Bed, Bath and Beyond 2005 Annual Report Download

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2005 Annual Report • Notice of Annual Meeting • Proxy Statement
ToOur Fellow Shareholders:
Through the exemplary efforts of our more than 33,000 associates, our name becomes more familiar each week.
As recognition of our name increases, this magnifies the significance of what our name represents. Bed Bath &
Beyond, with its Bed Bath & Beyond, Christmas Tree Shops and Harmon stores, must stand for selection, quality,
value and service. As importantly, our name must also stand for integrity and respect for our customers, associates
and the communities we serve. We know that everything we do, every interaction we have, reflects on our name.
Simply put, everything counts.
That is why many of you have noticed, and even encouraged, our efforts over the last several years to decrease
the cost of this annual publication. It is a small thing, but it reflects our commitment to be efficient and effective in
everything we do. This desire for efficiency naturally extends to the areas of our energy usage and the consumption
of natural resources. The broader concerns over energy costs, our nation’s dependence on foreign oil, the rate of
consumption and environmental impacts of fossil fuels, deforestation, and global warming, must be our concerns
as well. Our response to these broad concerns is local, from changing the temperature in our stores to managing
centrally their energy efficiency, to using new, “cooler” materials for our roofs and more efficient lights to illuminate
our storesigns. All these provide us many opportunities on a community level to conserve. Being concerned about
conservation is, often times, more expensive in the short term, but it would be far too expensive for our future and
for the futureof our children, in the long term, to ignore.
In the case of the booklet you areholding, this year we have opted to use recycled paper, which costs more
than the paper we have used previously. However, we have been able to keep the cost per book at the same level
as last year by going to a less expensive, coverless format. Also, as we have for the last several years, we have
combined our Annual Report, Notice of Annual Meeting and Proxy Statement into this single booklet. Our goal
again is to present you our annual information in as straightforward and cost efficient a manner as possible.
Continued on page 1

Table of contents

  • Page 1
    ... each week. As recognition of our name increases, this magnifies the significance of what our name represents. Bed Bath & Beyond, with its Bed Bath & Beyond, Christmas Tree Shops and Harmon stores, must stand for selection, quality, value and service. As importantly, our name must also stand for...

  • Page 2
    ...OPERATING DATA 721 629 519 396 311 241 186 141 108 80 61 45 38 Number of stores open...the Company acquired Christmas Tree Shops, Inc. (see Note 2 to the Consolidated ...Company has not declared any cash dividends in any of the fiscal years noted above. (4) In fiscal 2005 and 2004, the Company...

  • Page 3
    ...of approximately 4.5% in fiscal 2004. • During fiscal 2005, we opened 83 new Bed Bath & Beyond stores. We also opened three Christmas Tree Shops and four Harmon stores. We ended the year with 742 Bed Bath & Beyond stores, 29 Christmas Tree Shops and 38 Harmon stores. • We returned $600 million...

  • Page 4
    ... merchandise and home furnishings as well as food, giftware and health and beauty care items. The Company's objective is to be a customer's first choice for products and services in the categories offered, in the markets in which the Company operates. BED BATH & BEYOND ANNUAL REPORT 2005 2

  • Page 5
    ... profit Selling, general and administrative expenses Operating profit Earnings before provision for income taxes Net earnings February 28, 2004 100.0% 58.1 41.9 27.6 14.3 14.5 8.9 100.0% 57.2 42.8 27.7 15.1 15.8 9.9 12.9% 12.2 13.7 15.3 10.9 12.8 13.4 BED BATH & BEYOND ANNUAL REPORT 2005 3

  • Page 6
    ... due to a reduction in the weighted average effective tax rate resulting from a change in the mix of the business within the taxable jurisdictions in which the Company operates. For fiscal 2006, the effective tax rate is estimated at approximately 36.60%. BED BATH & BEYOND ANNUAL REPORT 2005 4

