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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended February 25, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
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) (IRS Employer Identification No.)
715 MORRIS AVENUE, SPRINGFIELD, NEW JERSEY 07081
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 379-1520
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK (PAR VALUE $ 0.01 PER SHARE)
(Title of class)
PAGE 1 OF 2 PAGE COVER PAGE.
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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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of May 13, 1996, the aggregate market value of the common stock held by
non-affiliates (which was computed by reference to the closing price on such
date of such stock on the NASDAQ National Market) was $1,349,751,476.*
Number of shares outstanding of the issuer's common stock (par value $0.01 per
share) at May 13, 1996: 68,339,778.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement filed pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year
(February 25, 1996) are incorporated by reference in Part III hereof.
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended February 25, 1996 are incorporated by reference in Part II hereof.
* For purposes of this calculation, all outstanding shares of common
stock have been considered held by non-affiliates other than the
21,186,888 shares beneficially owned by directors and executive
officers, including in the case of the Co-Chief Executive Officers,
members of their immediate families, partnerships in which they are
general partners, and trusts and foundations affiliated with them. In
making such calculation, the Registrant does not determine the
affiliate or non-affiliate status of any shares for any other purpose.
PAGE 2 OF 2 PAGE COVER PAGE.
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PART I
Unless otherwise indicated, the terms "Company" and "Bed Bath & Beyond"
refer collectively to Bed Bath & Beyond Inc. and its subsidiaries. The Company's
fiscal year is the 52 or 53 week period ending on the Sunday nearest February
28. Fiscal years 1995, 1994 and 1993 (all 52 week periods) ended on February 25,
1996, February 26, 1995 and February 27, 1994, respectively. Unless otherwise
indicated, all references herein to periods of time (e.g., quarters and years)
are to fiscal periods.
ITEM 1 - BUSINESS
INTRODUCTION
Bed Bath & Beyond believes that it is the nation's largest operator of
"superstores" selling predominantly better quality domestics merchandise and
home furnishings typically found in better department stores. The term
"superstore" as used herein means a store, other than a department store, that
is larger in size than the typical stores in its market selling similar product
categories and offers a breadth and depth of selection in most of its product
categories that far exceeds what is available in such stores. The Company offers
a wide assortment of merchandise at everyday low prices that are substantially
below regular department store prices and generally comparable to or below
department store sale prices. The Company's domestics merchandise line includes
items such as bed linens, bath accessories and kitchen textiles, and the
Company's home furnishings line includes items such as cookware, dinnerware,
glassware and basic housewares. The Company believes that it offers a breadth
and depth of selection in most of its product categories that far exceeds what
is generally available in department stores or other specialty retail stores and
that this enables it to offer customers the convenience of one-stop shopping for
most household items (other than furniture, major appliances and carpeting).
As of May 13, 1996, the Company operated 86 stores in 22 states:
Alabama (1), Arizona (2), California (11), Colorado (1), Connecticut (3),
Florida (10), Georgia (4), Illinois (6), Indiana (2), Kansas (1), Maryland (4),
Massachusetts (2), Michigan (3), Missouri (1), New Jersey (6), New York (8),
Ohio (3), Oklahoma (1), Pennsylvania (2), Texas (10), Virginia (4) and
Washington (1). Eighty-two of these stores use the superstore format that was
pioneered by the Company in 1985. These stores are on average approximately
42,000 square feet in size and carry the Company's full line of both domestics
merchandise and home furnishings. The other four stores, all established prior
to 1986, are smaller stores that primarily carry domestics merchandise.
HISTORY
The Company was founded in 1971. Leonard Feinstein and Warren
Eisenberg, the Co-Chief Executive Officers and founders of the Company, each has
more than 35 years of experience in the retail industry.
The Company commenced operations in 1971 with the opening of two
stores, one in New York and one in New Jersey. These stores operated under the
name "bed n bath" and sold primarily bed linens and bath accessories. The
Company continued to open bed n bath stores and by 1985 had opened stores in New
York, New Jersey, Connecticut and California. In 1985, the Company introduced
its superstore format with the opening of its first store carrying a full line
of both domestics merchandise and home furnishings. All stores opened by the
Company after 1985 use this format and carry the Company's full line of
domestics merchandise and home furnishings. The Company began using the name
"Bed Bath & Beyond" in 1987 in order to reflect the expanded product line
offered by its superstores and to distinguish its superstores from conventional
specialty retail stores offering only domestics merchandise or only home
furnishings.
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The Company has been engaged in an ongoing expansion program involving
the opening of new superstores (including nineteen in 1995, sixteen in 1994 and
nine in 1993) and the expansion of existing stores (including two in 1995, four
in 1994 and four in 1993). As a result of its expansion program, the Company's
store space has increased from approximately 625,000 square feet at the
beginning of 1991 to approximately 3,214,000 square feet at the end of 1995. The
Company's expansion program is continuing, and the Company currently anticipates
that in 1996 it will open approximately 24 to 26 new superstores.
MERCHANDISING AND MARKETING
The Company's strategy for merchandising and marketing is to offer
better quality merchandise at everyday low prices; to maintain a breadth and
depth of selection in most of its product categories that far exceeds what is
generally available in department stores or other specialty retail stores; to
present merchandise in a distinctive manner designed to maximize customer
convenience and reinforce customer perception of wide selection; and to
emphasize dedication to customer service and satisfaction.
MERCHANDISE SELECTION
The Company's eighty-two superstores offer both domestics merchandise
and home furnishings, while the Company's four smaller stores offer primarily
domestics merchandise. The Company's merchandise lines include:
Domestics Merchandise
- bed linens and related items: sheets, comforters, comforter
covers, bedspreads, quilts, window treatments, decorative
pillows, blankets, dust ruffles, bed pillows and mattress
pads.
- bath accessories: towels, shower curtains, waste baskets,
hampers, bathroom rugs and wall hardware.
- kitchen textiles: tablecloths, placemats, cloth napkins, dish
towels and chair pads.
Home Furnishings
- kitchen and tabletop items: cookware, cutlery, kitchen
gadgets, dinnerware, bakeware, flatware,
drinkware, serveware and glassware.
- basic housewares: storage items, closet-related items (such as
hangers, organizers and shoe racks), general housewares (such
as brooms, garbage pails and ironing boards), lifestyle
accessories (such as lamps, chairs, wicker and clocks) and
small electric appliances (such as blenders, coffee makers,
vacuums, irons, toaster ovens and hair dryers).
- miscellaneous: gifts, giftwrap, picture frames, wall art,
luggage, juvenile items (such as small toys and children's
books) and seasonal merchandise (such as summer and holiday
related items).
The Company, on an ongoing basis, tests new merchandise categories and
adjusts the categories of merchandise carried in its stores and may add new
departments or adjust the size of existing departments as required. The Company
believes that the process of adding new departments and expanding or reducing
the size of various departments in response to changing conditions is an
important part of its merchandising strategy.
The Company's merchandise consists primarily of better quality
merchandise typically found at better department stores. For those product lines
that have brand names associated with them, the Company generally offers leading
brand name merchandise (including Wamsutta, Martex, Fieldcrest Cannon, Croscill,
Laura Ashley, Mikasa, Krups, J.A. Henckels, Farberware, All-Clad, Portmeirion,
Rowenta, Black & Decker, Rubbermaid,
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Springs, Braun, Pillowtex and Waverly). The Company estimates that brand name
merchandise accounts for a significant portion of its net sales.
The Company offers a breadth and depth of product selection that
enables customers to select among a wide assortment of styles, brands, colors
and designs within each of the Company's major product lines. The Company also
generally maintains consistent in-stock availability of merchandise in order to
reinforce customer perception of wide selection and build customer loyalty. The
Company estimates that many of its 82 superstores carry in excess of 30,000
stock-keeping units.
The Company estimates that bed linens accounted for approximately 21%,
20% and 20% of net sales during 1995, 1994 and 1993, respectively. No other
individual product category accounted for 10% or more of net sales during 1995,
1994 and 1993, except for towels, which accounted for 10% of net sales during
1993.
PRICING POLICY
The Company's pricing policy is to maintain everyday low prices that
are substantially below regular department store prices and generally comparable
to or below department store sale prices. The Company regularly monitors price
levels at its competitors in order to ensure that the Company's prices are being
maintained in accordance with its pricing policy.
The Company believes that the uniform application of its everyday low
price policy is essential to maintaining the integrity of this policy and is an
important factor in establishing its reputation among customers. Accordingly, in
the few instances where the Company is unable to offer a brand name product at
price levels that are consistent with this policy, it will instead offer
comparable quality merchandise without that brand name rather than compromise
its everyday low price policy.
Because the Company has an everyday low price policy, the Company does
not run sales. However, the Company uses periodic markdowns and semi-annual
clearances for merchandise that it has determined to discontinue carrying. In
addition, the Company's advertising circulars include a coupon, which is
redeemed at the point-of-sale.
MERCHANDISE PRESENTATION
The Company has developed a distinctive style of merchandise
presentation. In each superstore, groups of related product lines are presented
together in separate areas of the store, creating the appearance that a Bed Bath
& Beyond superstore is comprised of several individual specialty stores for
different product lines. A "racetrack layout" that runs throughout the store
facilitates moving between areas and encourages customers to shop the entire
store. The Company believes that its format of merchandise presentation makes it
easy for customers to locate products, reinforces customer perception of wide
selection and communicates to customers that Bed Bath & Beyond superstores offer
a level of customer service generally associated with smaller specialty stores.
Merchandise is displayed in each of these separate areas from floor to
ceiling (generally 10 to 14 feet high) and, in addition, seasonal merchandise
and impulse items are prominently displayed in the front of the store. The
Company believes that its extensive merchandise selection, rather than
fixturing, should be the focus of customer attention and, accordingly, uses
simple modular fixturing throughout the store. This fixturing is designed so
that it can be easily reconfigured to adapt to changes in the Company's
merchandise mix and presentation. The Company believes that its floor to ceiling
displays create an exciting and attractive shopping environment that encourages
impulse purchases of additional items.
