Bed, Bath and Beyond 2010 Annual Report Download - page 13

BED BATH & BEYOND 2010 ANNUAL REPORT
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Goodwill and Other Indefinitely Lived Intangible Assets: The Company reviews goodwill and other intangibles that have
indefinite lives for impairment annually or 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
has not historically recorded an impairment to its goodwill and other indefinitely lived intangible assets. The Company completed
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
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.
Self Insurance: The Company utilizes a combination of insurance and self insurance for a number of risks including workers’
compensation, general 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.
Litigation: The Company records an estimated liability related to its various claims and legal actions arising in the ordinary
course of business when and to the extent that it concludes a liability is probable and the amount of the loss can be reasonably
estimated. Such estimated loss 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 claims and legal actions and
revises its estimated liabilities, as appropriate. The Company expects the ultimate disposition of these matters will not have a
material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. The Company also
cannot predict the nature and validity of claims which could be asserted in the future, and future claims could have a material
impact on its earnings.
Store Opening, Expansion, Relocation and Closing Costs: Store opening, expansion, relocation and closing costs, including
markdowns, asset residual values and projected occupancy costs, are charged to earnings as incurred.
Stock-Based Compensation:฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
free interest rate and the expected volatility. These assumptions reflect the Company’s best estimates, but they involve inherent
uncertainties based on market conditions generally outside the control of the Company. As a result, if other assumptions had
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
related to stock compensation.
฀ ฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
consistent with the expected life of the stock options.
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
observing actual prices of the Company’s stock over a period commensurate with the expected life of the awards. The
implied volatility represents the implied volatility of the Company’s call options, which are actively traded on multiple
exchanges, had remaining maturities in excess of twelve months, had market prices close to the exercise prices of the
employee stock options and were measured on the stock option grant date.