Petsmart 2000 Annual Report Download - page 46

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estimated useful lives of the related assets. Leasehold improvements and capital lease assets are amortized using
the straight-line method over the shorter of the lease term or the estimated useful lives of the related assets.
Maintenance and repairs are expensed as incurred. Property held for sale and leaseback, recorded at cost,
consists of land and construction- in- progress for new store sites where a sale and leaseback transaction will be
consummated upon completion of construction, and depreciation is not provided. New store furniture, fixtures
and equipment held for sale and leaseback of $18,201,000 and $11,286,000 at January 30, 2000 and
January 31, 1999, respectively, is recorded in receivables in the accompanying consolidated balance sheets, and
represents assets purchased that will be sold and leased back upon consummation of lease transactions as new
stores open.
The Company’ s property and equipment is depreciated using the following estimated useful lives:
Buildings 39 years or term of leas e
Furniture, fixtures and equipment 3 - 7 years
Leasehold improvements Remaining lease term
Computer software 3 - 5 years
Other Assets
Other assets consist primarily of goodwill and deferred financing fees. Goodwill of $4,316,000 and
$19,401,000 as of January 30, 2000 and January 31, 1999, respectively, net of accumulated amortization of
$4,523,000 and $6,591,000, respectively, represents the excess of the cost of acquired businesses over the fair
market value of their net assets (Note 14). Goodwill is being amortized using the straight- line method over fifteen
years.
Deferred financing fees of $6,346,000 were incurred in connection with the issuance of the Subordinated
convertible notes and bank credit facilities (N otes 8 and 9). Such costs are being amortized on a basis that
approximates the interest method over the expected term of the related debt. Accumulated amortization at
January 30, 2000 and January 31, 1999 was approximately $1,565,000 and $530,000 respectively.
Impairme nt of Long-Live d Ass e ts and Goodwill
Long- lived assets and enterprise goodwill are reviewed for impairment, based on undiscounted cash flows,
whenever events or changes in circumstances indicate that the carrying amount of such assets may not be
recoverable. If this review indicates that the carrying amount of the long- lived assets and goodwill is not
F-9
PETSMART, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
recoverable, the Company will recognize an impairment loss, measured by the future discounted cash flow
method.
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9/16/2010 www.sec.gov/Archives/edgar/data/86…
sec.gov/…/0000950153-00-000575-d1.… 46/70