Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | May. 29, 2010
| Feb. 27, 2010
|
Current assets: | ||
Cash and cash equivalents | $1,083,985 | $1,096,100 |
Short term investment securities | 560,174 | 431,476 |
Merchandise inventories | 1,846,140 | 1,759,703 |
Other current assets | 292,054 | 276,066 |
Total current assets | 3,782,353 | 3,563,345 |
Long term investment securities | 133,835 | 132,860 |
Property and equipment, net | 1,103,367 | 1,119,292 |
Other assets | 341,471 | 336,633 |
Total assets | 5,361,026 | 5,152,130 |
Current liabilities: | ||
Accounts payable | 678,685 | 611,163 |
Accrued expenses and other current liabilities | 271,193 | 281,730 |
Merchandise credit and gift card liabilities | 175,404 | 172,804 |
Current income taxes payable | 89,400 | 83,857 |
Total current liabilities | 1,214,682 | 1,149,554 |
Deferred rent and other liabilities | 257,312 | 246,273 |
Income taxes payable | 105,813 | 103,399 |
Total liabilities | 1,577,807 | 1,499,226 |
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 323,417 and 320,553 shares, respectively; outstanding 263,886 and 262,898 shares, respectively | 3,234 | 3,206 |
Additional paid-in capital | 1,099,250 | 1,020,515 |
Retained earnings | 4,892,507 | 4,754,954 |
Treasury stock, at cost; 59,531 and 57,655 shares, respectively | (2,211,701) | (2,126,499) |
Accumulated other comprehensive (loss) income | (71) | 728 |
Total shareholders' equity | 3,783,219 | 3,652,904 |
Total liabilities and shareholders' equity | $5,361,026 | $5,152,130 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Share data in Thousands, except Per Share data | May. 29, 2010
| Feb. 27, 2010
|
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 |
Preferred stock, authorized shares | 1,000 | 1,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | 0.01 | 0.01 |
Common stock, authorized shares | 900,000 | 900,000 |
Common stock, issued shares | 323,417 | 320,553 |
Common stock, outstanding shares | 263,886 | 262,898 |
Treasury stock, shares | 59,531 | 57,655 |
Consolidated Statements of Earn
Consolidated Statements of Earnings (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
May. 29, 2010 | 3 Months Ended
May. 30, 2009 |
Net sales | $1,923,051 | $1,694,340 |
Cost of sales | 1,148,015 | 1,027,522 |
Gross profit | 775,036 | 666,818 |
Selling, general and administrative expenses | 549,642 | 524,514 |
Operating profit | 225,394 | 142,304 |
Interest income | 516 | 1,767 |
Earnings before provision for income taxes | 225,910 | 144,071 |
Provision for income taxes | 88,357 | 56,899 |
Net earnings | $137,553 | $87,172 |
Net earnings per share - Basic (in dollars per share) | 0.53 | 0.34 |
Net earnings per share - Diluted (in dollars per share) | 0.52 | 0.34 |
Weighted average shares outstanding - Basic (in shares) | 259,400 | 256,942 |
Weighted average shares outstanding - Diluted (in shares) | 263,638 | 258,764 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 3 Months Ended
May. 29, 2010 | 3 Months Ended
May. 30, 2009 |
Cash Flows from Operating Activities: | ||
Net earnings | $137,553 | $87,172 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation | 45,013 | 44,779 |
Stock-based compensation | 11,836 | 11,010 |
Tax benefit from stock-based compensation | (2,679) | (55) |
Deferred income taxes | (1,303) | (5,081) |
Other | (304) | 54 |
(Increase) decrease in assets: | ||
Merchandise inventories | (86,437) | (61,480) |
Trading investment securities | (1,139) | (2,439) |
Other current assets | (19,122) | (16,998) |
Other assets | 128 | 170 |
Increase (decrease) in liabilities: | ||
Accounts payable | 77,767 | 98,819 |
Accrued expenses and other current liabilities | (10,681) | 2,220 |
Merchandise credit and gift card liabilities | 2,600 | (4,992) |
Income taxes payable | 7,957 | 34,856 |
Deferred rent and other liabilities | 11,094 | 6,274 |
Net cash provided by operating activities | 172,283 | 194,309 |
Cash Flows from Investing Activities: | ||
Purchase of held-to-maturity investment securities | (377,860) | |
Redemption of held-to-maturity investment securities | 217,520 | |
Redemption of available-for-sale investment securities | 30,850 | 7,600 |
Capital expenditures | (39,032) | (26,588) |
Net cash used in investing activities | (168,522) | (18,988) |
Cash Flows from Financing Activities: | ||
Proceeds from exercise of stock options | 68,364 | 23,303 |
Excess tax benefit from stock-based compensation | 962 | 1,712 |
Repurchase of common stock, including fees | (85,202) | (13,111) |
Net cash (used in) provided by financing activities | (15,876) | 11,904 |
Net (decrease) increase in cash and cash equivalents | (12,115) | 187,225 |
Cash and cash equivalents: | ||
Beginning of period | 1,096,100 | 668,209 |
End of period | $1,083,985 | $855,434 |
Basis of Presentation
Basis of Presentation | |
3 Months Ended
May. 29, 2010 | |
Basis of Presentation | |
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 May29, 2010 and February27, 2010 and the results of its operations and its cash flows for the three months ended May29, 2010 and May30, 2009, 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 February27, 2010 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 the calendar months of August, Novemberand December, and generally lower in February. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | |
3 Months Ended
May. 29, 2010 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | 2) Recent Accounting Pronouncements In January2010, the Financial Accounting Standards Board issued updated accounting guidance related to fair value measurements and disclosures which amends and clarifies existing disclosure requirements. This updated accounting guidance requires new disclosures related to amounts transferred into and out of Level 1 and 2 fair value measurements as well as separate disclosures of purchases, sales, issuances, and settlements related to amounts reported as Level 3 fair value measurements. This guidance also clarifies existing fair value disclosure requirements related to the level of disaggregation and the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual periods beginning after December15, 2009, except for the separate disclosures of purchases, sales, issuances, and settlements related to amounts reported as Level 3 fair value measurements which is effective for fiscal years beginning after December15, 2010. Early adoption is permitted. During the first quarter of fiscal 2010, the Company adopted this guidance, including the guidance related to disclosures of purchases, sales, issuances, and settlements for amounts reported as Level 3 fair value measurements. The adoption of this guidance did not have a material impact on the Companys consolidated financial statements (See Fair Value Measurements, Note 3). |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
May. 29, 2010 | |
Fair Value Measurements | |
Fair Value Measurements | 3) Fair Value Measurements 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. The hierarchy for inputs used in measuring fair value 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 May29, 2010, 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 categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified 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 approach, income approach and/or cost approach. The Companys Level 1 valuations are based on the market approach and consist primarily of quoted pric |
Cash and Cash Equivalents
Cash and Cash Equivalents | |
3 Months Ended
May. 29, 2010 | |
Cash and Cash Equivalents | |
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 five business days, of $66.0 million and $56.0 million as of May29, 2010 and February27, 2010, respectively. |
Investment Securities
Investment Securities | |
3 Months Ended
May. 29, 2010 | |
Investment Securities | |
Investment Securities | 5) Investment Securities The Companys investment securities as of May29, 2010 and February27, 2010 are as follows: (in millions) May29, 2010 February27, 2010 Available-for-sale securities: Short term $ $ 15.0 Long term 120.6 120.8 Trading securities: Short term 25.9 40.5 Long term 13.2 12.1 Held-to-maturity securities: Short term 534.2 373.6 Put option: Short term 0.1 2.3 Total investment securities $ 694.0 $ 564.3 Auction Rate Securities As of May29, 2010 and February27, 2010, the Companys available-for-sale investment securities represented approximately $123.8 million and approximately $137.9 million par value of auction rate securities, respectively, less temporary valuation adjustments of approximately $3.2 million and $2.1 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive (loss) income, 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 May29, 2010 and February27, 2010, 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 May29, 2010 and February27, 2010, 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 approximately $120.6 million and $120.8 million of these investments as long term investment securities at May29, 2010 and February27, 2010, respectively. During the three months ended May29, 2010, approximately $14.1 million of these securities were redeemed at par. As of May29, 2010 and February27, 2010, the Companys trading investment securities included approximately $25.9 million at fair value ($26.0 million at par) and $40.5 million at fair value ($42.8 million at par), respectively, of additional auction rate securities which are invested in securities collateralized by student loans. As of May29, 2010 and February27, 2010, these securities were more than 100% collateralized with approximately 84% and 90%, respectively, 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 May29, 2010 and February27, 2010. During the first quarter of fiscal 2010, the Company recognized a pre-tax unrealized gain of approximately $2.2 million in the consolidated statement of earnings to reflect the increase in the fair value of these securities. In fiscal 2008, the Company entered into an agreement (the Agreement) with the investment firm that sold the Company |
