Welcome to Bed Bath & Beyond's Second Quarter of Fiscal 2012 Results Conference Call. [Operator Instructions] Today's conference is being recorded. A rebroadcast of the conference call will be available beginning on Wednesday, September 19, 2012, at 6:30 p.m. Eastern Time through 6:30 p.m. Eastern Time on Friday, September 21, 2012. To access the rebroadcast, you may dial 1 (888) 203-1112 with the passcode ID of 6602434. And at this time, it's my pleasure to turn the conference over to Gene Castagna of Bed Bath & Beyond. Please go ahead. Eugene A. Castagna: Thank you and good afternoon. Welcome to Bed Bath & Beyond's Second Quarter of fiscal 2012 Conference Call. A short time ago, we issued a press release announcing Bed Bath & Beyond's results for the 3- and 6-month period ended August 25, 2012. During this call, we will comment on some of the second quarter highlights and provide an update of our model through the end of the fiscal year. We will also provide some additional information related to the recent acquisitions of Cost Plus, Inc. and Linen Holdings, LLC. Before proceeding, I will read the following statement and I quote, "Bed Bath & Beyond's fiscal second quarter press release and comments made during this call may contain forward-looking statements within the meaning of Section 21E of the Securities & Exchange Act of 1934 as amended. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, 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. Please refer to Bed Bath & Beyond's SEC filings, including its Form 10-K for the year ended February 25, 2012. The company does not undertake any obligation to update its forward-looking statements. Joining me on today's call are Warren Eisenberg, Co-Chairman of Bed Bath & Beyond; and Steven Temares, Chief Executive Officer and member of the Board of Directors. I'm now very pleased to introduce Warren Eisenberg. Warren?

Thanks, Gene, and good afternoon. We are pleased to report our company's fiscal second quarter net earnings per diluted share of $0.98, which, after accounting for the World Market and Linen Holdings acquisition, was at the high end of our model. As previously announced, we are excited that during the quarter, we completed the acquisition of both Cost Plus, Inc. and Linen Holdings, LLC. Cost Plus, Inc., which we will refer to as World Market, is a retailer with 258 stores in 30 states at the time of the acquisition, operating under the names of World Market, Cost Plus World Market and World Market Stores that sell a wide range of home decorating items, furniture, gifts, holiday and other seasonal items and specialty food and beverages. Linen Holdings is a business-to-business distributor of a variety of textile products, amenities and other goods. And we're looking forward to the opportunities provided by these acquisitions to do more for and with our collective customers. In a few minutes, Steve and Gene will provide some additional information regarding these transactions. In addition to these transactions, other second quarter activities included the opening of 5 Bed Bath & Beyond stores, 3 buybuy BABY stores, 2 Harmon Face Values store and 1 Christmas Tree Shops store. We also continued to relocate and renovate stores throughout the company. At August 25, 2012, consolidated store space, including the 258 World Market Stores, was approximately 41.4 million square feet, an increase of approximately 16.3% over the end of last year's second quarter. Since the beginning of the fiscal first quarter of 2012, we have opened 3 World Market Stores, our first opening since the acquisition was completed, and 1 additional buybuy BABY store. Including these stores, we currently operate 1,453 stores, consisting of 1,000 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada; 261 World Market Stores; 73 Christmas Tree Shops stores; and 72 buybuy BABY stores and 47 stores under the name Harmon or Harmon Face Values. During fiscal 2012, including the 22 stores we have opened to date and including several anticipated World Market openings, we have modeled opening approximately 45 stores across all our concepts. We believe that fiscal 2012 mix of store openings by concept, excluding World Market, will be relatively comparable to that of fiscal 2011. As the year progresses, the total number of stores that we will open will be updated as we gain greater visibility. We believe that throughout the United States and Canada, there is an opportunity to operate in excess of 1,300 Bed Bath & Beyond stores, as well as grow our World Market, Christmas Tree Shops, buybuy BABY concepts from coast to coast. Additionally, we will continue to open Harmon Face Values stores and place health and beauty care offerings in selected stores as well as specialty food and beverage departments in selected Bed Bath & Beyond stores. We remain committed to and are excited about the continued growth of all our merchandise categories. Our culture and the tremendous efforts of our associates have been and remain the key to our company's long term success. This culture, which takes advantage of the knowledge, the independence and the customer focus of our associates has always been the foundation of our long term performance and allows us to respond more quickly to market demands and to changing economic conditions on a market-by-market basis. We believe we have the people, the resources and the capability to