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CUSTOMER SERVICE
The Company places great emphasis on customer service and satisfaction
and, over the past 25 years, has sought to make this a defining feature of its
corporate culture. All managers provide leadership by example in this area by
regularly spending time assisting customers on the selling floor. The Company
believes that its success in the area of customer service is evidenced by its
ability to rely primarily on "word of mouth advertising".
The Company seeks to make shopping at its stores as pleasant and
convenient as possible. Each area within a store is staffed with knowledgeable
sales personnel who are available to assist customers in choosing merchandise,
to answer questions and to resolve any problems that may arise. In order to make
checking out convenient, check-out lines are continually monitored and
additional cashiers are added as necessary in order to minimize waiting time.
Returning merchandise is simplified through a return policy that permits
customers to return most items without presenting a sales receipt. Most Bed Bath
& Beyond stores are open seven days (and six evenings) a week in order to enable
customers to shop at times that are convenient for them.
ADVERTISING
In general, the Company relies on "word of mouth advertising" and on
its reputation for offering a wide assortment of quality merchandise at everyday
low prices, supplemented by the use of paid advertising. The Company's primary
medium of paid advertising is the use of circulars which are distributed through
the mail and/or newspaper inserts. In certain instances, paid radio and
television advertising may be used. Also, in connection with the opening of new
stores, the Company uses paid newspaper and circular advertising until the store
is established in its market. The Company believes that its ability to rely
primarily on "word of mouth advertising" will continue and that its limited use
of paid advertising permits it to spend significantly less on advertising than
many of its competitors.
EXPANSION
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 from 27 at the beginning of
1991 to 80 at the end of 1995, and the total square footage of store space has
increased from approximately 625,000 square feet at the beginning of 1991 to
approximately 3,214,000 square feet at the end of 1995.
The table below sets forth information concerning the Company's
expansion program for the fiscal periods indicated:
<TABLE>
<CAPTION>
STORE SPACE NUMBER OF STORES
-------------------------------- -----------------------
REPLACED NEW CLOSED BEGINNING END BEGINNING END
YEAR STORES (1) STORES (2) STORES OF YEAR OF YEAR OF YEAR OF YEAR
---- ---------- ---------- ------ -------- ------- ------- -------
(IN SQUARE FEET)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1991 1 7 -- 625,000 917,000 27 34
1992 5 4 -- 917,000 1,128,000 34 38
1993 4 9 2 1,128,000 1,512,000 38 45
1994 4 16 -- 1,512,000 2,339,000 45 61
1995 2 19 -- 2,339,000 3,214,000 61 80
</TABLE>
(1) A replaced store is an existing store that was either expanded or replaced
by a new store in the same area.
(2) Excludes any new store that replaced an existing store in the same area.
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The Company intends to continue its expansion program and believes that
the continued growth of the Company is dependent, in large part, on the success
of this program. As part of its expansion program, the Company expects to open
new superstores and, in addition, expects to expand existing stores as
opportunities arise.
The Company expects to open new superstores in existing markets,
contiguous markets and new markets. In determining where to open new
superstores, the Company evaluates a number of factors, including the
availability of prime real estate and demographic information (such as data
relating to income and education levels, age and occupation). The Company
believes that because it does not use central distribution centers and since it
relies on paid advertising to only a limited extent, it has the flexibility to
enter a new market with only a single store.
From the end of fiscal 1995 through May 13, 1996, the Company has
opened six stores which are located in: Northridge, California; Alpharetta,
Georgia; Burlington, Massachusetts; Independence, Missouri; Munsey Park, New
York; and Houston, Texas. During the balance of fiscal 1996, the Company
currently anticipates that it will open approximately 18 to 20 additional
stores. The Company has already leased sites for fifteen of these additional
stores, to be located in: Ontario, Santa Clara and Tustin, California; Denver,
Colorado; Atlanta, Georgia; Rockford, Illinois; Framingham, Massachusetts;
Edgewater, New Jersey; Rochester, New York; Canton, Ohio; Memphis, Tennessee
(two stores); Charlottesville, Chesapeake and Virginia Beach, Virginia; and is
in lease negotiations for several additional sites.
The Company has built its management structure with a view towards its
expansion and believes that as a result the Company has the management depth
necessary to support its anticipated expansion program. Each of the Company's
area and district managers typically supervise from three to six stores, even
though the Company believes that each district manager has the capacity to
supervise up to eight stores.
STORE OPERATIONS
MERCHANDISING
The Company maintains its own central buying staff, comprised of two
general merchandise managers and eleven buyers. The merchandise mix for each
store is selected by the central buying staff, in consultation with store
managers and other local store personnel. The factors taken into account in
selecting the merchandise mix for a particular store include store size and
configuration and local market conditions such as climate and demographics.
The central buying staff is responsible for ordering the initial
inventory required upon the opening of each store and for ordering the first
shipment of any new product line that may subsequently be added to a store's
merchandise mix. Local store personnel are thereafter responsible for monitoring
inventory levels and re-ordering such merchandise as required. In addition,
local store personnel are encouraged to monitor local sales trends and market
conditions and tailor the merchandise mix as appropriate to respond to changing
trends and conditions. The Company believes that its policy of having all
reordering done at the local store level, rather than centrally, and having
local store personnel determine the appropriate quantity to reorder encourages
entrepreneurship at the store level and better ensures that in-stock
availability will be maintained in accordance with the specific requirements of
each store.
The Company purchases its merchandise from approximately 1,900
suppliers. In 1995, the Company's largest supplier accounted for approximately
6% of the Company's merchandise purchases and the Company's ten largest
suppliers accounted for approximately 25% of such purchases. The Company
purchases substantially all of its merchandise in the United States, the
majority from domestic manufacturers and the balance from
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importers. On a limited basis, the Company has begun to make direct purchases
from overseas sources. The Company has no long-term contracts for the purchase
of merchandise. The Company believes that most merchandise, other than brand
name goods, is available from a variety of sources and that most brand name
goods can be replaced with comparable merchandise.
WAREHOUSING
Merchandise is shipped directly to each store by the Company's vendors,
making it unnecessary for the Company to maintain any central distribution
centers. As a result of the floor to ceiling displays used by the Company, a
substantial amount of merchandise is displayed on the sales floor of each store
at all times. Additional merchandise not displayed on the sales floor is stored
in separate warehouse space that is included in each store (with an estimated
10% to 15% of the space of each store being dedicated to warehouse and receiving
space). In addition, in the case of several stores, merchandise is also stored
at nearby supplemental storage space leased by the Company. At present, the
warehouse space included in the Company's stores provides approximately 80% of
the Company's warehouse space requirements and such nearby supplemental storage
space provides the balance.
MANAGEMENT INFORMATION SYSTEMS
The Company completed the implementation of computerized perpetual
inventory systems in all of its stores during fiscal 1995. The Company expects
that over the long-term, the implementation of integrated computer systems will
enable the Company to improve operations, increase productivity, enhance
inventory management and expense controls, and generally facilitate the
Company's expansion plans. The costs associated with the Company's computer
systems, including personnel costs, hardware leasing costs and software costs,
were approximately $6.9 million in 1995, $4.8 million in 1994, and $2.9 million
in 1993, and the Company estimates will be approximately $9.6 million in 1996.
MANAGEMENT
The Company seeks to encourage responsiveness and entrepreneurship at
the store level by providing its managers with a relatively high degree of
autonomy relating to operations and merchandising. This is reflected in the
Company's policy of having all reordering done at the store level, as well as in
the Company's policy of encouraging managers to tailor the merchandise mix of
each store in response to local sales trends and market conditions.
In general, stores are staffed with one to three assistant managers and
three to six department managers who report to a store manager, who in turn is
supervised by an area or district manager. Area and district managers report to
one of several regional managers who in turn report to one of two directors of
store operations. Decisions relating to pricing, advertising and markdowns for
all stores are made centrally in the Company's Buying Office, and certain store
support functions (such as finance and management information systems) are
performed centrally in the Company's Administrative Office.
TRAINING
The Company places great emphasis on the training of store level
management. Management trainees are generally required to work in different
departments of the store in order to acquire an overall understanding of store
operations. In addition, management trainees are trained in a number of areas,
including sales techniques, management techniques and product knowledge.
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The Company's policy is to build its management organization from
within. Each of the Company's area, district and regional managers was recruited
from the ranks of the Company's store managers and each of the Company's store
managers joined the Company in an entry level or trainee position. The Company
believes that its policy of promoting from within, as well as the opportunities
for advancement generated by its ongoing expansion program, serve as an
incentive to persons to seek and retain employment with the Company and results
in low turnover among its managers.
EMPLOYEES
As of February 25, 1996, the Company employed approximately 5,400
persons, of whom approximately 3,400 were full-time employees and 2,000 were
part-time employees. None of the Company's employees are covered by collective
bargaining agreements. The Company believes that its relations with its
employees are excellent and that the labor turnover rate among its management
employees is lower than that experienced in the industry.
SEASONALITY
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.
