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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 3, 2001
Commission File Number 0-20214
BED BATH & BEYOND INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2250488
(State of incorporation) (IRS Employer Identification No.)
650 LIBERTY AVENUE, UNION, NEW JERSEY 07083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 908/688-0888
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK (PAR VALUE $ 0.01 PER SHARE)
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of May 1, 2001, the aggregate market value of the common stock held by
non-affiliates (which was computed by reference to the closing price on such
date of such stock on the NASDAQ National Market) was $8,226,086,641.*
The number of shares outstanding of the issuer's common stock (par value $0.01
per share) at May 1, 2001: 288,634,619
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement dated May 24, 2001
pursuant to Regulation 14A are incorporated by reference in Part III hereof.
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended March 3, 2001 are incorporated by reference in Part II hereof.
* For purposes of this calculation, all outstanding shares of common stock
have been considered held by non-affiliates other than the 20,176,238
shares beneficially owned by directors and executive officers, including in
the case of the Co-Chief Executive Officers 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.
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TABLE OF CONTENTS
FORM 10-K
ITEM NO. NAME OF ITEM PAGE
PART I
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 11
Item 3. Legal Proceedings........................................... 12
Item 4. Submission of Matters to a Vote of
Security Holders........................................ 12
PART II
Item 5. Market for the Registrant's Common Equity
And Related Shareholder Matters......................... 12
Item 6. Selected Financial Data..................................... 13
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.............................................. 13
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk............................................. 13
Item 8. Financial Statements and Supplementary
Data.................................................... 13
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................................. 13
PART III
Item 10. Directors and Executive Officers of
the Registrant.......................................... 13
Item 11. Executive Compensation...................................... 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management................................... 13
Item 13. Certain Relationships and Related
Transactions............................................ 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K..................................... 14
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PART I
Unless otherwise indicated, the terms "Company" and "Bed Bath & Beyond"
refer collectively to Bed Bath & Beyond Inc. and its subsidiaries. The Company's
fiscal year is comprised of the 52 or 53 week period ending on the Saturday
nearest February 28. Accordingly, fiscal 2000 represented 53 weeks and ended on
March 3, 2001; fiscal 1999 represented 52 weeks and ended on February 26, 2000;
and fiscal 1998 represented 52 weeks and ended on February 27, 1999. Unless
otherwise indicated, all references herein to periods of time (e.g., quarters
and years) are to fiscal periods.
ITEM 1 - BUSINESS
INTRODUCTION
Bed Bath & Beyond believes that it is the nation's largest operator
of "superstores" selling predominantly better quality domestics merchandise and
home furnishings typically found in better department stores. The term
"superstore" as used herein means a store, other than a department store, that
is larger in size than the typical stores in its market selling similar product
categories and offering a breadth and depth of selection in most of its product
categories that far exceeds what is available in such stores. The Company offers
a wide assortment of merchandise at everyday low prices that are substantially
below regular department store prices and generally comparable to or below
department store sale prices. The Company's domestics merchandise line includes
items such as bed linens, bath accessories and kitchen textiles, and the
Company's home furnishings line includes items such as cookware, dinnerware,
glassware and basic housewares. The Company believes that it offers a breadth
and depth of selection in most of its product categories that far exceeds what
is generally available in department stores or other specialty retail stores and
that this enables it to offer customers the convenience of one-stop shopping for
most household items.
As of May 1, 2001, the Company operated 316 stores in 43 states:
Alabama (4), Arizona (5), Arkansas (2), California (37), Colorado (8),
Connecticut (6), Delaware (1), Florida (27), Georgia (12), Idaho (1), Illinois
(15), Indiana (5), Iowa (2), Kansas (4), Kentucky (2), Louisiana (3), Maine (1),
Maryland (10), Massachusetts (7), Michigan (14), Minnesota (2), Mississippi (1),
Missouri (5), Nebraska (1), Nevada (1), New Jersey (16), New Mexico (1), New
York (16), North Carolina (7), North Dakota (1), Ohio (12), Oklahoma (3), Oregon
(3), Pennsylvania (15), Rhode Island (2), South Carolina (5), Tennessee (6),
Texas (23), Utah (4), Vermont (1), Virginia (14), Washington (9) and Wisconsin
(2). Of these stores, 313 use the superstore format that was pioneered by the
Company in 1985. These stores are on average approximately 40,000 square feet in
size and carry the Company's full line of both domestics merchandise and home
furnishings. The other three stores, all established prior to 1986, are smaller
stores that primarily carry domestics merchandise.
HISTORY
The Company was founded in 1971 by Leonard Feinstein and Warren
Eisenberg, the Co-Chief Executive Officers of the Company. Each has more than 40
years of experience in the retail industry.
The Company commenced operations in 1971 with the opening of two
stores, one in New York and one in New Jersey. These stores sold primarily bed
linens and bath accessories. In 1985, the Company introduced its superstore
format with the opening of its first store carrying a full line of domestics
merchandise and home furnishings. The Company began using the name "Bed Bath &
Beyond" in 1987 in order to reflect the expanded product line offered by its
superstores and to distinguish its superstores from conventional specialty
retail stores offering only domestics merchandise or only home furnishings.
