Bed, Bath and Beyond 2009 Annual Report Download

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Notice of 2010 Annual Meeting of Shareholders
Proxy Statement
2009 Annual Report
BED BATH & BEYOND INC.
T o O u r F e l l o w S h a r e h o l d e r s :
Dedication, commitment, entrepreneurial spirit, these are the words that best describe our associates.
Their efforts during fiscal 2009, complemented by the contributions and support of our business partners,
demonstrate what can be accomplished when talented people challenge themselves and their respective
organizations. As a difficult economic environment persisted during the past fiscal year, our associates continued
to find ways to improve the profitability of and continue to grow our Company. This drive for the better is an
important aspect of the culture of our Company and is understood, appreciated and lived each day by our associates.
Continued on page 1

Table of contents

  • Page 1
    BED BATH & BEYOND INC. Notice of 2010 Annual Meeting of Shareholders Proxy Statement 2009 Annual Report To Our Fellow Shareholders: Dedication, commitment, entrepreneurial spirit, these are the words that best describe our associates. Their efforts during fiscal 2009, complemented by the ...

  • Page 2
    ... 6.1% 3.8% 12.0% 10.6% 7.2% comparable store sales 4.4% (2.4)% Comparable store $ 5,281,675 $ 4,468,095 $ 3,902,308 net sales (5) $ 7,409,203 $ 6,746,472 $ 6,457,268 $ 6,068,694 Number of 792 683 605 535 416 comparable stores (5) 942 874 BALANCE SHEET DATA (AT PERIOD END) $ 1,082,399...

  • Page 3
    ...the opening of our first Bed Bath & Beyond store in Hawaii. In addition, we are a partner in a joint venture which operates two stores in the Mexico City market under the name "Home & More." As we noted at the outset, the success of our Company is due to the dedication of our over 41,000 associates...

  • Page 4
    ...proxy. We encourage our registered shareholders to vote: By internet - www.proxyvote.com or By touch-tone phone - 1-800-690-6903 Have your proxy card in hand when you access the website or call the toll-free number. Then you can follow the directions provided. BED BATH & BEYOND 2009 ANNUAL REPORT 2

  • Page 5
    ... is a chain of retail stores, operating under the names Bed Bath & Beyond ("BBB"), Christmas Tree Shops ("CTS"), Harmon and Harmon Face Values ("Harmon") and buybuy BABY. In addition, the Company is a partner in a joint venture which operates two stores in the Mexico City market under the name "Home...

  • Page 6
    ... CTS stores, five Harmon stores and 14 buybuy BABY stores and closed four BBB stores. RESULTS OF OPERATIONS The following table sets forth for the periods indicated (i) selected statement of earnings data of the Company expressed as a percentage of net sales and (ii) the percentage change in dollar...

  • Page 7
    ... offset by an increase in the fair value of the trading investment securities related to the Company's nonqualified deferred compensation plan. Interest income decreased in fiscal 2008 compared to fiscal 2007 primarily as a result of lower interest rates. BED BATH & BEYOND 2009 ANNUAL REPORT 5

  • Page 8
    ...nancing activities of $26.8 million in fiscal 2008. The increase in net cash provided was primarily due to an $82.1 million increase in cash proceeds from the exercise of stock options partially offset by a $46.8 million increase in common stock repurchases. BED BATH & BEYOND 2009 ANNUAL REPORT 6

  • Page 9
    .... These investments will remain primarily classified as non-current assets until the Company has better visibility as to when their liquidity will be restored. The classification and valuation of these securities will continue to be reviewed quarterly. BED BATH & BEYOND 2009 ANNUAL REPORT 7

  • Page 10
    ... and income taxes payable in the Consolidated Balance Sheet as of February 27, 2010 have been reï¬,ected only in the Total column in the table above as the timing and/or amount of any cash payment is uncertain. Deferred rent and other liabilities are primarily comprised of deferred rent, workers...

  • Page 11
    ...was effective for all financial statements issued for interim and annual periods ending after September 15, 2009. Accordingly, the Company has reï¬,ected all necessary changes in this filing. In June 2006, the FASB issued updated accounting guidance related to income taxes. This guidance addresses...

  • Page 12
    ..., net of returns to vendors, discounts and volume and incentive rebates; inbound freight expenses; duty, insurance and commissions. At any one time, inventories include items that have been written down to the Company's best estimate of their realizable value. Judgment is required in estimating...