COMPETITION
The market for domestics merchandise and home furnishings is fragmented
and highly competitive. While the Company believes it is the preeminent marketer
in the superstore segment of the home goods industry, it competes directly with
a number of chains of superstores selling domestics merchandise and home
furnishings including: Linens 'n Things; HomePlace; Strouds; Home Goods
(division of TJX Companies); Three-D Bed & Bath; Home Express; and Pacific
Linen. In addition, the Company competes with many different types of retail
stores that sell many or most of the products sold by the Company. Such
competitors include: (i) better department stores, which often carry many of the
same product lines as the Company but do not typically have the same depth or
breadth of product selection, (ii) specialty stores (such as specialty linen or
housewares retailers), which often have a depth of product selection but
typically carry only a limited portion of the product lines carried by the
Company, and (iii) discount and mass merchandise stores. In addition, the
Company competes to a more limited extent with factory outlet stores that
typically offer limited quantities or limited lines of better quality
merchandise at discount prices. Many of the Company's competitors operate
substantially more stores and have substantially greater financial and other
resources than the Company, including, in some cases, better name recognition.
The Company believes that it is the largest operator of superstores
selling predominantly better quality domestics merchandise and home furnishings
typically found in better department stores, and that it is well positioned to
successfully compete in its markets as measured by several factors, including
pricing, breadth and quality of product selection, in-stock availability of
merchandise, effective merchandise presentation, customer service, and store
locations.
The visibility of the Company has encouraged superstore competitors to
imitate the Company's format and methods. Other retail chains, such as Home
Depot, are introducing new store concepts which include many of the product
lines carried by the Company. There can be no assurance that the operation of
competitors, including those companies operating stores similar to those of Bed
Bath & Beyond, will not have a material effect on the Company.
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TRADE NAMES, SERVICE MARKS AND FRANCHISE AGREEMENTS
The Company uses the "Bed Bath & Beyond" name as a trade name and as a
service mark in connection with retail services. The Company has registered the
"Bed Bath & Beyond" name and logo as service marks with the United States Patent
and Trademark Office. Management believes that the name Bed Bath & Beyond is an
important element of the Company's merchandising strategy. In certain situations
(as described below), the Company operates under other names.
The Company does not operate under the name "Bed Bath & Beyond" in the
Greater San Francisco area as a result of an agreement entered into by the
Company in connection with settling a litigation commenced against it claiming
that its use of the name "Bed Bath & Beyond" infringed upon the plaintiff's
prior use of the name "Bath & Beyond." Consequently, the Company's stores in San
Francisco and Oakland, California, operate under the name "Bed & Bath
Superstore"; the store in Santa Rosa, California operates under the name "Bed &
Bath." Also, the Company's stores in Massachusetts operate under the name
"BB&Beyond".
The Company is party to two agreements with a franchisee under which
the franchisee currently operates two stores in Ohio and has a right of first
refusal with respect to the opening of additional stores in certain areas of
Ohio and of neighboring states. The Company has no plans to enter into any
additional such franchisee relationships.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and business experience of
the executive officers of the Registrant:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- - - ---- --- ---------
<S> <C> <C>
Warren Eisenberg 65 Chairman, Co-Chief Executive Officer
and Director
Leonard Feinstein 59 President, Co-Chief Executive Officer
and Director
Ronald Curwin 66 Chief Financial Officer and Treasurer
</TABLE>
- - - ---------------
Mr. Eisenberg, a co-founder of the Company, has been a director and
officer of the Company since the Company commenced operations in 1971 (serving
as President and Co-Chief Executive Officer until April 9, 1992, and Chairman
and Co-Chief Executive Officer since that date).
Mr. Feinstein, a co-founder of the Company, has been a director and
officer of the Company since the Company commenced operations in 1971 (serving
as Co-Chief Executive Officer, Treasurer and Secretary until April 9, 1992, and
as President and Co-Chief Executive Officer since that date).
Mr. Curwin, a certified public accountant, joined the Company in
September 1994 as Chief Financial Officer and Treasurer. Prior to joining the
Company, Mr. Curwin was engaged as a registered representative in the financial
services industry for three years. From 1977 to 1991, he was employed as Chief
Financial Officer of Channel Home Centers, Inc., a retailer of home improvement
products.
The Company's officers are elected by the Board of Directors for
one-year terms and serve at the discretion of the Board of Directors. No family
relationships exist between any of the executive officers or directors of the
Company.
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ITEM 2 - PROPERTIES
The Company's 86 stores are located in 22 states, principally in
suburban areas of medium and large sized cities. These stores are situated in
strip and power strip shopping centers, as well as in major off-price and
conventional malls, and free standing buildings. The Company's superstores range
in size from 13,000 to 85,000 square feet, but are predominantly between 30,000
and 50,000 square feet in major markets. The Company's four smaller stores range
in size from 7,000 to 11,000 square feet. In both superstores and smaller
stores, approximately 80% to 85% of store space is used for selling areas and
the balance for warehouse, receiving and office space.
The table below sets forth the number of stores located in each state
as of May 13, 1996:
<TABLE>
<CAPTION>
Number Number
State of Stores State of Stores
----- --------- ----- ---------
<S> <C> <C> <C>
Alabama 1 Massachusetts 2
Arizona 2 Michigan 3
California 11 Missouri 1
Colorado 1 New Jersey 6
Connecticut 3 New York 8
Florida 10 Ohio 3
Georgia 4 Oklahoma 1
Illinois 6 Pennsylvania 2
Indiana 2 Texas 10
Kansas 1 Virginia 4
Maryland 4 Washington 1
</TABLE>
The Company currently leases all of its existing stores. The leases
provide for original lease terms that generally range from 5 to 15 years and
certain leases provide for renewal options, that range from 5 to 15 years, often
at increased rents. Certain leases provide for scheduled rent increases (which,
in the case of fixed increases, the Company accounts for on a straight line
basis over the noncancelable lease term) and certain of the leases provide for
contingent rent (based upon store sales exceeding stipulated amounts).
The earliest store lease expirations, which relate to two of the
Company's smaller stores, will occur in November 1996 and March 1998.
The Company also leases storage space in four locations amounting to
approximately 93,000 square feet. This space is used to supplement the warehouse
facilities in the Company's stores in proximity to these locations.
See Item 1 "Business--Store Operations--Warehousing."
The Company's Corporate Office is situated in 6,300 square feet of
office space that is part of the Company's store in Springfield, New Jersey and
an additional 26,300 square feet of rented office space in Union, New Jersey
houses the Company's Administrative Offices (including finance and management
information systems). The Company's Buying Office is located in 26,400 square
feet of rented office space that the Company leases in Farmingdale, New York.
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ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company is a party.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year ended February 25, 1996.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The following table sets forth the high and low reported sales prices
of the Company's common stock on the NASDAQ National Market System for the
periods indicated. These quotations reflect inter-dealer prices, without retail
markups, markdowns or commissions.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
Fiscal 1994:
------------
<S> <C> <C>
1st Quarter $ 16 3/8 $ 11 1/2
2nd Quarter 16 1/2 12 1/2
3rd Quarter 15 3/8 11 3/8
4th Quarter 15 3/4 12 7/8
Fiscal 1995 :
------------
1st Quarter 13 1/4 9
2nd Quarter 16 1/2 10 5/16
3rd Quarter 18 7/16 12 1/2
4th Quarter 22 7/16 15
Fiscal 1996:
------------
1st Quarter (through May 13, 1996) 29 11/16 19 11/16
</TABLE>
The common stock is quoted through the NASDAQ National Market System
under the symbol "BBBY". On May 13, 1996, there were approximately 400 holders
of record of the common stock (without including individual participants in
nominee security position listings). On May 13, 1996, the last reported sale
price of the common stock was $28 5/8.
For the foreseeable future, the Company intends to retain all
earnings for use in the operation and expansion of its business and,
accordingly, the Company currently has no plans to pay dividends on its common
stock. The payment of any future dividends will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition and requirements, restrictions in financing
agreements, business conditions and other factors. At present, the Company's
ability to pay dividends is limited under its Credit Agreement. See Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
12
<PAGE> 13
Bed Bath & Beyond Inc. was treated as an S corporation for Federal
and certain state income tax purposes during the period September 1, 1986
through June 9, 1992. As a result, earnings of Bed Bath & Beyond Inc. during
such period were taxed for Federal and certain state income tax purposes
directly to its shareholders rather than to the Company. In the years preceding
the Company's initial public offering (the "IPO"), the Company paid annual
distributions to its shareholders to provide them with funds to pay income taxes
on such earnings and as a return on their investment. In addition, prior to
completion of the IPO, the Company declared the following distributions payable
to the persons and entities that were shareholders of the Company immediately
preceding the IPO (such persons and entities being Warren Eisenberg, Leonard
Feinstein and certain members of their respective families and certain
affiliated trusts): (i) a $28.0 million distribution, representing a portion of
the previously earned and undistributed S corporation earnings of the Company
through March 1, 1992, which was paid upon completion of the IPO from the net
proceeds to the Company from the IPO, and (ii) a distribution in an amount equal
to the taxes payable on the earnings of the Company during the period from March
2, 1992 to completion of the IPO, which distribution amounted to $1,517,000 and
was paid from such earnings to such shareholders in September 1992. Subsequent
to the IPO, the Company has not been treated as an S corporation and,
accordingly, is subject to Federal and state income taxes.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is included in the registrant's
Annual Report to Shareholders for the year ended February 25, 1996 on page 1 and
is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item is included in the registrant's
Annual Report to Shareholders for the year ended February 25, 1996 on pages 9
through 11 and is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are included in the
registrant's Annual Report to Shareholders for the year ended February 25, 1996
on pages 12 through 20 and is incorporated herein by reference. These financial
statements are indexed under Item 14(a)(1). See also the financial statement
schedules that are included herein and are indexed under Item 14(a)(2).
13
<PAGE> 14
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
The information required by this Part III (Items 10, 11, 12 and 13) is
incorporated herein by reference from the Registrant's definitive Proxy
Statement for the Annual Meeting of Shareholders to be held June 27, 1996 filed
with the Commission pursuant to Regulation 14A. The Compensation Report of the
Board of Directors, the Compensation Report of a Special Committee of the Board
of Directors and the performance graph included in such Proxy Statement shall
not be deemed incorporated herein by reference.
