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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 24, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
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.)
715 MORRIS AVENUE, SPRINGFIELD, NEW JERSEY 07081
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (201) 379-1520
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 NOVEMBER 24, 1996
----- --------------------------------
Common Stock - $0.01 par value 68,506,078
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INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of November 24, 1996 and February 25, 1996 3
Consolidated Statements of Earnings
For the Three Month and Nine Month Periods Ended
November 24, 1996 and November 26, 1995 4
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended
November 24, 1996 and November 26, 1995 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 6. Exhibits and Reports on Form 8-K 10
Exhibit Index 11
3
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
November 24, February 25,
1996 1996
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 13,646 $ 10,267
Merchandise inventories 225,160 148,383
Prepaid expenses and other current assets 2,292 1,630
-------- --------
Total current assets 241,098 160,280
-------- --------
Property and equipment, net 86,241 66,635
Other assets 11,686 8,895
-------- --------
$339,025 $235,810
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 86,545 $ 39,025
Accrued expenses and other current liabilities 44,954 26,947
Income taxes payable 4,244 6,581
-------- --------
Total current liabilities 135,743 72,553
-------- --------
Long-term debt -- 5,000
Deferred rent 8,811 6,811
-------- --------
144,554 84,364
-------- --------
Shareholders' equity:
Preferred stock - $0.01 par value; authorized -
1,000,000 shares; no shares issued or
outstanding -- --
Common stock - $0.01 par value; authorized -
November 24, 1996, 150,000,000 shares
and February 25, 1996, 100,000,000 shares;
issued and outstanding - November 24, 1996,
68,506,078 shares and February 25,
1996, 68,067,972 shares 685 681
Additional paid-in capital 52,576 46,254
Retained earnings 141,210 104,511
-------- --------
Total shareholders' equity 194,471 151,446
-------- --------
$339,025 $235,810
======== ========
See accompanying Notes to Consolidated Financial Statements.
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BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------ -----------------
November 24, November 26, November 24, November 26,
1996 1995 1996 1995
---- ---- ---- ----
Net sales $ 214,793 $ 161,789 $ 577,954 $ 425,351
Cost of sales, including buying,
occupancy and indirect costs 126,129 94,845 339,565 249,319
----------- ------------ ----------- ------------
Gross profit 88,664 66,944 238,389 176,032
Selling, general and administrative expenses 65,852 49,843 177,882 130,208
----------- ------------ ----------- ------------
Operating profit 22,812 17,101 60,507 45,824
Interest income (expense), net 225 (142) 404 (669)
----------- ------------ ----------- ------------
Earnings before provision for income taxes 23,037 16,959 60,911 45,155
Provision for income taxes 9,157 6,953 24,212 18,514
----------- ------------ ----------- ------------
Net earnings $ 13,880 $ 10,006 $ 36,699 $ 26,641
=========== ============ =========== ============
Net earnings per share $ 0.20 $ 0.14 $ 0.52 $ 0.38
=========== ============ =========== ============
Weighted average shares outstanding 70,663,658 69,545,206 70,520,378 69,217,176
=========== ============ =========== ============
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)
Nine Months Ended
-----------------
November 24, November 26,
1996 1995
---- ----
Cash Flows from Operating Activities:
Net earnings $ 36,699 $ 26,641
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 9,624 7,116
Loss from disposal of property and equipment -- 102
Increase in assets:
Merchandise inventories (76,777) (59,329)
Prepaid expenses and other current assets (662) (1,800)
Other assets (2,791) (2,162)
Increase (decrease) in liabilities:
Accounts payable 47,520 33,814
Accrued expenses and other current liabilities 18,007 9,493
Income taxes payable (2,337) (98)
Deferred rent 2,000 1,458
-------- --------
Net cash provided by operating activities 31,283 15,235
-------- --------
Cash Flows from Investing Activities:
Capital expenditures - lease purchases -- (150)
Capital expenditures - leasehold improvements
and furniture and fixtures (29,230) (18,277)
-------- --------
Net cash used in investing activities (29,230) (18,427)
-------- --------
Cash Flows from Financing Activities:
Net decrease in long-term debt (5,000) (2,550)
Proceeds from exercise of stock options 6,326 1,897
-------- --------
Net cash provided by (used in) financing activities 1,326 (653)
-------- --------
Net increase (decrease) in cash and cash equivalents 3,379 (3,845)
Cash and cash equivalents:
Beginning of period 10,267 6,463
-------- --------
End of period $ 13,646 $ 2,618
======== ========
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 February 25,
1996 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 November 24, 1996 and February 25, 1996 and
the results of their operations for the three month and nine month periods ended
November 24, 1996 and November 26, 1995, respectively, and cash flows for the
nine month periods ended November 24, 1996 and November 26, 1995. 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 February 25, 1996 for additional disclosures,
including a summary of the Company's significant accounting policies.
2) STOCK SPLIT
On March 28, 1996, the Board of Directors of the Company approved a two-for-one
split of the Company's common stock effected in the form of a 100% stock
dividend. The stock split was distributed on April 30, 1996 to shareholders of
record on April 10, 1996. Accordingly, all share and per share data have been
adjusted to give effect to the stock split.