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The Company has been engaged in an ongoing expansion program
involving the opening of new superstores (including 70 in 2000, 55 in 1999, and
45 in 1998) and the expansion of existing stores (including two in 2000, four in
1999, and three in 1998). As a result of its expansion program, the Company's
store space has increased from approximately 917,000 square feet at the
beginning of 1992 to approximately 12,204,000 square feet at the end of 2000.
The Company's expansion program is continuing, and the Company currently
anticipates that in fiscal 2001 it will open at least 80 new superstores, which
includes the five new superstores opened through May 1, 2001.
MERCHANDISING AND MARKETING
The Company's strategy for merchandising and marketing is to offer
better quality merchandise at everyday low prices; to maintain a breadth and
depth of selection in most of its product categories that far exceeds what is
generally available in department stores or other specialty retail stores; to
present merchandise in a distinctive manner designed to maximize customer
convenience and reinforce customer perception of wide selection; and to
emphasize dedication to customer service and satisfaction.
MERCHANDISE SELECTION
The Company's superstores offer both domestics merchandise and home
furnishings, including:
Domestics Merchandise
- bed linens and related items: sheets, comforters, duvet
covers, bedspreads, quilts, window treatments (such as
curtains and valances), decorative pillows, blankets, dust
ruffles, bed pillows and mattress pads.
- bath items: towels, shower curtains and liners, waste
baskets, mirrors, hampers, robes and slippers, scales,
bathroom rugs, wall hardware and bath accessories.
- kitchen textiles: tablecloths, placemats, cloth napkins,
dish towels and chair pads.
Home Furnishings
- kitchen and tabletop items: cookware, cutlery, kitchen
gadgets, dinnerware, bakeware, flatware, drinkware,
serveware, glassware, food storage containers, tea kettles,
trash cans and cleaning supplies.
- basic housewares: storage items, closet-related items (such
as hangers, organizers and shoe racks), general housewares
(such as brooms, garbage pails and ironing boards),
lifestyle accessories (such as lamps, chairs, ready to
assemble furniture, furniture covers, accent rugs, wicker,
fountains and clocks) and small electric appliances (such
as blenders, food processors, coffee makers, vacuums,
irons, toaster ovens and hair dryers).
- general home furnishings: giftwrap, candles, personal care
products (such as soaps and lotions), picture frames, wall
art, juvenile items (such as toys and children's books),
artificial plants and flowers and seasonal merchandise
(such as summer and holiday related items).
The Company, on an ongoing basis, tests new merchandise categories
and adjusts the categories of merchandise carried in its stores and may add new
departments or adjust the size of existing departments as required. The Company
believes that the process of adding new departments and expanding or reducing
the size of various departments in response to changing conditions is an
important part of its merchandising strategy.
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The Company's merchandise consists primarily of better quality
merchandise typically found at better department stores. For those product lines
that have brand names associated with them, the Company generally offers leading
brand name merchandise (including All-Clad, Black & Decker, Braun, Brentwood,
Brita, Calphalon, Cannon, Conair, Croscill, Cuisinart, Divatex, Fieldcrest,
Gillette, Homedics, Hoover, J.A. Henckels, Kitchenaid, Krups, Laura Ashley,
Martex, Mikasa, Newell, Pacific Coast Feather Co., Pillowtex, Portmeirion,
Rubbermaid, Springs, Wamsutta and Waverly). The Company estimates that brand
name merchandise accounts for a significant portion of its net sales.
The Company offers a breadth and depth of product selection that
enables customers to select among a wide assortment of styles, brands, colors
and designs within each of the Company's major product lines. The Company also
generally maintains consistent in-stock availability of merchandise in order to
reinforce customer perception of wide selection and build customer loyalty. The
Company estimates that most of its superstores carry in excess of 30,000 active
stock-keeping units.
PRICING POLICY
The Company's pricing policy is to maintain everyday low prices that
are substantially below regular department store prices and generally comparable
to or below department store sale prices. The Company regularly monitors price
levels at its competitors in order to ensure that the Company's prices are being
maintained in accordance with its pricing policy. The Company believes that the
application of its everyday low price policy is essential to maintaining the
integrity of this policy and is an important factor in establishing its
reputation among customers.
Because the Company has an everyday low price policy, the Company
does not run sales. However, the Company uses periodic markdowns and semi-annual
clearances for merchandise that it has determined to discontinue carrying. In
addition, the Company's full-color circulars and mailing pieces include a
coupon, which is redeemed at the point-of-sale. The Company also honors
competitor coupons.
MERCHANDISE PRESENTATION
The Company has developed a distinctive style of merchandise
presentation. In each superstore, groups of related product lines are presented
together in separate areas of the store, creating the appearance that a Bed Bath
& Beyond superstore is comprised of several individual specialty stores for
different product lines. A "racetrack layout" that runs throughout the store
facilitates moving between areas and encourages customers to shop the entire
store. The Company believes that its format of merchandise presentation makes it
easy for customers to locate products, reinforces customer perception of wide
selection and communicates to customers that Bed Bath & Beyond superstores offer
a level of customer service generally associated with smaller specialty stores.