  • Page 13
    ... the Company's call options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve months, had market prices close to the exercise prices of the employee stock options and were measured on the stock option grant date. BED BATH & BEYOND 2009 ANNUAL REPORT 11

  • Page 14
    ... out of or related to the Company's stock option grants and procedures and related matters, including any tax implications relating to the Company's stock option grants. The Company does not undertake any obligation to update its forward-looking statements. BED BATH & BEYOND 2009 ANNUAL REPORT 12

  • Page 15
    CONSOLIDATED BALANCE SHEETS Bed Bath & Beyond Inc. and Subsidiaries (in thousands, except per share data) ASSETS Current assets: Cash and cash equivalents Short term investment securities Merchandise inventories Other current assets Total current assets Long term investment securities Property and ...

  • Page 16
    CONSOLIDATED STATEMENTS OF EARNINGS Bed Bath & Beyond Inc. and Subsidiaries (in thousands, except per share data) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Interest income Earnings before provision for income taxes Provision for income ...

  • Page 17
    ..., net 1,224 Stock-based compensation expense, net Director fees paid in stock 7 Repurchase of common stock, including fees Effect of change in pension plan measurement date Balance at February 28, 2009 314,678 Comprehensive Income (Loss): Net earnings Change in temporary impairment of auction rate...

  • Page 18
    ...liabilities, net of effect of acquisition: Accounts payable Accrued expenses and other current liabilities Merchandise credit and gift card liabilities Income taxes payable Deferred rent and other liabilities Net cash provided by operating activities Cash Flows from Investing Activities: Purchase of...

  • Page 19
    ... self insurance, litigation, store opening, expansion, relocation and closing costs, the provision for sales returns, vendor allowances, stock-based compensation and income taxes. Actual results could differ from these estimates. E. Cash and Cash Equivalents The Company considers all highly liquid...

  • Page 20
    ..., net of returns to vendors, discounts and volume and incentive rebates; inbound freight expenses; duty, insurance and commissions. At any one time, inventories include items that have been written down to the Company's best estimate of their realizable value. Judgment is required in estimating...

  • Page 21
    ... consolidated balance sheets as of February 27, 2010 and February 28, 2009, respectively, is $198.7 million for goodwill and $30.9 million for tradenames. K. Self Insurance The Company utilizes a combination of insurance and self insurance for a number of risks including workers' compensation...

  • Page 22
    ... to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. BED BATH & BEYOND 2009 ANNUAL REPORT 20

  • Page 23
    ... to reï¬,ect the change to its liability for gross unrecognized tax benefits as required. The Company also recorded additional gross unrecognized tax benefits, and corresponding higher deferred tax assets, of $35.6 million as a result of the adoption. BED BATH & BEYOND 2009 ANNUAL REPORT 21

  • Page 24
    ...time of acquisition, in Maryland, New Jersey, New York and Virginia. The stores range in size from approximately 28,000 to 60,000 square feet and offer a broad assortment of premier infant and toddler merchandise in categories including furniture, car seats, strollers, feeding, bedding, bath, health...

  • Page 25
    ... in its entirety based on the lowest level of input that is significant to the measurement of fair value. Valuation techniques used by the Company must be consistent with at least one of the three possible approaches: the market BED BATH & BEYOND 2009 ANNUAL REPORT 23

  • Page 26
    ... securities: Short term Long term Trading securities: Short term Long term Held-to-maturity securities: Short term Long term Put option: Short term Long term Total investment securities BED BATH & BEYOND 2009 ANNUAL REPORT February 27, 2010 $ 15.0 120.8 40.5 12.1 373.6 - 2.3 - $ 564.3 February 28...

  • Page 27
    ...fied deferred compensation plan, are stated at fair market value. The values of these trading investment securities included in the table above are approximately $12.1 million and $6.4 million as of February 27, 2010 and February 28, 2009, respectively. BED BATH & BEYOND 2009 ANNUAL REPORT 25

  • Page 28
    ...change to its liability for gross unrecognized tax benefits as required. The Company also recorded additional gross unrecognized tax benefits, and corresponding higher deferred tax assets, of $35.6 million as a result of the adoption. At March 4, 2007 the total BED BATH & BEYOND 2009 ANNUAL REPORT...

  • Page 29
    ... 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 27, 2010 and February 28, 2009. BED BATH & BEYOND 2009 ANNUAL REPORT 27

  • Page 30
    ...associated liability are included within interest income and selling, general and administrative expenses respectively, in the consolidated statements of earnings. Historically, these changes have resulted in no impact to the consolidated statements of earnings. BED BATH & BEYOND 2009 ANNUAL REPORT...

  • Page 31
    ... pension plan for the CTS employees, hired on or before July 31, 2003, who meet specified age and length-of-service requirements. The benefits are based on years of service and the employee's compensation near retirement. The Company recognizes the overfunded or underfunded status of the pension...

