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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 2, 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) (I.R.S. 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
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 [ ]
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
CLASS OUTSTANDING AT JUNE 2, 2001
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Common Stock - $0.01 par value 289,399,130
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BED BATH & BEYOND INC. AND SUBSIDIARIES
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
June 2, 2001 and March 3, 2001 3
Consolidated Statements of Earnings
Three Months Ended June 2, 2001 and May 27, 2000 4
Consolidated Statements of Cash Flows
Three Months Ended June 2, 2001 and May 27, 2000 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
Exhibit Index 12
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BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
June 2, March 3,
2001 2001
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 275,966 $ 239,328
Merchandise inventories 696,896 606,704
Prepaid expenses and other current assets 44,960 39,681
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Total current assets 1,017,822 885,713
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Property and equipment, net 312,659 302,656
Other assets 7,309 7,356
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$1,337,790 $1,195,725
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 260,121 $ 192,401
Accrued expenses and other current liabilities 145,432 128,800
Income taxes payable 35,252 31,988
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Total current liabilities 440,805 353,189
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Deferred rent and other liabilities 27,992 25,518
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Total liabilities 468,797 378,707
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Shareholders' equity:
Preferred stock - $0.01 par value; authorized -
1,000 shares; no shares issued or
outstanding -- --
Common stock - $0.01 par value;
authorized - 900,000 shares;
issued and outstanding - June 2, 2001,
289,399 shares and March 3, 2001,
287,890 shares 2,894 2,879
Additional paid-in capital 202,927 180,974
Retained earnings 663,172 633,165
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Total shareholders' equity 868,993 817,018
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$1,337,790 $1,195,725
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See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
--------------------------
June 2, May 27,
2001 2000
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Net sales $575,833 $459,163
Cost of sales, including buying,
occupancy and indirect costs 340,874 271,870
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Gross profit 234,959 187,293
Selling, general and administrative expenses 189,357 150,954
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Operating profit 45,602 36,339
Interest income 3,190 1,962
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Earnings before provision for income taxes 48,792 38,301
Provision for income taxes 18,785 14,937
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Net earnings $ 30,007 $ 23,364
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Net earnings per share - Basic $ .10 $ .08
Net earnings per share - Diluted $ .10 $ .08
Weighted average shares outstanding - Basic 288,467 281,718
Weighted average shares outstanding - Diluted 297,479 289,954
See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
Three Months Ended
------------------
June 2, May 27,
2001 2000
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Cash Flows from Operating Activities:
Net earnings $ 30,007 $ 23,364
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 14,418 9,928
Tax benefit from exercise of stock options 13,113 11,470
Deferred income taxes (288) (1,932)
(Increase) decrease in assets:
Merchandise inventories (90,192) (77,585)
Prepaid expenses and other current assets (3,360) (7,475)
Other assets 47 (363)
Increase (decrease) in liabilities:
Accounts payable 67,720 43,104
Accrued expenses and other current liabilities 16,632 6,894
Income taxes payable 3,264 (3,924)
Deferred rent 843 816
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Net cash provided by operating activities 52,204 4,297
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Cash Flows from Investing Activities:
Capital expenditures (24,421) (19,036)
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Net cash used in investing activities (24,421) (19,036)
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Cash Flows from Financing Activities:
Proceeds from exercise of stock options 8,855 7,095
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Net cash provided by financing activities 8,855 7,095
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Net increase (decrease) in cash and cash equivalents 36,638 (7,644)
Cash and cash equivalents:
Beginning of period 239,328 144,031
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End of period $ 275,966 $ 136,387
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See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements, except for the March 3, 2001
consolidated balance sheet, have been prepared without audit. In the opinion of
Management, the accompanying consolidated financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the
"Company") as of June 2, 2001 and March 3, 2001 and the results of their
operations and their cash flows for the three months ended June 2, 2001 and May
27, 2000, respectively. Because of the seasonality of the specialty retailing
business, operating results of the Company on a quarterly basis may not be
indicative of operating results for the full year.
The accompanying unaudited consolidated financial statements are presented in
accordance with the requirements for Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. Reference should be made to Bed Bath & Beyond Inc.'s Annual Report
for the fiscal year ended March 3, 2001 for additional disclosures, including a
summary of the Company's significant accounting policies.
2) SUBSEQUENT EVENTS
In June 2001, the shareholders approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
common stock (par value $.01 per share) from 350,000,000 shares to 900,000,000
shares, which has been affected in the accompanying consolidated financial
statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months June 2, 2001 vs. Three Months May 27, 2000
Net sales for the first quarter ended June 2, 2001 were $575.8 million, an
increase of $116.7 million or approximately 25.4% over net sales of $459.2
million for the corresponding quarter last year. Approximately 82% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the first quarter of 2001 was 4.4%. The increase in
comparable store net sales is due to a number of factors, including but not
limited to, the continued consumer acceptance of the Company's merchandise
offerings and a strong focus on customer service. Approximately 55% and 45% of
net sales for the first quarter were attributable to sales of domestics
merchandise and home furnishings merchandise, respectively.
Gross profit for the first quarter of 2001 was $235.0 million or 40.8% of net
sales, compared with $187.3 million or 40.8% of net sales during the first
quarter of 2000.
Selling, general and administrative expenses ("SG&A") were $189.4 million in the
first quarter of 2001 compared with $151.0 million in the same quarter last year
and as a percentage of net sales were 32.9% for each period, respectively.