Merchandise is displayed in each of these separate areas from floor
to ceiling (generally 10 to 14 feet high) and, in addition, seasonal merchandise
and impulse items are prominently displayed in the front of the store. The
Company believes that its extensive merchandise selection, rather than
fixturing, should be the focus of customer attention and, accordingly, typically
uses simple modular fixturing throughout the store. This fixturing is designed
so that it can be easily reconfigured to adapt to changes in the store's
merchandise mix and presentation. The Company believes that its floor to ceiling
displays create an exciting and attractive shopping environment that encourages
impulse purchases of additional items.
CUSTOMER SERVICE
The Company places great emphasis on customer service and
satisfaction and, over the past 30 years, has sought to make this a defining
feature of its corporate culture. All managers provide leadership by example in
this area by regularly spending time assisting customers on the selling floor.
The Company believes that its success in the area of customer service is
evidenced by its ability to rely primarily on "word of mouth advertising".
The Company seeks to make shopping at its stores as pleasant and
convenient as possible. Each area within
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a store is staffed with knowledgeable sales personnel who are available to
assist customers in choosing merchandise, to answer questions and to resolve any
problems that may arise. In order to make checking out convenient, check-out
lines are continually monitored and additional cashiers are added as necessary
in order to minimize waiting time. Returning merchandise is simplified through a
return policy that permits customers to return most items without presenting a
sales receipt. Most Bed Bath & Beyond stores are open seven days (and six
evenings) a week in order to enable customers to shop at times that are
convenient for them.
The Company launched its website, www.bedbathandbeyond.com, in 1999.
The website offers a broad range of online services and features, including
online shopping and gift registry. The Company believes that its E-Service
efforts have been well received by its customers.
ADVERTISING
In general, the Company relies on "word of mouth advertising" and on
its reputation for offering a wide assortment of quality merchandise at everyday
low prices, supplemented by the use of paid advertising. The Company uses
full-color circulars and mailing pieces as its primary vehicles of paid
advertising. Also, to support the opening of new stores, the Company uses "grand
opening" full-color circulars and newspaper advertising. The Company believes
that its ability to rely primarily on "word of mouth advertising" will continue
and that its limited use of paid advertising permits it to spend less on
advertising than a number of its competitors.
EXPANSION
The Company is engaged in an ongoing expansion program involving the
opening of new stores in both existing and new markets and the expansion or
replacement of existing stores with larger stores. As a result of this program,
the total number of stores has increased from 34 at the beginning of fiscal 1992
to 311 at the end of fiscal 2000, and the total square footage of store space
has increased from approximately 917,000 square feet at the beginning of fiscal
1992 to approximately 12,204,000 square feet at the end of fiscal 2000. During
2000, the Company opened 70 new superstores and expanded two stores, which
resulted in the addition of approximately 2,389,000 square feet of store space.
The table below sets forth information concerning the Company's
expansion program for the periods indicated:
STORE SPACE NUMBER OF STORES
------------------------- -----------------------
REPLACED NEW BEGINNING END BEGINNING END
YEAR STORES (1) STORES (2) OF YEAR OF YEAR OF YEAR OF YEAR
- ---- ---------- ---------- --------- ------- --------- -------
(IN SQUARE FEET)
1992 5 4 917,000 1,128,000 34 38
1993 4 9 1,128,000 1,512,000 38 45
1994 4 16 1,512,000 2,339,000 45 61
1995 2 19 2,339,000 3,214,000 61 80
1996 2 28 3,214,000 4,347,000 80 108
1997 3 33 4,347,000 5,767,000 108 141
1998 3 45 5,767,000 7,688,000 141 186
1999 4 55 7,688,000 9,815,000 186 241
2000 2 70 9,815,000 12,204,000 241 311
(1) A replaced store is an existing store that was either expanded or
replaced by a new store in the same area.
(2) Excludes any new store that replaced an existing store in the same
area.
The Company intends to continue its expansion program and believes
that the continued growth of the Company is dependent, in large part, on the
success of this program. As part of its expansion program, the Company expects
to open new superstores and, in addition, expects to expand existing stores as
opportunities arise.
The Company expects to open new superstores in existing markets and
new markets. In determining where to open new superstores, the Company evaluates
a number of factors, including the availability of prime real estate and
demographic information (such as data relating to income and education levels,
age and occupation). The
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Company believes that because it does not use central distribution centers, and
since it relies on paid advertising to only a limited extent, it has the
flexibility to enter a new market with only one or two stores. The Company will
consider opening additional stores in that market, once the stores have been
proven successful.
From the end of fiscal 2000 through May 1, 2001, the Company has
opened five stores which are located in: Wilkes Barre, Pennsylvania; El Paso,
Texas; North Richmond, Virginia; Pentagon Row, Virginia; and Bellevue,
Washington. During the balance of 2001, the Company currently anticipates that
it will open at least 75 additional stores.
The Company has built its management structure with a view towards
its expansion and believes that as a result the Company has the management depth
necessary to support its anticipated expansion program. Each of the Company's
area managers typically supervise up to three stores. Each of the Company's
district managers typically supervise four to ten stores.
