20230930-DK-Butterfly-1 (BBBYQ) 10-Q 7 Oct 09 2010 Q2 Quarterly report Financial data

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands	Aug. 29, 2009	Feb. 28, 2009
Current assets:
Cash and cash equivalents	$1,035,601	$668,209
Short term investment securities	43,125	2,000
Merchandise inventories	1,755,377	1,642,339
Other current assets	289,101	250,251
Total current assets	3,123,204	2,562,799
Long term investment securities	157,193	221,134
Property and equipment, net	1,111,971	1,148,435
Other assets	343,070	336,475
Total assets	4,735,438	4,268,843
Current liabilities:
Accounts payable	682,936	514,734
Accrued expenses and other current liabilities	264,066	247,508
Merchandise credit and gift card liabilities	163,338	165,621
Current income taxes payable	29,159	25,105
Total current liabilities	1,139,499	952,968
Deferred rent and other liabilities	236,107	227,209
Income taxes payable	98,928	88,212
Total liabilities	1,474,534	1,268,389
Shareholders' equity:
Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding	0	0
Common stock - $0.01 par value; authorized - 900,000 shares; issued 318,723 and 314,678 shares, respectively; outstanding 262,686 and 259,701 shares, respectively	3,187	3,147
Additional paid-in capital	945,272	878,568
Retained earnings	4,377,624	4,154,921
Treasury stock, at cost; 56,037 and 54,977 shares, respectively	(2,064,711)	(2,031,642)
Accumulated other comprehensive loss	(468)	(4,540)
Total shareholders' equity	3,260,904	3,000,454
Total liabilities and shareholders' equity	$4,735,438	$4,268,843

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
Share data in Thousands, except Per Share data	Aug. 29, 2009	Feb. 28, 2009
Consolidated Balance Sheets
Preferred stock par value (in dollars per share)	0.01	0.01
Preferred stock authorized (in shares)	1,000	1,000
Preferred stock issued (in shares)	0	0
Preferred stock outstanding (in shares)	0	0
Common stock par value (in dollars per share)	0.01	0.01
Common stock authorized (in shares)	900,000	900,000
Common stock issued (in shares)	318,723	314,678
Common stock outstanding (in shares)	262,686	259,701
Treasury stock shares (in shares)	56,037	54,977

Consolidated Statements of Earn

Consolidated Statements of Earnings (USD $)
In Thousands, except Per Share data	3 Months Ended Aug. 29, 2009	3 Months Ended Aug. 30, 2008	6 Months Ended Aug. 29, 2009	6 Months Ended Aug. 30, 2008
Net sales	$1,914,909	$1,853,892	$3,609,249	$3,502,383
Cost of sales	1,141,516	1,114,571	2,169,038	2,107,062
Gross profit	773,393	739,321	1,440,211	1,395,321
Selling, general and administrative expenses	551,362	551,900	1,075,876	1,089,081
Operating profit	222,031	187,421	364,335	306,240
Interest income	1,476	2,946	3,243	7,476
Earnings before provision for income taxes	223,507	190,367	367,578	313,716
Provision for income taxes	87,976	71,099	144,875	117,671
Net earnings	$135,531	$119,268	$222,703	$196,045
Net earnings per share - Basic (in dollars per share)	0.53	0.46	0.87	0.76
Net earnings per share - Diluted (in dollars per share)	0.52	0.46	0.86	0.76
Weighted average shares outstanding - Basic (in shares)	257,814	256,726	257,378	256,680
Weighted average shares outstanding - Diluted (in shares)	259,940	258,979	259,352	259,121

