1
Exhibit 13
A N N U A L R E P O R T
BED BATH &
BEYOND
Beyond any store of its kind.
2
BED BATH & BEYOND Annual Report 1997
Selected Financial Data
Fiscal Year Ended(1)
- - --------------------------------------------------------------------------------------------------------------
(in thousands, except per February 28, March 1, February 25, February 26, February 27,
share and selected operating data) 1998(2) 1997(2) 1996(2) 1995 1994
==============================================================================================================
Statement of Earnings Data:
Net sales $1,066,612 $ 823,178 $ 601,252 $ 440,261 $ 305,767
Gross profit 441,016 341,168 250,036 183,819 127,972
Operating profit 118,914 90,607 67,585 51,685 36,906
Net earnings 73,142 55,015 39,459 30,013 21,887
Net earnings per share(3) $ 1.03 $ .78 $ .57 $ .43 $ .32
Selected Operating Data:
Number of stores open
(at period end) 141 108 80 61 45
Total square feet of store space
(at period end) 5,767,000 4,347,000 3,214,000 2,339,000 1,512,000
Percentage increase in comparable store
net sales 6.4% 6.1% 3.8% 12.0% 10.6%
Balance Sheet Data (at period end):
Working capital $ 175,617 $ 121,679 $ 87,727 $ 71,902 $ 54,432
Total assets 458,330 329,925 235,810 176,678 121,468
Long-term debt -- -- 5,000 16,800 13,300
Shareholders' equity $ 295,397 $ 214,361 $ 151,446 $ 108,939 $ 77,305
(1) Each fiscal year represents 52 weeks, except for fiscal year 1996 which
represents 52 weeks and 6 days.
(2) Net earnings per share reflects diluted earnings per share in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per
Share". Basic earnings per share for fiscal years 1997, 1996 and 1995 were
$1.06, $.80 and $.58, respectively.
(3) Net earnings per share amounts have been adjusted for two-for-one stock
splits of the Company's common stock (each of which was effected in the
form of a 100% stock dividend), which were distributed in fiscal years
1996 and 1993. The Company has not declared any cash dividends in any of
the fiscal years noted above.
93 94 95 96 97
-- -- -- -- --
Net Sales
(in millions) 305.8 440.3 601.3 823.2 1066.6
Net Earnings
(in millions) 21.9 30.0 39.5 55.0 73.1
Net Earnings per Share
(in dollars) .32 .43 .57 .78 1.03
3
BED BATH & BEYOND Annual Report 1997 1
Founded in 1971, Bed Bath & Beyond Inc. is a nationwide chain of "superstores"
selling predominantly better quality domestics merchandise and home furnishings.
The Company's 148 stores principally range from 30,000 to 50,000 square feet,
with some stores exceeding 80,000 square feet. They combine superior service and
a huge selection of items (many of which are pictured in this report) at
everyday low prices within a constantly evolving shopping environment that has
proven to be both fun and exciting for customers. Bed Bath & Beyond Inc.'s stock
is traded on the NASDAQ National Market under the symbol BBBY and is included in
the Standard & Poor's MidCap 400 Index and the NASDAQ-100 Index.
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Contents
- - --------------------------------------------------------------------------------
Letter to Shareholders 2-9
Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10-13
Consolidated Financial
Statements 14-24
Corporate Data 25
Store Locations
- - --------------------------------------------------------------------------------
Alabama 2
Arizona 3
California 17
Colorado 3
Connecticut 3
Florida 16
Georgia 7
Illinois 9
Indiana 2
Kansas 1
Kentucky 1
Maryland 5
Massachusetts 5
Michigan 5
Minnesota 1
Missouri 4
New Jersey 9
New Mexico 1
New York 12
North Carolina 2
Ohio 4
Oklahoma 1
Oregon 1
Pennsylvania 5
Tennessee 3
Texas 16
Virginia 8
Washington 1
Wisconsin 1
- - --------------------------------------------------------------------------------
Call 1-800-GOBEYOND(SM) for exact locations. Total 148
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2 BED BATH & BEYOND Annual Report 1997
93 94 95 96 97
-- -- -- -- --
Total Assets 121.5 176.7 235.8 329.9 458.3
(in millions)
to our fellow shareholders
1997 was yet another exciting and memorable year for Bed Bath & Beyond!
A few of the highlights were:
o Net sales exceeded $1 billion for the first time;
o Net earnings increased by 32.9% to $73.1 million ($1.03 per share) -- our
sixth consecutive year of earnings increases in excess of 30%;
o Comparable store net sales grew by 6.4%;
o Working capital position improved by 44.3%;
o 33 superstores were opened, bringing the year-end total to 141 stores in
29 states;
o We remained debt-free throughout the entire year;
o Our overall financial condition is the strongest it has ever been.
When we began operations in 1971, with two small stores known as "bed n bath",
we could not have imagined that our business would grow into one of the largest
domestics and home furnishings retailers in the nation. Nor could we have
predicted consistent year-after-year gains in sales, earnings and shareholder
returns which rank among the very best in all of American retailing.
From those earliest days over twenty-six years ago, our Company has remained
true to a set of guiding principles, to a corporate culture, which has not only
distinguished Bed Bath & Beyond from its competitors, but which has been the
foundation for our outstanding operating results and solid financial position.
CORPORATE CULTURE
In general, these operating philosophies encompass many aspects of our Company,
including decentralization, our people, advertising, technology and logistics,
and expansion, to name a few. It is this corporate culture which differentiates
[PHOTO OMITTED]
Leonard Feinstein and Warren Eisenberg,
Co-Chief Executive Officers
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BED BATH & BEYOND Annual Report 1997 3
[PHOTO OMITTED]
Steven H. Temares, Executive
Vice President - Chief Operating Officer and Ronald Curwin,
Chief Financial Officer and Treasurer
Bed Bath & Beyond from our competitors, and which enables us to consistently
exceed their performance.
Decentralization
The cornerstone of our culture is decentralization. We believe that the closer
the ownership of the store is to our customer, the greater is the likelihood the
needs and desires of our customer will be met. Our store personnel are given
broad merchandising and operating authority, much more than is typical in the
retailing industry. Store management reorders most of the merchandise, tailoring
assortments to customer needs. Being entrepreneurial, and knowing merchandise
margins at the unit level, store managers are able to significantly impact
profitability in their stores through a process which we call "merchandising the
mix", a key ingredient of our success. Although we will never be completely
satisfied with the level of customer service in our stores, the principal
benefit of our decentralization, from bestowing "ownership" upon store
management, has been to produce an exceptional level of customer service and an
attentiveness to all the factors which produce the "bottom line". We receive
many communications directly from our customers, who often contrast their
favorable shopping experience in our stores with their unsatisfactory
experiences elsewhere, indicating that decentralization is effective where it
counts the most.
