450”), management records a reserve for estimated losses when the loss is probable and the amount can be reasonably estimated. If a range of possible loss exists and no anticipated loss within the range is more likely than any other anticipated loss, the Company records the accrual at the low end of the range, in accordance with ASC 450. As the Company believes that it has provided adequate reserves, it anticipates that the ultimate outcome of any matter currently pending against the Company will not materially affect the consolidated financial position or results of operations of the Company.

Acquisitions and Dispositions
Acquisitions and Dispositions

12. Acquisitions and Dispositions

On May 31, 2013, the Company completed a transaction with Dickson Concepts (International) Limited (“Dickson”) to acquire six existing American Eagle Outfitters franchised stores in Hong Kong and China, as well as and the related assets operated by Dickson, for total consideration of $20.8 million USD. Included in the total consideration for the transaction was a $10.0 million USD payment to Dickson terminate their right to open additional stores in Hong Kong, Macau, China and other designated territories in Asia.

The total purchase price was allocated to the net tangible and intangible assets acquired based on their preliminary estimated fair values as of May 31, 2013. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. The Company’s valuation of intangible assets, including deferred income taxes, is subject to finalization during Fiscal 2013.

The preliminary allocation of the purchase price to the fair value of assets acquired is as follows:

 

(In thousands)       

Merchandise inventory

   $ 2,456   

Other assets

     2,351   

Property and equipment

     6,460   

Intangible assets and goodwill

     9,484   
  

 

 

 

Total purchase price

   $ 20,751   
  

 

 

 

 

Results of operations of the six acquired stores have been included in our Consolidated Statements of Operations since the May 31, 2013 acquisition date. Pro forma results of the acquired business have not been presented as the results were not material to our Consolidated Financial Statements for all years presented and would not have been material had the acquisition occurred at the beginning of Fiscal 2013.

Discontinued Operations
Discontinued Operations

13. Discontinued Operations

During Fiscal 2012, the Company exited the 77kids business which included all 22 stores and related e-commerce operations. These Consolidated Financial Statements reflect the results of 77kids as a discontinued operation for all periods presented.

Additionally, the third party purchaser assumed certain liabilities associated with the 77kids business and paid the Company an amount equal to 65% of the cost of the acquired inventory. A $10.0 million inventory balance for 77kids has been recorded as a component of assets held-for-sale on the Company’s Consolidated Balance Sheets as of July 28, 2012. There were no balances for 77kids as of August 3, 2013 or February 2, 2013.

In connection with the exit of the 77kids business, the Company is secondarily liable for obligations under the lease agreements for 21 store leases assumed by the third party purchaser. These obligations will remain in effect until the leases expire through 2022, unless the Company otherwise is released by the applicable landlord. In the event that the third party purchaser does not fulfill its obligations under any of the leases and the Company is required to make any such payments, the Company would seek full reimbursement from the third party purchaser in accordance with the asset purchase agreement. The third party purchaser has provided a stand-by letter of credit to the Company in order to secure payment of obligations under the leases.

In accordance with ASC 460, Guarantees (“ASC 460”), as we became secondarily liable under the leases at the time that we transferred them to the third party, no amounts have been accrued in our Consolidated Financial Statements related to these guarantees.

The table below presents the significant components of 77kids’ results included in Loss from Discontinued Operations on the Consolidated Statement of Operations for the 13 and 26 weeks ended July 28, 2012. There were no losses from Discontinued Operations within the Consolidated Statement of Operations for both the 13 and 26 weeks ended August 3, 2013.

 

     13 Weeks
Ended
    26 Weeks
Ended
 
(In thousands)    July 28,
2012
    July 28,
2012
 

Total net revenue

   $ 9,719      $ 20,117   

Loss from discontinued operations, before income taxes

   $ (38,600   $ (45,648

Income tax benefit

     14,781        17,491   
  

 

 

   

 

 

 

Loss from discontinued operations, net of tax

   $ (23,819   $ (28,157

Loss per common share from discontinued operations:

    

Basic

   $ (0.12   $ (0.14

Diluted

   $ (0.12   $ (0.14

 

There were no assets or liabilities included in the Consolidated Balance Sheets for 77kids as of August 3, 2013 or February 2, 2013. The major classes of assets and liabilities included in the Consolidated Balance Sheet for 77kids as of July 28, 2012 are as follows:

 

(In thousands)    July 28,
2012
 

Current assets

   $ 10,189   

Non-current assets

     —     
  

 

 

 

Total assets (1)

   $ 10,189   
  

 

 

 

Total current liabilities

   $ 9,034   

Total non-current liabilities

     2,597   
  

 

 

 

Total liabilities

   $ 11,631   
  

 

 

 

 

(1) Current assets primarily relate to merchandise inventory classified as an asset held-for-sale on the Company’s Consolidated Balance Sheets.
Summary of Significant Accounting Policies (Policies)

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. At August 3, 2013, the Company operated in one reportable segment.

In Fiscal 2012, the Company announced plans to exit the 77kids business, which included all 22 stores and related e-commerce operations. These Consolidated Financial Statements reflect the results of 77kids as a discontinued operation for all periods presented. Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the discontinued operations of 77kids.