14
<PAGE> 15
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS
The following financial statements and reports are incorporated by
reference to pages 12 through 20 of the Company's Annual Report to
Shareholders for the fiscal year ended February 25, 1996:
Consolidated Balance Sheets as of February 25, 1996 and February 26,
1995
Consolidated Statements of Earnings for the fiscal years ended February
25, 1996, February 26, 1995 and February 27, 1994
Consolidated Statements of Changes in Shareholders' Equity for the
fiscal years ended February 25, 1996, February 26, 1995 and February
27, 1994
Consolidated Statements of Cash Flows for the fiscal years ended
February 25, 1996, February 26, 1995 and February 27, 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
(A) (2) SCHEDULES
The following schedules are included in this Report:
II - Amounts Receivable from Related Parties, Underwriters, Promoters
and Employees other than Related Parties
V - Property and Equipment
VI - Accumulated Depreciation of Property and Equipment
X - Supplementary Income Statement
(A) (3) EXHIBITS
The exhibits to this Report are listed in the Exhibit Index included
elsewhere herein.
(B) No reports on Form 8-K were filed by the Company during the fourth
quarter of the fiscal year covered by this report.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BY: /s/ Warren Eisenberg
-----------------------------
WARREN EISENBERG
CHAIRMAN, CO-CHIEF EXECUTIVE
OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- - - --------- -------- ----
<S> <C> <C>
Chairman, Co-Chief
Executive Officer and Director
/s/ Warren Eisenberg (principal executive officer) May 23, 1996
- - - -------------------------------
WARREN EISENBERG
President, Co-Chief
/s/ Leonard Feinstein Executive Officer and Director May 23, 1996
- - - -------------------------------
LEONARD FEINSTEIN
/s/ Klaus Eppler Director May 23, 1996
- - - -------------------------------
KLAUS EPPLER
/s/ Robert S. Kaplan Director May 23, 1996
- - - -------------------------------
ROBERT S. KAPLAN
/s/ Robert J. Swartz Director May 23, 1996
- - - -------------------------------
ROBERT J. SWARTZ
Chief Financial Officer
and Treasurer (principal financial
/s/ Ronald Curwin and accounting officer) May 23, 1996
- - - -------------------------------
RONALD CURWIN
</TABLE>
<PAGE> 17
ANNUAL REPORT ON FORM 10-K
ITEM 14 (d)
FINANCIAL STATEMENT SCHEDULES
BED BATH & BEYOND INC.
FISCAL YEAR ENDED FEBRUARY 25, 1996
<PAGE> 18
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
The Board of Directors and Shareholders
Bed Bath & Beyond Inc.:
Under date of March 22, 1996, we reported on the consolidated balance sheets of
Bed Bath & Beyond Inc. and subsidiaries as of February 25, 1996 and February 26,
1995, and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for each of the fiscal years in the
three-year period ended February 25, 1996, as contained in the 1995 Annual
Report to Shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the Annual Report on Form 10-K for the
fiscal year ended February 25, 1996. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
financial statement schedules as listed in answer to Part IV, Item 14 (a)(2) of
Form 10-K. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/S/ KPMG PEAT MARWICK LLP
New York, New York
March 22, 1996
<PAGE> 19
Schedule II
BED BATH & BEYOND INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS, PROMOTERS AND
EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING BALANCE AT
NAME OF DEBTOR OF PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
--------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Fiscal year ended February 25, 1996
Loan Receivable $ 0 $ 0 $ 0 $ 0
============ ========== ========== ===========
Fiscal year ended February 26, 1995
Loan Receivable $ 0 $ 0 $ 0 $ 0
============ ========== ========== ===========
Fiscal year ended February 27, 1994
Loan Receivable
Warren Eisenberg (1) $ - $ 30,766 $ 30,766 $ -
Leonard Feinstein (1) - 30,766 30,766 -
Jonathan Rothstein (2) 33,200 - 33,200 -
------------ ---------- ---------- ------------
Total $ 33,200 $ 61,532 $ 94,732 $ 0
============ ========== ========== ============
</TABLE>
(1) Expenses incurred in connection with the Company's initial public offering
and secondary offering that were allocated to the Chairman and President.
(2) The loan imputed interest based on the prime rate and was payable in equal
monthly installments commencing in February 1992 and subsequently paid in
full in January 1994.
<PAGE> 20
Schedule V
BED BATH & BEYOND INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS RETIREMENTS END OF
OF PERIOD AT COST OR SALES OTHER PERIOD
--------- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C>
Fiscal year ended February 25, 1996
Furniture, fixtures
and equipment $33,505 $14,502 $512 $ -- $47,495
Leasehold improvements 33,729 9,876 98 -- 43,507
Leasehold purchases 4,181 150 -- -- 4,331
------- ------- ---- ------- -------
$71,415 $24,528 $610 $ 0 $95,333
======= ======= ==== ======= =======
Fiscal year ended February 26, 1995
Furniture, fixtures
and equipment $20,266 $13,244 $ 5 $ -- $33,505
Leasehold improvements 22,528 11,279 78 -- 33,729
Leasehold purchases 4,181 -- -- -- 4,181
------- ------- ---- ------- -------
$46,975 $24,523 $ 83 $ 0 $71,415
======= ======= ==== ======= =======
Fiscal year ended February 27, 1994
Furniture, fixtures
and equipment $12,736 $ 7,530 $-- $ -- $20,266
Leasehold improvements 11,415 11,980 867 -- 22,528
Leasehold purchases 3,948 233 -- -- 4,181
------- ------- ---- ------- -------
$28,099 $19,743 $867 $ 0 $46,975
======= ======= ==== ======= =======
</TABLE>
<PAGE> 21
Schedule VI
BED BATH & BEYOND INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS RETIREMENTS END OF
OF PERIOD AT COST OR SALES OTHER PERIOD
--------- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C>
Fiscal year ended February 25, 1996
Furniture, fixtures
and equipment $10,511 $5,482 $368 $ -- $15,625
Leasehold improvements 6,927 3,968 50 -- 10,845
Leasehold purchases 1,776 452 -- -- 2,228
------- ------ ---- ------- -------
$19,214 $9,902 $418 $ 0 $28,698
======= ====== ==== ======= =======
Fiscal year ended February 26, 1995
Furniture, fixtures
and equipment $ 6,895 $3,617 $ 1 $ -- $10,511
Leasehold improvements 3,826 3,154 53 -- 6,927
Leasehold purchases 1,354 422 -- -- 1,776
------- ------ ---- ------- -------
$12,075 $7,193 $ 54 $ 0 $19,214
======= ====== ==== ======= =======
Fiscal year ended February 27, 1994
Furniture, fixtures
and equipment $ 4,789 $2,106 $-- $ -- $ 6,895
Leasehold improvements 2,725 1,680 579 -- 3,826
Leasehold purchases 940 414 -- -- 1,354
------- ------ ---- ------- -------
$ 8,454 $4,200 $579 $ 0 $12,075
======= ====== ==== ======= =======
</TABLE>
<PAGE> 22
Schedule X
BED BATH & BEYOND INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
<TABLE>
<CAPTION>
52 WEEKS ENDED 52 WEEKS ENDED 52 WEEKS ENDED
ITEM FEBRUARY 25, 1996 FEBRUARY 26 ,1995 FEBRUARY 27, 1994
- - - ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Advertising Costs $ 9,284 $ 6,734 $ 4,752
======= ======== ========
</TABLE>
<PAGE> 23
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a)(3)
EXHIBITS
BED BATH & BEYOND INC.
