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## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

that date. Greenbacks was a privately held company operating 100 stores in 10 western states and one expandable 252,000 square foot distribution center in Salt Lake City. As a result of this acquisition, the Company extended its geographical reach to include 47 states compared with 41 states prior to the acquisition. In addition, this acquisition has provided the Company with an expandable distribution infrastructure in the Rocky Mountain area of the country. The aggregate purchase price was approximately $100,000 and was paid in cash. In addition, the Company incurred approximately $800 in direct costs associated with the acquisition. The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition. 

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Included in the intangible assets acquired were non- compete agreements of $2,000 and favorable lease rights for operating leases for retail locations of $1,000. The non-compete agreements are with former key executives of Greenbacks. They are being amortized over five years, the weighted average term of the agreements. The favorable lease rights are being amortized on a straight- line basis to rent expense over the remaining initial lease terms, which expire at various dates through 2012. 

## NOTE 11 – INVESTMENT 

On August 7, 2003, the Company paid $4,000 to acquire a 10.5% fully diluted interest in Ollie’s Holdings, Inc. (Ollie’s), a multi-price point discount retailer located in the mid-Atlantic region. In addition, the SKM Equity Fund III, L.P. (SKM Equity) and SKM Investment Fund 

(SKM Investment) acquired a combined fully diluted interest in Ollie’s of 53.1%. Two of the Company’s directors, Thomas Saunders and John Megrue, are principal members of Saunders Karp & Megrue Partners, L.L.C., which serves as the general partner of SKM Equity and SKM Investment. In conjunction with the acquisition of its interest in Ollie’s, the Company also entered into a call option agreement. The option agreement provides the Company with the right to purchase all of SKM Equity’s and SKM Investment’s equity in Ollie’s, for a fixed price as set forth in the agreement, subject to adjustments dependent on the occurrence of certain future events. The Company has no obligation to exercise the option or make any additional investment in Ollie’s. The $4,000 investment in Ollie’s is accounted for under the cost method of accounting and is included in “other assets” in the accompanying consolidated balance sheets. 

## NOTE 12 – CONSOLIDATION OF VARIABLE INTEREST ENTITY 

In 2001, the Company entered into an operating lease arrangement, known as a synthetic lease, with a variable interest entity to finance the construction of four distri- bution centers. Because the Company accounted for this transaction as an operating lease, the related fixed assets and lease liabilities were not included in the consolidated balance sheets. In January 2003, the Financial Accounting Standards Board issued FIN 46. Under the terms of this standard, certain variable-interest entities, such as the entity in which the Company’s lease facility is held, are required to be consolidated. The Company implemented this standard effective January 1, 2003 and, as a result, the distribution center assets and the debt incurred by the variable-interest entity to purchase and construct the assets are included in balance sheets for periods after January 1, 2003. The cumulative effect of a change in accounting principle represents, net of the tax effect, the historical depreciation related to the distribution center assets and, the historical amortization of the deferred financing costs recognized previously by the variable- interest entity and the write-off of a deferred rent liability related to the lease. 