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Thousands	6 Months Ended Aug. 29, 2009	6 Months Ended Aug. 30, 2008
Cash Flows from Operating Activities:
Net earnings	$222,703	$196,045
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	89,746	87,138
Stock-based compensation	22,137	21,604
Tax benefit from stock-based compensation	(964)	266
Deferred income taxes	(13,943)	(17,565)
Other	(12)	155
(Increase) decrease in assets:
Merchandise inventories	(113,038)	(193,332)
Trading investment securities	(4,071)	(1,740)
Other current assets	(32,756)	(34,906)
Other assets	302	(928)
Increase (decrease) in liabilities:
Accounts payable	183,176	102,476
Accrued expenses and other current liabilities	19,123	(2,907)
Merchandise credit and gift card liabilities	(2,283)	(921)
Income taxes payable	11,318	(61)
Deferred rent and other liabilities	10,968	12,725
Net cash provided by operating activities	392,406	168,049
Cash Flows from Investing Activities:
Redemption of available-for-sale investment securities	27,245	31,350
Capital expenditures	(67,631)	(106,711)
Investment in unconsolidated joint venture, including fees		(4,764)
Net cash used in investing activities	(40,386)	(80,125)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options	45,663	12,779
Excess tax benefit from stock-based compensation	2,778	4,394
Repurchase of common stock, including fees	(33,069)	(40,625)
Net cash provided by (used in) financing activities	15,372	(23,452)
Net increase in cash and cash equivalents	367,392	64,472
Cash and cash equivalents:
Beginning of period	668,209	224,084
End of period	$1,035,601	$288,556

Basis of Presentation

Basis of Presentation
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Basis of Presentation	1) Basis of Presentation The accompanying consolidated financial statements have been prepared without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath Beyond Inc. and subsidiaries (the Company) as of August29, 2009 and February28, 2009 and the results of its operations for the three and six months ended August29, 2009 and August30, 2008, respectively, and its cash flows for the six months ended August29, 2009 and August30, 2008, respectively. The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form10-Q and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles (GAAP). Reference should be made to Bed Bath Beyond Inc.s Annual Report on Form10-K for the fiscal year ended February28, 2009 for additional disclosures, including a summary of the Companys significant accounting policies, and to subsequently filed Forms 8-K. The Company exhibits less seasonality than many other retail businesses, although sales levels are generally higher in August, Novemberand December, and generally lower in Februaryand October. The Company has evaluated subsequent events through October7, 2009, the filing date of this Form10-Q with the Securities and Exchange Commission (SEC).

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Recent Accounting Pronouncements	2) Recent Accounting Pronouncements In December2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) SFAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. FSP SFAS132(R)-1 amends Statement of Financial Accounting Standards (SFAS) No.132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of FASB Statements No.87, 88 and 106. FSP SFAS132(R)-1 requires more detailed disclosures about the assets of a defined benefit pension or other postretirement plan. FSP SFAS132(R)-1 is effective for fiscal years ending after December15, 2009. The Company does not believe FSP SFAS132(R)-1 will have a material impact on its consolidated financial statements. In April2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which amends SFAS No.107, Disclosures about Fair Value of Financial Instruments and Accounting Principles Board (APB) Opinion No.28, Interim Financial Reporting. This FSP requires the annual disclosures about the fair value of financial instruments required by SFAS No.107 to be presented in interim financial statements. The Company adopted FSP SFAS 107-1 and APB 28-1 during the second quarter of fiscal 2009. The adoption of FSP SFAS 107-1 and APB 28-1 did not have a material impact on the Companys consolidated financial statements (See Fair Value Measurements, Note 3). In April2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which modifies the recognition requirements for other-than-temporary impairments of debt securities and enhances existing disclosures with respect to other-than-temporary impairments of debt and equity securities. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The Company adopted FSP SFAS 115-2 and SFAS 124-2 during the second quarter of fiscal 2009. The adoption of FSP SFAS 115-2 and SFAS 124-2 did not have a material impact on the Companys consolidated financial statements (See Investment Securities, Note 5). In April2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides guidance for determining fair value when there is no active market or where the price inputs being used represent distressed sales, and also amends the interim and annual disclosure requirements of SFAS No.157, Fair Value Measurements. The Company adopted FSP SFAS157-4 during the second quarter of fiscal 2009. The adoption of FSP SFAS 157-4 did not have a material impact on the Companys consolidated financial statements (See Fair Value Measurements, Note 3). In May2009, the FASB issued SFAS No.165, Subsequent Events. SFAS No.165 was issued in order to establish principles and requirements for reviewing and reporting subsequent events and requires disclosure of the date through which subsequent events are evaluated and whether the date corresponds with the tim

