This excerpt taken from the BBBY 10-K filed May 2, 2007.
FORWARD LOOKING STATEMENTS
This Form 10-K contains forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Companys 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 Companys control. Such factors include the following:
Consumer Preferences and Demographic Factors
The Companys success depends on our ability to anticipate and respond in a timely manner to changing
merchandise trends, customer demands and demographics. The Companys failure to anticipate, identify or react appropriately to changes in customer tastes, preferences, spending patterns and other lifestyle decisions could lead to, among other things, excess inventories or a shortage of products and could have a material adverse affect on the Companys financial condition and results of operations.
General Economic Conditions
General economic factors that are beyond the Companys control impact the Companys forecasts and actual performance. These factors include interest rates, recession, inflation, deflation, consumer credit availability, consumer debt levels, fuel and energy costs, tax rates and policy, unemployment trends, the impact of natural disasters and terrorist activities, and other matters that influence consumer spending. Changes in the economic climate could adversely affect the Companys performance.
Unusual Weather Patterns
The Companys operating results could be negatively impacted by unusual weather patterns. Frequent or unusually heavy snow, ice or rain storms, hurricanes, floods, tornados or extended periods of unseasonable temperatures could adversely affect the Companys performance.
Competition and Pricing Pressures
The retail business is highly competitive. The Company competes for customers, associates, locations, merchandise, services and other important aspects of the business with many other local, regional and national retailers. Those competitors range from specialty retail stores to department stores and discounters. Unanticipated changes in the pricing and other practices of those competitors may adversely affect the Companys performance.
Cost of Labor, Merchandise and Other Expenses
The Companys success depends, in part, on our ability to manage operating costs and to look for opportunities to reduce costs. The Companys ability to meet its labor needs while controlling costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. The Companys ability to find qualified vendors and obtain access to products in a timely and efficient manner can be adversely affected by political instability, the financial instability of suppliers, suppliers noncompliance with applicable laws, transportation costs and other factors beyond the Companys control.
The Companys growth depends, in part, on our ability to open new stores and operate profitably. Our ability to open additional stores successfully will depend on a number of factors, including our identification and availability of suitable store locations; our success in negotiating leases on acceptable terms; our hiring and training of skilled store operating personnel, especially management; and our timely development of new stores, including the availability of construction materials and labor and the absence of significant construction and other delays in store openings based on weather or other events. In addition, as our business continues to grow, we are subject to more complex state and federal regulations and may be the target of private actions alleging violations of such regulations. This increases the cost of doing business and the risk that our business practices could result in liabilities that may adversely affect the Companys performance, despite the exercise of reasonable care.
Review of Equity Grants and Procedures and Related Matters
In June 2006, the Companys Board of Directors appointed a special committee of independent directors with authority, among other things, to conduct an investigation with respect to the setting of exercise prices for employee stock options and related matters. The review identified various deficiencies in the process of granting and documenting stock options and restricted shares. As a result of the deficiencies, the Company revised the
measurement dates for various option grants. Counsel to the special committee notified the SEC of the review. Following such self-reporting, the SEC Staff commenced an informal inquiry and the United States Attorneys office for the District of New Jersey commenced an inquiry regarding these matters. The Company is cooperating with these inquiries.
The Companys past stock option granting process has exposed the Company to risk factors that could have a material adverse affect on the Companys business and financial condition, including the outcome or any other matters arising out of the inquiries commenced by the SEC or the United States Attorneys office for the District of New Jersey; the possibility that the SEC or the United States Attorneys office for the District of New Jersey may not agree with all of the special committees findings and recommendations as set forth in the Companys Form 8-K filed October 10, 2006, and may require additional or different remediation or may bring proceedings in respect of such matters; any other proceedings which may be brought against the Company by other governmental agencies; any tax implications relating to the Companys stock option grants; the outcome of the shareholder derivative actions filed against certain of the Companys officers and its directors; the possibility of other private litigation relating to such stock option grants and related matters; and other matters arising out of or related to the Companys stock option grants and procedures and related matters.