Bed, Bath and Beyond 2007 Annual Report Download - page 24

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BED BATH& BEYOND ANNUAL REPORT 2007
22
Rent and Lease Accounting
The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the term of the lease.
In fiscal 2004, due to clarification by the Office of the Chief Accountant of the SEC, the Company changed its method of account-
ing to define the beginning of the lease term as the date the Company obtained possession of the leased premises. Prior to fiscal
2004, the Company’s method of accounting defined the beginning of the lease term as the date the Company commenced lease
payments. The Company recorded an adjustment to retained earnings and deferred rent and other liabilities to reflect these
accounts as if the Company had always defined the beginning of the lease term as the date the Company obtained possession
of the leased premises and to correspondingly increase deferred tax assets. The Company does not believe that the net effect of
this adjustment which includes fiscal years 1993 through 2003 was material.
Impact of Adjustments
The impact of each of the items noted above, net of tax, on fiscal 2006 beginning balances are presented below:
Review of Stock
Option Grant Rent &
Practices, Including Lease
(in thousands) Related Tax Items Accounting Total
Other Assets $ 11,273)$ 4,738)$ 16,011)
Income Taxes Payable (34,747) —)(34,747)
Deferred Rent and Other Liabilities —)(15,588) (15,588)
Additional Paid-in Capital (38,288) —)(38,288)
Retained Earnings 61,762)10,850)72,612)
Total $—)$—)$—)
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
March 1, March 3,
(in thousands) 2008 2007
Land and buildings $ 195,536)$ 112,527)
Furniture, fixtures and equipment 714,974)598,892)
Leasehold improvements 760,335)651,737)
Computer equipment and software 329,340)286,943)
2,000,185)1,650,099)
Less: Accumulated depreciation and amortization (878,279) (720,592)
$ 1,121,906)$ 929,507)
5. LINES OF CREDIT
At March 1, 2008, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of
September 3, 2008 and February 27, 2009, respectively. These uncommitted lines of credit are currently and are expected to be
used for letters of credit in the ordinary course of business. In addition, under these uncommitted lines of credit, the Company
can obtain unsecured standby letters of credit. During fiscal 2007, the Company did not have any direct borrowings under the
uncommitted lines of credit. As of March 1, 2008, there was approximately $8.1 million of outstanding letters of credit and
approximately $49.8 million of outstanding unsecured standby letters of credit, primarily for certain insurance programs.
Although no assurances can be provided, the Company intends to renew both uncommitted lines of credit before the respective
expiration dates.
At March 3, 2007, the Company maintained two uncommitted lines of credit of $100 million and $75 million. These uncommitted
lines of credit were utilized for letters of credit in the ordinary course of business. During fiscal 2006, the Company did not
have any direct borrowings under the uncommitted lines of credit. As of March 3, 2007, there was approximately $6.9 million of
outstanding letters of credit and approximately $40.0 million of outstanding unsecured standby letters of credit, primarily for
certain insurance programs.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)