Fair Value Measurements

Fair Value Measurements
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Fair Value Measurements	3) Fair Value Measurements The Company adopted SFAS No.157, Fair Value Measurements, for financial assets and liabilities on March2, 2008 and for non-financial assets and liabilities on March1, 2009. SFAS No.157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The adoption of SFAS No.157 for financial and non-financial assets and liabilities did not have a material impact on the Companys consolidated financial statements. Under SFAS No.157, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. SFAS No.157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a companys judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement. As of August29, 2009, the Companys financial assets utilizing Level 1 inputs include long term investment securities traded on active securities exchanges. The Company did not have any financial assets utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included short term and long term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds and securities collateralized by student loans, and a related put option (See Investment Securities, Note 5). To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the Companys degree of judgment exercised in determining fair value is greatest for instruments cat

Cash and Cash Equivalents

Cash and Cash Equivalents
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Cash and Cash Equivalents	4) Cash and Cash Equivalents Included in cash and cash equivalents are credit and debit card receivables from banks, which typically settle within 5 business days, of $64.3 million and $51.8 million as of August29, 2009 and February28, 2009, respectively.

Investment Securities

Investment Securities
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Investment Securities	5) Investment Securities The Companys investment securities as of August29, 2009 and February28, 2009 are as follows: August 29, February 28, (in millions) 2009 2009 Available-for-sale securities: Short term $ $ 2.0 Long term 146.6 171.4 Trading securities: Short term 41.2 Long term 10.5 47.8 Held-to-maturity securities: Long term 0.1 0.1 Put option: Short term 1.9 Long term 1.8 Total investment securities $ 200.3 $ 223.1 Auction Rate Securities As of August29, 2009 and February28, 2009, the Companys available-for-sale investment securities represented approximately $148.9 million and approximately $176.0 million par value of auction rate securities, respectively, less temporary valuation adjustments of approximately $2.3 million and $2.6 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Companys earnings. These securities at par are invested in preferred shares of closed end municipal bond funds, which are required, pursuant to the Investment Company Act of 1940, to maintain minimum asset coverage ratios of 200%. All of these available-for-sale investments carried triple-A credit ratings from one or more of the major credit rating agencies as of August29, 2009 and February28, 2009, and none of them are mortgage-backed debt obligations. The Company believes that the unrealized losses are temporary and reflect the investments current lack of liquidity. As of August29, 2009 and February28, 2009, the Companys available-for-sale investments have been in a continuous unrealized loss position for 12 months or more. Due to their lack of liquidity, the Company classified $146.6 million and $171.4 million of these investments as long term investment securities at August29, 2009 and February28, 2009, respectively. As of August29, 2009 and February28, 2009, the Companys trading investment securities included approximately $41.2 million at fair value ($43.1 million at par) and $41.4 million at fair value ($43.2 million at par), respectively, of auction rate securities which are invested in securities collateralized by student loans. As of August29, 2009 and February28, 2009, these securities were more than 100% collateralized with approximately 90% of such collateral in the aggregate being guaranteed by the United States government. All of these trading investment securities also carried triple-A ratings from one or more of the major credit rating agencies as of August29, 2009 and February28, 2009. During the first six months of fiscal 2009, the Company recognized a pre-tax unrealized loss of approximately $0.1 million in the consolidated statement of earnings to reflect the decrease in the fair value of these securities. In the third quarter of fiscal 2008, the Company entered into an agreement (the Agreement) with the investment firm that sold the Company these securities. By entering into the Agreement, the Company (1)received the right (Put Option) to sell these au

Property and Equipment

Property and Equipment
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Property and Equipment	6) Property and Equipment As of August29, 2009 and February28, 2009, included in property and equipment, net is accumulated depreciation and amortization of $1.1 billion.