FISCAL YEAR ENDED FEBRUARY 25, 1996
<PAGE> 24
EXHIBIT INDEX
Unless otherwise indicated, exhibits are incorporated by reference to the
correspondingly numbered exhibits to the Company's Registration Statement on
Form S-1 (Commission File No. 33-47250)
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT PAGE
--- ------- ----
<C> <S> <C>
3.1 Restated Certificate of Incorporation --
3.2 Amended and Restated By-laws --
10.1 Credit Agreement among the Company, bed 'n bath Stores, Inc., BBBL, Inc., BBBY --
Management Corporation, Chemical Bank New Jersey, N.A., Chemical Bank and Chemical
Bank New Jersey, N.A. as Agent (incorporated by reference to Exhibit 28 to the Company's
Form 8-K dated November 14, 1994)
10.2* Employment Agreement between the Company and Warren Eisenberg, as amended --
(incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on
Form S-1 Commission File No. 33-47250 and Exhibit 99.1 to the Company's Registration
Statement on Form S-3 Commission File No. 33-66860)
10.3* Employment Agreement between the Company and Leonard Feinstein, as amended --
(incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1
Commission File No. 33-47250 and Exhibit 99.2 to the Company's Registration Statement
on Form S-3 Commission File No. 33-66860)
10.4* Company's 1992 Stock Option Plan, as amended (incorporated by reference to Exhibit 28 to --
the Company's Form S-8 dated October 14, 1994)
10.5 Franchise Agreement among Linens, Etc., Inc. and Stuart Fredericks Corporation dated --
November 1, 1977 (incorporated by reference to Exhibit 10.6 to the Company's Registration
Statement on Form S-1 Commission File No. 33-47250)
10.6 Franchise Agreement among Linens, Etc., Inc. and Stuart Fredericks Corporation dated March --
1, 1982 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement
on Form S-1 Commission File No. 33-47250)
10.7 Franchise Modification Agreement among Linens Etc., Inc., Stuart Fredericks Corporation, --
the Company, Stuart Goldblatt and Warren Eisenberg dated as of May 30, 1992 (incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1 Commission
File No. 33-47250)
10.8 Form of U.S. Underwriting Agreement dated June 4, 1992 between the Company and Goldman, --
Sachs & Co. and Shearson Lehman Brothers Inc. as representatives (incorporated by reference to
Exhibit 1.1 to the Company's Registration Statement on Form S-1 Commission File No. 33-47250)
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
<C> <S> <C>
10.9 Form of International Underwriting Agreement dated June 4, 1992 between the Company --
and Goldman Sachs International Limited and Lehman Brothers International Limited, as
representatives (incorporated by reference to Exhibit 1.2 to the Company's Registration
Statement on Form S-1 Commission File No. 33-47250)
10.10* Agreement Concerning "Split Dollar" Life Insurance Plan, dated May 9, 1994, among --
the Company, Jay D.Waxenberg, as trustee of the Warren Eisenberg Life Insurance Trust,
Warren Eisenberg and Maxine Eisenberg (incorporated by reference to Exhibit 10.12 to
the Company's Form 10-K for the year ended February 27, 1994)
10.11* Agreement Concerning "Split Dollar" Life Insurance Plan, dated May 9, 1994, among --
the Company, Jay D.Waxenberg, as trustee of the Leonard Joseph Feinstein Life Insurance
Trust, Leonard Joseph Feinstein and Susan Feinstein (incorporated by reference to
Exhibit 10.13 to the Company's Form 10-K for the year ended February 27, 1994)
10.12** Agreement Concerning "Split Dollar" Life Insurance Plan, dated June 16, 1995, among the
Company, Jay D.Waxenberg, as trustee of the Warren Eisenberg Life Insurance Trust,
Warren Eisenberg and Maxine Eisenberg
10.13** Agreement Concerning "Split Dollar" Life Insurance Plan, dated June 16, 1995, among the
Company, Jay D.Waxenberg, as trustee of the Leonard Joseph Feinstein Life Insurance Trust,
Leonard Joseph Feinstein and Susan Feinstein
10.14** First Amendment to the Credit Agreement among the Company, bed 'n bath Stores, Inc.,
BBBL, Inc., BBBY Management Corporation, Chemical Bank New Jersey, N.A.,
Chemical Bank and Chemical Bank New Jersey, N.A. as Agent, dated October 1, 1995
11** Computation of per share earnings
13** Company's 1995 Annual Report, certain portions of which have been
incorporated by reference herein
21** Subsidiaries of the Company
Commission File No. 33-1
23** Independent Auditors' Consent
27 Financial Data Schedule (Filed electronically with SEC only.)
</TABLE>
* This is a management contract or compensatory plan or arrangement.
** Filed herewith.
25
<PAGE> 1
Exhibit 10.12
AGREEMENT CONCERNING "SPLIT-DOLLAR" LIFE INSURANCE PLAN
AGREEMENT made this 16th day of June, 1995, between BED BATH &
BEYOND, INC. (the "Employer"), JAY D. WAXENBERG, as Trustee (the "Trustee") of
the WARREN EISENBERG LIFE INSURANCE TRUST, dated May 18, 1993 (the "Trust"),
WARREN EISENBERG and MAXINE EISENBERG.
WHEREAS:
1. The Trust owns two policies of insurance on the joint
lives of WARREN EISENBERG and his wife, MAXINE EISENBERG (the "Insureds").
2. The policies of insurance owned by the Trust and referred
to in this Agreement were issued by the NEW YORK LIFE INSURANCE COMPANY as
Policy No. 44942683 and by the GUARDIAN LIFE INSURANCE COMPANY OF AMERICA as
Policy No. 3738112, respectively. In this Agreement, each insurance company is
referred to as the "Insurer", both insurance companies are collectively referred
to as the "Insurers", each policy is referred to as the "Policy" and both
policies are collectively referred to as the "Policies".
3. WARREN EISENBERG is employed by the Employer.
4. The Employer has agreed to establish a split-dollar life
insurance plan (the "Plan") to assist the Trust in paying premiums due on the
Policies.
5. The Trust has agreed to assign to the Employer certain
specific rights in and to the Policies in consideration of payment by the
Employer of premiums due on the Policies.
NOW, THEREFORE, the Employer, the Trust and the Insureds agree
that:
1. Payment of Premiums: On or before the date or dates on
which each premium becomes due (a) the Trust will pay to each Insurer a portion
of the premium for the Policy issued by it equal to the current term rate
(defined below) for the portion of the insurance proceeds the Trust would
receive on the death of the last surviving Insured during the year in which such
premium is due and (b) the Employer will pay to each Insurer the balance of the
premium for the Policy issued by it.
<PAGE> 2
The "current term rate" with respect to each Policy is (a) while the Insureds
are both living, an amount equal to the lesser of the issuing Insurer's rate for
a joint/survivorship one year term life insurance policy available to all
standard risks or the rate determined under the principles of Revenue Rulings
64- 328 and 66-110 (commonly known as the "U.S. 38 rates") and (b) while only
one of the Insureds is living, an amount equal to the lesser of the issuing
Insurer's rate for a single life one year term life insurance policy available
to all standard risks or the rate determined under the principles of Revenue
Rulings 64- 328 and 66-110 (commonly known as the "P.S. 58 rates").
2. Dividends: Dividends declared by each Insurer will be
used to purchase additional paid-up insurance on the lives of the Insureds and
not to reduce any premium due on the Policy issued by it.
3. Policy Ownership and Collateral Assignment: The Trust
will continue to own each Policy and shall assign to the Employer, subject to
the terms and conditions of each Policy and to any superior liens that each
Insurer may have against the Policy issued by it, the following specific rights
in and to each Policy:
(a) The right to obtain, upon surrender of said Policy
by the Trust, an amount from the surrender proceeds equal to but not exceeding
the amount of the Employer's interest in the Policy (as defined in Paragraph 4
below). If the amount of the Employer's interest in the policy exceeds the
surrender proceeds, any shortfall shall be paid to the Employer by the Insureds.
(b) The right to collect, upon a claim by the Trust
under said Policy by reason of the death of the Insureds, an amount from the
proceeds equal to but not exceeding the amount of the Employer's interest in the
Policy (as defined in Paragraph 4 below).
(c) The exclusive right to obtain loans secured by said
Policy; provided, however, that the aggregate amount of such loans, together
with interest, shall at no time exceed the aggregate amount of premiums paid by
the Employer with respect to said Policy, and all interest charges with respect
to such loans shall be paid by the Employer.
As owner of each Policy, the Trust will possess and exercise
exclusively all remaining rights in and to each Policy not otherwise assigned to
the Employer by reason of this Agreement, including, without limitation, the
right to assign each Policy to a third party, the right to designate the
beneficiary or beneficiaries of any death benefit of each Policy
2
<PAGE> 3
in excess of the Employer's interest in the Policy and the right to surrender
each Policy.
The Employer agrees that it will not exercise its rights in
and to the Policies in any way that may conflict with the exercise by the Trust
of its rights in and to the Policies or that may delay or otherwise interfere
with receipt by its designated beneficiary or beneficiaries of any death benefit
under each Policy in excess of the Employer's interest in the Policy. The
Employer agrees that it will not assign its rights in and to the Policies to any
person or entity other than the Trust without the prior consent of the Trustee.
The Trust agrees to notify the Employer of any assignment of
its rights in and to each Policy, in whole or in part.
4. Employer's interest in the Policy: With respect to each
Policy, the amount of the Employer's interest in the Policy, wherever referred
to in this Agreement, is an amount equal to (1) the difference between (i) the
aggregate amount of premiums paid by the Employer with respect to said Policy
and (ii) the aggregate amount, if any, paid by or on behalf of the Trust to the
Employer in reimbursement of premiums paid by the Employer with respect to said
Policy, less (2) the amount of any loans from the Insurer to the Employer
against the cash value of said Policy, plus any interest thereon.
5. Termination of Agreement: This Agreement will terminate
with respect to each Policy upon whichever of the following is the first to
occur:
(a) Surrender of the Policy by the Trust.
(b) Payment by or on behalf of the Trust to the Employer
of an amount equal to the amount of the Employer's interest in the Policy.
(c) The death of the last survivor of the Insureds.
Upon termination of this Agreement and receipt by the Employer
of the amount of the Employer's interest in the Policy, the Employer agrees to
execute such documents as may be reasonably required by the Trust to release the
Employer's rights in and to said Policy.
6. Amendment and Effect: This Agreement contains the entire
understanding between the Trust, the Employer and the Insureds concerning the
matters addressed herein. This
3
<PAGE> 4
Agreement, or any of its provisions, may not be amended, supplemented, modified
or waived unless by a writing signed by the party to be bound thereby. If any
provision of this Agreement is determined to be void, invalid or unenforceable,
the remaining provisions will not be affected, but will continue effect as
though such void, invalid or unenforceable provision were not originally a part
of this Agreement. This Agreement will benefit and bind the heirs, executors,
administrators, personal representatives, successors and assigns of each of the
parties hereto. Notwithstanding the foregoing, the Trustee is entering into this
Agreement solely in his capacity as Trustee and not individually.
7. Special Provisions: The following provisions are part of
this agreement and are intended to meet the requirements of the Employee
Retirement Income Security Act of 1974:
(a) The named fiduciary: The Employer.
(b) The funding policy under this Plan is that all
premiums on the Policies shall be remitted to the
Insurer when due.
(c) Direct payment by the Insurers is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the payment of
premiums as provided in the Plan.
(d) For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Employer.
(1) If for any reason a claim for benefits under
this plan is denied by the Employer, the Claims
Manager shall deliver to the claimant a written
explanation setting forth the specific reasons
for the denial, pertinent references to the
Plan section on which the denial is based, such
other data as may be pertinent and information
on the procedures to be followed by the
claimant in obtaining a review of the claim,
all written in a manner calculated to be
understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed
filed when presented orally or in
writing to the Claims Manager.