Our People
Throughout the years, a top priority has been to build our store management
organization from within. Virtually all of our
[PHOTO OMITTED]
Arthur Stark, Vice President - Merchandising; Matthew
Fiorilli, Vice President - Stores; and Jonathan Rothstein,
Vice President - Product Development and Marketing
6
4 BED BATH & BEYOND Annual Report 1997
93 94 95 96 97
-- -- -- -- --
Shareholders' Equity 77.3 108.9 151.4 214.4 295.4
regional managers, district managers, area managers, and store managers have
come up through the ranks. We believe in recruiting the brightest individuals
available, and then developing their potential through formalized training,
which now includes the Bed Bath & Beyond University program for our associates.
Although it is more difficult to train people our way, the look of our stores,
the level of customer service and ultimately, our operating results, tells us
our management philosophy regarding the recruitment and training of our people
is effective.
The appointment of Steven Temares as Executive Vice President-Chief Operating
Officer in early 1997 was indicative of our progress in developing senior
management. In view of the rapid growth of our Company, and the significant
expansion planned for the next few years, we recently further strengthened our
senior management ranks by recognizing the important contributions made, and
leadership shown, by three other veteran executives of Bed Bath & Beyond. Arthur
Stark, 42, Matthew Fiorilli, 41, and Jonathan Rothstein, 40, who have been
promoted to the newly-established positions of Vice President-Merchandising,
Vice President-Stores, and Vice President-Product Development and Marketing,
respectively, have a combined 60 years of outstanding accomplishment with the
Company.
Advertising
Another key aspect of our culture may be found in our approach to marketing and
advertising. Our customers are the most essential element of our business, and
we know that our attraction to them is our merchandise, our everyday low prices
and our superior level of customer service. We utilize everyday low pricing and
never run sales. We rely primarily on word of mouth advertising, limiting the
percentage of advertising expenditures to among the lowest in all of retailing.
Our advertising program essentially consists of several full-color circulars and
mailing pieces which are distributed during key selling periods of the year.
[PHOTO OMITTED]
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BED BATH & BEYOND Annual Report 1997 5
[PHOTO OMITTED]
8
6 BED BATH & BEYOND Annual Report 1997
[PHOTO OMITTED]
9
BED BATH & BEYOND Annual Report 1997 7
Technology and Logistics
Because our operations are decentralized, we customize the software needed to
support our business. We devote significant resources to developing the strong
systems capability required to support our rapid growth. Accomplishments in this
area to date have been impressive, and we continue to identify and prioritize
newer, and more advanced technologies for future implementation.
Although we have never operated distribution centers, we have always looked for
improved methods of providing logistical support for our stores. Recently, we
have begun to use outsourced cross-docking facilities located in proximity to
multiple vendors. Long-term benefits of this program are expected to include
reduced freight costs, improved control of freight, more timely deliveries and
reduced inventory shrinkage.
Expansion
Our expansion strategy also reflects our corporate culture. Because we are
decentralized, and since we do not have store prototypes, operate distribution
centers, or need to cluster stores in order to create "advertising umbrellas",
we are able to be quite flexible in our real estate strategy. This allows us to
take advantage of numerous opportunities as they are presented. We are able to
open stores ranging from 25,000 square feet to 85,000 square feet (and possibly
larger in the future), in new and existing markets, with varying demographics
and configurations. We can enter markets earlier, without having to wait for a
location of a certain size or dimension, in a desired locale, and we have
succeeded in every type of retail format including strip centers, off-price
malls, power centers, free-standing buildings, as well as in conventional malls.
In our most aggressive store opening program ever, we opened thirty-three new
superstores and expanded three others in fiscal 1997. Total store space
increased by approximately 32.7% to 5.8 million square feet. In fiscal 1998, we
plan to open approximately 40 additional new superstores, many of them during
the first half, in both new and existing markets.
Customer acceptance of our superstores has always been outstanding. Numerous
exciting new store locations continue to become available, affording us the
opportunity for strong growth in fiscal 1998 and beyond. Although our progress
to date has been impressive, Bed Bath & Beyond still enjoys a market share of
less than 2% of the estimated $65 billion, highly-fragmented, domestics and home
furnishings industry. Since department stores and other national retail chains
continue to generate most of the sales of the products featured in our stores,
we believe our prospects for gaining additional market share are excellent.
[PHOTO OMITTED]
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8 BED BATH & BEYOND Annual Report 1997
Our Outlook
Twenty-six years after our modest beginnings in 1971, we achieved our first
billion dollar sales year in fiscal 1997, and it was our most profitable year
ever. Consistent with our objective of doubling financial results every three
years, we are targeting sales of two billion dollars, accompanied by strong
earnings, cash flow, return on investment and financial condition, in fiscal
2000.
As a result of constant innovation and improvement, and our dedication to
exceptional customer service, Bed Bath & Beyond's consistent performance remains
unmatched in our retail sector. Furthermore, we are confident of our ability to
maintain the leadership position that we have always enjoyed over our direct
competitors. It has been, and will continue to be, our shared attitudes, values
and goals - our corporate culture - developed and carefully nurtured and honed
since inception, that differentiates our Company and defines us and our success.
We believe that our goals will be achieved through the continued outstanding
efforts of the over 8,000 associates who work in our stores and offices, who
provide our valued customers with the unique shopping experience that is Bed
Bath & Beyond.
To those associates, and to our vendors, we extend our thanks for a job
exceptionally well done. And to you, our fellow shareholders, we reiterate our
absolute dedication to enhancing shareholder value through our deep-seated
commitment to the operating philosophies which have always guided our Company.
As we continue to develop, innovate and experiment in so many ways, we can't
help but think that the best is truly yet to come for us all.