STORE OPERATIONS
MERCHANDISING
The Company maintains its own central buying group, comprising of
two Vice President - General Merchandising Managers, as well as a large staff
of divisional merchandise managers, buyers and assistant buyers. Merchandising
of activities are overseen by the Senior Vice President - Chief Merchandising
Officer. The merchandise mix for each store is initially selected by the
central buying group, in consultation with store managers and other local store
personnel. The central buying group is generally responsible for selecting the
merchandise, for ordering the initial inventory required upon the opening of
each store, for ordering the first shipment of any new product line that may be
subsequently added to a store's merchandise mix and for ordering seasonal
merchandise.
After a store is opened, local store personnel are primarily
responsible for monitoring inventory levels and reordering merchandise as
required. In addition, local store personnel are encouraged to monitor local
sales trends and market conditions and tailor the merchandise mix as appropriate
to respond to changing trends and conditions. The Company believes that its
policy of having the reordering performed at the local store level, rather than
centrally, and having local store personnel determine the appropriate quantity
to reorder encourages entrepreneurship at the store level and better ensures
that in-stock availability will be maintained in accordance with the specific
requirements of each store. The factors taken into account in selecting the
merchandise mix for a particular store include store size and configuration and
local market conditions such as climate and demographics.
The Company purchases its merchandise from more than 2,800
suppliers. In 2000, the Company's largest supplier accounted for approximately
7% of the Company's merchandise purchases and the Company's 10 largest
suppliers accounted for approximately 28% of such purchases. The Company
purchases substantially all of its merchandise in the United States, the
majority from domestic manufacturers and the balance from importers. The
Company purchases a small amount of its merchandise directly from overseas
sources. The Company has no long-term contracts for the purchase of
merchandise. The Company believes that most merchandise, other than brand name
goods, is available from a variety of sources and that most brand name goods
can be replaced with comparable merchandise.
WAREHOUSING
Merchandise is shipped to each store from the Company's vendors,
making it unnecessary for the Company to maintain any central distribution
centers. As a result of the floor to ceiling displays used by the Company, a
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substantial amount of merchandise is displayed on the sales floor of each store
at all times. Additional merchandise not displayed on the sales floor is stored
in separate warehouse space that is included in each store (with an estimated
10% to 15% of the space of each store being dedicated to warehouse and receiving
space). In the case of a few stores, merchandise is also stored at nearby
supplemental storage space leased by the Company. At present, the warehouse
space included in the Company's stores provides approximately 88% of the
Company's warehouse space requirements and such nearby supplemental storage
space provides the balance.
MANAGEMENT
The Company seeks to encourage responsiveness and entrepreneurship at
the store level by providing its managers with a relatively high degree of
autonomy relating to operations and merchandising. This is reflected in the
Company's policy of having reordering conducted at the store level, as well as
in the Company's policy of encouraging managers to tailor the merchandise mix of
each store in response to local sales trends and market conditions.
In general, stores are staffed with two assistant managers, one
operating manager, and three to six department managers who report to a store
manager, who in turn is supervised by an area or district manager. Area and
district managers report to one of several regional managers or directly to one
of five regional Vice Presidents of Stores, who in turn report to the Senior
Vice President of Stores. Decisions relating to pricing and advertising for all
stores are made centrally in the Company's Buying Office, and certain store
support functions (such as finance and information technology) are performed
centrally in the Company's Corporate Office.
TRAINING
The Company places great emphasis on the training of store level
management. All entry management personnel are generally required to work in
different departments of the store in order to acquire an overall understanding
of store operations. In addition, all associates receive formalized training,
including sales techniques and product knowledge, through the Bed Bath & Beyond
University program.
The Company's policy is to generally build its management
organization from within. Each of the Company's area, district and regional
managers was recruited from the ranks of the Company's store managers and each
of the Company's store managers joined the Company in an entry level position.
The Company believes that its policy of promoting from within, as well as the
opportunities for advancement generated by its ongoing expansion program, serve
as an incentive to persons to seek and retain employment with the Company and
results in low turnover among its managers.
EMPLOYEES
As of March 3, 2001, the Company employed approximately 15,000
persons, of whom approximately 9,500 were full-time employees and approximately
5,500 were part-time employees. None of the Company's employees are covered by
collective bargaining agreements. The Company believes that its relations with
its employees are excellent and that the labor turnover rate among its
management employees is lower than that experienced in the industry.
SEASONALITY
The Company's business exhibits less seasonality than many other
retail businesses, although sales levels are generally higher in August,
November and December, and generally lower in February and March.
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COMPETITION
The market for domestics merchandise and home furnishings is
fragmented and highly competitive. While the Company believes it is the
preeminent marketer in the superstore segment of the home goods industry, it
competes directly with a small number of chains of superstores selling domestics
merchandise and home furnishings. In addition, the Company competes with many
different types of retail stores that sell many or most of the products sold by
the Company. Such competitors include: (i) better department stores, which often
carry many of the same product lines as the Company but do not typically have
the same depth or breadth of product selection, (ii) specialty stores (such as
specialty linens or housewares retailers), which often have a depth of product
selection but typically carry only a limited portion of the product lines
carried by the Company, and (iii) discount and mass merchandise stores. In
addition, the Company competes to a more limited extent with factory outlet
stores that typically offer limited quantities or limited lines of better
quality merchandise at discount prices.