Stock-Based Compensation

Stock-Based Compensation
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Stock-Based Compensation	7) Stock-Based Compensation The Company records stock-based compensation under the provisions of SFAS No.123 (revised 2004), Share-Based Payment (SFAS No.123R), which requires companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its consolidated financial statements. Currently, the Companys stock-based compensation relates to restricted stock awards and stock options. The Companys restricted stock awards are considered nonvested share awards as defined under SFAS No.123R. Stock-based compensation expense for the three and six months ended August 29, 2009 was approximately $11.1 million ($6.7 million after tax or $0.03 per diluted share) and approximately $22.1 million ($13.4 million after tax or $0.05 per diluted share), respectively. Stock-based compensation expense for the three and six months ended August 30, 2008 was approximately $11.2 million ($7.0 million after tax or $0.03 per diluted share) and approximately $21.6 million ($13.5 million after tax or $0.05 per diluted share), respectively. In addition, the amount of stock-based compensation cost capitalized for the six months ended August 29, 2009 and August 30, 2008 was approximately $0.6 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. The Company generally issues new shares for stock option exercises and restricted stock awards. As of August29, 2009, unrecognized compensation expense related to the unvested portion of the Companys stock options and restricted stock awards was $34.4 million and $113.3 million, respectively, which is expected to be recognized over a weighted average period of 3.0 years and 4.8 years, respectively. Stock Options Stock option grants are issued at fair market value on the date of grant and generally become exercisable in five equal annual installments beginning one to three years from the date of grant. Option grants for stock options issued prior to May10, 2004 expire ten years after the date of grant. Option grants for stock options issued since May10, 2004 expire eight years after the date of grant. All option grants are nonqualified. The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table. During the first quarter of fiscal 2009, the Company granted approximately 0.7 million stock options. No stock options were granted during the second quarter of fiscal 2009. Six Months Ended August 29,

Shareholders Equity

Shareholders Equity
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Shareholders' Equity	8) Shareholders Equity Between December 2004 and September 2007, the Companys Board of Directors authorized, through several share repurchase programs, the repurchase of $2.950 billion of its shares of common stock. The Company was authorized to make repurchases from time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and regulations. The Company also purchases shares of its common stock to cover employee related taxes withheld on vested restricted stock awards. In the first six months of fiscal 2009, the Company repurchased approximately 1.1 million shares of its common stock for a total cost of approximately $33.1 million, bringing the aggregate total of common stock repurchased to approximately 56.0 million shares for a total cost of approximately $2.1 billion since the initial authorization in December 2004.

Earnings Per Share

Earnings Per Share
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Earnings Per Share	9) Earnings Per Share The Company presents earnings per share on a basic and diluted basis. Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding including the dilutive effect of stock-based awards as calculated under the treasury stock method. Stock-based awards for the three and six months ended August29, 2009 of approximately 12.6 million and 14.0 million shares, respectively, and for the three and six months ended August30, 2008 of approximately 15.0 million and 15.1 million shares, respectively, were excluded from the computation of diluted earnings per share as the effect would be anti-dilutive.

Lines of Credit

Lines of Credit
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Lines of Credit	10) Lines of Credit At August 29, 2009, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of September 3, 2009 and February 26, 2010, respectively. Subsequent to the end of the second fiscal quarter of 2009, the expiration date on the line of credit that expired on September 3, 2009 was extended to September 3, 2010. These uncommitted lines of credit are currently and are expected to be used for letters of credit in the ordinary course of business. As of August 29, 2009, the Company did not have any direct borrowings under the uncommitted lines of credit. Although no assurances can be provided, the Company intends to renew both uncommitted lines of credit before the respective expiration dates.

Supplemental Cash Flow Informat

Supplemental Cash Flow Information
	6 Months Ended Aug. 29, 2009 USD / shares
Notes to Consolidated Financial Statements
Supplemental Cash Flow Information	11) Supplemental Cash Flow Information The Company paid income taxes of $147.6 million and $136.1 million in the first six months of fiscal 2009 and 2008, respectively. The Company recorded an accrual for capital expenditures of $6.6 million and $18.1 million as of August29, 2009 and August30, 2008, respectively.

Document and Entity Information

Document and Entity Information (USD $)
	6 Months Ended Aug. 29, 2009	Aug. 30, 2008
Document and Entity Information
Entity Registrant Name	BED BATH & BEYOND INC.
Entity Central Index Key	0000886158
Document Type	10-Q
Document Period End Date	2009-08-29
Amendment Flag	false
Current Fiscal Year End Date	--02-27
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$7,430,283,934	[1]
Entity Common Stock, Shares Outstanding	262,685,710
[1]For purposes of this calculation, all outstanding shares of common stock have been considered held by non-affiliates other than the 17,353,465 shares beneficially owned by directors and executive officers, including in the case of the Co-Chairmen trusts and foundations affiliated with them. In making such calculation, the Registrant does not determine the affiliate or non-affiliate status of any shares for any other purpose.