3) AUTHORIZED SHARES OF COMMON STOCK
In July 1996, the Company's Certificate of Incorporation was amended to increase
the number of authorized shares of common stock (par value $.01 per share) from
100,000,000 shares to 150,000,000 shares.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months November 24, 1996 vs. Three Months November 26, 1995
Net sales for the third quarter ended November 24, 1996 were $214.8 million, an
increase of $53.0 million or approximately 32.8% over net sales of $161.8
million for the corresponding quarter last year. Approximately 82.6% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the third quarter of 1996 was approximately 6.4%. The
comparable store net sales results are attributable to a number of factors
including, but not limited to, the continued consumer acceptance of the
Company's merchandise offerings and customer service, and the generally
favorable retailing environment. Approximately 55% and 45% of net
sales for the third quarter were attributable to sales of domestics
merchandise and home furnishings merchandise, respectively.
Gross profit for the third quarter of 1996 was $88.7 million or 41.3% of net
sales compared with $66.9 million or 41.4% of net sales during the third quarter
of 1995.
Selling, general and administrative expenses ("SG&A") were $65.9 million in the
third quarter of 1996 compared with $49.8 million in the same quarter last year
and as a percentage of net sales were 30.7% and 30.8%, respectively.
Expenses associated with store advertising are charged to earnings as incurred.
For the three months ended November 24, 1996 and November 26, 1995, advertising
expenses amounted to $3.9 million and $3.0 million, respectively.
Operating profit in the third quarter of 1996 increased to $22.8 million from
$17.1 million in the third quarter of 1995, reflecting primarily the increase in
net sales which was partially offset by increases in cost of sales and SG&A.
Nine Months November 24, 1996 vs. Nine Months November 26, 1995
Net sales for the nine months ended November 24, 1996 were $578.0 million, an
increase of $152.6 million or approximately 35.9% over net sales of $425.4
million for the corresponding period last year. Approximately 83.8% of the
increase was attributable to new store net sales. The increase in comparable
store net sales for the first nine months of 1996 was approximately 6.3%. The
comparable store net sales results are attributable to a number of factors
including, but not limited to, the continued consumer acceptance of the
Company's merchandise offerings and customer service, and the generally
favorable retailing environment. Approximately 55% and 45% of net sales for
the first nine months were attributable to sales of domestics merchandise and
home furnishings merchandise, respectively.
Gross profit for the first nine months of 1996 was $238.4 million or 41.2% of
net sales compared with $176.0 million or 41.4% of net sales during the same
period last year. The decrease of approximately 0.2% in gross profit, as a
percentage of net sales, was attributable to a number of factors, including a
different mix of sales during the first nine months of this year compared with
the mix of sales in the corresponding period last year.
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SG&A expenses were $177.9 million in the first nine months of 1996 compared with
$130.2 million for the same period last year and as a percentage of net sales
were 30.8% and 30.6%, respectively. The increase of approximately 0.2% in SG&A,
as a percentage of net sales, was primarily attributable to increases in
occupancy costs and expenses associated with new store openings, which were
partially offset by a decrease in payroll and payroll related items.
Expenses associated with store advertising are charged to earnings as incurred.
For the nine months ended November 24, 1996 and November 26, 1995, advertising
expenses amounted to $9.0 million and $6.8 million, respectively.
Operating profit in the first nine months of 1996 increased to $60.5 million
from $45.8 million for the same period last year, primarily resulting from the
increase in net sales, which was partially offset by a slight increase in cost
of sales and SG&A expenses.
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 108 stores at the end of the third quarter of
1996 compared with 80 stores at the end of the corresponding quarter last year.
Total square footage grew to 4,347,000 square feet at the end of the third
quarter of 1996, from 3,214,000 square feet at the end of the third quarter of
last year.
During the first nine months of fiscal 1996, the Company opened twenty-eight new
superstores and expanded two stores resulting in an aggregate addition of
1,133,000 square feet to total store space. The Company does not anticipate
opening any additional new stores or expanding/relocating any stores during the
remainder of fiscal 1996.
FINANCIAL CONDITION
Total assets at November 24, 1996 were $339.0 million compared with $235.8
million at February 25, 1996, an increase of $103.2 million. Of the total
increase, $80.8 million represented an increase in current assets and $22.4
million represented an increase in non-current assets. The increase in current
assets was primarily attributable to an increase in merchandise inventories,
which resulted from new store space and, to a lesser extent, the expansion of
merchandise categories and assortments, as well as seasonal requirements.
Total liabilities at November 24, 1996 were $144.6 million compared with $84.4
million at February 25, 1996, an increase of $60.2 million. The increase was
primarily attributable to a $47.5 million increase in accounts payable
(resulting from an increase in inventories) and an $18.0 million increase in
accrued expenses and other current liabilities, which was partially offset by a
$5.0 million decrease in long-term debt.
Shareholders' equity was $194.5 million at November 24, 1996 compared with
$151.4 million at February 25, 1996. The increase primarily reflects net
earnings for the first nine months of fiscal 1996 and additional paid-in capital
from the exercise of stock options.
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Capital expenditures for the first nine months of fiscal 1996 were $29.2 million
compared with $18.4 million for the corresponding period last year. The increase
is primarily attributable to furniture and fixtures and leasehold improvements
for the twenty-eight new superstores opened and two stores expanded during the
first nine months compared to furniture and fixtures and leasehold improvements
for the nineteen new superstores opened and two expanded stores in the same
period last year.
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 February 25, 1996.
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PART II - OTHER INFORMATION
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 November 24, 1996.
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: January 7, 1997 By: /s/ Ronald Curwin
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Ronald Curwin
Chief Financial Officer and Treasurer
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EXHIBIT INDEX
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Exhibit No. Exhibit Page No.
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11 Computation of Per Share Earnings 12
27 Financial Data Schedule 13
(Filed electronically with SEC only)
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