Fiscal Year

The Company’s financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, “Fiscal 2013” refers to the 52 week period ending February 1, 2014. “Fiscal 2012” refers to the 53 week period ended February 2, 2013. “Fiscal 2011” and “Fiscal 2010” refer to the 52 week periods ended January 28, 2012 and January 29, 2011, respectively.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of our contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, our management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide additional information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income. Because the standard only affects the presentation of comprehensive income and does not impact what is included in comprehensive income, ASU 2013-02 did not have an impact on the Company’s Consolidated Financial Statements.

Foreign Currency Translation

In accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters, assets and liabilities denominated in foreign currencies were translated into United States dollars (“USD”) (the reporting currency) at the exchange rate prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into USD at the monthly average exchange rate for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation adjustments are reported as an element of other comprehensive income in accordance with ASC 220, Comprehensive Income.

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. The Company’s e-commerce operation records revenue upon the estimated customer receipt date of the merchandise. Shipping and handling revenues are included in total net revenue. Sales tax collected from customers is excluded from revenue and is included as part of accrued income and other taxes on the Company’s Consolidated Balance Sheets.

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions and other promotions. The Company records the impact of adjustments to its sales return reserve quarterly within total net revenue and cost of sales. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages.

Revenue is not recorded on the purchase of gift cards. A current liability is recorded upon purchase, and revenue is recognized when the gift card is redeemed for merchandise. Additionally, the Company recognizes revenue on unredeemed gift cards based on an estimate of the amounts that will not be redeemed (“gift card breakage”), determined through historical redemption trends. Gift card breakage revenue is recognized in proportion to actual gift card redemptions as a component of total net revenue. For further information on the Company’s gift card program, refer to the Gift Cards caption below.

The Company recognizes royalty revenue generated from its franchise agreements based on a percentage of merchandise sales by the franchisee. This revenue is recorded as a component of total net revenue when earned.

Cost of Sales, Including Certain Buying, Occupancy and Warehousing Expenses

Cost of sales consists of merchandise costs, including design, sourcing, importing and inbound freight costs, as well as markdowns, shrinkage and certain promotional costs (collectively “merchandise costs”) and buying, occupancy and warehousing costs. Buying, occupancy and warehousing costs consist of compensation, employee benefit expenses and travel for our buyers and certain senior merchandising executives; rent and utilities related to our stores, corporate headquarters, distribution centers and other office space; freight from our distribution centers to the stores; compensation and supplies for our distribution centers, including purchasing, receiving and inspection costs; and shipping and handling costs related to our e-commerce operation. Gross profit is the difference between total net revenue and cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of compensation and employee benefit expenses, including salaries, incentives and related benefits associated with our stores and corporate headquarters. Selling, general and administrative expenses also include advertising costs, supplies for our stores and home office, communication costs, travel and entertainment, leasing costs and services purchased. Selling, general and administrative expenses do not include compensation, employee benefit expenses and travel for our design, sourcing and importing teams, our buyers and our distribution centers as these amounts are recorded in cost of sales.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income/expense, foreign currency transaction gain/loss and realized investment gains/losses.

Other-than-Temporary Impairment

The Company evaluates its investments for impairment in accordance with ASC 320, InvestmentsDebt and Equity Securities (“ASC 320”). ASC 320 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss is recognized in the Consolidated Statement of Operations equal to the difference between the investment’s cost and its fair value. Additionally, ASC 320 requires additional disclosures relating to debt and equity securities both in the interim and annual periods as well as requires the Company to present total other-than-temporary impairment (“OTTI”) with an offsetting reduction for any non-credit loss impairment amount recognized in other comprehensive income (“OCI”). There was no net impairment loss for investment securities recognized in earnings during the 13 and 26 weeks ended August 3, 2013 or July 28, 2012.

Cash and Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

As of August 3, 2013, short-term investments include treasury bills and term-deposits with a maturity of greater than three months, but less than one year.

Unrealized gains and losses on the Company’s available-for-sale securities are excluded from earnings and are reported as a separate component of stockholders’ equity, within accumulated other comprehensive income, until realized. When available-for-sale securities are sold, the cost of the securities is specifically identified and is used to determine any realized gain or loss.

Refer to Note 3 to the Consolidated Financial Statements for information regarding cash and cash equivalents and short-term investments.

Merchandise Inventory

Merchandise inventory is valued at the lower of average cost or market, utilizing the retail method. Average cost includes merchandise design and sourcing costs and related expenses. The Company records merchandise receipts at the time at which title and risk of loss for the merchandise transfers to the Company.

The Company reviews its inventory levels to identify slow-moving merchandise and generally uses markdowns to clear merchandise. Additionally, the Company estimates a markdown reserve for future planned permanent markdowns related to current inventory. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have a material adverse impact on earnings, depending on the extent and amount of inventory affected. The Company also estimates a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve, based on historical results, can be affected by changes in merchandise mix and changes in actual shrinkage trends.

Income Taxes

The Company calculates income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the difference between the Consolidated Financial Statement carrying amounts of existing assets and liabilities and their respective tax bases as computed pursuant to ASC 740. Deferred tax assets and liabilities are measured using the tax rates, based on certain judgments regarding enacted tax laws and published guidance, in effect in the years when those temporary differences are expected to reverse. A valuation allowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in the Company’s level and composition of earnings, tax laws or the deferred tax valuation allowance, as well as the results of tax audits may materially impact the Company’s effective income tax rate.

 

The Company evaluates its income tax positions in accordance with ASC 740, which prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. Under ASC 740, a tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits.

