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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 May 31, 1997
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.)
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 MAY 31, 1997
Common Stock - $0.01 par value 68,664,942
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INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of May 31, 1997 and March 1, 1997 3
Consolidated Statements of Earnings
For the Three Months Ended May 31, 1997 and May 26, 1996 4
Consolidated Statements of Cash Flows
For the Three Months Ended May 31, 1997 and May 26, 1996 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 8
PART II - OTHER INFORMATION
Item 2. Changes in Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9 - 10
Item 6. Exhibits and Reports on Form 8-K 10
Exhibit Index 11
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BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
May 31, March 1,
1997 1997
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 44,095 $ 38,765
Merchandise inventories 234,633 187,185
Prepaid expenses and other current assets 3,010 1,605
-------- --------
Total current assets 281,738 227,555
-------- --------
Property and equipment, net 94,305 88,332
Other assets 14,514 14,038
-------- --------
$390,557 $329,925
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 90,423 $ 47,821
Accrued expenses and other current liabilities 53,135 47,923
Income taxes payable 11,261 10,132
-------- --------
Total current liabilities 154,819 105,876
-------- --------
Deferred rent 10,518 9,688
-------- --------
165,337 115,564
-------- --------
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 - 150,000,000 shares; issued and
outstanding - May 31, 1997, 68,664,942 shares and March 1, 1997,
68,603,022 shares 687 686
Additional paid-in capital 55,100 54,149
Retained earnings 169,433 159,526
-------- --------
Total shareholders' equity 225,220 214,361
-------- --------
$390,557 $329,925
======== ========
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
May 31, May 26,
1997 1996
---- ----
Net sales $ 213,662 $ 159,658
Cost of sales, including buying,
occupancy and indirect costs 126,304 93,870
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Gross profit 87,358 65,788
Selling, general and administrative expenses 71,548 53,127
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Operating profit 15,810 12,661
Interest income 637 142
----------- -----------
Earnings before provision for income taxes 16,447 12,803
Provision for income taxes 6,540 5,089
----------- -----------
Net earnings $ 9,907 $ 7,714
=========== ===========
Net earnings per share $ 0.14 $ 0.11
=========== ===========
Weighted average shares outstanding 70,700,211 70,479,479
=========== ===========
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
May 31, May 26,
1997 1996
-------- --------
Cash Flows from Operating Activities:
Net earnings $ 9,907 $ 7,714
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 4,078 2,957
Increase in assets:
Merchandise inventories (47,448) (30,683)
Prepaid expenses and other current assets (1,405) (679)
Other assets (476) (1,165)
Increase in liabilities:
Accounts payable 42,602 23,037
Accrued expenses and other current liabilities 5,212 2,484
Income taxes payable 1,129 282
Deferred rent 830 633
-------- --------
Net cash provided by operating activities 14,429 4,580
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (10,051) (5,107)
-------- --------
Net cash used in investing activities (10,051) (5,107)
-------- --------
Cash Flows from Financing Activities:
Net decrease in long-term debt -- (5,000)
Proceeds from exercise of stock options 952 4,747
-------- --------
Net cash provided by (used in) financing activities 952 (253)
-------- --------
Net increase (decrease) in cash and cash equivalents 5,330 (780)
Cash and cash equivalents:
Beginning of period 38,765 10,267
-------- --------
End of period $ 44,095 $ 9,487
======== ========
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 1, 1997
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 May 31, 1997 and March 1, 1997 and the results of their
operations and their cash flows for the three months ended May 31, 1997 and May
26, 1996, 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 1, 1997 for additional disclosures, including a
summary of the Company's significant accounting policies.
2) CLASSIFICATION OF THE BOARD OF DIRECTORS
In June 1997, the Company's Certificate of Incorporation was amended to provide
for the classification of the Board of Directors into three separate classes.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months May 31, 1997 vs. Three Months May 26, 1996
Net sales for the first quarter ended May 31, 1997 were $213.7 million, an
increase of $54.0 million or approximately 33.8% over net sales of $159.7
million for the corresponding quarter last year. Approximately 79.2% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the first quarter of 1997 was 6.8%. The increase in
comparable net sales reflects 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 quarter were attributable
to sales of domestics merchandise and home furnishings merchandise,
respectively.
