Bed, Bath and Beyond 2003 Annual Report Download - page 15

BED BATH& BEYOND ANNUAL REPORT 2003
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K. Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment by comparing the carrying value of the assets with their esti-
mated future undiscounted cash flows when events or changes in circumstances indicate the carrying value of these
assets may exceed their current fair values. If it is determined that an impairment loss has occurred, the loss would be
recognized during that period. The impairment loss is calculated as the difference between asset carrying values and
the present value of the estimated net cash flows. The Company does not believe that any material impairment cur-
rently exists related to its long-lived assets.
L. Investment Securities
Investment securities consist of U.S. Government Agency debt securities and municipal debt securities. Because the
Company has the ability and intent to hold the securities until maturity, it classifies its securities as held-to-maturity.
These investment securities are recorded at amortized cost. Premiums are amortized and discounts are accreted over
the life of the related held-to-maturity securities as adjustments to interest income using the effective interest
method. Dividend and interest income are recognized when earned.
M. Goodwill and Other Indefinitely Lived Intangible Assets
The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually and other-
wise when events or changes in circumstances indicate the carrying value of these assets might exceed their current
fair values. Impairment testing is based upon the best information available including estimates of fair value which
incorporate assumptions marketplace participants would use in making their estimates of fair value. The Company
does not believe that any material impairment currently exists related to its goodwill and indefinitely lived intangible
assets.
Included within other assets in the accompanying consolidated balance sheet as of February 28, 2004 is
$19.9 million for the tradename of Christmas Tree Shops, Inc. (“CTS”) (see Note 2 - Acquisitions) which is not
subject to amortization.
N. Gift Cards, Gift Certificates and Merchandise Credits
Gift cards, gift certificates and merchandise credits which have not been redeemed are recorded as a liability within
accrued expenses and other current liabilities and amounted to an aggregate total of $63.2 million and $44.2 million
as of February 28, 2004 and March 1, 2003, respectively.
O. Self Insurance
The Company uses self insurance for a number of risks including worker’s compensation, general liability, automobile
liability and employee related health care benefits (a portion of which is paid by our employees). Liabilities associated
with these risks are estimated by considering historical claims experience, demographic factors, severity factors and
other actuarial assumptions.
P. Deferred Rent
The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the noncance-
lable lease term. Deferred rent amounted to $32.7 million and $29.1 million as of February 28, 2004 and March 1,
2003, respectively.
Q. Litigation
The Company records an estimated liability related to various claims and legal actions arising in the ordinary course
of business which is based on available information and advice from outside counsel, where appropriate.
As additional information becomes available, the Company reassesses the potential liability related to its pending
litigation and revises its estimates as appropriate.