The calculation of the deferred tax assets and liabilities, as well as the decision to recognize a tax benefit from an uncertain position and to establish a valuation allowance require management to make estimates and assumptions. The Company believes that its assumptions and estimates are reasonable, although actual results may have a positive or negative material impact on the balances of deferred tax assets and liabilities, valuation allowances or net income.

Refer to Note 10 to the Consolidated Financial Statements for additional information regarding income taxes.

Property and Equipment

Property and equipment is recorded on the basis of cost, including costs to prepare the asset for use, with depreciation computed utilizing the straight-line method over the assets’ estimated useful lives. The useful lives of our major classes of assets are as follows:

 

Buildings    25 years
Leasehold improvements    Lesser of 10 years or the term of the lease
Fixtures and equipment    5 years

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), the Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified, for stores that have been open for a period of time sufficient to reach maturity. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. When events such as these occur, the impaired assets are adjusted to their estimated fair value and an impairment loss is recorded.

The Company had $4.7 million, $9.5 million and $19.9 million of long-lived assets held-for-sale as of August 3, 2013, February 2, 2013 and July 28, 2012, respectively. The $19.9 million of long-lived assets held for sale as of July 28, 2012 include merchandise inventory related to 77kids in addition to other corporate assets. These long-lived corporate assets held-for-sale, which the Company believes will be sold within one year, are recorded at their estimated net realizable value, less disposal costs. Refer to Note 13 for additional information regarding 77kids as a discontinued operation.

Refer to Note 6 to the Consolidated Financial Statements for additional information regarding property, plant and equipment.

Goodwill

The Company’s goodwill is primarily related to the acquisition of its importing operations, Canadian business and recently acquired operations in Hong Kong and China. In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), the Company evaluates goodwill for possible impairment on at least an annual basis and last performed an annual impairment test as of February 2, 2013. As a result of the Company’s annual goodwill impairment test, the Company concluded that its goodwill was not impaired.

Refer to Note 12 to the Consolidated Financial Statements for additional information on the Company’s acquisition of its Hong Kong and China operations.

Intangible Assets

Intangible assets are recorded on the basis of cost with amortization computed utilizing the straight-line method over the assets’ estimated useful lives. The Company’s intangible assets, which primarily include trademark assets, are generally amortized over 15 to 25 years.

The Company evaluates intangible assets for impairment in accordance with ASC 350 when events or circumstances indicate that the carrying value of the asset may not be recoverable. Such an evaluation includes the estimation of undiscounted future cash flows to be generated by those assets. If the sum of the estimated future undiscounted cash flows are less than the carrying amounts of the assets, then the assets are impaired and are adjusted to their estimated fair value. No intangible asset impairment charges were recorded in the 13 and 26 weeks ended August 3, 2013 or July 28, 2012.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding intangible assets.

Gift Cards

The value of a gift card is recorded as a current liability upon purchase, and revenue is recognized when the gift card is redeemed for merchandise. The Company estimates gift card breakage and recognizes revenue in proportion to actual gift card redemptions as a component of total net revenue. The Company determines an estimated gift card breakage rate by continuously evaluating historical redemption data and the time when there is a remote likelihood that a gift card will be redeemed. The Company recorded $1.3 million and $1.4 million of revenue related to gift card breakage during the 13 weeks ended August 3, 2013 and July 28, 2012, respectively. During the 26 weeks ended August 3, 2013 and July 28, 2012, the Company recorded $3.2 million and $3.3 million, respectively, of revenue related to gift card breakage.

Deferred Lease Credits

Deferred lease credits represent the unamortized portion of construction allowances received from landlords related to the Company’s retail stores. Construction allowances are generally comprised of cash amounts received by the Company from its landlords as part of the negotiated lease terms. The Company records a receivable and a deferred lease credit liability at the lease commencement date (date of initial possession of the store). The deferred lease credit is amortized on a straight-line basis as a reduction of rent expense over the term of the original lease (including the pre-opening build-out period) and any subsequent renewal terms. The receivable is reduced as amounts are received from the landlord.

Co-branded Credit Card and Customer Loyalty Program

The Company offers a co-branded credit card (the “AEO Visa Card”) and a private label credit card (the “AEO Credit Card”). These credit cards are issued by a third-party bank (the “Bank”), and the Company has no liability to the Bank for bad debt expense, provided that purchases are made in accordance with the Bank’s procedures. Once a customer is approved to receive the AEO Visa Card or the AEO Credit Card and the card is activated, the customer is eligible to participate in the credit card rewards program. Customers who make purchases earn discounts in the form of savings certificates when certain purchase levels are reached. Also, AEO Visa Card customers who make purchases at other retailers where the card is accepted earn additional discounts. Savings certificates are valid for 90 days from issuance.

Points earned under the credit card rewards program on purchases are accounted for by analogy to ASC 605-25, Revenue Recognition, Multiple Element Arrangements (“ASC 605-25”). The Company believes that points earned under its point and loyalty programs represent deliverables in a multiple element arrangement rather than a rebate or refund of cash. Accordingly, the portion of the sales revenue attributed to the award points is deferred and recognized when the award is redeemed or when the points expire. Additionally, credit card reward points earned on non-AE or aerie purchases are accounted for in accordance with ASC 605-25. As the points are earned, a current liability is recorded for the estimated cost of the award, and the impact of adjustments is recorded in cost of sales.