Sincerely,
/s/ Warren Eisenberg,
----------------------------------------
Warren Eisenberg,
Chairman and Co-Chief Executive Officer
/s/ Leonard Feinstein,
----------------------------------------
Leonard Feinstein,
President and Co-Chief Executive Officer
May 8, 1998
[PHOTO OMITTED]
Store Expansion
Total Square Footage
Number of Stores (in thousands)
93 45 1,512
94 61 2,339
95 80 3,214
96 108 4,347
97 141 5,767
11
BED BATH & BEYOND Annual Report 1997 9
[PHOTO OMITTED]
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10 BED BATH & BEYOND Annual Report 1997
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The following table sets forth for the periods indicated (i) selected
statement of earnings data of the Company expressed as a percentage of net sales
and (ii) the percentage change from the prior year in selected statement of
earnings data:
Fiscal Year Ended
---------------------------------------------------------------------------------
Percentage of Net Sales Percentage Change from Prior Year
-------------------------------------------- -----------------------------------
February 28, March 1, February 25, February 28, March 1,
1998 1997 1996 1998 1997
========================================================================================================================
Net sales 100.0% 100.0% 100.0% 29.6% 36.9%
Cost of sales, including buying,
occupancy and indirect costs 58.7 58.6 58.4 29.8 37.2
Gross profit 41.3 41.4 41.6 29.3 36.4
Selling, general and
administrative expenses 30.2 30.4 30.3 28.6 37.3
Operating profit 11.1 11.0 11.2 31.2 34.1
Earnings before provision
for income taxes 11.4 11.1 11.1 33.0 36.5
Net earnings 6.9 6.7 6.6 32.9 39.4
Fiscal 1997 Compared With Fiscal 1996
In fiscal 1997, the Company expanded store space by 32.7%, from 4,347,000
square feet at fiscal year-end 1996 to 5,767,000 square feet at fiscal year-end
1997. The 1,420,000 square feet increase was the result of opening thirty-three
new superstores and expanding three existing stores.
Net sales in fiscal 1997 increased $243.4 million to $1.067 billion,
representing an increase of 29.6% over the $823.2 million net sales in fiscal
1996. Approximately 81% of the increase is attributable to new store net sales
and the balance to an increase in comparable store net sales.
Approximately 55% and 45% of net sales in fiscal 1997 were attributable to
sales of domestics merchandise and home furnishings, respectively. The Company
estimates that bed linens accounted for approximately 21% of net sales during
fiscal 1997 and fiscal 1996. No other individual product category accounted for
10% or more of net sales during either fiscal year.
Gross profit in fiscal 1997 was $441.0 million or 41.3% of net sales
compared with $341.2 million or 41.4% of net sales, a year ago. The decrease in
gross profit as a percentage of net sales was primarily attributable to a
different mix of sales during fiscal 1997 compared to the mix of sales during
the prior year and an increase in coupons redeemed associated with the Company's
marketing program.
The percentage increase in comparable store net sales was 6.4% in fiscal
1997 compared with 6.1% in fiscal 1996. The increase in comparable store net
sales relative to the prior year reflects a number of factors, including the
continued consumer acceptance of the Company's merchandise offerings, a strong
focus on customer service and the generally favorable retailing environment.
Selling, general and administrative expenses ("SG&A") were $322.1 million
or 30.2% of net sales in fiscal 1997 compared to $250.6 million or 30.4% of net
sales in fiscal 1996. The decrease in SG&A as a percentage of net sales
primarily reflects a relative decrease in costs associated with new store
openings as well as a decrease in payroll and payroll related items, which were
partially offset by an increase in occupancy costs. Expenses associated with
new, relocated or expanded stores are charged to earnings as incurred.
13
BED BATH & BEYOND Annual Report 1997 11
Operating profit was $118.9 million in fiscal 1997, an increase of $28.3
million or 31.2% from fiscal 1996, reflecting primarily the increase in net
sales which was partially offset by increases in cost of sales and SG&A.
The increase in earnings before provision for income taxes of 33.0% from
fiscal 1996 to fiscal 1997 compared to the year to year increase in operating
profit of 31.2% is attributable to interest income.
Fiscal 1996 Compared With Fiscal 1995
In fiscal 1996, the Company expanded store space by 35.3%, from 3,214,000
square feet at fiscal year-end 1995 to 4,347,000 square feet at fiscal year-end
1996. The 1,133,000 square feet increase was the result of opening twenty-eight
new superstores and expanding two existing stores.
Net sales in fiscal 1996 increased $221.9 million to $823.2 million,
representing an increase of 36.9% over the $601.3 million net sales in fiscal
1995. Approximately 84% of the increase is attributable to new store net sales
and the balance to an increase in comparable store net sales.
Approximately 55% and 45% of net sales in fiscal 1996 were attributable to
sales of domestics merchandise and home furnishings, respectively. The Company
estimates that bed linens accounted for approximately 21% of net sales during
fiscal 1996 and fiscal 1995. No other individual product category accounted for
10% or more of net sales during either fiscal year.
Gross profit in fiscal 1996 was $341.2 million or 41.4% of net sales
compared with $250.0 million or 41.6% of net sales, a year ago. 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 fiscal 1996 compared to the
mix of sales during the prior year, and an increase in coupons redeemed
associated with the circular marketing program.
The percentage increase in comparable store net sales was 6.1% in fiscal
1996 compared with 3.8% in fiscal 1995. The increase in comparable net sales
relative to the prior year primarily 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.
SG&A was $250.6 million or 30.4% of net sales in fiscal 1996 compared to
$182.5 million or 30.3% of net sales in fiscal 1995. The increase in SG&A as a
percentage of net sales primarily reflects an increase in occupancy costs, which
was partially offset by a decrease in payroll and payroll related items.
Expenses associated with new, relocated or expanded stores are charged to
earnings as incurred.
Operating profit was $90.6 million in fiscal 1996, an increase of $23.0
million or 34.1% from fiscal 1995, reflecting primarily the increase in net
sales which was partially offset by increases in cost of sales and SG&A.
The change in the effective tax rate reflects a decrease in the amount
provided for state and local taxes due primarily to the composition of states in
which the Company conducts business.
Expansion Program
The Company is engaged in an ongoing expansion program involving the
opening of new stores in both new and existing markets and the expansion or
replacement of existing stores with larger stores. In the five-year period from
the beginning of fiscal 1993 to the end of fiscal 1997, the chain has grown from
38 stores to 141 stores. Total square footage grew from 1,128,000 square feet at
the beginning of fiscal 1993 to 5,767,000 square feet at the end of fiscal 1997.
A major portion of the increase in the Company's net sales during each of
the preceding five years was attributable to new store net sales as
distinguished from increases in comparable store net sales, with new store net
sales accounting for approximately 81%, 84%, 91%, 78% and 75% of the increase
in net sales in fiscal 1997, 1996, 1995, 1994 and 1993, respectively.