Gross profit for the first quarter of 1997 was $87.4 million or 40.9% of net
sales compared with $65.8 million or 41.2% of net sales during the first quarter
of 1996. The decrease 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 quarter of 1997 compared to the mix of sales during the first quarter
of 1996, and an increase in coupons redeemed associated with the Company's
marketing program.
Selling, general and administrative expenses ("SG&A") were $71.5 million in the
first quarter of 1997 compared with $53.1 million in the same quarter last year
and as a percentage of net sales were 33.5% and 33.3%, respectively. The
increase in SG&A, as a percentage of net sales, primarily reflects increases in
occupancy costs, which were partially offset by a decrease in payroll and
payroll related items.
Operating profit in the first quarter of 1997 increased to $15.8 million from
$12.7 million in the first quarter of 1996, reflecting primarily the increase in
net sales which was partially offset by increases in cost of sales and SG&A.
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 116 stores at the end of the first quarter of
1997 compared with 86 stores at the end of the corresponding quarter last year.
Total square footage grew to 4,644,000 square feet at the end of the first
quarter of 1997, from 3,481,000 square feet at the end of the first quarter of
last year.
During the first quarter of fiscal 1997, the Company opened eight new stores
resulting in an aggregate addition of 297,000 square feet to total store space.
The Company anticipates opening approximately twenty-two additional stores and
expanding several existing stores by the end of the fiscal year, aggregating
approximately 1,030,000 square feet of store space.
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FINANCIAL CONDITION
Total assets at May 31, 1997 were $390.6 million compared with $329.9 million at
March 1, 1997, an increase of $60.6 million. Of the total increase, $54.2
million represented an increase in current assets and $6.4 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.
Total liabilities at May 31, 1997 were $165.3 million compared with $115.6
million at March 1, 1997, an increase of $49.8 million. The increase was
primarily attributable to a $42.6 million increase in accounts payable
(resulting from an increase in inventories) and a $5.2 million increase in
accrued expenses and other current liabilities.
Shareholders' equity was $225.2 million at May 31, 1997 compared with $214.4
million at March 1, 1997. The increase primarily reflects net earnings for the
first three months of fiscal 1997 and additional paid-in capital from the
exercise of stock options.
Capital expenditures for the first three months of fiscal 1997 were $10.1
million compared with $5.1 million for the corresponding period last year. The
increase is primarily attributable to leasehold improvements for the eight new
stores opened during the first quarter compared to leasehold improvements for
the six new stores opened and one store expanded 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 March 1, 1997.
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PART II - OTHER INFORMATION
Item 2. Changes in Securities
In June 1997, the Company's Certificate of Incorporation was amended to provide
for the classification of the Board of Directors into three separate classes
(the "Classified Board Amendment"). Accordingly, the holders of Common Stock at
future meetings for the election of directors shall vote only for the directors
to succeed those directors whose terms then expire. The Classified Board
Amendment also requires the vote of the holders of at least 80% of Voting Stock,
including the Common Stock, for any amendment or modification that has the
effect of amending or modifying the Classified Board Amendment or the provisions
of the By-laws relating to the Board of Directors or meetings of shareholders.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting was held on June 26, 1997. At the Annual Meeting,
the following items were voted upon:
1. The election of five directors.
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending February 28, 1998.
3. The Classified Board Amendment.
The results of the voting were as follows:
SHARES VOTED
Against/
Description For Withheld
Election of the Board
of Directors:
Warren Eisenberg 64,220,070 2,268,839
Leonard Feinstein 64,231,436 2,257,473
Robert J. Swartz 63,859,802 2,629,107
Klaus Eppler 63,860,374 2,628,535
Robert S. Kaplan 63,868,887 2,620,022
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SHARES VOTED
Against/
For Withheld Abstentions
--- -------- -----------
Appointment of Auditors:
KPMG Peat Marwick LLP 66,406,119 25,303 57,487
Against/ Broker
For Withheld Abstentions Non-Votes
--- -------- ----------- ---------
Amend the Company's
Certificate of Incorporation: 41,018,765 21,300,258 100,632 4,069,254
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 May 31, 1997.
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 15, 1997 By: /s/ Ronald Curwin
-----------------
Ronald Curwin
Chief Financial Officer and Treasurer
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EXHIBIT INDEX
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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