Bed, Bath and Beyond 2008 Annual Report Download - page 21

BED BATH & BEYOND 2008 ANNUAL REPORT
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participants would use in making their estimates of fair value. The Company has not historically recorded an impairment to its
goodwill and other indefinitely lived intangible assets. In the future, if events or market conditions affect the estimated fair value
to the extent that an asset is impaired, the Company will adjust the carrying value of these assets in the period in which the
impairment occurs.
Included within other assets in the accompanying consolidated balance sheets as of February 28, 2009 and March 1, 2008 is
$198.7 million and $198.4 million, respectively, for goodwill, and $30.9 million in both years, for tradenames, which are not subject
to amortization.
K. Self Insurance
The Company utilizes a combination of insurance and self insurance for a number of risks including workers’ compensation, gen-
eral liability, automobile liability and employee related health care benefits (a portion of which is paid by its employees). Liabilities
associated with the risks that the Company retains are estimated by considering historical claims experience, demographic factors,
severity factors and other actuarial assumptions. Although the Company’s claims experience has not displayed substantial volatility
in the past, actual experience could materially vary from its historical experience in the future. Factors that affect these estimates
include but are not limited to: inflation, the number and severity of claims and regulatory changes. In the future, if the Company
concludes an adjustment to self insurance accruals is required, the liability will be adjusted accordingly.
L. Deferred Rent
The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the term of the lease
beginning as of the date the Company obtained possession of the leased premises. Deferred rent amounted to $79.5 million and
$77.8 million as of February 28, 2009 and March 1, 2008, respectively.
Cash or lease incentives (“tenant allowances”) received pursuant to certain storeleases are recognized on a straight-line basis
as a reduction to rent over the lease term. The unamortized portion of tenant allowances is included in deferred rent and other
liabilities. Tenant allowances amounted to $72.7 million and $51.0 million as of February 28, 2009 and March 1, 2008, respectively.
M. Treasury Stock
Between December 2004 and September 2007, the Company’s Board of Directors authorized, through several share repurchase
programs, the repurchase of $2.950 billion of its shares of common stock. The Company was authorized to make repurchases from
time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and
regulations. During fiscal 2008, the Company repurchased approximately 1.7 million shares of its common stock at a total cost of
approximately $48.1 million. During fiscal 2007, the Company repurchased approximately 20.6 million shares of its common stock
at a total cost of approximately $734.2 million. During fiscal 2006, the Company repurchased approximately 7.5 million shares of
its common stock at a total cost of approximately $301.0 million.
N. Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable and certain other
liabilities. The Company’s investment securities consist primarily of auction rate securities which are stated at their approximate
fair value. The book value of all financial instruments is representative of their fair values. On March 2, 2008, the Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” and SFAS No. 159, “The Fair
Value Option for Financial Assets and Financial Liabilities–Including an amendment of FASB Statement No. 115” (See “Fair Value
Measurements,” Note 6).
O. Revenue Recognition
Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from its
websites. The value of point of sale coupons and point of sale rebates that result in a reduction of the price paid by the customer
are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction are recorded in
sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.
Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no provisions
for reduction in the value of unused card balances over defined time periods and have no expiration dates, but are subject to
state escheat regulations; as such, the Company does not recordincome associated with unredeemed gift cards.
Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the esti-
mate for sales returns has not varied materially from historical provisions, actual experience could vary from historical experience
in the futureif the level of sales returnactivity changes materially. In the future, if the Company concludes that an adjustment to
the sales return accrual is required due to material changes in the returns activity, the reserve will be adjusted accordingly.