The Company offers its customers the AEREWARD$sm loyalty program (the “Program”). Under the Program, customers accumulate points based on purchase activity and earn rewards by reaching certain point thresholds during three-month earning periods. Rewards earned during these periods are valid through the stated expiration date, which is approximately one month from the mailing date of the reward. These rewards can be redeemed for a discount on a purchase of merchandise. Rewards not redeemed during the one-month redemption period are forfeited. The Company determined that rewards earned using the Program should be accounted for in accordance with ASC 605-25. Accordingly, the portion of the sales revenue attributed to the award credits is deferred and recognized when the awards are redeemed or expire.

Segment Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company has identified three operating segments (American Eagle Brand retail stores, aerie retail stores and AEO Direct) that reflect the basis used internally to review performance and allocate resources. All of the operating segments have been aggregated and are presented as one reportable segment, as permitted by ASC 280.

Reclassification

Certain reclassifications have been made to the Consolidated Financial Statements for prior periods in order to conform to the current period presentation.

Summary of Significant Accounting Policies (Tables)
Useful Lives of Major Classes of Assets

The useful lives of our major classes of assets are as follows:

 

Buildings    25 years
Leasehold improvements    Lesser of 10 years or the term of the lease
Fixtures and equipment    5 years
Cash and Cash Equivalents and Short-term Investments (Tables)
Fair Market Values for Cash and Marketable Securites

The following table summarizes the fair market values for the Company’s cash and marketable securities, which are recorded on the Consolidated Balance Sheets:

 

(In thousands)    August 3,
2013
     February 2,
2013
     July 28,
2012
 

Cash and cash equivalents:

        

Cash

   $ 289,444       $ 257,191       $ 623,277   

Money-market

     46,912         221,929         44,789   

Treasury bills

     8,832         —           23,011   

Commercial paper

     —           29,999         5,000   
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 345,188       $ 509,119       $ 696,077   

Short-term investments:

        

Treasury bills

   $ 50,035       $ 109,305       $ 5,995   

Term-deposits

     9,643         12,568         —     
  

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 59,678       $ 121,873       $ 5,995   
  

 

 

    

 

 

    

 

 

 

Total

   $ 404,866       $ 630,992       $ 702,072   
  

 

 

    

 

 

    

 

 

 
Fair Value Measurements (Tables)
Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) Measured at Fair Value on a Recurring Basis

In accordance with ASC 820, the following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of August 3, 2013 and July 28, 2012:

 

     Fair Value Measurements at August 3, 2013  
(In thousands)    Carrying
Amount
     Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
     Significant Other
Observable
Inputs (Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash and cash equivalents:

           

Cash

   $ 289,444       $ 289,444       $ —         $ —     

Money-market

     46,912         46,912         —           —     

Treasury bills

     8,832         8,832         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 345,188       $ 345,188       $ —         $ —     

Short-term investments:

           

Treasury bills

   $ 50,035       $ 50,035       $ —         $ —     

Term-deposits

     9,643         9,643         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 59,678       $ 59,678       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 404,866       $ 404,866       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value Measurements at July 28, 2012  
(In thousands)    Carrying
Amount
     Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
     Significant Other
Observable
Inputs (Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash and cash equivalents:

           

Cash

   $ 623,277       $ 623,277       $ —         $ —     

Money-market

     44,789         44,789         —           —     

Treasury bills

     23,011         23,011         —           —     

Commercial paper

     5,000         5,000         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents

   $ 696,077       $ 696,077       $ —         $ —     

Short-term investments:

           

Treasury bills

   $ 5,995       $ 5,995       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total short-term investments

   $ 5,995       $ 5,995       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 702,072       $ 702,072       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
Earnings per Share (Tables)
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding

The following is a reconciliation between basic and diluted weighted average shares outstanding:

 

     13 Weeks Ended      26 Weeks Ended  
(In thousands)    August 3,
2013
     July 28,
2012
     August 3,
2013
     July 28,
2012
 

Weighted average common shares outstanding:

           

Basic number of common shares outstanding

     192,731         196,160         192,720         195,525   

Dilutive effect of stock options and non-vested restricted stock

     3,220         3,647         3,731         2,804   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted number of common shares outstanding

     195,951         199,807         196,451         198,329   
  

 

 

    

 

 

    

 

 

    

 

 

 
Property and Equipment (Tables)
Property and Equipment

Property and equipment consists of the following:

 

(In thousands)    August 3,
2013
    February 2,
2013
    July 28,
2012
 

Property and equipment, at cost

   $ 1,544,477      $ 1,417,933      $ 1,432,517   

Less: Accumulated depreciation

     (950,598     (917,799     (897,631
  

 

 

   

 

 

   

 

 

 

Property and equipment, net

   $ 593,879      $ 500,134      $ 534,886   
  

 

 

   

 

 

   

 

 

 
Intangible Assets (Tables)
Intangible Assets

Intangible assets consist of the following:

 

(In thousands)    August 3,
2013
    February 2,
2013
    July 28,
2012
 

Trademarks and other intangibles, at cost

   $ 51,956      $ 44,272      $ 43,844   

Less: Accumulated amortization

     (7,298     (6,136     (5,162
  

 

 

   

 

 

   

 

 

 

Intangible assets, net

   $ 44,658      $ 38,136      $ 38,682   
  

 