14
12 BED BATH & BEYOND Annual Report 1997
Management's Discussion and Analysis of
Financial Condition and Results of Operations, continued
The Company intends to continue its expansion program and currently
anticipates that in fiscal 1998 it will open approximately 40 new stores (see
details under "Liquidity and Capital Resources" below). The Company believes
that a predominant portion of any increase in its net sales in fiscal 1998 will
continue to be attributable to new store net sales. Accordingly, the continued
growth of the Company is dependent, in large part, upon the Company's ability to
execute its expansion program successfully, of which there can be no assurance.
Liquidity and Capital Resources
The Company has been able to finance both its normal operations and its
expansion program principally through internally generated funds during the
preceding five years. For the foreseeable future, the Company intends to retain
all earnings for use in the operation and expansion of its business.
The Company's merchandise inventory has grown from $148.4 million at the
end of fiscal 1995, to $187.2 million at the end of fiscal 1996, and to $270.4
million at the end of fiscal 1997. The increase in inventory between the end of
fiscal 1996 and fiscal 1997 was primarily attributable to the addition of new
store space. The increase in inventory between the end of fiscal 1995 and fiscal
1996 was attributable to the addition of new store space during the period,
which was partially offset by a decrease in inventory levels at existing stores.
This decrease in inventory levels at existing stores as of the end of fiscal
1996 primarily reflected the timing of fiscal year-end inventory receipts.
The Company's working capital increased from $87.7 million at the end of
fiscal 1995 to $121.7 million at the end of fiscal 1996, and to $175.6 million
at the end of fiscal 1997. The increases between the fiscal years were primarily
the result of increases in merchandise inventories and cash and cash
equivalents, which were partially offset by increases in accounts payable and
accrued expenses and other current liabilities.
The Company's expansion program requires the Company to make capital
expenditures for furniture and fixtures and leasehold improvements on an ongoing
basis. The Company's total capital expenditures were $41.3 million, $35.1
million and $24.5 million during fiscal 1997, 1996 and 1995, respectively.
Under the Company's revolving Credit Agreement (the "Credit Agreement")
concluded in November 1994, and as subsequently amended, the Company may borrow
up to $45.0 million for loans and letters of credit. The Credit Agreement
matures in October 1998, at which time any revolving credit loans outstanding
may be converted to a term loan payable in twelve quarterly installments
maturing in October 2001.
The Credit Agreement contains certain covenants which, among other things,
place limitations on payment of dividends, capital expenditures and certain
expenses. Additionally, there are restrictions on additional borrowings and a
requirement that the Company maintain certain financial ratios. The Company does
not believe that any of these covenants will materially affect its business or
its expansion program as currently planned.
The Company did not borrow under the Credit Agreement during fiscal 1997.
Although there was no amount of outstanding indebtedness at March 1, 1997,
during fiscal 1996, the Company borrowed under the Credit Agreement primarily to
meet seasonal cash requirements as well as capital expenditures and inventory
requirements for new store space opened during the year.
The Company believes that during fiscal 1998, internally generated funds,
supplemented, if necessary, by borrowings under the Credit Agreement, will be
sufficient to fund both its normal operations and its expansion program.
As of March 27, 1998, the Company has leased sites for twenty-three new
superstores planned for opening in fiscal 1998, including three new stores
already opened in Pembroke Pines, Florida; Roseville, Michigan; and Knoxville,
Tennessee.
15
BED BATH & BEYOND Annual Report 1997 13
Other new stores expected to open in fiscal 1998 for which the Company has
leased sites will be located in Chandler, Arizona; Pasadena, San Mateo, and
Valencia, California; North Colorado Springs, Colorado; Brandywine, Delaware;
Aventura, Boynton Beach, Oviedo, and St. Petersburg, Florida; Crystal Lake,
Fairview Heights, and Geneva, Illinois; Shawnee, Kansas; Frederick and Towson,
Maryland; Columbus, Ohio; Oklahoma City, Oklahoma; Richmond, Virginia; and
Redmond, Washington.
Approximate aggregate costs for the twenty-three leased stores are
estimated at $43.7 million for merchandise inventories, $16.6 million for
furniture and fixtures and leasehold improvements, and $7.2 million for
preopening expenses (which will be expensed as incurred). In addition to the
foregoing twenty-three locations already leased, the Company expects to open
approximately seventeen additional locations during fiscal 1998. The costs that
the Company is expected to incur in connection with the anticipated opening of
other superstores for which sites have not yet been leased cannot presently be
determined.
Year 2000
The Company has conducted an extensive review of its computer systems to
identify the systems that could be affected by the Year 2000 issue and has
developed an implementation plan to address the issue. The Year 2000 problem is
the result of computer programs being written using two digits rather than four
to define the applicable year. Any of the Company's programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations. The Company presently believes that, with modifications to
existing software and conversions to new software for certain applications, the
Year 2000 problem will not pose significant operational problems for the
Company's computer systems. However, if such modifications and conversions are
not completed timely, the Year 2000 problem may have a material impact on the
operations of the Company. Also, while the Company's implementation plan
addresses vendor issues, there can be no assurance that the systems of other
companies on which the Company's systems rely will be timely converted, or that
any such failure to convert by another company would not have an adverse effect
on the Company's systems or operations.
Forward Looking Statements
This Annual Report and, in particular, Management's Discussion and
Analysis of Financial Condition and Results of Operations contain forward
looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended. The Company's actual results of operations and future
financial condition may differ materially from those expressed in any such
forward looking statements as a result of many factors that may be beyond the
Company's control. Such factors include, without limitation: general economic
conditions, changes in the retail environment and consumer spending habits,
demographics and other macroeconomic factors that may impact the level of
spending for the types of merchandise sold by the Company; unusual weather
patterns; competition from existing and potential competitors; pricing
pressures; the ability to find suitable locations at reasonable occupancy costs
to support the Company's expansion program; the availability of trained
qualified management personnel to support the Company's growth; and the cost of
labor, merchandise and other costs and expenses.
Inflation and Seasonality
The Company does not believe that its operating results have been
materially affected by inflation during the three preceding years. There can be
no assurance, however, that the Company's operating results will not be affected
by inflation in the future.
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.
