Bed, Bath and Beyond 2014 Annual Report Download - page 26

Between December 2004 and July 2014, the Company’s Board of Directors authorized, through share repurchase programs, the
repurchase of $9.450 billion of the Company’s common stock. On July 17, 2014, the Company entered into an accelerated
share repurchase agreement (‘‘ASR’’) with an investment bank to repurchase an aggregate $1.1 billion of the Company’s
common stock. The ASR was completed in December 2014. The total number of shares repurchased under the ASR was
16.8 million shares at a weighted average share price of $65.41. Since 2004 through the end of fiscal 2014, the Company has
repurchased approximately $8.6 billion of its common stock through share repurchase programs, which include the shares
repurchased under the ASR.
During fiscal 2014, including the shares repurchased under the ASR, the Company repurchased approximately 33.0 million
shares of its common stock at a total cost of approximately $2.251 billion. During fiscal 2013, the Company repurchased
approximately 18.3 million shares of its common stock at a total cost of approximately $1.284 billion. During fiscal 2012, the
Company repurchased approximately 16.1 million shares of its common stock at a total cost of approximately $1.001 billion.
The Company has approximately $0.9 billion remaining of authorized share repurchases as of February 28, 2015.
N. Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable, long term
debt and certain other liabilities. The Company’s investment securities consist primarily of U.S. Treasury securities, which are
stated at amortized cost, and auction rate securities, which are stated at their approximate fair value. The book value of the
financial instruments, excluding the Company’s long term debt, is representative of their fair values (See ‘‘Fair Value
Measurements,’’ Note 3). The fair value of the Company’s long term debt is approximately $1.616 billion, which is based on
quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared to the carrying value of
approximately $1.500 billion.
O. Revenue Recognition
Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from
its websites. The value of point-of-sale coupons and point-of-sale rebates that result in a reduction of the price paid by the
customer are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction
are recorded in sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.
Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no
provisions for reduction in the value of unused card balances over defined time periods and have no expiration dates.
Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the
estimate for sales returns has not varied materially from historical provisions, actual experience could vary from historical
experience in the future if the level of sales return activity changes materially. In the future, if the Company concludes that an
adjustment to the sales return accrual is required due to material changes in the returns activity, the reserve will be adjusted
accordingly.
P. Cost of Sales
Cost of sales includes the cost of merchandise, buying costs and costs of the Company’s distribution network including inbound
freight charges, distribution facility costs, receiving costs, internal transfer costs and shipping and handling costs.
Q. Vendor Allowances
The Company receives allowances from vendors in the normal course of business for various reasons including direct
cooperative advertising, purchase volume and reimbursement for other expenses. Annual terms for each allowance include the
basis for earning the allowance and payment terms, which vary by agreement. All vendor allowances are recorded as a
reduction of inventory cost, except for direct cooperative advertising allowances which are specific, incremental and
identifiable. The Company recognizes purchase volume allowances as a reduction of the cost of inventory in the quarter in
which milestones are achieved. Advertising costs were reduced by direct cooperative allowances of $25.6 million, $24.0 million
and $19.8 million for fiscal 2014, 2013 and 2012, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
BED BATH & BEYOND 2014 ANNUAL REPORT
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