 

   

 

 

   

 

 

 
Share-Based Compensation (Tables)

A summary of the Company’s stock option activity for the 26 weeks ended August 3, 2013 follows:

 

     Options     Weighted-
Average
Exercise Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic Value
 
     (In thousands)            (In years)      (In thousands)  

Outstanding - February 2, 2013

     4,629      $ 15.31         

Granted

     376      $ 22.55         

Exercised (1)

     (180   $ 14.84         

Cancelled

     (42   $ 23.09         
  

 

 

   

 

 

    

 

 

    

 

 

 

Outstanding - August 3, 2013

     4,783      $ 16.78         3.2       $ 20,777   
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested and expected to vest - August 3, 2013

     4,708      $ 16.77         3.1       $ 20,472   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable - August 3, 2013 (2)

     3,294      $ 14.80         2.9       $ 17,306   

 

(1) Options exercised during the 26 weeks ended August 3, 2013 had exercise prices ranging from $4.24 to $19.28.
(2) Options exercisable represent “in-the-money” vested options based upon the weighted-average exercise price of vested options compared to the Company’s stock price at August 3, 2013.

The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

     26 Weeks Ended  

Black-Scholes Option Valuation Assumptions

   August 3,
2013
    July 28,
2012
 

Risk-free interest rate (1)

     0.3     0.6

Dividend yield

     2.0     2.8

Volatility factor (2)

     34.4     41.2

Weighted-average expected term (3)

     2.5 years        4.0 years   

Expected forfeiture rate (4)

     8.0     8.0

 

(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.
(2) Based on a combination of historical volatility of the Company’s common stock and implied volatility.
(3) Represents the period of time options are expected to be outstanding, based on historical experience.
(4) Based upon historical experience.

A summary of the Company’s restricted stock activity is presented in the following tables:

 

    Time-Based Restricted Stock Units     Performance-Based Restricted Stock  Units  
    26 Weeks Ended
August 3, 2013
    26 Weeks Ended
August 3, 2013
 
(Shares in thousands)   Shares     Weighted-Average Grant
Date Fair Value
    Shares     Weighted-Average Grant
Date Fair Value
 

Nonvested - February 2, 2013

    1,386      $ 13.91        2,086      $ 14.91   

Granted

    871      $ 22.36        857      $ 21.80   

Vested

    (972   $ 13.55        (566   $ 17.39   

Cancelled

    (51   $ 18.50        (4   $ 14.65   
 

 

 

   

 

 

   

 

 

   

 

 

 

Nonvested - August 3, 2013

    1,234      $ 19.97        2,373      $ 16.81   
Acquisitions and Dispositions (Tables)
Preliminary Allocation Of Purchase Price To Fair Value Of Assets Acquired

The preliminary allocation of the purchase price to the fair value of assets acquired is as follows:

 

(In thousands)       

Merchandise inventory

   $ 2,456   

Other assets

     2,351   

Property and equipment

     6,460   

Intangible assets and goodwill

     9,484   
  

 

 

 

Total purchase price

   $ 20,751   
  

 

 

 

 

Discontinued Operations (Tables)

The table below presents the significant components of 77kids’ results included in Loss from Discontinued Operations on the Consolidated Statement of Operations for the 13 and 26 weeks ended July 28, 2012. There were no losses from Discontinued Operations with the Consolidated Statement of Operations for both the 13 and 26 weeks ended August 3, 2013.

 

     13 Weeks
Ended
    26 Weeks
Ended
 
(In thousands)    July 28,
2012
    July 28,
2012
 

Total net revenue

   $ 9,719      $ 20,117   

Loss from discontinued operations, before income taxes

   $ (38,600   $ (45,648

Income tax benefit

     14,781        17,491   
  

 

 

   

 

 

 

Loss from discontinued operations, net of tax

   $ (23,819   $ (28,157

Loss per common share from discontinued operations:

    

Basic

   $ (0.12   $ (0.14

Diluted

   $ (0.12   $ (0.14

 

There were no assets or liabilities included in the Consolidated Balance Sheets for 77kids as of August 3, 2013 or February 2, 2013. The major classes of assets and liabilities included in the Consolidated Balance Sheet for 77kids as of July 28, 2012 are as follows:

 

(In thousands)    July 28,
2012
 

Current assets

   $ 10,189   

Non-current assets

     —     
  

 

 

 

Total assets (1)

   $ 10,189   
  

 

 

 

Total current liabilities

   $ 9,034   

Total non-current liabilities

     2,597   
  

 

 

 

Total liabilities

   $ 11,631   
  

 

 

 

 

(1) Current assets primarily relate to merchandise inventory classified as an asset held-for-sale on the Company’s Consolidated Balance Sheets.
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Segment
Jul. 28, 2012
Feb. 2, 2013
Significant Accounting Policies [Line Items]
 
 
 
 
 
Number of reportable segments
 
 
 
 
Assets held-for-sale, long lived
$ 4,700,000 
$ 19,900,000 
$ 4,700,000 
$ 19,900,000 
$ 9,500,000 
Assets held-for-sale
4,669,000 
19,850,000 
4,669,000 
19,850,000 
9,499,000 
Revenue related to gift card breakage
1,300,000 
1,400,000 
3,200,000 
3,300,000 
 
Minimum
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Finite lived intangibles, useful life
 
