Note 4 – Property and Equipment, Net

The Company’s fixed assets consisted of building, computer software (purchased and internally developed), machinery and equipment, furniture and fixtures, and vehicles, and are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are provided for in amounts sufficient to relate the cost of depreciable and amortizable assets to operations over their estimated service lives. Depreciation and amortization expense for fiscal year 2012, 2011 and 2010 was $15.2 million, $12.7 million and $9.5 million, respectively. The cost and related accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings.

The Company accounts for the impairment of property and equipment in accordance with ASC 360. During the fourth quarter of 2012, the Company identified adverse events related to the Company’s overall financial performance, including the accelerating downward trend in the Company’s revenues and negative cash flows from operations, which indicate that the carrying amount of certain property and equipment may not be recoverable. Based on its analysis, the Company recognized an impairment loss on building and internally developed website and software development cost of $1.0 million and $0.9 million, respectively, for the fourth quarter of 2012. Any future decline in the fair value of an asset group result in future impairments. The Company did not recognize any impairment loss on property and equipment for fiscal year 2011 and 2010. Refer to “Note 1- Summary of Significant Accounting Policies and Nature of Operations” and “Note 3 – Fair Value Measurements” for additional details.

Property and equipment consisted of the following at December 29, 2012 and December 31, 2011 (in thousands):

Construction in process primarily relates to the Company’s internally developed software (refer to caption “Website and Software Development Costs” in “Note 1 – Summary of Significant Accounting Policies and Nature of Operations”). Certain of the Company’s net property and equipment were located in the Philippines as of December 29, 2012 and December 31, 2011, in the amount of $1.0 million and $1.6 million, respectively.

Depreciation of property and equipment is provided using the straight-line method for financial reporting purposes, at rates based on the following estimated useful lives: