This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Bed Bath & Beyond, Inc. (BBBY: chart) on April 11, 2007.

Key Investors Issues

- Earnings per share were up 12% from the 52-week fiscal 2005 to $2.15.
- Net sales were $6.6 billion, up 13.9% from the prior fiscal year.
- Capital expenditures for fiscal 2007 are estimated at $375 million, constituting the company’s largest capital expenditures program to-date.

Fiscal Year 2006 Financial Highlights

The company achieved its 15th consecutive year of record earnings since becoming a publicly-held company in 1992, partly due to the effect of the additional week in the fiscal year.

The earnings per share value excluded the non-recurring 7 cents per share charge related to Internal Revenue Code Section 409A. Fiscal 2005 included only half a year of stock option expense due to the early adoption of FAS 123(R) starting in the third quarter.

- Comparable store sales rose by 4.9% on top of an increase of 4.6% in fiscal 2005.
- Gross profit margin improved slightly from fiscal 2005.
- Consolidated capital expenditures were $320 million, mostly for new and existing stores, information technology, the acquisition of the company’s corporate office building and supply chain costs, including those related to its planned Christmas Tree Shops, New Jersey distribution center and e-fulfillment center.

Merchandise inventories as of March 3, 2007, were on plan at $1.5 billion or about $54 per consolidated square foot.

- Consolidated shareholders’ equity at March 3, 2007, approximated $2.6 billion net of share repurchases of common stock, including the adoption of Staff Accounting Bulletin 108, which relates to immaterial adjustments to prior year accounting treatments.
- Depreciation amounted to approximately $133 million.
- Cash, cash equivalents and investments securities were $1.1 billion at year end.

The deleveraging of SG&A of approximately 130 basis points resulted from several factors, excluding the non-recurring pre-tax charge related to 409A.

The factors included the expensing of stock options for 12 months in fiscal 2006 versus just six months in fiscal 2005; additional stock-based compensation charges, primarily related to the revised measurement dates; increased legal and accounting charges associated with the stock option review; and an increase in advertising, which includes higher paper costs and postal rates. Lastly, there were one-time benefits experienced in 2005, the settlement of credit card litigation and certain insurance recoveries, which were not experienced in fiscal 2006.

As of March 3, 2007, the company operated a total of 888 stores.

- This included 815 Bed Bath & Beyond stores (20 of which were opened during the fiscal fourth quarter, including the first store in the state of Alaska), in 48 states, the District of Columbia and Puerto Rico.
- As of March 3, 2007, Christmas Tree Shops, Inc. operated 34 stores in 8 states and Harmon Stores, Inc. operated 39 stores in 3 states (one of which was opened during the fiscal fourth quarter).
-New Fine China departments and new Harmon health and beauty care departments were opened within Bed Bath & Beyond stores.
- Consolidated store space at the end of the year was 27.8 million square feet.

Fourth Quarter Highlights

- The fourth quarter lasted 14 weeks, and the additional week had a good influence on the EPS and net sales values.
- Earnings per share were 79 cents, up 17.9% from the 67 cents per share earned a year ago, excluding the non-recurring charge of 7 cents per share related to 409A.

The non-recurring charge primarily resulted from cash payments to over 1,600 employees, excluding senior management, to protect them from certain potential adverse tax consequences arising pursuant to Internal Revenue Code Section 409A. The company had initially estimated this pre-tax charge to be approximately $40 million, but the actual charge was approximately $30 million, equivalent to about 7 cents per share.

- Net sales were $2 billion, up 18.4% from 2005, which had only 13 weeks.
- Same-store sales rose 5.2% vs. an increase of 6.3% a year ago.

The approximate 110 basis point decline in the fourth quarter was primarily due to higher inventory acquisition costs.

- Inventory acquisition costs were higher primarily due to a shift in purchase volume incentives earned during the third quarter, which benefited that quarter.
- Selling, general and administrative expenses were $523 million, or 26.2% of net sales, excluding the non-recurring pre-tax charge of $30 million related to 409A, compared with $443 million, or 26.3% of net sales a year ago.
- The SG&A ratio for the quarter benefited from higher sales.

The company’s Board of Directors approved a $1 billion share repurchase program.