 
15 years 
 
 
Maximum
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Finite lived intangibles, useful life
 
 
25 years 
 
 
77 kids stores
 
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
 
Assets held-for-sale
 
$ 19,900,000 
 
$ 19,900,000 
 
Useful Lives of Major Classes of Assets (Detail)
6 Months Ended
Aug. 3, 2013
Buildings
 
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
 
Useful lives in asset class
25 years 
Leasehold Improvements
 
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
 
Useful lives in asset class
Lesser of 10 years or the term of the lease 
Fixtures and equipment
 
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
 
Useful lives in asset class
5 years 
Useful Lives of Major Classes of Assets (Parenthetical) (Detail) (Maximum, Leasehold Improvements)
6 Months Ended
Aug. 3, 2013
Maximum |
Leasehold Improvements
 
Property, Plant and Equipment, Estimated Useful Lives, Lease Terms [Line Items]
 
Useful lives in asset class
10 years 
Fair Market Values for Cash and Marketable Securities (Detail) (USD $)
In Thousands, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Jan. 28, 2012
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
$ 345,188 
$ 509,119 
$ 696,077 
$ 719,545 
Short-term investments:
 
 
 
 
Short-term investments
59,678 
121,873 
5,995 
 
Fair Value, Measurements, Recurring
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
345,188 
509,119 
696,077 
 
Short-term investments:
 
 
 
 
Short-term investments
59,678 
121,873 
5,995 
 
Total
404,866 
630,992 
702,072 
 
Fair Value, Measurements, Recurring |
Cash
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
289,444 
257,191 
623,277 
 
Fair Value, Measurements, Recurring |
Money-market
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
46,912 
221,929 
44,789 
 
Fair Value, Measurements, Recurring |
Treasury bills
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
8,832 
 
23,011 
 
Short-term investments:
 
 
 
 
Short-term investments
50,035 
109,305 
5,995 
 
Fair Value, Measurements, Recurring |
Commercial paper
 
 
 
 
Cash and cash equivalents:
 
 
 
 
Cash and cash equivalents
 
29,999 
5,000 
 
Fair Value, Measurements, Recurring |
Term-deposits
 
 
 
 
Short-term investments:
 
 
 
 
Short-term investments
$ 9,643 
$ 12,568 
 
 
Cash and Cash Equivalents and Short-term Investments - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
Proceeds from sale of available-for-sale securities
$ 69,173 
$ 20,592 
Purchase of available-for-sale securities
$ (7,571)
$ (570)
Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) Measured at Fair Value on Recurring Basis (Detail) (USD $)
In Thousands, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Jan. 28, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
$ 345,188 
$ 509,119 
$ 696,077 
$ 719,545 
Short-term investments
59,678 
121,873 
5,995 
 
Fair Value, Measurements, Recurring
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
345,188 
509,119 
696,077 
 
Short-term investments
59,678 
121,873 
5,995 
 
Total
404,866 
630,992 
702,072 
 
Fair Value, Measurements, Recurring |
Cash
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
289,444 
257,191 
623,277 
 
Fair Value, Measurements, Recurring |
Money-market
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
46,912 
221,929 
44,789 
 
Fair Value, Measurements, Recurring |
Commercial paper
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
 
29,999 
5,000 
 
Fair Value, Measurements, Recurring |
Treasury bills
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
8,832 
 
23,011 
 
Short-term investments
50,035 
109,305 
5,995 
 
Fair Value, Measurements, Recurring |
Term-deposits
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Short-term investments
9,643 
12,568 
 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1)
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
345,188 
 
696,077 
 
Short-term investments
59,678 
 
5,995 
 
Total
404,866 
 
702,072 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Cash
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
289,444 
 
623,277 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Money-market
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
46,912 
 
44,789 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Commercial paper
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
 
 
5,000 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Treasury bills
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents
8,832 
 
23,011 
 
Short-term investments
50,035 
 
5,995 
 
Fair Value, Measurements, Recurring |
Quoted Market Prices in Active Markets for Identical Assets (Level 1) |
Term-deposits
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Short-term investments
$ 9,643 
 
 
 
Reconciliation Between Basic and Diluted Weighted Average Shares Outstanding (Detail)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Weighted average common shares outstanding:
 
 
 
 
Basic number of common shares outstanding
192,731 
196,160 
192,720 
195,525 
Dilutive effect of stock options and non-vested restricted stock
3,220 
3,647 
3,731 
2,804 
Diluted number of common shares outstanding
195,951 
199,807 
196,451 
198,329 
Earnings per Share - Additional Information (Detail)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Aug. 3, 2013
Outstanding Stock Awards
Jul. 28, 2012
Outstanding Stock Awards
Aug. 3, 2013
Outstanding Stock Awards
Jul. 28, 2012
Outstanding Stock Awards
Aug. 3, 2013
Restricted Stock Units (RSUs)
Jul. 28, 2012
Restricted Stock Units (RSUs)
Jul. 28, 2013
Restricted Stock Units (RSUs)
Aug. 3, 2013
Restricted Stock Units (RSUs)
Earnings Per Share Disclosure [Line Items]
 
 
 
 
 
 
 
 
Shares that were not included in the computation of weighted average diluted common share amounts as the effect of doing so would have been anti-dilutive
1,800,000 
2,900,000 
1,000,000 
3,400,000 
 
