Bed, Bath and Beyond 2005 Annual Report Download - page 7

BED BATH& BEYOND ANNUAL REPORT 2005
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EXPANSION PROGRAM
The Company is engaged in an ongoing expansion program involving the opening of new stores in both new and existing
markets and the expansion or relocation of existing stores. In the fourteen year period from the beginning of fiscal 1992 to
the end of fiscal 2005, the chain has grown from 34 to 809 stores. Total square footage grew from 917,000 square feet at the
beginning of fiscal 1992 to 25,502,000 square feet at the end of fiscal 2005.
The Company intends to continue its expansion program and currently plans to open new stores in fiscal 2006 (see details under
“Liquidity and Capital Resources” below). The Company believes that a predominant portion of any increase in its net sales in fis-
cal 2006 will continue to be attributable to new store net sales. Accordingly, the continued growth of the Company is dependent,
in large part, upon the Company’s ability to execute its expansion program successfully.
LIQUIDITY AND CAPITAL RESOURCES
The Company has been able to finance its operations, including its expansion program, through internally generated funds.
Net cash provided by operating activities in fiscal 2005 was $660.4 million, compared with $607.0 million in fiscal 2004. The
increase in net cash provided by operating activities was primarily attributable to an increase in net income and the timing
of certain liability payments, partially offset by an increase in other current assets (primarily due to receivables from the settle-
ment of credit card litigation and hurricane related insurance claims), an increase in merchandise inventories (primarily the result
of new store space) and an increase in income taxes paid.
Inventory per square foot was $51.04 as of February 25, 2006 and $50.21 as of February 26, 2005. The Company continues to
focus on optimizing inventory productivity while maintaining appropriate in-store merchandise levels to support sales growth.
Net cash used in investing activities in fiscal 2005 was $67.6 million, compared with $353.7 million in fiscal 2004. The decrease
in net cash used in investing activities was attributable to a decrease in purchases of investment securities partially offset by
adecrease in redemptions of investment securities and an increase in capital expenditures.
Net cash used in financing activities in fiscal 2005 was $567.3 million, compared with $325.7 million in fiscal 2004. The increase
in net cash used in financing activities was primarily attributable to common stock repurchased of $598 million in the current year
compared to $350 million in the prior year under the Company’s stock repurchase program.
At February 25, 2006, the Company maintained two uncommitted lines of credit of $100 million and $75 million, with expiration
dates of September 3, 2006 and February 28, 2006, respectively. These uncommitted lines of credit are currently and are expected
to be used for letters of credit in the ordinarycourse of business. In addition, under these uncommitted lines of credit, the
Company can obtain unsecured standby letters of credit. During fiscal 2005, the Company did not have any direct borrowings
under the uncommitted lines of credit. As of February25, 2006, there was approximately $11.5 million of outstanding letters
of credit and approximately $33.7 million of outstanding unsecured standby letters of credit, primarily for certain insurance
programs. Subsequent to the end of fiscal 2005, the Company extended the $75 million uncommitted line of credit to February
28, 2007. Although no assurances can be provided, the Company intends to renew the $100 million uncommitted line of credit
before the expiration date. The Company believes that during fiscal 2006, internally generated funds will be sufficient to fund
its operations, including its expansion program.
The Company has contractual obligations consisting mainly of operating leases for stores, offices, warehouse facilities and
equipment, purchase obligations and deferred acquisition payments which the Company is obligated to pay as of February 25,
2006 as follows:
(in thousands) Total Less than 1 year 1-3 years 4-5 years After 5 years
Operating Lease Obligations $3,067,143 $ 340,806 $ 687,529 $ 617,538 $ 1,421,270
Purchase Obligations 415,513 415,513 — — —
Deferred Acquisition Payments 6,667 6,667 — — —
Total Contractual Obligations $ 3,489,323 $ 762,986 $ 687,529 $ 617,538 $ 1,421,270
As of February 25, 2006, the Company has leased sites for 56 new stores planned for opening in fiscal 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.