  • Page 7
    ... 2006 or 2007, for which aggregate minimum rental payments over the term of the leases are approximately $355.7 million and are included in the table above. Purchase obligations primarily consist of purchase orders for merchandise and capital expenditures. BED BATH & BEYOND ANNUAL REPORT 2005 5

  • Page 8
    ...quarter of fiscal 2005 and restricted stock awards from the date of grant, was $25.6 million ($16.0 million after tax or $0.05 per diluted share). The amount of stock-based compensation cost capitalized as of February 25, 2006 was approximately $0.9 million. BED BATH & BEYOND ANNUAL REPORT 2005 6

  • Page 9
    ... overall approach to compensation for its employees, including stock-based compensation, and adopted the Bed Bath & Beyond 2004 Incentive Compensation Plan (the "2004 Plan"). The 2004 Plan is a ï¬,exible compensation plan that enables the Company to offer incentive compensation through stock options...

  • Page 10
    ... these estimates include but are not limited to: inï¬,ation, the number and severity of claims and regulatory changes. In the future, if the Company concludes an adjustment to self insurance accruals is required, the liability will be adjusted accordingly. BED BATH & BEYOND ANNUAL REPORT 2005 8

  • Page 11
    ... operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income... to find suitable locations at acceptable occupancy costs to support the Company's expansion program. BED BATH & BEYOND ANNUAL REPORT 2005 9

  • Page 12
    ... expenses and other current liabilities Merchandise credit and gift card liabilities Income taxes payable Total current liabilities Deferred ... 491,508) 2,059,377) (350,151) 2,203,762) $ 3,199,979) See accompanying Notes to Consolidated Financial Statements. BED BATH & BEYOND ANNUAL REPORT 2005 10

  • Page 13
    ...26, 2005 Net earnings Shares sold under employee stock option plans, including tax benefit Issuance of restricted shares, net Stock-based compensation expense...,244) $ (948,395) 306,156 $ 3,062 See accompanying Notes to Consolidated Financial Statements. BED BATH & BEYOND ANNUAL REPORT 2005 11

  • Page 14
    ... liabilities Merchandise credit and gift card liabilities Income taxes payable Deferred rent and other liabilities Net cash provided by operating activities Cash Flows from ... (683,237) 74,597) -) -) -) (21,215) 53,382) (85,409) 379,909) $ 294,500) $ $ BED BATH & BEYOND ANNUAL REPORT 2005 12

  • Page 15
    ... OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS A. Nature of Operations Bed Bath & Beyond Inc. and subsidiaries (the "Company") is a nationwide chain of retail stores, operating under the names Bed Bath & Beyond ("BBB"), Christmas Tree Shops ("CTS") and Harmon. The Company sells a wide...

  • Page 16
    ... estimates its reserve for shrinkage throughout the year, based on historical shrinkage. Actual shrinkage is recorded at year-end based upon the results of the Company's physical inventory count. Historically, the Company's shrinkage has not been volatile. BED BATH & BEYOND ANNUAL REPORT 2005 14

  • Page 17
    ..., which are not subject to amortization. N. Self Insurance The Company utilizes a combination of insurance and self insurance for a number of risks including workers' compensation, general liability, automobile liability and employee related health care benefits (a portion of which is paid by its...

  • Page 18
    ...the year ended February 25, 2006. While SFAS No. 123R is not required to be effective until the first annual reporting period that begins after June 15, 2005, early adoption was encouraged and the Company elected to adopt before the required effective date. BED BATH & BEYOND ANNUAL REPORT 2005 16

  • Page 19
    ... market value on the date of grant. No compensation expense for stock-based awards was recognized in fiscal 2004 and 2003. X. Income Taxes The Company files a consolidated Federal income tax return. Income tax returns are filed with each state and territory in which the Company conducts business...

