Exhibit 99.1
BED BATH & BEYOND INC. REPORTS NET EARNINGS
FOR FISCAL SECOND QUARTER
· Net Earnings for Quarter Increase to $.51 per diluted share
· Quarterly Net Sales Increase by 12.3%
· Quarterly Comparable Store Sales Increase by 4.8%
· Independent Review of Option Grants and Procedures
UNION, New Jersey, September 20, 2006 — Bed Bath & Beyond Inc. today reported net earnings of $.51 per diluted share ($145.5 million) in the fiscal second quarter ended August 26, 2006. In the fiscal second quarter of 2005, the Company reported net earnings of $.47 per diluted share ($141.4 million). Net sales for the fiscal second quarter of 2006 were approximately $1.607 billion, an increase of approximately 12.3% from net sales of approximately $1.431 billion reported in the fiscal second quarter of 2005. Comparable store sales in the fiscal second quarter of 2006 grew by approximately 4.8%, compared with an increase of approximately 4.5% in last year’s fiscal second quarter.
For the fiscal first half ended August 26, 2006, the Company reported net earnings of $.86 per diluted share ($246.0 million). In the fiscal first half of 2005, the Company reported net earnings of $.80 per diluted share ($240.3 million). Net sales for the fiscal first half of 2006 were approximately $3.003 billion, an increase of approximately 12.2% from net sales of approximately $2.676 billion in the corresponding period a year ago. Comparable store sales for the fiscal first half of 2006 increased by approximately 4.8%, compared with an increase of approximately 4.4% in last year’s fiscal first half.
The fiscal second quarter and fiscal first half of 2006 results included incremental stock-based compensation expense resulting from the early adoption, at the beginning of the fiscal third quarter of 2005, of Statement of Financial Accounting Standards 123(R).
The Company also announced an independent committee of its Board of Directors is carrying out a review of the Company’s stock option grants and procedures. The independent committee’s review was initiated voluntarily by the Company and is being conducted with the assistance of independent legal counsel and outside accounting experts selected by the committee. The independent committee’s review is not complete. The Company expects to report further with respect to the review in its Form 10-Q for the quarter ended August 26, 2006, which the Company expects to file on a timely basis on or before October 5, 2006.
As of August 26, 2006, the Company operated a total of 831 stores, including 762 Bed Bath & Beyond stores (11 of which were opened during the fiscal second quarter) in 46 states, the District of Columbia and Puerto Rico. In addition, as of that date, Christmas Tree Shops, Inc. operated 31 stores in 8 states (one of which was opened during the fiscal second quarter) and Harmon Stores, Inc. operated 38 stores in 3 states. Consolidated store space as of August 26, 2006 was approximately 26.2 million square feet. Since the beginning of the fiscal third quarter, on August 27, 2006, 7 Bed Bath & Beyond stores have been opened, bringing to 769 the total number of Bed Bath & Beyond stores presently in operation.
* * * * * * * *
Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is a nationwide chain of retail stores, operating under the names Bed Bath & Beyond, Christmas Tree Shops and Harmon. The Company sells a wide assortment of merchandise principally including domestics merchandise and home furnishings as well as food, giftware and health and beauty care items. Shares of Bed Bath & Beyond Inc. are traded on NASDAQ under the symbol “BBBY” and are included in the Standard & Poor’s 500 and Global 1200 Indices and the NASDAQ-100 Index. The Company is counted among the Fortune 500 and the Forbes 2000.
This press release may contain forward-looking statements. Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan and similar words and phrases. The Company’s actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors that may be outside the Company’s control. Such factors include, without limitation: changes in the retailing environment and consumer preferences and spending habits; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; general economic conditions; unusual weather patterns; competition from existing and potential competitors; competition from other channels of distribution; pricing pressures; the cost of labor, merchandise and other costs and expenses; the ability to find suitable locations at acceptable occupancy costs to support the Company’s expansion program; and the outcome of the independent committee’s review of the Company’s stock option grants and procedures. The Company does not undertake any obligation to update its forward-looking statements.