The Company believes that it is the largest operator of superstores
selling predominantly better quality domestics merchandise and home furnishings
typically found in better department stores, and that it is well positioned to
compete successfully in its markets as measured by several factors, including
pricing, breadth and quality of product selection, in-stock availability of
merchandise, effective merchandise presentation, customer service and store
locations.
The visibility of the Company has encouraged superstore competitors
to imitate the Company's format and methods. Other retail chains continue to
introduce new store concepts which include many of the product lines carried by
the Company. There can be no assurance that the operation of competitors,
including those companies operating stores similar to those of Bed Bath &
Beyond, will not have a material effect on the Company.
TRADE NAMES AND SERVICE MARKS
The Company uses its nationally recognized "Bed Bath & Beyond" name
and logo and its "Beyond any store of its kind" tag line as service marks in
connection with retail services. The Company has registered these marks and
others with the United States Patent and Trademark Office. The Company also has
registered or has applications pending with the trademark registries of several
foreign countries. Management believes that its nationally recognized name and
its service marks are an important element of the Company's merchandising
strategy.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and business experience
of the Executive Officers of the Registrant:
NAME AGE POSITIONS
- ---- --- ---------
Warren Eisenberg 70 Co-Chairman, Co-Chief Executive Officer
and Director
Leonard Feinstein 64 Co-Chairman, Co-Chief Executive Officer
and Director
Steven H. Temares 42 President, Chief Operating
Officer and Director
Ronald Curwin 71 Chief Financial Officer and Treasurer
Arthur Stark 46 Chief Merchandising Officer
and Senior Vice President
Matthew Fiorilli 44 Senior Vice President - Stores
Mr. Eisenberg, a co-founder of the Company, has been a director and
officer of the Company since the Company commenced operations in 1971 (serving
as President and Co-Chief Executive Officer until 1992, as Chairman and Co-Chief
Executive Officer until 1999, thereafter as Co-Chairman and Co-Chief Executive
Officer).
Mr. Feinstein, a co-founder of the Company, has been a director and
officer of the Company since the Company commenced operations in 1971 (serving
as Co-Chief Executive Officer, Treasurer and Secretary until 1992, as President
and Co-Chief Executive Officer until 1999, thereafter as Co-Chairman and
Co-Chief Executive Officer).
Mr. Temares joined the Company in 1992. Mr. Temares has been
President and Chief Operating Officer of the Company since January 1999. Prior
to 1999, Mr. Temares served as Executive Vice President - Chief Operating
Officer from 1997 to 1999 and previously was Director of Real Estate and
General Counsel.
Mr. Curwin, a certified public accountant, joined the Company in 1994
as Chief Financial Officer and Treasurer.
Mr. Stark joined the Company in 1977. Mr. Stark has been Chief
Merchandising Officer and Senior Vice President since January 1999. Prior to
1999, Mr. Stark was Vice President - Merchandising from 1998 until 1999,
Director of Store Operations - Western Region from 1994 until 1998.
Mr. Fiorilli joined the Company in 1973. Mr. Fiorilli has been Senior
Vice President - Stores since January 1999. Prior to 1999, Mr. Fiorilli was Vice
President - Stores from 1998 until 1999, Director of Store Operations - Eastern
Region from 1994 until 1998.
The Company's officers are elected by the Board of Directors for
one-year terms and serve at the discretion of the Board of Directors. No family
relationships exist between any of the executive officers or directors of the
Company.
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ITEM 2 - PROPERTIES
The Company's 316 stores are located in 43 states, principally in
suburban areas of medium and large sized cities. These stores are situated in
strip and power strip shopping centers, as well as in major off-price and
conventional malls, and free standing buildings. The Company's superstores range
in size from 13,000 to 103,000 square feet, but are predominantly between 30,000
and 50,000 square feet in major markets. The Company's three smaller stores
range in size from 7,000 to 11,000 square feet. In both superstores and smaller
stores, approximately 80% to 85% of store space is used for selling areas and
the balance for warehouse, receiving and office space.
The table below sets forth the number of stores located in each state
as of May 1, 2001:
Number
State of Stores
----- ---------
Alabama 4
Arizona 5
Arkansas 2
California 37
Colorado 8
Connecticut 6
Delaware 1
Florida 27
Georgia 12
Idaho 1
Illinois 15
Indiana 5
Iowa 2
Kansas 4
Kentucky 2
Louisiana 3
Maine 1
Maryland 10
Massachusetts 7
Michigan 14
Minnesota 2
Mississippi 1
Missouri 5
Nebraska 1
Nevada 1
New Jersey 16
New Mexico 1
New York 16
North Carolina 7
North Dakota 1
Ohio 12
Oklahoma 3
Oregon 3
Pennsylvania 15
Rhode Island 2
South Carolina 5
Tennessee 6
Texas 23
Utah 4
Vermont 1
Virginia 14
Washington 9
Wisconsin 2
The Company currently leases all of its existing stores. The leases
provide for original lease terms that generally range from five to fifteen years
and certain leases provide for renewal options that range from five to fifteen
years, often at increased rents. Certain leases provide for scheduled rent
increases (which, in the case of fixed increases, the Company accounts for on a
straight line basis over the noncancelable lease term) and/or for contingent
rent (based upon store sales exceeding stipulated amounts).
