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 August 25, 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
NEW YORK 11-2250488
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
|
Registrant's telephone number, including area code: (201) 379-1520
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
CLASS OUTSTANDING AT AUGUST 25, 1996
----- ------------------------------
Common Stock - $0.01 par value 68,437,018
================================================================================
|
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of August 25, 1996 and February 25, 1996 3
Consolidated Statements of Earnings
For the Three Month and Six Month Periods Ended
August 25, 1996 and August 27, 1995 4
Consolidated Statements of Cash Flows
For the Six Month Periods Ended
August 25, 1996 and August 27, 1995 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 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 10
Exhibit Index 11
|
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
|
August 25, February 25,
1996 1996
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 13,759 $ 10,267
Merchandise inventories 190,027 148,383
Prepaid expenses and other current assets 2,346 1,630
-------- --------
Total current assets 206,132 160,280
-------- --------
Property and equipment, net 74,441 66,635
Other assets 10,941 8,895
-------- --------
$291,514 $235,810
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 59,280 $ 39,025
Accrued expenses and other current liabilities 37,973 26,947
Income taxes payable 6,628 6,581
-------- --------
Total current liabilities 103,881 72,553
-------- --------
Long-term debt - 5,000
Deferred rent 8,101 6,811
-------- --------
111,982 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 - August 25, 1996, 150,000,000 shares
and February 25, 1996, 100,000,000 shares;
issued and outstanding - August 25, 1996, 68,437,018
shares and February 25, 1996, 68,067,972 shares 684 681
Additional paid-in capital 51,518 46,254
Retained earnings 127,330 104,511
-------- --------
Total shareholders' equity 179,532 151,446
-------- --------
$291,514 $235,810
======== ========
|
See accompanying Notes to Consolidated Financial Statements.
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
------------------ ----------------
August 25, August 27, August 25, August 27,
1996 1995 1996 1995
---- ---- ---- ----
Net sales $ 203,503 $ 150,110 $ 363,161 $ 263,562
Cost of sales, including buying,
occupancy and indirect costs 119,566 87,886 213,436 154,474
------------ ------------ ------------ ------------
Gross profit 83,937 62,224 149,725 109,088
Selling, general and administrative expenses 58,903 43,288 112,030 80,365
------------ ------------ ------------ ------------
Operating profit 25,034 18,936 37,695 28,723
Interest income (expense), net 37 (334) 179 (527)
------------ ------------ ------------ ------------
Earnings before provision for income taxes 25,071 18,602 37,874 28,196
Provision for income taxes 9,966 7,627 15,055 11,561
------------ ------------ ------------ ------------
Net earnings $ 15,105 $ 10,975 $ 22,819 $ 16,635
============ ============ ============ ============
Net earnings per share $ 0.21 $ 0.16 $ 0.32 $ 0.24
============ ============ ============ ============
Weighted average shares outstanding 70,464,644 69,053,962
============ ============
|
See accompanying Notes to Consolidated Financial Statements.
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
Six Months Ended
----------------
August 25, August 27,
1996 1995
---- ----
Cash Flows from Operating Activities:
Net earnings $ 22,819 $ 16,635
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 6,132 4,598
Loss from disposal of property and equipment - 35
Increase in assets:
Merchandise inventories (41,644) (32,608)
Prepaid expenses and other current assets (716) (950)
Other assets (2,046) (1,169)
Increase in liabilities:
Accounts payable 20,255 18,086
Accrued expenses and other current liabilities 11,026 3,383
Income taxes payable 47 1,851
Deferred rent 1,290 887
-------- --------
Net cash provided by operating activities 17,163 10,748
-------- --------
Cash Flows from Investing Activities:
Capital expenditures - lease purchases - (150)
Capital expenditures - leasehold improvements
and furniture and fixtures (13,938) (6,822)
-------- --------
Net cash used in investing activities (13,938) (6,972)
-------- --------
Cash Flows from Financing Activities:
Net decrease in long-term debt (5,000) (6,800)
Proceeds from exercise of stock options 5,267 1,101
-------- --------
Net cash provided by (used in) financing activities 267 (5,699)
-------- --------
Net increase (decrease) in cash and cash equivalents 3,492 (1,923)
Cash and cash equivalents:
Beginning of period 10,267 6,463
-------- --------
End of period $ 13,759 $ 4,540
======== ========
|
See accompanying Notes to Consolidated Financial Statements.