INVESTOR CONTACTS (at 908-688-0888): | | | |
Ronald Curwin | Ext. 4550 | | |
Kenneth C. Frankel | Ext. 4554 | | |
Paula J. Marbach | Ext. 4552 | | |
(Tables Follow)
BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
| | Three Months Ended | | Six Months Ended | |
| | August 26,
2006 | | August 27,
2005 | | August 26,
2006 | | August 27,
2005 | |
Net sales | | $ | 1,607,239 | | $ | 1,431,182 | | $ | 3,003,202 | | $ | 2,675,603 | |
Cost of sales | | 928,990 | | 829,398 | | 1,734,855 | | 1,553,038 | |
Gross profit | | 678,249 | | 601,784 | | 1,268,347 | | 1,122,565 | |
Selling, general and administrative expenses | | 458,627 | | 383,907 | | 899,975 | | 753,804 | |
Operating profit | | 219,622 | | 217,877 | | 368,372 | | 368,761 | |
Interest income | | 9,928 | | 8,005 | | 19,587 | | 15,113 | |
Earnings before provision for income taxes | | 229,550 | | 225,882 | | 387,959 | | 383,874 | |
Provision for income taxes | | 84,015 | | 84,480 | | 141,993 | | 143,569 | |
Net earnings | | $ | 145,535 | | $ | 141,402 | | $ | 245,966 | | $ | 240,305 | |
Net earnings per share—Basic | | $ | 0.52 | | $ | 0.48 | | $ | 0.88 | | $ | 0.81 | |
Net earnings per share—Diluted | | $ | 0.51 | | $ | 0.47 | | $ | 0.86 | | $ | 0.80 | |
Weighted average shares outstanding—Basic | | 280,567 | | 295,458 | | 280,385 | | 294,936 | |
Weighted average shares outstanding—Diluted | | 284,654 | | 301,362 | | 284,903 | | 300,208 | |
BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, unaudited)
| | August 26, | | August 27, | |
| | 2006 | | 2005 | |
Assets | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 167,994 | | $ | 296,477 | |
Short term investment securities | | 649,253 | | 703,395 | |
Merchandise inventories | | 1,421,922 | | 1,238,875 | |
Other current assets | | 143,854 | | 114,173 | |
| | | | | |
Total current assets | | 2,383,023 | | 2,352,920 | |
| | | | | |
Long term investment securities | | 332,980 | | 353,516 | |
Property and equipment, net | | 801,438 | | 645,574 | |
Other assets | | 193,328 | | 169,268 | |
| | $3,710,769 | | $ | 3,521,278 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 592,210 | | $ | 503,056 | |
Accrued expenses and other current liabilities | | 242,487 | | 249,368 | |
Merchandise credit and gift card liabilities | | 123,510 | | 93,907 | |
Income taxes payable | | 57,923 | | 50,255 | |
Total current liabilities | | 1,016,130 | | 896,586 | |
Deferred rent and other liabilities | | 145,419 | | 131,701 | |
Total liabilities | | 1,161,549 | | 1,028,287 | |
Total shareholders’ equity | | 2,549,220 | | 2,492,991 | |
| | $3,710,769 | | $ | 3,521,278 | |
| | | | | |
BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands, unaudited)
| | Six Months Ended | |
| | August 26, | | August 27, | |
| | 2006 | | 2005 (1) | |
Cash Flows from Operating Activities: | | | | | |
Net earnings | | $ | 245,966 | | $ | 240,305 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 62,603 | | 52,303 | |
Amortization of bond premium | | 2,007 | | 4,458 | |
Stock-based compensation | | 24,287 | | — | |
Excess tax benefit from stock-based compensation | | 1,775 | | 18,523 | |
Deferred income taxes | | (20,135 | ) | (650 | ) |
Increase in assets: | | | | | |
Merchandise inventories | | (120,202 | ) | (86,847 | ) |
Trading investment securities | | (1,392 | ) | — | |
Other current assets | | (20,792 | ) | (17,507 | ) |
Other assets | | (291 | ) | (173 | ) |
Increase (decrease) in liabilities: | | | | | |
Accounts payable | | 68,734 | | 52,746 | |
Accrued expenses and other current liabilities | | (1 | ) | (5,372 | ) |
Merchandise credit and gift card liabilities | | 9,996 | | 6,846 | |
Income taxes payable | | (34,107 | ) | (31,109 | ) |
Deferred rent and other liabilities | | 15,275 | | 13,194 | |
| | | | | |
Net cash provided by operating activities | | 233,723 | | 246,717 | |
| | | | | |
Cash Flows from Investing Activities: | | | | | |
| | | | | |
Purchase of held-to-maturity investment securities | | (124,124 | ) | (179,771 | ) |
Redemption of held-to-maturity investment securities | | 138,011 | | 107,147 | |
Purchase of available-for-sale investment securities | | (670,425 | ) | (955,075 | ) |
Redemption of available-for-sale investment securities | | 471,665 | | 922,875 | |
Capital expenditures | | (135,760 | ) | (88,261 | ) |
| | | | | |
Net cash used in investing activities | | (320,633 | ) | (193,085 | ) |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
Proceeds from exercise of stock options | | 10,225 | | 27,404 | |
Excess tax benefit from stock-based compensation | | 4,504 | | — | |
Repurchase of common stock | | (855 | ) | — | |
Payment of deferred purchase price for acquisition | | (6,667 | ) | (6,667 | ) |
| | | | | |
Net cash provided by financing activities | | 7,207 | | 20,737 | |
| | | | | |
Net (decrease) increase in cash and cash equivalents | | (79,703 | ) | 74,369 | |
| | | | | |
Cash and cash equivalents: | | | | | |
| | | | | |
Beginning of period | | 247,697 | | 222,108 | |
End of period | | $ | 167,994 | | $ | 296,477 | |
(1) Reflects the accrual for purchases of capital expenditures as a non-cash investing activity to conform with current presentation.