(B) The Claims Manager's explanation shall
be in
4
<PAGE> 5
writing delivered to the claimant
within 90 days of the date the claim is
filed.
(2) The claimant shall have 60 days following
receipt of the denial of the claim to file with
the Claims Manager a written request for review
of the denial. For such review, the claimant or
the claimant's representative may submit
pertinent documents and written issues and
comments.
(3) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of the claim. The decision
on review shall be in writing and shall include
specific reasons for the decision, written in a
manner calculated to be understood by the
claimant, as well as specific references to the
pertinent Plan provisions on which the decision
is based. If a copy of the decision is not so
furnished to the claimant within such 60 days,
the claim shall be deemed denied on review.
8. Governing Law: This Agreement will be governed by and its
validity, effect and interpretation determined by the laws of the State of New
Jersey applicable to contracts made and to be performed wholly in that state.
9. Further Assurances: Each party, upon the other's request
and without cost to the other, agrees to take any action, and to sign,
acknowledge and deliver to the other party any additional document, necessary or
expedient to effectuate the purposes of this Agreement.
10. Counterparts: This Agreement may be executed in
counterparts, each of which will be an original, which together will constitute
one Agreement.
IN WITNESS WHEREOF, the parties have signed this
5
<PAGE> 6
Agreement as of the day and year first written above.
ATTEST: BED BATH & BEYOND, INC.
/s/ Ronald Curwin By: /s/ Leonard Feinstein
- - - ---------------------------- ----------------------------
WITNESS: WARREN EISENBERG LIFE
INSURANCE TRUST, UNDER
AGREEMENT DATED MAY 18, 1993
/s/ Kenna Hudson By:/s/ Jay D. Waxenberg
- - - ---------------------------- ----------------------------
JAY D. WAXENBERG, as
Trustee and not
individually
/s/Arlene Wagner /s/ Warren Eisenberg
- - - ---------------------------- ----------------------------
WARREN EISENBERG
/s/Arlene Wagner /s/Maxine Eisenberg
- - - ---------------------------- ----------------------------
MAXINE EISENBERG
6
<PAGE> 1
Exhibit 10.13
AGREEMENT CONCERNING "SPLIT-DOLLAR" LIFE INSURANCE PLAN
AGREEMENT made this 16th day of June, 1995, between BED BATH &
BEYOND, INC. (the "Employer"), JAY D. WAXENBERG, as Trustee (the "Trustee") of
the LEONARD JOSEPH FEINSTEIN LIFE INSURANCE TRUST, dated May 18, 1993 (the
"Trust"), LEONARD JOSEPH FEINSTEIN and SUSAN FEINSTEIN.
WHEREAS:
1. The Trust owns two policies of insurance on the joint
lives of LEONARD JOSEPH FEINSTEIN and his wife, SUSAN FEINSTEIN (the
"Insureds").
2. The policies of insurance owned by the Trust and referred
to in this Agreement were issued by the NEW YORK LIFE INSURANCE COMPANY as
Policy No. 44902629 and by the GUARDIAN LIFE INSURANCE COMPANY OF AMERICA as
Policy No. 3731898, respectively. In this Agreement, each insurance company is
referred to as the "Insurer", both insurance companies are collectively referred
to as the "Insurers", each policy is referred to as the "Policy" and both
policies are collectively referred to as the "Policies".
3. LEONARD JOSEPH FEINSTEIN is employed by the Employer.
4. The Employer has agreed to establish a split-dollar life
insurance plan (the "Plan") to assist the Trust in paying premiums due on the
Policies.
5. The Trust has agreed to assign to the Employer certain
specific rights in and to the Policies in consideration of payment by the
Employer of premiums due on the Policies.
NOW, THEREFORE, the Employer, the Trust and the Insureds agree
that:
1. Payment of Premiums: On or before the date or dates on
which each premium becomes due (a) the Trust will pay to each Insurer a portion
of the premium for the Policy issued by it equal to the current term rate
(defined below) for the portion of the insurance proceeds the Trust would
receive on the death of the last surviving Insured during the year in which such
premium is due and (b) the Employer will pay to each
<PAGE> 2
Insurer the balance of the premium for the Policy issued by it. The "current
term rate" with respect to each Policy is (a) while the Insureds are both
living, an amount equal to the lesser of the issuing Insurer's rate for a
joint/survivorship one year term life insurance policy available to all standard
risks or the rate determined under the principles of Revenue Rulings 64-328 and
66-110 (commonly known as the "U.S. 38 rates") and (b) while only one of the
Insureds is living, an amount equal to the lesser of the issuing Insurer's rate
for a single life one year term life insurance policy available to all standard
risks or the rate determined under the principles of Revenue Rulings 64-328 and
66-110 (commonly known as the "P.S. 58 rates").
2. Dividends: Dividends declared by each Insurer will be
used to purchase additional paid-up insurance on the lives of the Insureds and
not to reduce any premium due on the Policy issued by it.
3. Policy Ownership and Collateral Assignment: The Trust
will continue to own each Policy and shall assign to the Employer, subject to
the terms and conditions of each Policy and to any superior liens that each
Insurer may have against the Policy issued by it, the following specific rights
in and to each Policy:
(a) The right to obtain, upon surrender of said Policy
by the Trust, an amount from the surrender proceeds equal to but not exceeding
the amount of the Employer's interest in the Policy (as defined in Paragraph 4
below). If the amount of the Employer's interest in the policy exceeds the
surrender proceeds, any shortfall shall be paid to the Employer by the Insureds.
(b) The right to collect, upon a claim by the Trust
under said Policy by reason of the death of the Insureds, an amount from the
proceeds equal to but not exceeding the amount of the Employer's interest in the
Policy (as defined in Paragraph 4 below).
(c) The exclusive right to obtain loans secured by said
Policy; provided, however, that the aggregate amount of such loans, together
with interest, shall at no time exceed the aggregate amount of premiums paid by
the Employer with respect to said Policy, and all interest charges with respect
to such loans shall be paid by the Employer.
As owner of each Policy, the Trust will possess and exercise
exclusively all remaining rights in and to each Policy not otherwise assigned to
the Employer by reason of this Agreement, including, without limitation, the
right to assign each Policy to a third party, the right to designate the
2
<PAGE> 3
beneficiary or beneficiaries of any death benefit of each Policy in excess of
the Employer's interest in the Policy and the right to surrender each Policy.
The Employer agrees that it will not exercise its rights in
and to the Policies in any way that may conflict with the exercise by the Trust
of its rights in and to the Policies or that may delay or otherwise interfere
with receipt by its designated beneficiary or beneficiaries of any death benefit
under each Policy in excess of the Employer's interest in the Policy. The
Employer agrees that it will not assign its rights in and to the Policies to any
person or entity other than the Trust without the prior consent of the Trustee.
The Trust agrees to notify the Employer of any assignment of
its rights in and to each Policy, in whole or in part.
4. Employer's interest in the Policy: With respect to each
Policy, the amount of the Employer's interest in the Policy, wherever referred
to in this Agreement, is an amount equal to (1) the difference between (i) the
aggregate amount of premiums paid by the Employer with respect to said Policy
and (ii) the aggregate amount, if any, paid by or on behalf of the Trust to the
Employer in reimbursement of premiums paid by the Employer with respect to said
Policy, less (2) the amount of any loans from the Insurer to the Employer
against the cash value of said Policy, plus any interest thereon.
5. Termination of Agreement: This Agreement will terminate
with respect to each Policy upon whichever of the following is the first to
occur:
(a) Surrender of the Policy by the Trust.
(b) Payment by or on behalf of the Trust to the Employer
of an amount equal to the amount of the Employer's interest in the Policy.
(c) The death of the last survivor of the Insureds.
Upon termination of this Agreement and receipt by the Employer
of the amount of the Employer's interest in the Policy, the Employer agrees to
execute such documents as may be reasonably required by the Trust to release the
Employer's rights in and to said Policy.
6. Amendment and Effect: This Agreement contains the entire
understanding between the Trust, the Employer and the
3
<PAGE> 4
Insureds concerning the matters addressed herein. This Agreement, or any of its
provisions, may not be amended, supplemented, modified or waived unless by a
writing signed by the party to be bound thereby. If any provision of this
Agreement is determined to be void, invalid or unenforceable, the remaining
provisions will not be affected, but will continue effect as though such void,
invalid or unenforceable provision were not originally a part of this Agreement.
This Agreement will benefit and bind the heirs, executors, administrators,
personal representatives, successors and assigns of each of the parties hereto.
Notwithstanding the foregoing, the Trustee is entering into this Agreement
solely in his capacity as Trustee and not individually.
7. Special Provisions: The following provisions are part of
this agreement and are intended to meet the requirements of the Employee
Retirement Income Security Act of 1974:
(a) The named fiduciary: The Employer.
(b) The funding policy under this Plan is that all
premiums on the Policies shall be remitted to the
Insurer when due.
(c) Direct payment by the Insurers is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the payment of
premiums as provided in the Plan.
(d) For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Employer.
(1) If for any reason a claim for benefits under
this plan is denied by the Employer, the Claims
Manager shall deliver to the claimant a written
explanation setting forth the specific reasons
for the denial, pertinent references to the
Plan section on which the denial is based, such
other data as may be pertinent and information
on the procedures to be followed by the
claimant in obtaining a review of the claim,
all written in a manner calculated to be
understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed
filed when presented orally or in
writing to the Claims Manager.
4
<PAGE> 5
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant
within 90 days of the date the claim is
filed.
(2) The claimant shall have 60 days following
receipt of the denial of the claim to file with
the Claims Manager a written request for review
of the denial. For such review, the claimant or
the claimant's representative may submit
pertinent documents and written issues and
comments.