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 August 25, 1996 and February 25, 1996 and the results of their operations for the three month and six month periods ended August 25, 1996 and August 27, 1995, respectively, and cash flows for the six month periods ended August 25, 1996 and August 27, 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months August 25, 1996 vs. Three Months August 27, 1995
Net sales for the second quarter ended August 25, 1996 were $203.5 million, an increase of $53.4 million or approximately 35.6% over net sales of $150.1 million for the corresponding quarter last year. Approximately 87.2% of the increase was attributable to new store net sales. The increase in comparable store net sales in the second quarter of 1996 was approximately 4.9%.
Gross profit for the second quarter of 1996 was $83.9 million or 41.2% of net sales compared with $62.2 million or 41.5% of net sales during the second quarter of 1995. The decrease of approximately 0.3% in gross profit, as a percentage of net sales, was attributable to a number of factors, including a different mix of sales during the second quarter of this year compared with the mix of sales in the corresponding period last year.
Selling, general and administrative expenses ("SG&A") were $58.9 million in the second quarter of 1996 compared with $43.3 million in the same quarter last year and as a percentage of net sales were 28.9% and 28.8%, respectively. The increase of approximately 0.1% in SG&A, as a percentage of net sales, was primarily attributable to an increase in occupancy costs, which was partially offset by a decrease in payroll and payroll related items.
Operating profit in the second quarter of 1996 increased to $25.0 million from $18.9 million in the second quarter of 1995, reflecting primarily the increase in net sales which was partially offset by increases in cost of sales and SG&A.
Six Months August 25, 1996 vs. Six Months August 27, 1995
Net sales for the six months ended August 25, 1996 were $363.2 million, an increase of $99.6 million or approximately 37.8% over net sales of $263.6 million for the corresponding period last year. Approximately 84.5% of the increase was attributable to new store net sales. The increase in comparable store net sales for the first six months of 1996 was approximately 6.2%.
Gross profit for the first six months of 1996 was $149.7 million or 41.2% of net sales compared with $109.1 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 six months of this year compared with the mix of sales in the corresponding period last year.
SG&A expenses were $112.0 million in the first six months of 1996 compared with $80.4 million for the same period last year and as a percentage of net sales were 30.8% and 30.5% respectively. The increase of approximately 0.3% 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.
Operating profit in the first six months of 1996 increased to $37.7 million from $28.7 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 new, larger stores. As a result of this program, the total number of stores has increased to 90 stores at the end of the second quarter of 1996 compared with 67 stores at the end of the corresponding quarter last year. Total square footage grew to 3,619,000 square feet at the end of the second quarter of 1996, from 2,620,000 square feet at the end of the second quarter of last year.
During the first six months of fiscal 1996, the Company opened 10 new superstores and expanded one store resulting in an aggregate addition of 405,000 square feet to total store space. The Company anticipates opening an additional seventeen superstores by the end of the fiscal year, aggregating approximately 650,000 square feet of store space.
FINANCIAL CONDITION
Total assets at August 25, 1996 were $291.5 million compared with $235.8 million at February 25, 1996, an increase of $55.7 million. Of the total increase, $45.9 million represented an increase in current assets and $9.8 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 August 25, 1996 were $112.0 million compared with $84.4 million at February 25, 1996, an increase of $27.6 million. The increase was primarily attributable to a $20.3 million increase in accounts payable (resulting from an increase in inventories) and an $11.0 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 $179.5 million at August 25, 1996 compared with $151.4 million at February 25, 1996. The increase primarily reflects net earnings for the first six months of fiscal 1996 and additional paid-in capital from the exercise of stock options.
Capital expenditures for the first six months of fiscal 1996 were $13.9 million compared with $7.0 million for the corresponding period last year. The increase is primarily attributable to furniture and fixtures and leasehold improvements for the ten new superstores opened and one store expanded during the first six months compared to furniture and fixtures and leasehold improvements for the six new superstores opened and one expanded store 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.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On June 27, 1996, Bed Bath and Beyond Inc. held its Annual Meeting. At the Annual Meeting, the following items were voted upon:
1. The election of five directors to serve until the next Annual Meeting and until their successors have been elected and qualified.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors for fiscal year 1996.
