Property and
Equipment
Property and equipment are recorded at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets or, in the case of leasehold improvements, over the shorter of the
estimated useful lives or lease terms. Useful lives for buildings,
leasehold improvements, fixtures and equipment generally range from 30 to
40 years, 10 to 20 years and 3 to 15 years, respectively. When indicators
of impairment exist, the Company evaluates long-lived assets for
impairment using undiscounted cash flow analysis.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
of businesses acquired in fiscal 2001. Goodwill is being amortized using
the straight-line method over 20 years. The Company periodically reviews
goodwill for impairment and assesses whether significant events or changes
in business circumstances indicate that the carrying value of the goodwill
may not be recoverable. An impairment loss would be recorded in the period
such determination is made. The Company believes that no material
impairment of goodwill existed at March 3, 2001.
Revenue Recognition
The Company recognizes revenues from the sale of merchandise at the time
the merchandise is sold. Service revenues are recognized at the time the
service is provided.
The Company sells extended service contracts, called Performance Service
Plans, on behalf of an unrelated third party. In those states where the
Company is deemed to be the obligor on the contract at the time of sale,
the net commission revenue from the sale is recognized ratably over the
term of the service contract, generally two to five years. For contracts
sold in all other states, the net commission revenue is recognized at the
time of sale.
Stock-Based Compensation
The Company accounts for employee stock-based compensation using the
intrinsic value method as prescribed under Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. The Company also presents pro forma net earnings
and earnings per share in Note 5 as if the Company had adopted Statement
of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation.
Pre-Opening Costs
Non-capital expenditures associated with opening new stores are expensed
as incurred.
Advertising Costs
Advertising costs, which are included in selling, general and
administrative expenses, are expensed the first time the advertisement
runs.
Earnings per Share
Basic earnings per share is computed based on the weighted average number
of common shares outstanding. Diluted earnings per share is computed based
on the weighted average number of common shares outstanding adjusted by
the number of additional shares that would have been outstanding had the
potentially dilutive common shares been issued. Potentially dilutive
shares of common stock include stock options and other stock-based awards
granted under stock-based compensation plans. Convertible preferred
securities were assumed to be converted into common stock, and any related
interest expense, net of income taxes, was added back to net earnings when
the assumed conversion resulted in lower earnings per share.
The Company completed two-for-one stock splits effected in the form of
100% stock dividends distributed on March 18, 1999, and May 26, 1998. All
share and per share information reflects these stock splits.
Reclassifications
Certain previous year amounts have been reclassified to conform to the
current year presentation. These reclassifications had no impact on net
earnings or total shareholders’ equity. 
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