The Company also leases merchandise storage space in nine locations
amounting to approximately 208,000 square feet. This space is used to supplement
the warehouse facilities in the Company's stores in proximity to these
locations. One of these locations also provides fulfillment for the Company's
E-service activities. See Item 1 "Business--Store Operations--Warehousing."
The Company's Corporate Office is located in 131,000 square feet of
office space in Union, New Jersey,
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and the Company's Buying Office is located in 66,000 square feet of office space
in Farmingdale, New York. The Company plans to lease additional office space at
both of these locations.
ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company is a party.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year ended March 3, 2001.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The following table sets forth the high and low reported sales prices
of the Company's common stock on the NASDAQ National Market System for the
periods indicated. These quotations reflect inter-dealer prices, without retail
markups, markdowns or commissions.
HIGH LOW
---- ---
Fiscal 1999 :
1st Quarter $ 19.69 $ 14.56
2nd Quarter 19.47 12.75
3rd Quarter 18.50 13.69
4th Quarter 18.00 11.22
Fiscal 2000 :
1st Quarter $ 21.81 $ 11.38
2nd Quarter 20.19 16.38
3rd Quarter 26.44 17.44
4th Quarter 27.06 20.17
Fiscal 2001 :
1st Quarter (through May 1, 2001) $ 29.12 $ 23.19
The common stock is quoted through the NASDAQ National Market System
under the symbol BBBY. On May 1, 2001, there were approximately 670 shareholders
of record of the common stock (without including individual participants in
nominee security position listings). On May 1, 2001, the last reported sale
price of the common stock was $28.50.
For the foreseeable future, the Company intends to retain all earnings
for use in the operation and expansion of its business and, accordingly, the
Company currently has no plans to pay dividends on its common stock. The payment
of any future dividends will be determined by the Board of Directors in light of
conditions then existing, including the Company's earnings, financial condition
and requirements, restrictions in financing agreements, business conditions and
other factors. At present, the Company's ability to pay dividends is limited
under its Credit Agreement. See Item 8 - Financial Statements and Supplementary
Data.
12
13
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is included in the registrant's
Annual Report to Shareholders for the fiscal year ended March 3, 2001 on the
inside front cover and is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is included in the registrant's
Annual Report to Shareholders for the fiscal year ended March 3, 2001 on pages 8
through 10 and is incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are included in the
registrant's Annual Report to Shareholders for the fiscal year ended March 3,
2001 on pages 11 through 19 and are incorporated herein by reference. These
financial statements are indexed under Item 14(a)(1).
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The Executive Officers of the Registrant information required by Part
III, Item 10 - Directors and Executive Officers of the Registrant is included in
this document; all other information required by Part III (Item 10 - Directors
and Executive Officers of the Registrant, Item 11 - Executive Compensation, Item
12 - Security Ownership of Certain Beneficial Owners and Management, and Item 13
- - Certain Relationships and Related Transactions) is incorporated herein by
reference from the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held June 28, 2001 filed with the Commission
pursuant to Regulation 14A. The Compensation Report of the Board of Directors,
the Stock Price Performance Graph and the Audit Committee Report included in
such Proxy Statement shall not be deemed incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
13
14
(a) (1) FINANCIAL STATEMENTS
The following financial statements and reports are incorporated by
reference to pages 11 through 19 of the Company's Annual Report to
Shareholders for the fiscal year ended March 3, 2001:
Consolidated Balance Sheets as of March 3, 2001 and February 26,
2000.
Consolidated Statements of Earnings for the fiscal years ended March
3, 2001, February 26, 2000 and February 27, 1999.
Consolidated Statements of Shareholders' Equity for the fiscal years
ended March 3, 2001, February 26, 2000 and February 27, 1999.
Consolidated Statements of Cash Flows for the fiscal years ended
March 3, 2001, February 26, 2000, and February 27, 1999.
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) (2) FINANCIAL STATEMENT SCHEDULE
Schedule 1 - The supplementary income statement schedule is included
in this report.
Independent Auditors' Report on Schedule.
(a) (3) EXHIBITS
The exhibits to this Report are listed in the Exhibit Index included
elsewhere herein.
(b) No reports on Form 8-K were filed by the Company during the fourth
quarter of the fiscal year covered by this report.
14
15
SCHEDULE 1
BED BATH & BEYOND INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT SCHEDULE
(IN THOUSANDS)
YEAR ENDED
---------------------------------------------
MARCH 3, FEBRUARY 26, FEBRUARY 27,
2001 2000 1999
---- ---- ----
ITEM
----
Advertising Costs $36,961 $28,176 $20,800
======= ======= =======
15
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BED BATH & BEYOND INC.
