Bed, Bath and Beyond 2008 Annual Report Download - page 31

BED BATH & BEYOND 2008 ANNUAL REPORT
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For fiscal 2008, the effective tax rate is comprised of the Federal statutory income tax rate of 35.00%, the State income tax rate,
net of Federal benefit, of 2.90% and other income tax benefits of 0.12%. For fiscal 2007, the effective tax rate is comprised of
the Federal statutory income tax rate of 35.00%, the State income tax rate, net of Federal benefit, of 2.57% and other income tax
benefits of 2.62%. Included in other income tax benefits for fiscal 2007 are the settlement of certain discrete tax items from
ongoing examinations, the recognition of favorable discrete state tax items and from changing the blended state tax rate of
deferred income taxes. For fiscal 2006, the effective tax rate is comprised of the Federal statutory income tax rate of 35.00%, the
State income tax rate, net of Federal benefit, of 3.06% and other income tax benefits of 1.76%.
9. 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 Company’s interest in these policies was equivalent to the net premiums paid by the Company. 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 28, 2009 and March 1, 2008.
B. In fiscal 2008, 2007 and 2006, the Company leased office and retail space from entities controlled by management of CTS.
In fiscal 2008 and 2007, the Company leased retail space from entities controlled by management of buybuy BABY. The
Company paid such entities occupancy costs of approximately $7.1 million, $7.1 million and $6.3 million in fiscal 2008, 2007
and 2006, respectively.
C. On March 22, 2007, the Company acquired buybuy BABY, a retailer of infant and toddler merchandise, for approximately
$67 million (net of cash acquired) and repayment of debt of approximately $19 million. buybuy BABY was founded in 1996 by
Richard and Jeffrey Feinstein, both of whom were previously employed by the Company, and are the sons of Leonard Feinstein,
one of the Company’sCo-Chairmen. The aforementioned repayment of approximately $19 million of debt resulted in the
retirement of all indebtedness of buybuy BABY, which debt was held by Richard and Jeffrey Feinstein (approximately $16 mil-
lion) and Leonard Feinstein (approximately $3 million). The Company’s Co-Chairmen, Leonard Feinstein and Warren Eisenberg,
recused themselves from deliberations relating to the transaction.
10. LEASES
The Company leases retail stores, as well as warehouses, office facilities and equipment, under agreements expiring at various
dates through 2041. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts
and areimmaterial in fiscal 2008, 2007 and 2006), 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 February 28, 2009, future minimum lease payments under non-cancelable operating leases are as follows:
Amount
Fiscal Year (in thousands)
2009 $ 424,635
2010 412,947
2011 381,096
2012 342,432
2013 300,122
Thereafter 1,301,526
Total future minimum lease payments $3,162,758
Expenses for all operating leases were$405.5 million, $380.5 million and $355.7 million for fiscal 2008, 2007 and 2006, respectively.