Big Lots 2008 Annual Report Download - page 122

Download and view the complete annual report

Please find page 122 of the 2008 Big Lots annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

54
BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 2 — Property and Equipment — Net
Property and equipment – net consist of:
January 31,
2009
February 2,
2008
(In thousands)
Land and land improvements .......................................... $ 44,952 $ 39,813
Buildings and leasehold improvements................................... 675,787 663,086
Fixtures and equipment............................................... 621,617 597,643
Computer software costs.............................................. 67,166 66,428
Transportation equipment ............................................. 22,567 22,647
Construction-in-progress.............................................. 20,860 7,685
Property and equipment - cost .................................... 1,452,949 1,397,302
Less accumulated depreciation and amortization...................... 962,908 915,936
Property and equipment - net ..................................... $ 490,041 $ 481,366
In 2008, we acquired, for $8.6 million, two store properties we were previously leasing. The cost of these properties
was included in land and land improvements and buildings and leasehold improvements at January 31, 2009. In prior
periods, these leased properties were accounted for as operating leases.
Property and equipment - cost includes $8.3 million and $3.1 million at January 31, 2009 and February 2, 2008,
respectively, to recognize assets from capital leases. Accumulated depreciation and amortization includes $2.0
million and $0.6 million at January 31, 2009 and February 2, 2008, respectively, related to capital leases.
We incurred $0.1 million, $0.8 million, and $7.7 million in asset impairment charges in 2008, 2007, and 2006,
respectively. These charges principally related to the write-down of long-lived assets identified as part of
our annual store impairment review at six, three, and 26 stores in 2008, 2007, and 2006, respectively. Asset
impairment charges are included in selling and administrative expenses in our accompanying consolidated
statements of operations. We perform annual impairment reviews of our long-lived assets at the store level.
When we perform the annual impairment reviews, we first determine which stores had impairment indicators
present. We use actual historical cash flows to determine which stores had negative cash flows in each of the
past two years (on a rolling basis). For each store with two years of negative cash flows, we obtain future cash
flow estimates based on operating performance estimates specific to each store’s operations that are based
on assumptions currently being used to develop our company level operating plans. If the net book value of a
store’s long-lived assets is not recoverable by the expected future cash flows of the store, we estimate the fair
value of the store’s assets and recognize an impairment charge for the excess net book value of the store’s long-
lived assets over their fair value. The fair value of store assets is estimated based on information available in the
marketplace for similar assets.
Upon the successful completion of a pilot program in 32 of our stores in 2006 and the decision to move forward
with the implementation of a new point-of-sale register system in all of our stores, we reduced the remaining
estimated service life on approximately $6.9 million of certain point-of-sale equipment. This service life
reduction resulted in the recognition of depreciation expense of approximately $2.3 million in the fourth quarter
of 2006, $4.1 million in 2007, and $0.5 million in 2008.
Note 3 — Bank Credit Facility
We entered into the $500.0 million 2004 Credit Agreement on October 29, 2004. The 2004 Credit Agreement
is scheduled to terminate on October 28, 2009. The proceeds of the 2004 Credit Agreement are available for
general corporate purposes, working capital, and initially to repay certain of our indebtedness.
The pricing and fees related to the 2004 Credit Agreement may fluctuate based on our credit rating. Borrowings
obtained by us under the 2004 Credit Agreement may be prepaid without penalty. The 2004 Credit Agreement