Interest income increased to $3.2 million for the first quarter of 2001 compared
to $2.0 million for the first quarter of 2000 due to an increase in invested
cash partially offset by a decrease in the weighted average investment interest
rate.
The effective tax rate decreased to 38.5% for the first quarter of 2001
compared with 39.0% for the first quarter of 2000 due to a decrease in the
amount provided for state and local taxes due primarily to the composition of
states in which the Company currently conducts its business.
EXPANSION PROGRAM
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 to 322 stores at the end of the first quarter of
2001 compared with 251 stores at the end of the corresponding quarter last year.
Total square footage grew to 12.5 million square feet at the end of the first
quarter of 2001 from 10.1 million square feet at the end of the first quarter
of last year.
During the first quarter of fiscal 2001, the Company opened eleven stores
resulting in an aggregate addition of .3 million square feet to total store
space. The Company anticipates opening approximately 69 additional stores and by
the end of the fiscal year, aggregating approximately 2.4 million square feet of
additional store space.
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FINANCIAL CONDITION
Total assets at June 2, 2001 were $1.3 billion compared with $1.2 billion at
March 3, 2001, an increase of $142.1 million. Of the total increase, $132.1
million represented an increase in current assets and $10.0 million represented
an increase in non-current assets. The increase in current assets was primarily
attributable to an increase in merchandise inventories and, to a lesser extent,
an increase in cash and cash equivalents. The increase in merchandise
inventories was principally the result of new store space.
Total liabilities at June 2, 2001 were $468.8 million compared with $378.7
million at March 3, 2001, an increase of $90.1 million. The increase was
primarily attributable to a $67.7 million increase in accounts payable
(resulting from an increase in inventories) and a $16.6 million increase in
accrued expenses and other current liabilities.
Shareholders' equity was $869.0 million at June 2, 2001 compared with $817.0
million at March 3, 2001. The increase primarily reflects net earnings for the
first three months of fiscal 2001 and additional paid-in capital from the
exercise of stock options.
Capital expenditures for the first three months of fiscal 2001 were $24.4
million compared with $19.0 million for the corresponding period last year. The
increase is primarily attributable to expenditures for furniture, fixtures and
leasehold improvements for the eleven new superstores opened during the first
three months as well as expenditures for infomation technology additions,
compared to expenditures for furniture,fixtures and leasehold improvements for
the ten new superstores opened in the same period last year and expenditures
for the electronic service site.
RECENT ACCOUNTING PRONOUNCEMENTS
In the fourth quarter of fiscal 2000, the Company adopted the provisions of the
Financial Accounting Standards Board's Emerging Issues Task Force ("EITF")
Issue No. 00-14, "Accounting for Certain Sales Incentives", which provides that
the value of point of sale coupons and rebates that result in a reduction of
the price paid by the customer be recorded as a reduction of sales. Prior to
adoption, the Company recorded its point of sale coupons and rebates in cost of
sales. In connection therewith, the Company has reclassified such sales
incentives as a reduction of sales in the consolidated statement of earnings
for the three months ended May 27, 2000. The reclassifications were not
material to the consolidated financial statements and had no impact on gross
profit, operating profit or net earnings.
In the fourth quarter of fiscal 2000, the Company also adopted the provisions of
EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs",
which provides that amounts billed to a customer in a sale transaction related
to shipping and handling represent revenues. Prior to adoption, the Company
recorded such revenues and costs in selling, general and administrative expense.
In connection therewith, the Company has reclassified such shipping and handling
fees to sales and shipping and handling costs to cost of sales in the
consolidated statements of earnings for the three months ended May 27, 2000. The
reclassifications were not material to the consolidated financial statements and
had no impact on operating profit or net earnings.
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FORWARD LOOKING STATEMENTS
This Form 10-Q may contain forward looking statements. Important factors which
may affect these statements are contained in the Company's Annual Report to
shareholders for the fiscal year ended March 3, 2001.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting was held on June 28, 2001. At the Annual Meeting,
the following items were voted upon:
1. Election of two directors of the Corporation.
2. Ratification of the appointment of KPMG LLP as independent auditors
for the fiscal year ending March 2, 2002.
3. Approval of the amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares.
4. A shareholder proposal concerning diversified representation on the
Board of Directors.
The results of the voting were as follows:
SHARES VOTED (in thousands)
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Against/
Description For Withheld
- ----------- --- --------
1. Election of the Board
of Directors:
Warren Eisenberg 213,156 45,020
Robert J. Swartz 249,950 8,226
Against/
For Withheld Abstentions
--- -------- -----------
2. Appointment of Auditors:
KPMG LLP 256,390 962 824
Against/
For Withheld Abstentions
3. Amend the Company's
Certificate of Incorporation: 231,585 25,692 899
Against/ Broker
For Withheld Abstentions Non-Votes
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4. Diversified representation
on the Board of Directors: 61,112 163,669 6,697 26,698
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Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits to this report are listed on the Exhibit Index included
elsewhere herein.
(b) No reports on Form 8-K were filed by the Company during the three
month period ended June 2, 2001.
Pursuant to the requirements 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.
(Registrant)
Date: July 16, 2001 By: /s/ Eugene A. Castagna
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Eugene A. Castagna
Vice President - Finance & Principal
Accounting Officer
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EXHIBIT INDEX
Exhibit No. Exhibit Page No.
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10.1 Amended By-Laws of Bed Bath & Beyond 13
(as amended through June 28, 2001)
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