30,000 
30,000 
800,000 
Shares of restricted stock units not included in the computation of weighted average diluted common share amounts because the number of shares ultimately issued is contingent on performance
 
 
 
 
600,000 
 
 
600,000 
Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, at cost
$ 1,544,477 
$ 1,417,933 
$ 1,432,517 
Less: Accumulated depreciation
(950,598)
(917,799)
(897,631)
Property and equipment, net
$ 593,879 
$ 500,134 
$ 534,886 
Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Finite-Lived Intangible Assets [Line Items]
 
 
 
Trademarks and other intangibles, at cost
$ 51,956 
$ 44,272 
$ 43,844 
Less: Accumulated amortization
(7,298)
(6,136)
(5,162)
Intangible assets, net
$ 44,658 
$ 38,136 
$ 38,682 
Other Credit Arrangements - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Feb. 2, 2013
Aug. 3, 2013
Debt Disclosure [Line Items]
 
 
Borrowing agreements, number of financial institutions
 
Demand letter of credit facilities
 
 
Debt Disclosure [Line Items]
 
 
Borrowing agreements with financial institutions
 
$ 135.0 
Trade Letter of Credit
 
 
Debt Disclosure [Line Items]
 
 
Outstanding borrowings
 
88.8 
Unsecured Revolving Credit Facility
 
 
Debt Disclosure [Line Items]
 
 
Line of credit facility, expiration period
5 years 
 
Borrowing agreements with financial institutions
150.0 
 
Credit facility interest rate description
The Credit Agreement has various borrowing options, including rates of interest that are based on (i) an Adjusted London Interbank Offered Rate ("LIBOR" as defined in the Credit Agreement) plus a margin ranging from 1.00% to 1.75% based on a defined leverage ratio, payable at the end of the applicable interest period; and (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.75% based on a defined leverage ratio, payable quarterly. 
 
Frequency of payments for interest on borrowing
Quarterly 
 
Letters of credit outstanding amount
 
8.3 
Borrowings
 
$ 0 
Unsecured Revolving Credit Facility |
LIBOR |
Minimum
 
 
Debt Disclosure [Line Items]
 
 
Interest rate margin
1.00% 
 
Unsecured Revolving Credit Facility |
LIBOR |
Maximum
 
 
Debt Disclosure [Line Items]
 
 
Interest rate margin
1.75% 
 
Unsecured Revolving Credit Facility |
Base Rate |
Minimum
 
 
Debt Disclosure [Line Items]
 
 
Interest rate margin
0.00% 
 
Commitment fee payable on the unused portion of total lender commitments
0.175% 
 
Unsecured Revolving Credit Facility |
Base Rate |
Maximum
 
 
Debt Disclosure [Line Items]
 
 
Interest rate margin
0.75% 
 
Commitment fee payable on the unused portion of total lender commitments
0.30% 
 
Share-Based Compensation - Additional Information (Detail) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation expense
$ 4,400,000 
$ 7,100,000 
$ 9,700,000 
$ 28,000,000 
Share-based compensation expense, net of tax
2,700,000 
4,400,000 
6,000,000 
17,300,000 
Weighted-average grant date fair value of stock options granted
 
 
$ 4.17 
$ 3.69 
Aggregate intrinsic value of options exercised
 
 
900,000 
15,000,000 
Cash received from the exercise of stock options
 
 
2,632,000 
18,495,000 
Tax benefit realized from stock option exercises
 
 
8,100,000 
4,400,000 
Shares available for all equity grants
17.8 
 
17.8 
 
Employee Stock Option
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Unrecognized compensation expense
1,800,000 
 
1,800,000 
 
Unrecognized compensation expense, weighted average period
 
 
1 year 4 months 24 days 
 
Time Based Restricted Stock Units
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Unrecognized compensation expense, weighted average period
 
 
1 year 8 months 12 days 
 
Vesting period
 
 
3 years 
 
Unrecognized compensation expense
20,300,000 
 
20,300,000 
 
Performance-Based Restricted Stock Units
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Vesting period
 
 
3 years 
 
Unrecognized compensation expense
$ 20,700,000 
 
$ 20,700,000 
 
Performance-Based Restricted Stock Units |
Minimum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Unrecognized compensation expense, weighted average period
 
 
1 year 
 
Performance-Based Restricted Stock Units |
Maximum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Unrecognized compensation expense, weighted average period
 
 
3 years 
 
Summary of Stock Option Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Aug. 3, 2013
Options
 
Outstanding - beginning of period
4,629 
Granted
376 
Exercised
(180)1
Cancelled
(42)
Outstanding- end of period
4,783 
Vested and expected to vest-end of period
4,708 
Exercisable-end of period
3,294 2
Weighted-Average Exercise Price
 
Outstanding-beginning of period
$ 15.31 
Granted
$ 22.55 
Exercised
$ 14.84 1
Cancelled
$ 23.09 
Outstanding-end of period
$ 16.78 
Vested and expected to vest-end of period
$ 16.77 
Exercisable-end of period
$ 14.80 2
Weighted-Average Remaining Contractual Term (In years)
 
Outstanding-end of period
3 years 2 months 12 days 
Vested and expected to vest-end of period
3 years 1 month 6 days 
Exercisable-end of period
2 years 10 months 24 days 2
Aggregate Intrinsic Value
 
