Derivative
Financial Instruments
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, requires that all derivatives be recorded on the
balance sheet at fair value. At March 2, 2002, the fair value of
existing interest-rate swaps was not significant.
Reclassifications
Certain previous year amounts have been reclassified to conform to
the current year presentation. These reclassifications had no
impact on net earnings or financial position.
New
Accounting Standards
In June 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, Business Combinations, and No. 142, Goodwill
and Other Intangible Assets, effective for fiscal years
beginning after Dec. 15, 2001. Under these new standards, all
acquisitions subsequent to June 30, 2001, must be accounted for by
the purchase method of accounting, and goodwill is no longer
amortized over its useful life. Rather, goodwill will be subject
to an annual impairment test based on its fair value. Separable
intangible assets that are determined to have a finite life will
continue to be amortized over their useful lives. We are currently
evaluating these pronouncements to determine the impact, if any,
they may have on our net earnings or financial position.
In August 2001,
the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, effective for fiscal years
beginning after Dec. 15, 2001. This statement develops one
accounting model (based on the model in SFAS No. 121) for
long-lived assets to be disposed of, expands the scope of
discontinued operations and modifies the accounting for
discontinued operations. The adoption of this new statement is not
expected to have material impact on our net earnings or financial
position.
2.
Acquisitions
Effective Nov. 4, 2001, we acquired all of the common stock of
Future Shop for $377, or $368 net of cash acquired, including
transaction costs. We acquired Future Shop to further our
expansion plans and increase
shareholder value. The acquisition was accounted for using the
purchase method in accordance with SFAS No. 141. Accordingly, the
net assets were recorded at their estimated fair values, and
operating results were included in our financial statements from
the date of acquisition. The purchase price was allocated on a
preliminary basis using information currently available. The
allocation of the purchase price to the assets and liabilities
acquired will be finalized in fiscal 2003. We will adjust the
allocation of the purchase price after obtaining more information
regarding asset valuations, liabilities assumed and revisions of
preliminary estimates of fair values made at the date of purchase.
The preliminary allocations resulted in goodwill of approximately
$406, which is non-deductible for tax purposes. Under SFAS No.
142, goodwill is not amortized.
The preliminary purchase price allocation was as follows:
 
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