3. To adopt the Bed Bath & Beyond Inc. 1996 Stock Option Plan.
4. To amend the Company's Certificate of Incorporation to increase the number of authorized shares of common stock.
The results of the voting were as follows:
SHARES VOTED
Against/ Broker
Description For Withheld Abstentions Non-Votes
- ----------- --- -------- ----------- ---------
Election of the Board
of Directors:
Warren Eisenberg 63,620,384 964,829 0 0
Leonard Feinstein 63,621,444 963,769 0 0
Robert J. Swartz 63,257,484 1,327,729 0 0
Klaus Eppler 63,150,049 1,435,164 0 0
Robert S. Kaplan 63,617,729 967,484 0 0
Appointment of Auditors:
KPMG Peat Marwick LLP 63,826,909 579,776 178,528 0
Adopt the 1996
Stock Option Plan: 36,798,847 26,617,944 219,994 0
Amend the Company's
Certificate of Incorporation: 62,717,046 971,415 200,052 0
|
Except for the directors elected as described above, there are no other directors serving on the Board of Directors of Bed Bath & Beyond Inc.
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 August 25, 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: October 8, 1996 By: /s/ Ronald Curwin
-----------------
Ronald Curwin
Chief Financial Officer and Treasurer
|
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
- ----------- ------- --------
3 Certificate of Amendment of Certificate 12
of Incorporation
11 Computation of Per Share Earnings 13
27 Financial Data Schedule 14
(Filed electronically with SEC only)
|
Exhibit 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BED BATH & BEYOND INC.
(Under Section 805 of the Business Corporation Law)
It is certified that:
1. The name of the corporation is BED BATH & BEYOND INC. The name under which the corporation was originally formed is B&B TEXTILE CORPORATION.
2. The original Certificate of Incorporation of the corporation was filed by the Department of State of the State of New York on October 5, 1971.
3. Paragraph (a) of article fourth of the Certificate of Incorporation is amended as follows: to increase the number of shares from the presently authorized 100,000,000 shares of common stock PV .01 per share to 150,000,000 shares of common stock PV .01. The 1,000,000 shares of preferred stock PV .01 shall remain unchanged.
"(a) Authorized Classes of Stock: The total number of shares which the corporation shall have the authority to issue is 151,000,000 of which 150,000,000 are designated Common Stock, par value $.01 per share ("Common Stock"), and 1,000,000 shares are designated Preferred Stock, par value $.01 per share ("Preferred Stock")."
4. The amendment of the Certificate of Incorporation was authorized first by vote of the Board of Directors of the corporation and then by the vote of the holders of a majority of all outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, we have subscribed this document on July 10, 1996, and do hereby affirm, under the penalties of perjury, that the statements contained herein have been examined by us and are true and correct.
/s/ Leonard Feinstein ---------------------------- LEONARD FEINSTEIN, President /s/ Warren Eisenberg ---------------------------- WARREN EISENBERG, Secretary |
Exhibit 11
BED BATH & BEYOND INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS ENDED
August 25, August 27,
1996 1995
---- ----
Weighted average number of shares outstanding 68,308,680 67,794,898
Dilutive effect of common equivalent shares
(stock options) outstanding 2,155,964 1,259,064
----------- -----------
Weighted average number of shares and dilutive common
equivalent shares (stock options) outstanding 70,464,644 69,053,962
=========== ===========
Net earnings $22,819,000 $16,635,000
=========== ===========
Net earnings per share $ .32 $ .24
=========== ===========
|
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF AUGUST 25, 1996, AND THE CONSOLIDATED STATEMENT
OF EARNINGS FOR THE SIX MONTH PERIOD ENDED AUGUST 25, 1996, AND IS QUALIFED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[PERIOD-TYPE] 6-MOS [FISCAL-YEAR-END] MAR-02-1997 [PERIOD-START] FEB-26-1996 [PERIOD-END] AUG-25-1996 [CASH] 13,759 [SECURITIES] 0 [RECEIVABLES] 0 [ALLOWANCES] 0 [INVENTORY] 190,027 [CURRENT-ASSETS] 206,132 [PP&E] 109,271 [DEPRECIATION] 34,830 [TOTAL-ASSETS] 291,514 [CURRENT-LIABILITIES] 103,881 [BONDS] 0 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 684 [OTHER-SE] 178,848 [TOTAL-LIABILITY-AND-EQUITY] 291,514 [SALES] 363,161 [TOTAL-REVENUES] 363,161 [CGS] 213,436 [TOTAL-COSTS] 213,436 [OTHER-EXPENSES] 112,030 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] (179) [INCOME-PRETAX] 37,874 [INCOME-TAX] 15,055 [INCOME-CONTINUING] 22,819 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 22,819 [EPS-PRIMARY] .32 [EPS-DILUTED] .32 |