  • Page 32
    ...exercised during fiscal 2009, 2008 and 2007 were $61.9 million, $20.4 million and $28.2 million, respectively. Net cash proceeds from the exercise of stock options for fiscal 2009 were $99.7 million and the associated income tax benefits were $0.3 million. BED BATH & BEYOND 2009 ANNUAL REPORT 30

  • Page 33
    ... $ 0.55 $ 1,648,491 656,000 118,819 123,349 46,572 $ 76,777 $ 0.30 $ 0.30 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 2009 ANNUAL REPORT 31

  • Page 34
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders Bed Bath & Beyond Inc.: We have audited the accompanying consolidated balance sheets of Bed Bath & Beyond Inc. and subsidiaries (the Company) as of February 27, 2010 and February 28, 2009, and the ...

  • Page 35
    ... reporting as of February 27, 2010, based on criteria established in Internal Control - Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Bed Bath & Beyond...

  • Page 36
    BED BATH & BEYOND INC. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS JUNE 29, 2010 TIME 9:00 A.M. on Tuesday, June 29, 2010 PLACE Madison Hotel One Convent Road Morristown, New Jersey 07960 ITEMS OF BUSINESS (1) To elect nine directors until the Annual Meeting in 2011 and until their respective ...

  • Page 37
    ... Bed Bath & Beyond Inc.'s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those shares, and these proxy materials are being sent directly to you. If you hold restricted stock under the Company's 2004 Incentive Compensation Plan...

  • Page 38
    ... not be voting at the Annual Meeting, your final voting instructions must be received by no later than 11:59 p.m. on June 28, 2010. Beneficial Owner Most shareholders of Bed Bath & Beyond Inc. hold their shares through a stockbroker, bank or other nominee, rather than directly in their own name...

  • Page 39
    ... or the Annual Meeting or would like additional copies of this document or our 2009 Annual Report on Form 10-K, please contact: Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, NJ 07083, Attention: Investor Relations Dept., Telephone: (908) 688-0888. ELECTION OF DIRECTORS (PROPOSAL 1) How...

  • Page 40
    ..., Mr. Gaston held a variety of management positions at Verizon Communications Inc. and its predecessors since 1984, including positions in operations, marketing, human resources, strategic planning and government relations. He has been a director of the Company since 2007. Among other things, Mr...

  • Page 41
    ... date of the Company's 2009 Annual Meeting of Shareholders (the average of the high and low trading prices on such date). (4) Mr. Kaplan received a prorated annual fee and was not granted a stock award due to his retirement from the Board of Directors effective June 30, 2009. BED BATH & BEYOND PROXY...

  • Page 42
    ... and Nominating and Corporate Governance Committees are considered independent pursuant to applicable Securities and Exchange Commission ("SEC") and NASDAQ rules. None of the members of the Compensation Committee was (i) during fiscal 2009, an officer or employee of the Company or any of...

  • Page 43
    ... at the Company's 2010 Annual Meeting of Shareholders, the Board appointed Mr. Eppler to serve as a member of the Compensation Committee in replacement of Ms. Stoller. In addition to meeting the NASDAQ independence requirements, these members are "non-employee directors" for applicable SEC rules and...

  • Page 44
    ... Management A complete copy of the charter of each of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee as well as the Company's policies on director attendance at the Annual Meeting and how shareholders can communicate with the Board of Directors...

  • Page 45
    ... to the Company's internal control over financial reporting. Based on these discussions and the written disclosures received from the independent auditors, the Committee recommended that the Board of Directors include the audited financial statements in the Company's Annual Report on Form 10-K for...

  • Page 46
    ... President - Legal and General Counsel, and G. William Waltzinger, Jr., Vice President - Bed Bath & Beyond Inc. - Corporate Development and President - Harmon Stores, Inc., report to Mr. Temares and comprise the Company's Operating Team. EXECUTIVE COMPENSATION Compensation Discussion and Analysis...

  • Page 47
    ... Company's independent directors and its Board committees. Under the direction of the Committee, the compensation review included a peer group competitive market review and total compensation recommendations by JFR. The methodology used by JFR included reviewing available data based on the Company...

  • Page 48
    ... to address the requirements of Section 409A ("Section 409A") of the Internal Revenue Code of 1986, as amended (the "Code"). See "Potential Payments Upon Termination or Change in Control" below for a description of the SERP. While the amounts payable under the SERP were not changed, the timing of...

  • Page 49
    .... Changes in base salary, if any, are effective in May of each fiscal year. As noted above, the Company believes that cash compensation levels for our named executive officers are lower than its peers as the Company places greater emphasis on equity compensation. BED BATH & BEYOND PROXY...