16
14 BED BATH & BEYOND Annual Report 1997
Consolidated Balance Sheets
BED BATH & BEYOND INC. AND SUBSIDIARIES
(in thousands, except share and per share data)
February 28, March 1,
1998 1997
Assets
Current assets:
Cash and cash equivalents $ 53,280 $ 38,765
Merchandise inventories 270,357 187,185
Prepaid expenses and other current assets 2,323 1,605
------------------------
Total current assets 325,960 227,555
------------------------
Property and equipment, net (note 2) 111,381 88,332
Other assets (notes 4 and 5) 20,989 14,038
------------------------
$458,330 $329,925
========================
Liabilities And Shareholders' Equity
Current liabilities:
Accounts payable $ 64,718 $ 47,821
Accrued expenses and other current liabilities 73,610 47,923
Income taxes payable 12,015 10,132
------------------------
Total current liabilities 150,343 105,876
------------------------
Deferred rent 12,590 9,688
------------------------
Total liabilities 162,933 115,564
------------------------
Commitments and contingencies (notes 3, 6 and 8)
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 -
February 28, 1998, 69,043,973 shares and
March 1, 1997, 68,603,022 shares 690 686
Additional paid-in capital 62,039 54,149
Retained earnings 232,668 159,526
------------------------
Total shareholders' equity 295,397 214,361
------------------------
$458,330 $329,925
========================
See accompanying Notes to Consolidated Financial Statements.
17
BED BATH & BEYOND Annual Report 1997 15
Consolidated Statements Of Earnings
BED BATH & BEYOND INC. AND SUBSIDIARIES
(in thousands, except share and per share data)
Fiscal Year Ended
---------------------------------------------
February 28, March 1, February 25,
1998 1997 1996
Net sales $ 1,066,612 $ 823,178 $ 601,252
Cost of sales, including buying, occupancy and
indirect costs 625,596 482,010 351,216
------------------------------------------
Gross profit 441,016 341,168 250,036
Selling, general and administrative expenses 322,102 250,561 182,451
------------------------------------------
Operating profit 118,914 90,607 67,585
Interest income (expense), net 2,484 704 (705)
------------------------------------------
Earnings before provision for income taxes 121,398 91,311 66,880
Provision for income taxes (note 4) 48,256 36,296 27,421
------------------------------------------
Net earnings $ 73,142 $ 55,015 $ 39,459
==========================================
Net earnings per share - Basic $ 1.06 $ .80 $ .58
Net earnings per share - Diluted $ 1.03 $ .78 $ .57
==========================================
Weighted average shares outstanding - Basic 68,832,352 68,408,706 67,879,779
Weighted average shares outstanding - Diluted 71,181,009 70,564,981 69,387,270
==========================================
See accompanying Notes to Consolidated Financial Statements.
18
16 BED BATH & BEYOND Annual Report 1997
Consolidated Statements Of Shareholders' Equity
BED BATH & BEYOND INC. AND SUBSIDIARIES
Common Stock Additional
------------------ Paid-in Retained
(in thousands) Shares Amount Capital Earnings Total
==============================================================================================================
Balance at February 26, 1995 67,769 $ 339 $ 43,548 $ 65,052 $108,939
Net earnings 39,459 39,459
Shares sold under employee stock option
plan (note 10) 299 2 3,046 3,048
Reclassification of additional paid-in
capital to common stock in connection
with the 2 for 1 stock split 340 (340) --
----------------------------------------------------------
Balance at February 25, 1996 68,068 681 46,254 104,511 151,446
Net earnings 55,015 55,015
Shares sold under employee stock option
plan (note 10) 535 5 7,895 7,900
----------------------------------------------------------
Balance at March 1, 1997 68,603 686 54,149 159,526 214,361
Net earnings 73,142 73,142
Shares sold under employee stock option
plans (note 10)
441 4 7,890 7,894
----------------------------------------------------------
Balance at February 28, 1998 69,044 $ 690 $ 62,039 $232,668 $295,397
==========================================================
See accompanying Notes to Consolidated Financial Statements.
19
BED BATH & BEYOND Annual Report 1997 17
Consolidated Statements Of Cash Flows
BED BATH & BEYOND INC. AND SUBSIDIARIES
Fiscal Year Ended
----------------------------------------------
February 28, March 1, February 25,
(in thousands) 1998 1997 1996
==============================================================================================================
Cash Flows from Operating Activities:
Net earnings $ 73,142 $ 55,015 $ 39,459
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 18,238 13,439 9,902
Deferred income taxes (6,345) (2,895) (1,863)
Loss from disposal of property and equipment -- -- 192
(Increase) decrease in assets:
Merchandise inventories (83,172) (38,802) (39,995)
Prepaid expenses and other current assets (718) 25 1,530
Other assets (606) (2,248) (566)
Increase in liabilities:
Accounts payable 16,897 8,796 11,522
Accrued expenses and other current liabilities 25,687 20,976 12,123
Income taxes payable 1,883 3,551 2,799
Deferred rent 2,902 2,877 1,981
-------------------------------------------
Net cash provided by operating activities 47,908 60,734 37,084
-------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures (41,287) (35,136) (24,528)
-------------------------------------------
Net cash used in investing activities (41,287) (35,136) (24,528)
-------------------------------------------
Cash Flows from Financing Activities:
Proceeds from long-term debt -- 17,000 55,060
Repayment of long-term debt -- (22,000) (66,860)
Proceeds from exercise of stock options 7,894 7,900 3,048
-------------------------------------------
Net cash provided by (used in) financing activities 7,894 2,900 (8,752)
-------------------------------------------
Net increase in cash and cash equivalents 14,515 28,498 3,804
Cash and cash equivalents:
Beginning of period 38,765 10,267 6,463
-------------------------------------------
End of period $ 53,280 $ 38,765 $ 10,267
===========================================
See accompanying Notes to Consolidated Financial Statements.
20
18 BED BATH & BEYOND Annual Report 1997
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies and Related Matters
a. Nature of Operations
Bed Bath & Beyond Inc. (the "Company") is a nationwide chain of
"superstores" selling predominantly better quality domestics merchandise and
home furnishings. As the Company operates in the retail industry, its results of
operations are affected by general economic conditions and consumer spending
habits.
b. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly owned.