(3) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of the claim. The decision
on review shall be in writing and shall include
specific reasons for the decision, written in a
manner calculated to be understood by the
claimant, as well as specific references to the
pertinent Plan provisions on which the decision
is based. If a copy of the decision is not so
furnished to the claimant within such 60 days,
the claim shall be deemed denied on review.
8. Governing Law: This Agreement will be governed by and
its validity, effect and interpretation determined by the laws of the State of
New Jersey applicable to contracts made and to be performed wholly in that
state.
9. Further Assurances: Each party, upon the other's request
and without cost to the other, agrees to take any action, and to sign,
acknowledge and deliver to the other party any additional document, necessary or
expedient to effectuate the purposes of this Agreement.
10. Counterparts: This Agreement may be executed in
counterparts, each of which will be an original, which together will constitute
one Agreement.
IN WITNESS WHEREOF, the parties have signed this
5
<PAGE> 6
Agreement as of the day and year first written above.
ATTEST: BED BATH & BEYOND, INC.
/s/Leonard Feinstein By: /s/Warren Eisenberg
- - - ---------------------------- -------------------------
WITNESS: LEONARD JOSEPH FEINSTEIN LIFE
INSURANCE TRUST, UNDER
AGREEMENT DATED MAY 18, 1993
/s/ Kenna Hudson By: /s/ Jay D. Waxenberg
- - - ---------------------------- -------------------------
JAY D. WAXENBERG, as
Trustee and not
individually
/s/ Debra Aisenberg /s/Leonard Joseph Feinstein
- - - ---------------------------- ----------------------------
LEONARD JOSEPH FEINSTEIN
/s/ Debra Aisenberg /s/Susan Feinstein
- - - ---------------------------- ----------------------------
SUSAN FEINSTEIN
6
<PAGE> 1
EXHIBIT 10.14
FIRST AMENDMENT (the "Amendment"), dated as of October 1, 1995, of a
certain Credit Agreement dated as of October 26, 1994 (the "Agreement") among
BED BATH & BEYOND, INC. (the "Company"), BED-N-BATH STORES, INC. ("BNBS"), BBBL,
INC. ("BBBL") AND BBBY MANAGEMENT CORPORATION ("BBBY"; BNBS, BBBL AND BBBY being
together the "Guarantors" and individually each a "Guarantor", and the
Guarantors together with the Company being the "Credit Parties") and CHEMICAL
BANK NEW JERSEY, NATIONAL ASSOCIATION ("Chemical NJ") and CHEMICAL BANK
("Chemical NY"; Chemical NJ and Chemical NY are together referred to as the
"Banks" and individually as a "Bank") and Chemical NJ, as agent for the Banks
(in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Credit Parties, the Banks and the Agent are parties to the
Agreement; and
WHEREAS, Chemical NJ has assigned all of its right, title and interest
in, to and under the Agreement, and all of its obligations and liabilities
thereunder, as a Bank to Chemical NY and Chemical NY has accepted such
assignment and has assumed all of the obligations and liabilities of Chemical NJ
as a Bank thereunder; and
WHEREAS, the Agent has assigned all of its responsibilities as Agent
under the Agreement to Chemical NY and Chemical NY has accepted such assignment;
and
WHEREAS, the Credit Parties have requested certain modifications to the
Agreement, and Chemical NY is agreeable to such request;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto hereby agree as follows:
1. Definitions. Except as otherwise stated, capitalized terms
defined in the Agreement and used herein without definition shall have the
respective meanings assigned to them in the Agreement.
2. Amendments of the Agreement.
(a) All references in the Agreement to Chemical NJ, Chemical
NY, the Banks, any Bank and the Agent shall be deemed to mean and
include Chemical NY and any and all terms in the agreement which
include the term "Chemical NJ" shall be deemed to include the term
"Chemical NY".
(b) All references in the Agreement to the "Revolving Credit
Note(s)" shall be deemed to mean the "Amended and Restated Revolving
Credit Note dated as of October 1, 1995."
<PAGE> 2
(c) Subsection 1.1 of the Agreement is hereby amended by (i)
deleting the definitions of "Term Loan" and "Term Note" in their
entirety and (ii) deleting the definitions of "Applicable Margin",
"Chemical NJ Rate", "Chemical NJ Rate Loans" and "Interest Period" and
substituting the following:
"`Applicable Margin': for each Type of Loan, the rate per
annum set forth opposite Revolving Credit Loans or Term-out
Loans under the relevant column heading below:
<TABLE>
<CAPTION>
Chemical NY Eurodollar COF
Rate Loans Loans Rate Loans
---------- ----- ----------
<S> <C> <C> <C>
Revolving
Credit Loans (1)% 0.40 % 0.40 %
Term-out Loans -0- 0.875% 0.875%
</TABLE>
"`Chemical NY Rate': the rate of interest publicly
announced by Chemical NY from time to time in New York, New York
as its prime rate."
"`Chemical NY Rate Loans': Loans, the rate of interest
applicable to which, is based upon the Chemical NY rate."
"`Interest Period':
(a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending between one and
twelve months thereafter, as selected by the Company in
its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and
(ii) thereafter, each period commencing on
the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending between one
and twelve months thereafter, as selected by the Company
by irrevocable notice to the Agent not less than three
Working Days prior to the last day of the then current
Interest Period with respect thereto;
(b) with respect to any COF Rate Loan, the date agreed
to between the Company and the Bank;
<PAGE> 3
provided that, the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Working Day, such Interest Period shall be extended to the
next succeeding Working Day unless the result of such
extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Working Day;
(2) any Interest Period that would otherwise
extend beyond the Termination Date or beyond the date
final payment is due on the Term-out Loans shall end on
the Termination Date or such date of final payment, as the
case may be;
(3) any Interest Period pertaining to a
Eurodollar Loan that begins on the last Working Day of a
calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Working
Day of a calendar month; and
(4) the Company shall select Interest
Periods so as not to require a payment or repayment of any
Eurodollar Loan or COF Rate Loan during an Interest Period
for such Loan."
(d) Subsection 2.1 of the Agreement is hereby amended by
deleting paragraph (b) and substituting the following:
"(b) The Revolving Credit Loans may from time to time be
(i) Eurodollar Loans, (ii) Chemical NY Rate Loans, (iii) COF Rate
Loans or (iv) a combination thereof, as determined by the Company
and notified to Chemical NY in accordance with subsections 2.3
and 2.10, provided that no Revolving Credit Loan shall be made as
a Eurodollar Loan after the day that is one month prior to the
Termination Date."
(e) Subsection 2.2 of the Agreement is hereby amended by
deleting the entire subsection and substituting the following:
"2.2 Revolving Credit Notes. The Revolving Credit Loans
shall be evidenced by the promissory note of the Company,
substantially in the form of Exhibit A-1 with appropriate
insertions as to date and maximum principal amount (the
`Revolving Credit Note'), payable to the order of Chemical NY
and, in a principal amount equal to the amount of the Revolving
Credit Commitment or, if less, the aggregate unpaid principal
amount of all Revolving Credit Loans outstanding. Chemical NY is
hereby authorized to record the date, Type and amount of each
<PAGE> 4
Revolving Credit Loan, each continuation thereof, each conversion
of all or a portion thereof to another Type, the date and amount
of each payment or repayment of principal thereof and, in the
case of Eurodollar Loans and COF Rate Loans, the length of each
Interest Period with respect thereto, on the schedule annexed to
and constituting a part of the Revolving Credit Note, and any
such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded absent manifest error.
The Revolving Credit Note shall (x) be dated as of October 1,
1995, (y) be stated to mature on the Termination Date and (z)
provide for the payment of interest in accordance with subsection
5.1."
(f) Subsection 2.3 of the Agreement is hereby amended by
deleting the entire subsection and substituting the following:
"2.3 Procedure for Revolving Credit Borrowing. The
Company may borrow under the Revolving Credit Commitment during
the Revolving Credit Commitment Period on any Working Day, if all
or any part of the requested Revolving Credit Loans are to be
initially Eurodollar Loans, or on any Business Day, otherwise,
provided that the Company shall give Chemical NY irrevocable
notice (which notice must be received by the Agent prior to 11:00
A.M., New York City time, (a) two Working Days prior to the
requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans, or
(b) on the Borrowing Date, otherwise) specifying (i) the amount
to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar Loans, Chemical NY Rate
Loans, COF Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans or COF
Rate Loans, the amount thereof and the length of the initial
Interest Period therefor. Each borrowing under the Revolving
Credit Commitments shall be in an amount equal to (w) in the case
of Chemical NY Rate Loans, $50,000 or a whole multiple thereof
(or, if the then aggregate Available Revolving Credit Commitment
is less than $50,000, such lesser amount), (x) in the case of
Eurodollar Loans, $500,000 or a whole multiple of $100,000 in
excess thereof, (y) in the case of COF Rate Loans maturing one
(1) Business Day after the Borrowing Date thereof, $2,000,000 and
(3) in the case of COF Rate Loan maturing more than one (1)
Business Day after the Borrowing Date thereof, $50,000. Upon
receipt of any such notice from the Company, Chemical NY will
make the amount (except as provided in subsection 2.12) of each
borrowing available to the Company by crediting the account of
the Borrower on the books of Chemical NY at its office set forth
in subsection 14.2 hereof."
(g) Subsection 2.4 of the Agreement is hereby amended by
deleting the entire subsection and substituting the following:
"2.4 Commitment Fee. The Company agrees to pay to
Chemical NY a commitment fee for the period from and including
the date on which the First Amendment to the Agreement becomes
effective to the Termination Date, computed
<PAGE> 5
at the rate of 1/8 of 1% per annum on the first $15,000,000 and
.08 of 1% on all amounts in excess thereof of the average daily
amount of the Available Revolving Credit Commitment except for
the L/C Commitment during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date or such
earlier date as the Revolving Credit Commitment shall terminate
as provided herein, commencing on the first of such dates to
occur after the date on which the First Amendment to the
Agreement becomes effective."