achieve our near and long term goals. And now I'll turn the call over to Steven Temares. Steve? Steven H. Temares: Thank you, Warren. Good afternoon, everyone, and thank you for participating in this conference call. Before reviewing our fiscal second quarter results that have been reported within the last hour, I'd like to again welcome the associates, customers and vendors of World Market and Linen Holdings to Bed Bath & Beyond's growing family. The prospects offered by our newly added, dedicated and talented people are extremely exciting to our organization and as Warren mentioned, we look forward to the opportunities that, in combination with all our concepts, gives us to do more for and with our collective customers. We're also excited about the completion of the relocation of our offices in Farmingdale and Garden City, New York to our corporate headquarters in Union, New Jersey. As a result of this relocation, we expect to further improve the communication, coordination and execution across all our concepts, activities and platforms to enhance the continuing growth of our company. Offering a broad and deep assortment of merchandise at everyday low prices with superior customer service remains at the core of our identity. At the same time, we remain focused on increasing the productivity of our existing stores and enhancing our customer experience by expanding our product offerings to both new and existing customers; expanding, renovating and/or relocating stores; growing our bridal, baby and gift registries; and continuing the development of our interactive platforms. We continue to invest in all aspects of our company to enhance our customer's overall experience in store, online and through mobile devices and social media, and remain committed to being our customers' first choice for the merchandise categories we offer domestically, interactively and over the longer term, internationally. We are confident that our company is well positioned to grow profitably and increase market share and shareholder value over time. We are pleased that we've been able to continue our strong performance despite the ongoing challenges that continue to affect consumers. We believe our culture and the dedication and talents of our associates and their focus on improving the overall customer shopping experience, while at the same time creating a more productive and efficient company, are the keys to producing the strong results we have experienced. Turning to our fiscal second quarter of 2012 performance, which includes the results of World Market and Linen Holdings from the date of each acquisition, the end of the quarter, we reported earlier today that our fiscal second quarter net earnings per diluted share are $0.98, an increase of approximately 5.4% when compared to the $0.93 per diluted share that we earned in last year's second quarter. For the fiscal first half, net earnings per diluted share were $1.87, an increase of approximately 13.3% compared to the $1.65 earned last year. Net sales for the fiscal second quarter were approximately $2.6 billion, approximately 12.1% higher than in the prior year. Of this increase, approximately 57% was the result of our recently completed acquisitions, approximately 29% was attributable to the increase in comp store sales and the remaining 14% resulted primarily from new stores. Net sales for the fiscal first half of the year were approximately $4.8 billion, approximately 8.8% higher than in the fiscal first half of 2011. Of this increase, approximately 41% was the result of our recently completed acquisitions, approximately 37% was attributable to the increase in comp store sales and the remaining 22% resulted primarily from new stores. Excluding World Market and Linen Holdings for the purpose of our comp store sales calculations, second quarter comp store sales increased by approximately 3.5% compared with an increase of approximately 5.6% last year. For the fiscal first half, comp store sales increased by approximately 3.3% compared with an increase of approximately 6.3% last year. These increases in comp store sales for the fiscal second quarter and for the fiscal first half of 2012 were attributed to increases in both the number of transactions and the average transaction amount. Gross profit for the fiscal second quarter was approximately 39.8% of net sales compared to approximately 41.1% of net sales for the second quarter of 2011. This decrease in the gross profit margin as a percentage of net sales was primarily attributed to an increase in coupons due to an increase in both the redemptions and the average coupon amount as well as a shift in the mix of merchandise sold to lower margin categories and the inclusion of World Markets financial results. Gross profit for the fiscal first half was approximately 39.9% compared to approximately 40.9% of net sales for the fiscal first half of 2011. This decrease in the gross profit margin as a percentage of sales is primarily attributed to an increase in coupons due to increases in both the redemptions and the average coupon amount as well as a shift in the merchandise -- in the mix of the merchandise sold to lower margin categories. As for selling, general and administrative expenses for the fiscal second quarter, they were approximately 25.7% of net sales as compared to approximately 25% of net sales in last year's fiscal second quarter, an increase of