All significant intercompany balances and transactions have been
eliminated in consolidation.
c. Fiscal Year
Effective February 26, 1996, the Company changed its fiscal year-end from
the 52 or 53 week period ending on the Sunday nearest February 28 to the 52 or
53 week period ending on the Saturday nearest February 28. Accordingly, the 1997
fiscal year represented 52 weeks and ended on February 28, 1998; the 1996 fiscal
year represented 52 weeks and 6 days and ended on March 1, 1997; and the 1995
fiscal year represented 52 weeks and ended on February 25, 1996.
d. Accounting Standards
In fiscal 1997, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share", which requires a dual presentation of
earnings per share - basic and diluted. Basic earnings per share has been
computed by dividing net income by the weighted average number of shares
outstanding. Diluted earnings per share has been computed by dividing net income
by the weighted average number of shares outstanding including the effect of
dilutive stock options.
In fiscal 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").
As permitted under SFAS No. 123, the Company has elected not to adopt the fair
value based method of accounting for its stock-based compensation plans, but
will continue to apply the provisions of Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25"). The Company has
complied with the disclosure requirements of SFAS No. 123.
In fiscal 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". There was no
material impact on the Company's financial condition or results of operations as
a result of the adoption.
e. Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with
maturities of three months or less to be cash equivalents.
f. Merchandise Inventories
Merchandise inventories are stated at the lower of cost or market,
determined by means of the retail inventory method of accounting.
g. Property and Equipment
Property and equipment are stated at cost. Depreciation of furniture,
fixtures and equipment is computed primarily using the straight-line method over
the estimated useful lives of the assets, which is generally five to ten years.
Leasehold purchases are amortized using the straight-line method over the life
of the lease and leasehold improvements are amortized using the straight-line
method over the lesser of their estimated useful life or the life of the lease.
The cost of maintenance and repairs is charged to earnings as incurred;
significant renewals and betterments are capitalized. Maintenance and repairs
amounted to $12.2 million, $9.6 million and $6.9 million for fiscal 1997, 1996
and 1995, respectively.
h. Deferred Rent
The Company accounts for scheduled rent increases contained in its leases
on a straight-line basis over the noncancelable lease term.
21
BED BATH & BEYOND Annual Report 1997 19
i. Shareholders' Equity
In March 1996, the Board of Directors of the Company approved a
two-for-one split of the Company's common stock 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, in fiscal 1996 all share and per share
data were adjusted to give effect to the stock split.
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.
j. Preopening Expenses
Expenses associated with new, relocated or expanded stores are charged to
earnings as incurred.
k. Advertising Costs
Expenses associated with store advertising are charged to earnings as
incurred. For the 1997, 1996 and 1995 fiscal years, advertising expenses
amounted to $15.7 million, $12.3 million and $9.3 million, respectively.
l. Income Taxes
The Company files a consolidated Federal income tax return. Separate state
income tax returns are filed with each state in which the Company conducts
business.
The Company accounts for its income taxes using the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the year in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in earnings in the period that includes the
enactment date.
m. Fair Value of Financial Instruments
The Company's financial instruments include cash and cash equivalents,
accounts payable and accrued expenses and other current liabilities. The book
value of cash and cash equivalents, accounts payable and accrued expenses and
other current liabilities are representative of their fair values due to the
short-term maturity of these instruments.
n. Impairment of Long-Lived Assets
When changes in circumstances warrant measurement, impairment losses for
store fixed assets are calculated by comparing the present value of projected
individual store cash flows over the lease term to the asset carrying values.
The Company does not believe that any material impairment currently exists
related to its long-lived assets.
o. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
p. Reclassifications
Certain reclassifications have been made to the fiscal 1996 and 1995
consolidated financial statements to conform to the fiscal 1997 consolidated
financial statements.
2. Property and Equipment
Property and equipment consist of the following:
February 28, March 1,
(in thousands) 1998 1997
================================================================================
Furniture, fixtures and equipment $ 102,633 $ 72,576
Leasehold improvements 63,070 53,562
Leasehold purchases 3,141 4,331
----------------------------
168,844 130,469
Less: Accumulated depreciation
and amortization (57,463) (42,137)
----------------------------
$ 111,381 $ 88,332
============================
22
20 BED BATH & BEYOND Annual Report 1997
Notes to Consolidated Financial Statements, continued
3. Credit Agreement
Under the Company's revolving Credit Agreement (the "Credit Agreement")
concluded in November 1994, and as subsequently amended, the Company may borrow
up to $45.0 million for loans and letters of credit. The Credit Agreement
matures in October 1998, at which time any revolving credit loans outstanding
may be converted to a term loan payable in twelve quarterly installments
maturing in October 2001. Interest on all borrowing is determined based upon
several alternative rates as stipulated in the Credit Agreement.
The Credit Agreement contains certain covenants which, among other things,
place limitations on payment of dividends, capital expenditures and certain
expenses. Additionally, there are restrictions on additional borrowings and a
requirement that the Company maintain certain financial ratios. The Company does
not believe that any of these covenants have materially affected its business.
Under the terms of these covenants, approximately $36.6 million was available
for the payment of dividends at February 28, 1998.
The Company did not borrow under the Credit Agreement during fiscal 1997.
Although there was no amount of outstanding indebtedness at March 1, 1997,
during fiscal 1996, the Company borrowed under the Credit Agreement primarily to
meet seasonal cash requirements as well as capital expenditures and inventory
requirements for new store space opened during the year. During fiscal 1996,
interest rates on outstanding debt ranged from 5.70% to 7.25%. As of February
28, 1998 and March 1, 1997, there were approximately $1.4 million and $1.0
million in outstanding letters of credit, respectively.
4. Provision for Income Taxes
The components of the provision for income taxes are as follows:
Fiscal Years
---------------------------------------------
(in thousands) 1997 1996 1995
================================================================================
Current:
Federal $ 44,981 $ 32,157 $ 22,383
State and local 9,620 7,034 6,901
---------------------------------------------
54,601 39,191 29,284
---------------------------------------------
Deferred:
Federal (5,587) (2,527) (1,635)
State and local (758) (368) (228)
---------------------------------------------
(6,345) (2,895) (1,863)
---------------------------------------------
$ 48,256 $ 36,296 $ 27,421
=============================================
Included in other assets are deferred income taxes which reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. The significant components of the Company's deferred tax assets
consist of the following:
February 28, March 1,
(in thousands) 1998 1997
================================================================================
Deferred rent $ 5,004 $ 3,851
Inventories 4,599 2,845
Other 6,332 2,894
-----------------------------
$ 15,935 $ 9,590
=============================
Reconciliations of the Federal statutory income tax rate to the effective
tax rates are as follows:
Fiscal Years
------------------------------------
1997 1996 1995
===============================================================================
Federal statutory
income tax rate 35.00% 35.00% 35.00%
State income taxes, net
of Federal tax benefit 4.75 4.75 6.48
Other -- -- (.48)
------------------------------------
Effective tax rate 39.75% 39.75% 41.00%
====================================
5. Transactions and Balances with Related Parties
a. The Company has an interest in certain life insurance policies on the
lives of its Chairman and President. The beneficiaries of these policies are
related to the aforementioned individuals. The Company's interest in these
policies is equivalent to the net premiums paid by the Company. At February 28,
1998 and March 1, 1997, other assets include $2.9 million and $2.4 million,
respectively, representing the Company's interest in the life insurance
policies.
