Bed, Bath and Beyond 2010 Annual Report Download - page 21

BED BATH & BEYOND 2010 ANNUAL REPORT
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J. 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 its annual impairment testing of goodwill
and other indefinitely lived intangible assets and determined that, as of February 26, 2011, no impairment existed because the
fair value of these assets substantially exceeded their carrying values. 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 26, 2011 and February 27, 2010,
respectively, is $198.7 million for goodwill and $30.9 million for indefinite lived tradenames.
K. 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.
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 $78.3 million
and $78.7 million as of February 26, 2011 and February 27, 2010, respectively.
Cash or lease incentives (“tenant allowances”) received pursuant to certain store leases 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. The unamortized portion of tenant allowances amounted to $111.9 million and $86.8 million as of February 26, 2011
and February 27, 2010, respectively.
M. Treasury Stock
In December 2010, the Company’s Board of Directors authorized a new $2.0 billion share repurchase program. Between
December 2004 and December 2010, the Company’s Board of Directors has authorized, through several share repurchase
programs, the repurchase of $4.950 billion of its shares of common stock.
During fiscal 2010, the Company repurchased approximately 15.9 million shares of its common stock at a total cost of
approximately $687.6 million. During fiscal 2009, the Company repurchased approximately 2.7 million shares of its common
stock at a total cost of approximately $94.9 million. During fiscal 2008, the Company repurchased approximately 1.7 million
shares of its common stock at a total cost of approximately $48.1 million.
The Company has authorization 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.
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 U.S. Treasury securities, which are stated at amortized
cost, and auction rate securities, which are stated at their approximate fair value. The book value of all financial instruments is
representative of their fair values (See “Fair Value Measurements,” Note 4).