BY: /s/ Warren Eisenberg
-----------------------------------
WARREN EISENBERG
CO-CHAIRMAN, CO-CHIEF EXECUTIVE
OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- --------- -------- ----
/s/ Warren Eisenberg Co-Chairman, Co-Chief May 31, 2001
- ---------------------- Executive Officer and Director
WARREN EISENBERG
/s/ Leonard Feinstein Co-Chairman, Co-Chief May 31, 2001
- ---------------------- Executive Officer and Director
LEONARD FEINSTEIN
/s/ Steven H. Temares President, Chief Operating May 31, 2001
- ---------------------- Officer and Director
STEVEN H. TEMARES
/s/ Eugene A. Castagna Vice President - Finance May 31, 2001
- ---------------------- (Principal Financial and
EUGENE A. CASTAGNA Accounting Officer)
/s/ Klaus Eppler Director May 31, 2001
- ----------------------
KLAUS EPPLER
/s/ Robert S. Kaplan Director May 31, 2001
- ----------------------
ROBERT S. KAPLAN
/s/ Robert J. Swartz Director May 31, 2001
- ----------------------
ROBERT J. SWARTZ
16
17
Independent Auditor's Report on Schedule
To the Board of Directors and Shareholders of Bed Bath & Beyond Inc.:
Under the date of March 30, 2001, we reported on the consolidated balance
sheets of Bed Bath & Beyond Inc. and subsidiaries as of March 3, 2001 and
February 26, 2000, and the related consolidated statements of earnings,
shareholders' equity and cash flows for each of the fiscal years in the
three-year period ended March 3, 2001, as contained in the Company's Annual
Report to Shareholders for the fiscal year ended March 3, 2001. These
consolidated financial statements and our report thereon are incorporated by
reference in the Annual Report on Form 10-K for the fiscal year ended March 3,
2001. In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule listed
in Part IV, Item 14(a)(2) of this Form 10-K. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/KPMG LLP
New York, New York
March 30, 2001
17
18
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a)(3)
EXHIBITS
BED BATH & BEYOND INC.
FISCAL YEAR ENDED MARCH 3, 2001
19
EXHIBIT INDEX
Unless otherwise indicated, exhibits are incorporated by reference to the
correspondingly numbered exhibits to the Company's Registration Statement on
Form S-1 (Commission File No. 33-47250)
EXHIBIT
NO. EXHIBIT
------- -------
3.1 Restated Certificate of Incorporation
3.2 Certificate of Amendment to the Company's Certificate of
Incorporation (incorporated by reference to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q/A for the quarter
ended August 25, 1996)
3.3 Certificate of Amendment to the Company's Certificate of
Incorporation (incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
August 30, 1997)
3.4 Certificate of Change of Bed Bath & Beyond Inc. under Section
805-A of the Business Corporation Law (incorporated by
reference to Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 30, 1997)
3.5 Amended and Restated By-laws, as amended through June 26, 1997
(incorporated by reference to Exhibit 3.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended August 30,
1997)
3.6 Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.6 to the Company's
Form 10-K for the year ended February 27, 1999)
3.7 Amended By-Laws of Bed Bath & Beyond Inc. (As amended through
December 17, 1998) (incorporated by reference to Exhibit 3.7
to the Company's on Form 10-K for the year ended February 27,
1999)
3.8 Amended By-Laws of Bed Bath & Beyond Inc. (As amended through
September 22, 1999) (incorporated by reference to Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the quarter
ended August 28, 1999)
10.1 Credit Agreement among the Company, bed 'n bath Stores, Inc.,
BBBL, Inc., BBBY Management Corporation, Chemical Bank New
Jersey, N.A., Chemical Bank and Chemical Bank New Jersey, N.A.
as Agent (incorporated by reference to Exhibit 28 to the
Company's Form 8-K dated November 14, 1994)
10.2* Agreement Concerning "Split Dollar" Life Insurance Plan, dated
May 9, 1994, among the Company, Jay D.Waxenberg, as trustee of
the Warren Eisenberg Life Insurance Trust, Warren Eisenberg
and Maxine Eisenberg (incorporated by reference to Exhibit
10.12 to the Company's Form 10-K for the year ended February
27, 1994)
19
20
10.3* Agreement Concerning "Split Dollar" Life Insurance Plan, dated
May 9, 1994, among the Company, Jay D.Waxenberg, as trustee of
the Leonard Joseph Feinstein Life Insurance Trust, Leonard
Joseph Feinstein and Susan Feinstein (incorporated by
reference to Exhibit 10.13 to the Company's Form 10-K for the
year ended February 27, 1994)
10.4* Agreement Concerning "Split Dollar" Life Insurance Plan, dated
June 16, 1995, among the Company, Jay D. Waxenberg, as trustee
of the Warren Eisenberg Life Insurance Trust, Warren Eisenberg
and Maxine Eisenberg (incorporated by reference to Exhibit
10.12 to the Company's Form 10-K for the year ended February
27, 1994)
10.5* Agreement Concerning "Split Dollar" Life Insurance Plan, dated
June 16, 1995, among the Company, Jay D. Waxenberg, as trustee
of the Leonard Joseph Feinstein Life Insurance Trust, Leonard
Joseph Feinstein and Susan Feinstein (incorporated by
reference to Exhibit 10.13 to the Company's Form 10-K for the
year ended February 27, 1994)
10.6 First Amendment to the Credit Agreement among the Company, bed
`n bath Stores, Inc., BBBL, Inc., BBBY Management Corporation,