Property and Equipment
Property and Equipment | |
3 Months Ended
May. 29, 2010 | |
Property and Equipment | |
Property and Equipment | 6) Property and Equipment As of May29, 2010 and February27, 2010, included in property and equipment, net is accumulated depreciation and amortization of $1.3 billion and $1.2 billion, respectively. |
Stock-Based Compensation
Stock-Based Compensation | |
3 Months Ended
May. 29, 2010 | |
Stock-Based Compensation | |
Stock-Based Compensation | 7) 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 Companys stock-based compensation relates to restricted stock awards and stock options. The Companys restricted stock awards are considered nonvested share awards. Stock-based compensation expense for the three months ended May29, 2010 and May30, 2009 was approximately $11.8 million ($7.2 million after tax or $0.03 per diluted share) and approximately $11.0 million ($6.7 million after tax or $0.03 per diluted share), respectively. In addition, the amount of stock-based compensation cost capitalized for the three months ended May29, 2010 and May30, 2009 was approximately $0.3 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. Under the 2004 Plan and the Prior Plans, an aggregate of 83.4 million shares of common stock were authorized for issuance. The Company generally issues new shares for stock option exercises and restricted stock awards. As of May29, 2010, unrecognized compensation expense related to the unvested portion of the Companys stock options and restricted stock awards was $31.2 million and $126.0 million, respectively, which is expected to be recognized over a weighted average period of 3.4 years and 4.7 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. Three Months Ended Black-Scholes Valuation Assumptions (1) May29, 2010 May30, 2009 W |
Shareholders' Equity
Shareholders' Equity | |
3 Months Ended
May. 29, 2010 | |
Shareholders' Equity | |
Shareholders' Equity | 8) Shareholders Equity Between December2004 and September2007, 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 rulesand regulations. The Company also purchases shares of its common stock to cover employee related taxes withheld on vested restricted stock awards. In the first three months of fiscal 2010, the Company repurchased approximately 1.9 million shares of its common stock for a total cost of approximately $85.2 million, bringing the aggregate total of common stock repurchased to approximately 59.5 million shares for a total cost of approximately $2.2 billion since the initial authorization in December2004. |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
May. 29, 2010 | |
Earnings Per Share | |
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 of approximately 1.2 million and 15.3 million were excluded from the computation of diluted earnings per share as the effect would be anti-dilutive for the three months ended May29, 2010 and May30, 2009, respectively. |
Lines of Credit
Lines of Credit | |
3 Months Ended
May. 29, 2010 | |
Lines of Credit | |
Lines of Credit | 10) Lines of Credit At May29, 2010, the Company maintained two uncommitted lines of credit of $100 million each, with expiration dates of September3, 2010 and February28, 2011, respectively. These uncommitted lines of credit are currently and are expected to be used for letters of credit in the ordinary course of business. During the first three months of fiscal 2010, 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 | |
3 Months Ended
May. 29, 2010 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | 11) Supplemental Cash Flow Information The Company paid income taxes of $83.5 million and $27.3 million in the first three months of fiscal 2010 and 2009, respectively. The Company recorded an accrual for capital expenditures of $11.5 million and $11.4 million as of May29, 2010 and May30, 2009, respectively. |
Document and Entity Information
Document and Entity Information | |
3 Months Ended
May. 29, 2010 | |
Document and Entity Information | |
Entity Registrant Name | BED BATH & BEYOND INC |
Entity Central Index Key | 0000886158 |
Document Type | 10-Q |
Document Period End Date | 2010-05-29 |
Amendment Flag | false |
Current Fiscal Year End Date | --02-26 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 263,885,848 |
Document Fiscal Year Focus | 2,010 |
Document Fiscal Period Focus | Q1 |