  • Page 20
    ... Computer equipment and software February 25, 2006 $ 49,900) 517,469) 528,109) 231,047) 1,326,525) (587,783) 738,742) February 26, 2005 $ 43,165) 452,919) 405,928) 184,626) 1,086,638) (477,007) 609,631) Less: Accumulated depreciation and amortization $ $ BED BATH & BEYOND ANNUAL REPORT 2005 18

  • Page 21
    ...investment securities were not material as of February 25, 2006 and February 26, 2005. As of February 25, 2006 and February 26, 2005, the Company had no cumulative unrecognized holding gains or losses relating to its available-for-sale investment securities. BED BATH & BEYOND ANNUAL REPORT 2005 19

  • Page 22
    ... income tax rate, net of Federal benefit, of 2.60% and other income tax effects of .15%. For fiscal 2003, the effective tax rate is comprised of the Federal statutory income tax rate of 35.00% and the State income tax rate, net of Federal benefit, of 3.50%. BED BATH & BEYOND ANNUAL REPORT 2005...

  • Page 23
    ... compensated. A certain percentage of an employee's contributions may be matched by the Company, subject to certain Plan limitations. This match will vest over a specified period of time. The Company did not make any contributions to the plan for fiscal 2005. BED BATH & BEYOND ANNUAL REPORT 2005...

  • Page 24
    ... ended on August 27, 2005, the Company recognized compensation expense for restricted stock awards over the service period, but did not recognize compensation expense for stock options, since the options were granted at market value on the date of grant. BED BATH & BEYOND ANNUAL REPORT 2005 22

  • Page 25
    ... overall approach to compensation for its employees, including stock-based compensation, and adopted the Bed Bath & Beyond 2004 Incentive Compensation Plan (the "2004 Plan"). The 2004 Plan is a ï¬,exible compensation plan that enables the Company to offer incentive compensation through stock options...

  • Page 26
    ...expected life of the stock options. Changes in the Company's stock options for the fiscal ...cash proceeds from the exercise of stock options for fiscal 2005 was $35.0 million and the associated income tax benefit was $22.7 million for that same time period. BED BATH & BEYOND ANNUAL REPORT 2005...

  • Page 27
    ... 26, 2005 $ 1,467,646 650,546 283,621 290,731 109,751 180,980 0.60 0.59 $ $ $ $ $ $ $ $ $ $ $ $ Net earnings per share ("EPS") amounts for each quarter are required to be computed independently and may not equal the amount computed for the total year. BED BATH & BEYOND ANNUAL REPORT 2005 25

  • Page 28
    ...of, internal control over financial reporting. As discussed in Note 1 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payments." New York, New York May 11, 2006 BED BATH & BEYOND ANNUAL REPORT 2005 26

  • Page 29
    ... over financial reporting is effective based on these criteria. Our independent registered public accounting firm, KPMG LLP, issued an audit report on our assessment of our internal control over financial reporting, which is included herein. May 12, 2006 BED BATH & BEYOND ANNUAL REPORT 2005 27

  • Page 30
    ... Region Jim Brendle Vice President - Construction and Store Development P. Timothy Brewster Vice President - Stores - N.Y.C. Region Michael J. Callahan Vice President - Corporate Counsel Robert Claybrook Vice President - Business Application Development BED BATH & BEYOND ANNUAL REPORT 2005 28

  • Page 31
    .../688-0888 Christmas Tree Shops, Inc. 261 White's Path South Yarmouth, Massachusetts 02664 Telephone: 508/394-1225 Bed Bath & Beyond Procurement Co. Inc. 110 Bi-County Boulevard, Suite 114 Farmingdale, New York 11735 Telephone: 631/420-7050 Shareholder Information A copy of the Company's 2005 Form 10...

  • Page 32
    ... 3 2 1 29 Connecticut New Jersey New York Total For exact Harmon locations, visit us at www.harmondiscount.com. 2 27 9 38 For exact Christmas Tree Shops locations, visit us at www.christmastreeshops.com. For exact Bed Bath & Beyond locations, visit us at www.bedbathandbeyond.com or call 1-800-GO...

  • Page 33
    650 Liberty Avenue Union, NJ 07083 908-688-0888 Made with 50% Recycled Paper (30% Post-Consumer Content)