Bed, Bath and Beyond 2010 Annual Report Download - page 29

BED BATH & BEYOND 2010 ANNUAL REPORT
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retained earnings. For the years ended February 26, 2011, February 27, 2010 and February 28, 2009, the net periodic pension
cost was not material to the Company’s results of operations. The Company has a $7.5 million and $6.8 million liability, which
is included in deferred rent and other liabilities as of February 26, 2011 and February 27, 2010, respectively. In addition, as of
February 26, 2011 and February 27, 2010, the Company recognized a gain of $0.7 million, net of taxes of $0.4 million, and a
gain of $0.3 million, net of taxes of $0.2 million, respectively, within accumulated other comprehensive income.
10. COMMITMENTS AND CONTINGENCIES
The Company maintains employment agreements with its Co-Chairmen, which extend through June 2013. The agreements
provide for a base salary (which may be increased by the Board of Directors), termination payments, postretirement benefits
and other terms and conditions of employment. In addition, the Company maintains employment agreements with other
executives which provide for severance pay and, in some instances, certain other supplemental retirement benefits.
The Company records an estimated liability related to its various claims and legal actions arising in the ordinary course
of business when and to the extent that it concludes a liability is probable and the amount of the loss can be reasonably
estimated. Such estimated loss is based on available information and advice from outside counsel, where appropriate. As
additional information becomes available, the Company reassesses the potential liability related to claims and legal actions and
revises its estimated liabilities, as appropriate. The Company expects the ultimate disposition of these matters will not have a
material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. The Company also
cannot predict the nature and validity of claims which could be asserted in the future, and future claims could have a material
impact on its earnings.
11. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes of $487.4 million, $338.9 million and $261.3 million in fiscal 2010, 2009 and 2008, respectively.
The Company recorded an accrual for capital expenditures of $17.8 million, $21.7 million and $21.6 million as of February 26,
2011, February 27, 2010 and February 28, 2009, respectively.
12. STOCK-BASED COMPENSATION
The Company measures all employee stock-based compensation awards using a fair value method and records such expense in
its consolidated financial statements. Currently, the Company’s stock-based compensation relates to restricted stock awards and
stock options. The Company’s restricted stock awards are considered nonvested share awards.
Stock-based compensation expense for the fiscal year ended February 26, 2011, February 27, 2010 and February 28, 2009 was
approximately $44.3 million ($27.1 million after tax or $0.10 per diluted share), approximately $44.2 million ($26.9 million after
tax or $0.10 per diluted share) and approximately $43.7 million ($27.2 million after tax or $0.11 per diluted share), respectively.
In addition, the amount of stock-based compensation cost capitalized for each of the years ended February 26, 2011 and
February 27, 2010 was approximately $1.2 million.
Incentive Compensation Plans
The Company currently grants awards under the Bed Bath & Beyond 2004 Incentive Compensation Plan (the “2004 Plan”). The
2004 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options,
restricted stock awards, stock appreciation rights and performance awards, including cash awards. Under the 2004 Plan,
grants are determined by the Compensation Committee for those awards granted to executive officers and by an appropriate
committee for all other awards granted. Awards of stock options and restricted stock generally vest in five equal annual
installments beginning one to three years from the date of grant.
Prior to fiscal 2004, the Company had adopted various stock option plans (the “Prior Plans”), all of which solely provided for the
granting of stock options. Upon adoption of the 2004 Plan, the common stock available under the Prior Plans became available
for issuance under the 2004 Plan. No further option grants may be made under the Prior Plans, although outstanding awards
under the Prior Plans will continue to be in effect.