The plant and property of American Eagle Outfitters

The plant and property of American Eagle Outfitters consist of “land, buildings, leasehold improvements, fixtures and equipment, and development in progress”. The property cost $1,594,360,000 in the fiscal year that ended February 1st, 2014. The cost of the property increased by 5.67% to $1,684,853,000 in 2015. The net book value is the asset’s cost less cumulative depreciation. As a result, the net book value for the fiscal year ended 2014 was $632,986,000, increasing by 9.77% to $694,856,000 for the fiscal year concluded 2015. The depreciation for the year ended February 2013 was $122.756 million, $116.761 million for 2014, and $132.529 million for 2015. The trend shows a 4.88% decrease between 2013 and 2014, and then it increases by 13.50% from 2015 to 2015. Additional depreciation expense is related to the asset write-off, and for 2013 it is $14.6 million and $6.4 million for 2014. The decrease in depreciation between 2013 and 2014 is attributable to the higher store asset write-off during 2014. However, the company did not write-off any assets during the year 2015.

Leases

American Eagle Outfitters leases all of its store premises, some of the office space, and particular IT and office equipment. The most common term for the store leases is 10 years (initially), and the company classifies them as operating leases. The company pays a base rental charge. Also, it makes a “payment of a percentage of sales as additional contingent rent when the actual sales exceed the specified levels”. The company also recognizes that these leases have construction allowances and other landlord incentives such as rent holidays. American Eagle Outfitters is responsible for store, office, and distribution leases as well as other expenses such as real estate taxes. The company amortizes the store operating leases using the straight-line method over the term of the lease.

As at January 31st, 2015, the future minimum lease obligation (consists of fixed minimum rent) is $287,091,000.

Working

(in thousands)

2015

2014

differences

% change

land

17,495

17,986

-491

-2.73%

Buildings

201024

140600

60,424

42.98%

leasehold improvements

571312

600572

-29,260

-4.87%

fixtures and equipment

852408

732228

120,180

16.41%

construction in progress

852408

732228

120,180

16.41%

property and equipment, at cost

1684709

1594360

90,349

5.67%

less accumulated depreciation

-989853

-961374

-28,479

2.96%

property and equipment, net

694856

632986

61,870

9.77%

For the year ended (thousands)

2015

2014

2013

Depreciation expense

132529

116761

122756

Change

15768

-5995

% change

13.50%

-4.88%