approximately 70 basis points. This increase can primarily be attributed to higher expenses for payroll and payroll-related costs, occupancy costs and advertising expenses as a percentage of net sales. Each of these expense items was impacted by the inclusion of World Market's financial results and their higher percentages for these categories. In addition, professional fees were higher due to our acquisitions. Lastly, payroll and payroll-related costs were also impacted by our office relocation. For the fiscal first half, selling, general and administrative expenses were approximately 25.8% of net sales, a decrease of approximately 10 basis points when compared to approximately 25.9% of net sales in the fiscal first half of 2011. Just as a reminder, the consolidation of World Market and Linen Holdings' financial results will be slightly accretive to our earnings per diluted share for the full year but will increase certain expenses such as payroll and occupancy as a percentage of net sales. The deleverage as a result of the consolidation will continue until we anniversary the acquisitions in the third quarter of fiscal 2013. With all that said, the operating profit margin for the fiscal second quarter was lower than in the same period a year ago by approximately 200 basis points. For the fiscal first half, the operating margin decreased by approximately 80 basis points. The provision for income taxes continues to fluctuate as taxable events occur and exposures are reevaluated. For the fiscal second quarter, the provision for income taxes was approximately 38.6% compared to approximately 38% for the comparable quarter last year, an increase of approximately 60 basis points. For the fiscal first half, the provision for income taxes was approximately 36.4% compared to approximately 37.8% for the comparable period last year, a decrease of approximately 140 basis points. The fiscal first half provisions included net after-tax benefits of $15.3 million this year and $5 million last year due to distinct tax events occurring during these periods. Capital expenditures. Let's see if we could say that again. Capital expenditures for the fiscal first half of 2012 were approximately $158.1 million, principally for new stores, existing store improvements, Information Technology enhancements and other projects that are important to our future, including the development of an enhanced website experience, our office relocation, new E-Commerce Fulfillment Center and new IT Data Center. While we continue to review and prioritize our capital needs, we remain committed to making the required investments in our company to help position us for our long term success. Our company's Board of Directors continues to review our capital structure on an ongoing basis. In addition to providing value to our shareholders through share repurchase programs, our strong operations should allow us to continue to invest in our infrastructure and maintain our flexibility to take advantage of opportunities as they may arise. As always, we want to thank our associates for their ongoing efforts, which produce Bed Bath & Beyond's long-term success. Through their efforts, we look forward to meeting the challenges that lie ahead and to seizing the opportunities to satisfy our customers, and by doing so, improving our competitive position in the merchandise categories that we offer. I'll now turn the call back to Gene. Gene? Eugene A. Castagna: Thanks, Steve. As Warren said, we are pleased with the $0.98 per diluted share that we earned during the fiscal second quarter, which, after accounting for the World Market and Linen Holdings acquisitions, was at the high end of our model. While we are encouraged by our positive fiscal second quarter results, we continue to be cautiously optimistic about the remainder of the coming year. The following are the planning assumptions for the remainder of fiscal 2012, which consists of 53 weeks and includes World Market and Linen Holdings from the date of each acquisition to the end of the fiscal year. One, as Warren said, including the 22 stores opened to date and including several anticipated World Market openings, we have modeled opening approximately 45 stores across all of our concepts. We believe that fiscal 2012's mix of store openings by concept, excluding World Market, will be relatively comparable to that of fiscal 2011. As the year progresses, the total number of stores that we will open will be updated as we gain greater visibility. Two, we expect to continue our program of relocating, renovating, and expanding a number of our stores in fiscal 2012. Three, capital expenditures for fiscal 2012, including World Market and Linen Holdings, are now planned to be in the range of $300 million to $350 million, which, of course, remains subject to the timing and composition of projects, including new stores and existing store refurbishments, Information Technology enhancements and other projects important to our future, including the following major initiatives: The development of an enhanced website experience for our customers; the opening of a new 800,000 square foot E-Commerce Fulfillment Center in Pendergrass, Georgia; the relocation of our Farmingdale and Garden City, New York offices to our corporate headquarters in Union, New Jersey, for which the remaining construction items are expected to be completed by the end of the fiscal