Bed, Bath and Beyond 2005 Annual Report Download - page 23

BED BATH& BEYOND ANNUAL REPORT 2005
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7. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
A. In fiscal 2002, the Company had an interest in certain life insurance policies on the lives of its Co-Chairmen and their spouses.
The beneficiaries of these policies were related to the aforementioned individuals. The Company’s interest in these policies was
equivalent to the net premiums paid by the Company. Since the Company is no longer permitted to pay policy premiums due
to restrictions in the Sarbanes-Oxley Act of 2002, the agreements relating to the Company’s interest in the life insurance
policies on the lives of its Co-Chairmen and their spouses were terminated in fiscal 2003. Upon termination in fiscal 2003, the
Co-Chairmen paid to the Company $5.4 million, representing the total amount of premiums paid by the Company under the
agreements and the Company was released from its contractual obligation to make substantial future premium payments.
In order to confer a benefit to its Co-Chairmen in substitution for the aforementioned terminated agreements, the Company
has agreed to pay to the Co-Chairmen, at a future date, an aggregate amount of $4.2 million, which is included in accrued
expenses and other current liabilities as of February 25, 2006 and February 26, 2005.
B. In fiscal 2005 and 2004, the Company leased office and retail space from entities controlled by management of CTS. In fiscal
2003, the Company leased warehouse, office and retail space from such entities. Through November 15, 2004, the Company
leased warehouse and office space from an entity controlled by management of Harmon. The Company paid such entities
occupancy costs of approximately $6.5 million, $6.9 million and $4.7 million in fiscal 2005, 2004 and 2003, respectively.
8. LEASES
The Company leases retail stores, as well as warehouses, office facilities and equipment, under agreements expiring at various
dates through 2042. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts
and areimmaterial in fiscal 2005, 2004 and 2003), scheduled rent increases and renewal options. The Company is obligated under
amajority of the leases to pay for taxes, insurance and common area maintenance charges.
As of February25, 2006, futureminimum lease payments under noncancelable operating leases areas follows:
Fiscal Year (in thousands) Amount
2006 $ 340,806
2007 347,398
2008 340,131
2009 322,488
2010 295,050
Thereafter 1,421,270
Total future minimum lease payments $3,067,143
Expenses for all operating leases were $322.0 million, $288.9 million and $251.0 million for fiscal 2005, 2004 and 2003, respectively.
9. EMPLOYEE BENEFIT PLANS
Defined Contribution Plans
The Company has three defined contribution 401(k) savings plans covering all eligible employees of the Company (“the Plans”).
Effective December 31, 2003, one of these defined contribution 401(k) savings plans was frozen. Participants of the Plans may
defer annual pre-tax compensation subject to statutory and Plan limitations. Effective January 1, 2006, a certain percentage of
an employee’s contributions, will be matched by the Company, subject to certain statutory and Plan limitations. This match will
vest over a specified period of time. For fiscal 2005, the Company contributed approximately $0.5 million. For fiscal 2004 and
fiscal 2003, the Company did not make a material contribution to the Plans, as the match was not yet effective.
Nonqualified Deferred Compensation Plan
Effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of employees
defined by the Internal Revenue Service as highly 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.