Outstanding-end of period
$ 20,777 
Vested and expected to vest-end of period
20,472 
Exercisable-end of period
$ 17,306 
Summary of Stock Option Activity (Parenthetical) (Detail)
6 Months Ended
Aug. 3, 2013
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
 
Options exercised, exercise price range, lower limit
$ 4.24 
Options exercised, exercise price range, upper limit
$ 19.28 
Black-Scholes Option Valuation Assumptions (Detail)
3 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items]
 
 
Risk-free interest rate
0.30% 1
0.60% 1
Dividend yield
2.00% 
2.80% 
Volatility factor
34.40% 2
41.20% 2
Weighted-average expected term
2 years 6 months 3
4 years 3
Expected forfeiture rate
8.00% 4
8.00% 4
Summary of Restricted Stock Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Aug. 3, 2013
Time Based Restricted Stock Units
 
Shares
 
Nonvested - beginning of period
1,386 
Granted
871 
Vested
(972)
Cancelled/Forfeited
(51)
Nonvested - End of period
1,234 
Weighted-Average Grant Date Fair Value
 
Nonvested - beginning of period
$ 13.91 
Granted
$ 22.36 
Vested
$ 13.55 
Canceled/Forfeited
$ 18.50 
Nonvested - end of period
$ 19.97 
Performance-Based Restricted Stock Units
 
Shares
 
Nonvested - beginning of period
2,086 
Granted
857 
Vested
(566)
Cancelled/Forfeited
(4)
Nonvested - End of period
2,373 
Weighted-Average Grant Date Fair Value
 
Nonvested - beginning of period
$ 14.91 
Granted
$ 21.80 
Vested
$ 17.39 
Canceled/Forfeited
$ 14.65 
Nonvested - end of period
$ 16.81 
Income Taxes - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Income Taxes [Line Items]
 
 
 
 
Effective income tax rate from continuing operations
35.90% 
30.30% 
37.20% 
32.80% 
Increased decreased in unrecognized tax benefits
 
$ (7.3)
 
 
Acquisitions and Dispositions - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
1 Months Ended
May 31, 2013
Store
Significant Acquisitions and Disposals [Line Items]
 
Number of stores acquired
Contract Termination
 
Significant Acquisitions and Disposals [Line Items]
 
Number of stores to be acquired
Payment to acquire assets operated by Dickson on termination of agreement
$ 20.8 
Payment to terminate Dickson Right
$ 10.0 
Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired (Detail) (USD $)
In Thousands, unless otherwise specified
May 31, 2013
Business Combination Allocation of Purchase Price [Line Items]
 
Merchandise inventory
$ 2,456 
Other assets
2,351 
Property and equipment
6,460 
Intangible assets and goodwill
9,484 
Total purchase price
$ 20,751 
Discontinued Operations - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Aug. 3, 2013
Aug. 3, 2013
Feb. 2, 2013
Jul. 28, 2012
Jul. 28, 2012
77 kids stores
Feb. 2, 2013
Discontinued Operations
Store
Feb. 2, 2013
Discontinued Operations
77 kids stores
Store
Aug. 3, 2013
Segment, Discontinued Operations
77 kids stores
Feb. 2, 2013
Segment, Discontinued Operations
77 kids stores
Jul. 28, 2012
Segment, Discontinued Operations
77 kids stores
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
Number of stores impaired
 
 
 
 
 
 
22 
 
 
 
Percentage of cost paid for acquired inventory
 
 
 
 
 
 
 
 
65.00% 
 
Assets held for sale
$ 4,669,000 
$ 4,669,000 
$ 9,499,000 
$ 19,850,000 
$ 19,900,000 
 
 
$ 0 
$ 0 
$ 10,000,000 
Number of stores leases
 
 
 
 
 
21 
 
 
 
 
Loss from Discontinued Operations
$ 0 
$ 0 
 
 
 
 
 
 
 
 
Significant Components of 77kid's Results Included in Loss from Discontinued Operations on Consolidated Statement of Operations (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Aug. 3, 2013
Jul. 28, 2012
Aug. 3, 2013
Jul. 28, 2012
Discontinued Operations [Line Items]
 
 
 
 
Total net revenue
$ 727,313 
$ 739,680 
$ 1,406,790 
$ 1,448,375 
Loss from discontinued operations, net of tax
 
(23,819)
 
(28,157)
Loss per common share from discontinued operations:
 
 
 
 
Basic
 
$ (0.12)
 
$ (0.14)
Diluted
 
$ (0.12)
 
$ (0.14)
77 kids stores
 
 
 
 
Discontinued Operations [Line Items]
 
 
 
 
Total net revenue
 
9,719 
 
20,117 
Loss from discontinued operations, before income taxes
 
(38,600)
 
(45,648)
Income tax benefit
 
14,781 
 
17,491 
Loss from discontinued operations, net of tax
 
$ (23,819)
 
$ (28,157)
Loss per common share from discontinued operations:
 
 
 
 
Basic
 
$ (0.12)
 
$ (0.14)
Diluted
 
$ (0.12)
 
$ (0.14)
Major Classes of Assets & Liabilities Included in Consolidated Balance Sheets (Detail) (77 kids stores, USD $)
In Thousands, unless otherwise specified
Jul. 28, 2012
77 kids stores
 
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
Current assets
$ 10,189 
Non-current assets
   
Total assets
10,189 1
Total current liabilities
9,034 
Total non-current liabilities
2,597 
Total liabilities
$ 11,631