Chemical Bank New Jersey, N.A., Chemical Bank and Chemical
Bank New Jersey, N.A. as Agent, dated October 1, 1995
(incorporated by reference to Exhibit 10.9 to the Company's
Form 10-K for the year ended March 1, 1997)
10.7 Second Amendment to the Credit Agreement among the Company,
bed `n bath Stores, Inc., BBBL, Inc., BBBY Management
Corporation, Chemical Bank New Jersey, N.A., Chemical Bank and
Chemical Bank New Jersey, N.A. as Agent, dated February 24,
1997 (incorporated by reference to Exhibit 10.11 to the
Company's Form 10-K for the year ended March 1, 1997)
10.8 Third Amendment to the Credit Agreement among the Company, bed
`n bath Stores, Inc., BBBL, Inc., BBBY Management Corporation,
and The Chase Manhattan Bank, dated September 11, 1997
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
29, 1997)
10.9 Fourth Amendment to the Credit Agreement among the Company,
bed `n bath Stores, Inc., BBBL, Inc., BBBY Management
Corporation, and The Chase Manhattan Bank, dated September 19,
1997 (incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
November 29, 1997)
10.10* Employment Agreement between the Company and Warren Eisenberg,
dated as of June 30, 1997 (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended August 30, 1997)
10.11* Employment Agreement between the Company and Leonard
Feinstein, dated as of June 30, 1997 (incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 30, 1997)
10.12* Stock Option Agreement between the Company and Warren
Eisenberg, dated as of August 26, 1997 (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly
20
21
Report on Form 10-Q for the quarter ended August 30, 1997)
10.13* Stock Option Agreement between the Company and Leonard
Feinstein, dated as of August 26, 1997 (incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 30, 1997)
10.14* Company's 1992 Stock Option Plan, as amended through August
26, 1997 (incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
August 30, 1997)
10.15* Company's 1996 Stock Option Plan, as amended through August
26, 1997 (incorporated by reference to Exhibit 10.6 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
August 30, 1997)
10.16* Employment Agreement between the Company and Steven H. Temares
(dated as of December 1, 1994) (incorporated by reference to
Exhibit 10.16 to the Company's Form 10-K for the year ended
February 28, 1998)
10.17* Form of Employment Agreement between the Company and certain
executives (including all of the executive officers of the
Company other than the Co-Chief Executive Officers, the Chief
Operating Officer and the Chief Financial Officer) (dated as
of December 1, 1994) (incorporated by reference to Exhibit
10.17 to the Company's Form 10-K for the year ended February
28, 1998)
10.18* Company's 1998 Stock Option Plan (incorporated by reference to
Exhibit 10 to the to the Company's Quarterly Report on Form
10-Q for the quarter ended May 30, 1998)
10.19 Fifth Amendment to the Credit Agreement among the Company, bed
`n bath Stores, Inc., BBBL, Inc., Bed Bath & Beyond of
California Limited Liability Company, BBBY Management
Corporation and The Chase Manhattan Bank, dated October 26,
1998 (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
November 29, 1998)
10.20 Second Amended and Restated Revolving Credit Note among the
Company, bed `n bath Stores, Inc., BBBL, Inc., Bed Bath &
Beyond of California Limited Liability Company, BBBY
Management Corporation and The Chase Manhattan Bank, dated
October 26, 1998 (incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended November 29, 1998)
10.21* Stock Option Agreement between the Company and Warren
Eisenberg, dated as of August 13, 1999 (incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 27, 1999)
10.22* Stock Option Agreement between the Company and Leonard
Feinstein, dated as of August 13, 1999 (incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 27, 1999)
21
22
10.23* Form of Standard Stock Option Agreement (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 27, 1999)
10.24* Company's 2000 Stock Option Plan (incorporated by reference to
Exhibit 10 to the Company's Quarterly Report on Form 10-Q for
the quarter ended May 27, 2000 which is incorporated by
reference to Exhibit A to the Registrant's Proxy Statement
dated May 22, 2000)
10.25* Form of Standard Stock Option Agreement (incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 26, 2000)
10.26* Amendment to Employment Agreement dated as of June 30, 2000
between Bed Bath & Beyond Inc. and Warren Eisenberg
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
25, 2000)
10.27* Amendment to Employment Agreement dated as of June 30, 2000
between Bed Bath & Beyond Inc. and Leonard Feinstein
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
25, 2000)
10.28** Sixth Amendment to the Credit Agreement among the Company, bed
`n bath Stores, Inc., BBBL, Inc., Bed Bath & Beyond of
California Limited Liability Company, BBBY Management
Corporation and The Chase Manhattan Bank, dated March 28, 2001
10.29** Company's 2001 Stock Option Plan
13** Company's 2000 Annual Report, certain portions of which have
been incorporated by reference herein
21** Subsidiaries of the Company Commission File No. 33-1
23** Independent Auditors' Consent
- ----------
* This is a management contract or compensatory plan or arrangement.
** Filed herewith.
22