b. The Company obtains certain payroll services from a related party. The
Company paid fees for such services of $308,000, $213,000 and $161,000 for
fiscal 1997, 1996 and 1995, respectively.
c. The Company made charitable contributions to the Mitzi and Warren
Eisenberg Family Foundation, Inc. (the "Eisenberg Foundation") and the Feinstein
Family Foundation, Inc. (the "Feinstein Foundation") in the aggregate amounts of
$300,000, $240,000 and $190,000 for
23
BED BATH & BEYOND Annual Report 1997 21
fiscal 1997, 1996 and 1995, respectively. The Eisenberg Foundation and the
Feinstein Foundation are each not-for-profit corporations of which Messrs.
Eisenberg and Feinstein, the Chairman and President of the Company,
respectively, and their family members are the trustees and officers.
6. Leases
The Company leases retail stores, as well as warehouses, office facilities
and equipment, under agreements expiring at various dates through 2017. Certain
leases provide for contingent rents (based upon store sales exceeding stipulated
amounts), scheduled rent increases and renewal options generally ranging from
five to fifteen years. The Company is obligated under a majority of the leases
to pay for taxes, insurance and common area maintenance charges.
As of February 28, 1998, future minimum lease payments under noncancelable
operating leases are as follows:
Fiscal Year (in thousands) Amounts
================================================================================
1998 $ 72,534
1999 71,728
2000 70,426
2001 69,969
2002 69,231
Thereafter 478,712
--------
Total minimum lease payments $832,600
========
As of March 27, 1998, the Company had executed leases for twenty-three
stores planned for opening in fiscal 1998.
Expenses for all operating leases were $70.2 million, $52.0 million and
$37.3 million for fiscal 1997, 1996 and 1995, respectively.
7. Employee Benefit Plan
The Company has a defined contribution 401(k) savings plan (the "Plan")
covering all eligible employees. Participants may defer between 1% and 15% of
annual pre-tax compensation not to exceed $10,000, $9,500 and $9,500 for
calendar years 1998, 1997 and 1996, respectively. The Company has an option to
contribute an amount as determined by the Board of Directors. In addition, each
participant may elect to make voluntary, non-tax deductible contributions in
excess of the pre-tax compensation limit up to 15% of compensation. As of
February 28, 1998, the Company has made no contributions to the Plan.
8. Commitments and Contingencies
Under terms of employment agreements with its Chairman and President
extending through June 2002, the Company is required to pay each a base salary
(which may be increased by the Board of Directors) of $750,000 per annum. The
agreements also provide for other terms and conditions of employment, including
termination payments.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
9. Supplemental Cash Flow Information
The Company paid income taxes of $48.5 million, $31.2 million and $25.2
million in fiscal 1997, 1996 and 1995, respectively.
The Company also paid interest of $54,000, $108,000 and $991,000 in fiscal
1997, 1996 and 1995, respectively.
10. Stock Compensation Plans
Under its 1996 Stock Option Plan, the Company may grant options to
purchase not more than an aggregate of 2,000,000 shares of common stock, subject
to adjustment under certain circumstances. Under its Amended 1992 Stock Option
Plan, the Company may grant options to purchase not more than an aggregate of
5,600,000 shares of common stock, subject to adjustment under certain
circumstances. Some or all of the options under the stock option plans may be
"incentive stock options" within the meaning of the Internal Revenue Code of
1986. Options have been granted at market value and are exercisable at a rate of
20% per year over a five-year period commencing
24
22 BED BATH & BEYOND Annual Report 1997
Notes to Consolidated Financial Statements, continued
10. Stock Compensation Plans (continued)
with the date of grant, or one or two years thereafter and expire ten years from
the date of grant.
The following table summarizes stock option transactions:
Number Weighted-
of Average
Shares Exercise Price
=================================================================
Balance at February 26, 1995 3,113,090 $ 8.12
Options granted 1,121,500 11.22
Options exercised (299,090) 5.87
Options canceled (279,640) 12.07
---------
Balance at February 25, 1996 3,655,860 8.96
---------
Options granted 819,200 21.43
Options exercised (535,050) 6.26
Options canceled (191,970) 13.00
---------
Balance at March 1, 1997 3,748,040 11.86
---------
Options granted 2,174,900 29.41
Options exercised (440,951) 7.81
Options canceled (179,540) 17.45
---------
Balance at February 28, 1998 5,302,449 $19.21
=================================================================
Options exercisable:
At February 25, 1996 679,540 $ 6.46
At March 1, 1997 822,780 $ 8.05
At February 28, 1998 1,105,769 $ 9.27
=================================================================
The stock option committees appointed pursuant to the stock option plans
determine the number of shares and the option price per share for all options
issued under the stock option plans.