year; and the initial phase of a new IT Data Center to support our ongoing technology initiatives. Currently, we estimate the remaining fiscal 2012 incremental operating costs associated with these major initiatives to be approximately $0.06 per diluted share. Four, we are modeling an increase of 2% to 4% in comparable store sales for the third and fourth quarters. Five, our model reflects that we are not planning to open on Thanksgiving this year. Last year, approximately 20% of our stores were opened that night. Six, taking into account the 53rd week in fiscal 2012, including our newly acquired companies, we are modeling consolidated net sales to increase by 15% to 18% for the third quarter and by 24% to 26% in the fourth quarter. Seven, depreciation for fiscal 2012 is expected to be approximately $195 million to $205 million. Eight, assuming these sales levels and modeling advertising events that are relatively consistent with last year, we are modeling operating profit margin as a percentage of net sales to deleverage for the third and fourth quarters, as well as the full year. Significantly contributing to this -- to the deleverage are the shift in mix and merchandise sold to lower margin categories, the incremental operating costs associated with the previously discussed major initiatives and the consolidation of World Market and Linen Holdings financial results, which will be slightly accretive to our earnings per diluted share for the year, but will increase certain expenses such as payroll and occupancy as a percentage of net sales. The deleverage as a result of the consolidation will continue until we anniversary of the acquisitions in the third quarter of fiscal 2013. Nine, the third and fourth quarter tax provisions are estimated to be in the mid- to high-30s percent range, with expected variability as distinct tax events occur. Ten, we expect to generate positive operating cash flow and continue to fund operations entirely from internally-generated sources. Eleven, we plan to continue to repurchase shares under our current $2 billion repurchase program, which we anticipate completing by the end of the fiscal year. Our share repurchase program may be influenced by several factors, including business and market conditions. Based on these and other planning assumptions, we are modeling net earnings per diluted share to be approximately $0.99 to $1.04 for the fiscal third quarter of 2012. For all of fiscal 2012, including the benefit of the 53rd week, the incremental operating costs from the previously discussed major initiatives, the transaction and integration costs related to the recently completed acquisitions and the results of the newly acquired companies, we continue to model net earnings per diluted share to increase by a high single-digit to low double-digit percentage range over fiscal 2011. Before concluding this afternoon's call, a few additional comments relative to our recently concluded fiscal second quarter. Our balance sheet and cash flows remain strong. We ended the fiscal second quarter with cash and cash equivalents and investment securities of approximately $991 million. This includes approximately $75.3 million of investments related to auction rate securities. These securities have an estimated temporary valuation adjustment of approximately $3 million to reflect their current lack of liquidity. Subsequent to the end of the second fiscal quarter, the company tendered approximately $14.3 million of its auction rate securities at a price equal to 95% of par value. As a result, the company will incur a realized loss of approximately $700,000, which will be reflected in its fiscal third quarter results. After this redemption, we will hold approximately $61 million of these securities. We will continue to monitor the market for these securities, which, up until this tender, had redeemed our securities at par and will expense any permanent changes to the value of our remaining securities, if any, as they occur going forward. As of August 25, 2012, retail inventories at cost, including World Market, were approximately $2.4 billion or $58.20 per square foot, a decrease of approximately 2.2% on a per square foot basis over the end of last year's second quarter. This decrease is the result of the consolidation of World Market financial results. Retail inventories continue to be tailored by store to meet the anticipated demands of our customers and are in good condition. Consolidated shareholders' equity at August 25, 2012 was approximately $3.9 billion, which is net of share repurchases, including the approximately $199 million, representing approximately 3.1 million shares repurchased during the fiscal second quarter of 2012. As of August 25, 2012, the remaining balance of the current share repurchase program authorized in December of 2010 was approximately $414 million. As a reminder, our next conference call will be on Wednesday, December 19, 2012. During this call, we will review operating results for the third quarter and 9 months ending on November 24, 2012, and will provide our initial planning assumptions for fiscal 2013. If you have any questions, Ken Frankel and I will be in our offices this evening, September 19, to take your calls. As always, we appreciate your interest in Bed Bath & Beyond.

Ladies and gentlemen, this concludes today's conference call. Thank you for listening. You may now disconnect.