Bed, Bath and Beyond 2006 Annual Report Download - page 26

BED BATH& BEYOND ANNUAL REPORT 2006
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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 March 3, 2007 and February 25, 2006.
B. In fiscal 2006, 2005 and 2004, the Company leased office and retail space from entities controlled by management of CTS.
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 $6.3 million, $6.5 million and $6.9 million in fiscal
2006, 2005 and 2004, respectively.
C. Subsequent to fiscal year end, the Company acquired buybuy BABY from Richard and Jeffrey Feinstein, both of whom were
previously employed by the Company, and are the sons of Leonard Feinstein, one of the Company’s Co-Chairmen. (See
“Subsequent Event,” Note 13).
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 are immaterial in fiscal 2006, 2005 and 2004), scheduled rent increases and renewal options. The Company is obligated under
a majority of the leases to pay for taxes, insurance and common area maintenance charges.
As of March 3, 2007, future minimum lease payments under noncancelable operating leases are as follows:
Fiscal Year (in thousands) Amount
2007 $ 372,168
2008 379,091
2009 364,226
2010 338,374
2011 306,524
Thereafter 1,435,481
Total future minimum lease payments $ 3,195,864
Expenses for all operating leases were $355.7 million, $322.0 million and $288.9 million for fiscal 2006, 2005
and 2004, respectively.
9. EMPLOYEE BENEFIT PLANS
Defined Contribution Plans
The Company has two defined contribution savings plans covering all eligible employees of the Company (“the Plans”). During
fiscal 2006, a 401(k) savings plan, which was frozen effective December 31, 2003, was merged into one of the Plans. 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. The Company contributed approximately $4.8 million and $0.5 million for
fiscal 2006 and 2005, respectively. For fiscal 2004, the Company did not make a material contribution to the Plans, as the match
was not yet effective.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)