The following tables summarize information pertaining to stock options
outstanding and exercisable at February 28, 1998:
Options Outstanding
- - -----------------------------------------------------------------
Weighted-Average
Range of Number Remaining Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price
=================================================================
$ 4.25 to 8.16 994,475 4.80 $ 6.59
9.22 to 12.19 1,017,784 6.82 10.31
12.50 to 21.25 974,990 7.74 17.60
24.25 to 30.94 960,800 9.06 25.54
31.25 to 40.63 1,354,400 9.54 31.81
---------
$ 4.25 to 40.63 5,302,449 7.71 $ 19.21
=========
Options Exercisable
- - -----------------------------------------------------------------
Range of Number Weighted-Average
Exercise Prices Exercisable Exercise Price
=================================================================
$ 4.25 to 8.16 640,835 $ 5.73
9.22 to 12.19 220,764 11.57
12.50 to 21.25 213,910 15.10
24.25 to 30.94 30,260 26.14
31.25 to 40.63 -- --
---------
$ 4.25 to 40.63 1,105,769 $ 9.27
=========
The Company applies APB No. 25 and related interpretations in accounting
for its stock option plans. Accordingly, no compensation cost has been
recognized in connection with the plans. Set forth below are the Company's net
earnings and net earnings per share presented "as reported", and as if
compensation cost had been recognized in accordance with the fair value
provisions of SFAS No. 123:
Fiscal Years
------------------------------
(in thousands, except per share data) 1997 1996 1995
=====================================================================
Net earnings:
As reported $73,142 $55,015 $39,459
Pro forma $69,257 $53,908 $39,056
Net earnings per share:
Basic:
As reported $ 1.06 $ 0.80 $ 0.58
Pro forma $ 1.01 $ 0.79 $ 0.58
Diluted:
As reported $ 1.03 $ 0.78 $ 0.57
Pro forma $ 0.97 $ 0.76 $ 0.56
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions used
for grants for fiscal 1997, 1996 and 1995, respectively: dividend yield of 0%
for all years; expected volatility of 42% for all years; risk free interest
rates of 6.36%, 6.62% and 6.52%; and expected lives of six years for all years.
The weighted-average fair value of options granted during the year is $15.16,
$11.65 and $5.89 for fiscal 1997, 1996 and 1995, respectively.
25
BED BATH & BEYOND Annual Report 1997 23
11. Summary of Quarterly Results (unaudited)
Fiscal 1997 Quarter Ended
------------------------------------------------------
May 31, August 30, November 29, February 28,
(in thousands, except per share data) 1997 1997 1997 1998
==============================================================================================
Net sales $ 213,662 $ 266,895 $ 280,978 $ 305,077
Gross profit 87,358 109,500 115,422 128,736
Operating profit 15,810 31,770 30,726 40,608
Earnings before provision
for income taxes 16,447 32,274 31,440 41,237
Provision for income taxes 6,540 12,827 12,497 16,392
Net earnings $ 9,907 $ 19,447 $ 18,943 $ 24,845
Net earnings per share - Basic(1) $ .14 $ .28 $ .27 $ .36
Net earnings per share - Diluted(1) $ .14 $ .27 $ .27 $ .35
Fiscal 1996 Quarter Ended
------------------------------------------------------
May 26, August 25, November 24, March 1,
(in thousands, except per share data) 1996 1996 1996 1997
==============================================================================================
Net sales $ 159,658 $ 203,503 $ 214,793 $ 245,224
Gross profit 65,788 83,937 88,664 102,779
Operating profit 12,661 25,034 22,812 30,100
Earnings before provision
for income taxes 12,803 25,071 23,037 30,400
Provision for income taxes 5,089 9,966 9,157 12,084
Net earnings $ 7,714 $ 15,105 $ 13,880 $ 18,316
Net earnings per share - Basic(1) $ .11 $ .22 $ .20 $ .27
Net earnings per share - Diluted(1) $ .11 $ .21 $ .20 $ .26
(1) Net earnings per share amounts for each quarter are required to be computed
independently and may not equal the amount computed for the total year.
26
24 BED BATH & BEYOND Annual Report 1997
KPMG [LOGO] Peat Marwick LLP
Independent Auditors' Report
To the Board of Directors and Shareholders of Bed Bath & Beyond Inc.:
We have audited the accompanying consolidated balance sheets of Bed Bath &
Beyond Inc. and subsidiaries as of February 28, 1998 and March 1, 1997, and the
related consolidated statements of earnings, shareholders' equity and cash flows
for each of the fiscal years in the three-year period ended February 28, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bed Bath &
Beyond Inc. and subsidiaries as of February 28, 1998 and March 1, 1997, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended February 28, 1998 in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
March 27, 1998
27
BED BATH & BEYOND Annual Report 1997 25
Corporate Data
Officers & Directors
Warren Eisenberg
Chairman, Co-Chief Executive Officer and Director
Leonard Feinstein
President, Co-Chief Executive Officer and Director
Steven H. Temares
Executive Vice President - Chief Operating Officer
Ronald Curwin
Chief Financial Officer and Treasurer
Arthur Stark
Vice President - Merchandising
Matthew Fiorilli
Vice President - Stores
Jonathan Rothstein
Vice President - Product Development and Marketing
Klaus Eppler
Director - Partner, Proskauer Rose LLP,
New York, New York
Robert S. Kaplan
Director - Managing Director, Goldman, Sachs & Co.,
New York, New York
Robert J. Swartz
Director - Vice President, Alco Capital Group Inc.,
New York, New York
Corporate Office
Bed Bath & Beyond Inc.
650 Liberty Avenue
Union, New Jersey 07083
Telephone: 908/688-0888
Shareholder Information
The Company's 1997 Annual Report on Form 10-K (excluding exhibits) may be
obtained, without charge, by writing to the Investor Relations Department at
the Corporate Office, or by fax (908/810-8813).
Stock Listing
The Common Stock of Bed Bath & Beyond Inc. trades on the NASDAQ National
Market System under the symbol BBBY.
Stock Activity
The following table sets forth by fiscal quarter the high and low reported sales
prices of the Company's Common Stock on the NASDAQ National Market during fiscal
1996 and fiscal 1997:
Quarter High Low
================================================================================
Fiscal 1996
First $ 31 1/2 $ 19 11/16
Second 31 18 1/4
Third 29 3/4 20 3/8
Fourth 31 3/4 24 1/8
Fiscal 1997
First $ 29 1/2 $ 22 7/8
Second 36 1/8 27 3/4
Third 36 1/4 28 13/16
Fourth 44 7/8 32
At March 27, 1998, there were approximately 500 shareholders of record. This
number excludes individual shareholders holding stock under nominee security
position listings.
28
Transfer Agent
The Transfer Agent should be contacted on questions of change of address, name
or ownership, lost certificates and consolidation of accounts.
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 10005
Telephone: 800/937-5449
Independent Auditors
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
Annual Meeting
The Annual Meeting of Shareholders will be held at 9:00 A.M. Friday, June 26,
1998, at the Headquarters Plaza Hotel, Three Headquarters Plaza, Morristown, New
Jersey.
(C) 1998 Bed Bath & Beyond Inc. and its subsidiaries.
[LOGO] Recycled Paper
BED BATH &
BEYOND (R)
650 Liberty Avenue
Union, N.J. 07083
908/688-0888