  • Page 50
    ... its equity compensation policies have been highly successful in the long term retention of its executives and key associates, including its named executive officers. Consistent with the Company's historic practice, the stock options vest over time, subject, in general, to the named executive of...

  • Page 51
    ...Castagna, as well as for the other executives whose compensation is determined by the Compensation Committee. For further discussion related to equity grants to the named executive officers, see "Potential Payments Upon Termination or Change in Control" below. BED BATH & BEYOND PROXY STATEMENT 49

  • Page 52
    ... compensation payable to the named executive officers is significantly tied to the Company's performance and the return to its shareholders over time. The Company believes that its compensation programs will allow it to attract and retain a top performing management team. BED BATH & BEYOND PROXY...

  • Page 53
    ... Summary Compensation Table, salaries to named executive officers were paid in cash in fiscal 2009, fiscal 2008 and fiscal 2007, and increases in salary, if any, were effective in May of the fiscal year. The value of stock awards and option awards represents their respective total fair value...

  • Page 54
    ...11,700 and $8,580 of his salary for fiscal 2009, 2008 and 2007, respectively, to the Bed Bath & Beyond Inc. 401(k) Savings Plan (the "Company 401(k)"). The actuarial present value of the benefits payable under the supplemental executive retirement benefit agreement with Mr. Temares increased from...

  • Page 55
    ... the term of employment. Potential Payments Upon Termination or Change in Control The named executive officers' employment agreements and certain of the plans in which the executives participate require the Company to pay compensation to the executives if their employment terminates. The estimated...

  • Page 56
    ...full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result in the loss of a deduction for such payment pursuant to applicable federal income tax law. Messrs. Temares, Stark and Castagna The agreements with Messrs. Temares and Stark...

  • Page 57
    ... any impact resulting from the possible application of Section 409A to the terms of the SERP due to the complexities surrounding Section 409A, the Company believes that no such payment will be required. Table and related footnotes follow on the next two pages. BED BATH & BEYOND PROXY STATEMENT 55

  • Page 58
    ... the life of the executive and his spouse. Reï¬,ects executives' vested account balances as of February 27, 2010. For Messrs. Eisenberg and Feinstein, represents the estimated present value of lifetime supplemental pension payments, commencing six months following the conclusion of the Senior Status...

  • Page 59
    ... result of payments subject to Section 280G of the Code that would have been made in connection with a change in control occurring on February 27, 2010. Cash severance represents three times current salary payable over a period of three years. In the event of a termination of employment due to death...

  • Page 60
    ... met, time vesting, subject in general to the executive remaining in the Company's employ on specific vesting dates. The performance-based test for fiscal 2009 was met. The performance test is designed to meet the standard for performance-based compensation under the Code, so that restricted stock...

  • Page 61
    ...table sets forth information for each of the named executive officers with respect to the value of all unexercised options and unvested restricted stock awards as of February 27, 2010, the end of fiscal 2009. Number...,387 Eugene A. Castagna 89,595 $3,728,048 BED BATH & BEYOND PROXY STATEMENT 59

  • Page 62
    ... any portion of such grant may be exercised. Market value is based on the closing price of the Company's common stock of $41.61 per share on February 26, 2010, the last trading day in fiscal 2009. Option Exercises and Restricted Stock Vested for Fiscal 2009 The following table includes certain...

  • Page 63
    ... bonus or incentive compensation, welfare benefits, fringe benefits, noncash remuneration, amounts realized from the sale of stock acquired under a stock option or grant, and moving expenses. When a participant elects to make a deferral under the plan, the Company credits the account of the...

  • Page 64
    ...following table has sole voting and investment power with respect to all shares of our common stock that he, she or it beneficially owns. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083. Number...

  • Page 65
    ...common stock holdings for fiscal 2009, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors and executive officers, except that Patrick R. Gaston had a single Form 4 report filed eight days late. BED BATH & BEYOND PROXY...

  • Page 66
    ... 2011 Annual Meeting of Shareholders is less than 100 days prior to the date of the 2011 Annual Meeting of Shareholders, the 10th day following the date on which notice of the date of the meeting is given to shareholders or made public, whichever occurs first. BED BATH & BEYOND 2009 ANNUAL REPORT...

  • Page 67
    ... 774/213-6000 Bed Bath & Beyond Procurement Co. Inc. 110 Bi-County Boulevard, Suite 114 Farmingdale, New York 11735 Telephone: 631/420-7050 Buy Buy Baby, Inc. 895 East Gate Boulevard Garden City, New York 11530 Telephone: 516/507-3410 Shareholder Information A copy of the Company's 2009 Form 10-K as...

  • Page 68
    BED BATH & BEYOND INC. 650฀Liberty฀Avenue Union,฀NJ฀฀07083 908-688-0888 Cert no.