(h) Subsection 2.10 of the Agreement is hereby amended by
deleting paragraphs (a) and (c) and substituting the following:
"(a) In the case of Revolving Loans, the Company may
elect from time to time to convert Eurodollar Loans to Chemical
NY Rate Loans or COF Rate Loans by giving Chemical NY at least
two Business Days' prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto.
Also, in such case, the Company may elect from time to time to
convert Chemical NY Rate Loans to Eurodollar Loans or COF Rate
Loans by giving Chemical NY at least three Working Days' prior
irrevocable notice of such election. Finally, the Company may
elect from time to time to convert COF Rate Loans to Chemical NY
Rate Loans or Eurodollar Loans by giving Chemical NY at least
three Business Days' prior irrevocable notice of such election,
provided that any such conversion of COF Rate Loans may only be
made on the last day of an Interest Period with respect thereto.
Any such notice of conversion to Eurodollar Loans or COF Rate
Loans shall specify the length of the initial Interest Period or
Interest Periods therefor."
"(c) Any Eurodollar Loan may be continued as such upon
the expiration of the then current Interest Period with respect
thereto by the Company giving notice to the Banks, in accordance
with the applicable provisions of the term 'Interest Period' set
forth in subsection 1.1, of the length of the next Interest
Period to be applicable to such Loan, provided that no Eurodollar
Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Banks have determined that
such a continuation is not appropriate, (ii) if, after giving
effect thereto, subsection 2.11 would be contravened or (iii)
after the date that is one month or 30 days prior to,
respectively, the Termination Date (in the case of continuations
of Revolving Credit Loans) and provided, further, that if the
Company shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso, unless otherwise converted in
accordance with the above provisions, such Loans shall be
automatically converted to Chemical NY Rate Loans on the last day
of such then expiring Interest Period."
(i) Subsection 2.11 of the Agreement is hereby amended by
deleting the entire subsection and substituting the following:
<PAGE> 6
"2.11 Minimum Amounts of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts
and be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be as set forth in
Section 2.3 hereof."
(j) Subsection 3.3(b) of the Agreement is hereby amended by
deleting "1.5%" in line 5 thereof and substituting therefor ".75%".
(k) Section 12 of the Agreement is hereby deleted.
(l) Section 14.2 of the Agreement is hereby amended by
deleting the notice provision for the Banks and the Agent and
substituting the following:
"Chemical NY: 270 Park Avenue
New York, New York 10017
Attention: Stephen W. Revis, V.P.
Telecopy: 212-270-1123
with a copy to: Chemical Bank New Jersey, National Association
4 Campus Drive
Parsippany, New Jersey 07054
Attention: Valerie Schanzer, V.P.
Telecopy: 201-734-1123
(m) Schedule I of the Agreement is hereby amended by deleting
it in its entirety and by inserting in its place and stead the attached
Schedule I.
3. Replacement of the Revolving Credit Note.
(a) Any and all Revolving Credit Notes held by Chemical NJ and
Chemical NY are hereby amended and restated by a new note in the form
of Exhibit A-1 hereto (the "Amended and Restated Revolving Credit
Note").
(b) All references in the Agreement to the Revolving Credit
Note shall be deemed to be references to the Amended and Restated
Revolving Credit Note.
4. Representations and Warranties. To induce Chemical NY to enter
into this Amendment, each of the Credit Parties hereby represents and warrants
that:
(a) Such Credit Party has the power, authority and legal right
to make and deliver this Amendment and the Amended and Restated
Revolving Credit Note and to perform its obligations under the
Agreement, as amended by this Amendment, and the Amended and
<PAGE> 7
Restated Revolving Credit Note without any notice, consent, approval or
authorization not already obtained, and such Credit Party has taken all
necessary action to authorize the same.
(b) The making and delivery of this Amendment and the Amended
and Restated Revolving Credit Note and the performance of the Agreement
and the Amended and Restated Revolving Credit Note, as amended by this
Amendment, do not violate any provision of law or any regulation or of
the charter or by-laws of such Credit Party or result in the breach of
or constitute a default under or require any consent under any
indenture or other agreement or instrument to which such Credit Party
is a party or by which such Credit Party or any of its property may be
bound or affected. The Agreement and the Amended and Restated Revolving
Credit Note, as amended by this Amendment, constitute a legal, valid
and binding obligation of such Credit Party, enforceable against it in
accordance with its terms, except as the enforceability thereof may be
limited by any applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally.
(c) The representations and warranties contained in Section 6
of the Agreement are true and correct on and as of the date of this
Amendment and after giving effect thereto.
(d) No Default or Event of Default has occurred and is
continuing under the Agreement as of the date of this Amendment and
after giving effect thereto.
5. Effective Date. This Amendment shall become effective as of
October 1, 1995 when:
(a) Chemical NY shall have received counterparts of this \
Amendment and the Amended and Restated Revolving Credit Note, duly
executed by the respective parties thereto; and
(b) the principal of, all accrued and unpaid interest on and
all other amounts payable with respect to any and all Term Loans
(including, without limitation, any prepayment penalty) shall have been
paid in full.
6. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original and all of which taken together
shall constitute a single instrument with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7. Full Force and Effect. Except as expressly modified by this
Amendment, all of the terms and provisions of the Agreement shall continue in
full force and effect, and all parties hereto shall be entitled to the benefits
thereof.
8. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of New Jersey.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the date set forth above.
BED BATH & BEYOND, INC.
By: /s/ Warren Eisenberg
--------------------
Title: Chairman and Co-Chief Executive
Officer
BED-N-BATH STORES, INC.
By: /s/ Warren Eisenberg
--------------------
Title: President
BBBL, INC.
By: /s/ Arthur Stark
----------------
Title: President
BBBY MANAGEMENT CORPORATION
By: /s/ Warren Eisenberg
--------------------
Title: President
CHEMICAL BANK
By: /s/ Stephen W. Revis
--------------------
Title: Vice-President
<PAGE> 9
EXHIBIT A-1
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$45,000,000 New York, New York
as of October 1, 1995
FOR VALUE RECEIVED, the undersigned (the "Borrower"), a New York
corporation, hereby unconditionally promises to pay to the order of CHEMICAL
BANK (the "Bank"), at the office of the Bank located at 270 Park Avenue, New
York, New York 10017, or at such other place as the Bank or any holder hereof
may from time to time designate, on the Termination Date (as defined in the
Credit Agreement referred to below) in lawful money of the United States of
America and in immediately available funds, the principal amount of (a)
FORTY-FIVE MILLION DOLLARS ($45,000,000) or, if less, (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Bank to the Borrower
pursuant to Subsection 2.1 of the Credit Agreement. The Borrower further agrees
to pay interest in like money on the unpaid principal amount hereof from time to
time from the date hereof at said office, on the dates, at the rates and for the
periods specified in Sections 2 and 5 of the Credit Agreement.
The holder of this Amended and Restated Revolving Credit Note is
authorized to record the date, Type and amount of each Loan made by the Bank,
each continuation thereof, each conversion of all or a portion thereof to
another Type, the date and amount of each payment or prepayment of principal
thereof and the length of each Interest Period with respect thereto, on the
schedule annexed hereto and made a part hereof, which recordation shall
constitute prima facie evidence of the accuracy of the information recorded
absent manifest error; provided, however, that failure by any holder to make any
such recordation on such schedules or continuation thereof shall not in any
manner affect any of the obligations of the Borrower to make payments of
principal and interest in accordance with the terms of this Amended and Restated
Revolving Credit Note and the Credit Agreement.
This Amended and Restated Revolving Credit Note is the Revolving Credit
Note referred to in, and is entitled to the benefits of, the Credit Agreement
dated as of October 26, 1994 (as amended, modified or supplemented from time to
time, the "Credit Agreement"; capitalized terms not otherwise defined in this
Amended and Restated Revolving Credit Note shall have the meanings assigned to
them in the Credit Agreement) among the Borrower, Bed-N-Bath Stores, Inc., BBBL,
Inc., BBBY Management Corporation, Inc., the Bank, other Banks party thereto and
the Agent.
This Amended and Restated Revolving Credit Note is issued in
substitution, modification and restatement of, but not as repayment,
satisfaction or cancellation of any and all prior Revolving Credit Notes and
this Amended and Restated Revolving Credit Note supersedes, modifies and
restates all of the terms of such prior Revolving Credit Notes.
<PAGE> 10
The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for optional and mandatory prepayments on account of principal hereof
prior to the maturity hereof on the terms and conditions therein specified.
All parties now or hereafter liable with respect to this Amended and
Restated Revolving Credit Note, whether maker, principal, surety, guarantor,
endorser or otherwise, hereby waive presentment, demand, protest and all other
notices of any kind.
THIS AMENDED AND RESTATED REVOLVING CREDIT NOTE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY.
BED BATH & BEYOND, INC.
By: /s/ Warren Eisenberg
--------------------
Title: Chairman and Co-Chief
Executive Officer
<PAGE> 11
SCHEDULE I TO CREDIT AGREEMENT
See attached list of active corporations.
<PAGE> 12
SUBSIDIARIES OF THE COMPANY
This list does not include certain subsidiaries which in the aggregate are not
significant.
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of Riverchase Inc. Alabama
Bed Bath & Beyond of Tucson Inc. Arizona
Bed Bath & Beyond of Paradise Valley Inc. Arizona
Bed Bath & Beyond of Chandler Inc. Arizona
Bed Bath & Beyond of Beverly Center Inc. California
Bed Bath & Beyond of Ontario Mills Inc. California
Bed Bath & Beyond of Northridge Inc. California
Bed Bath & Beyond of La Jolla Inc. California
Bed Bath & Beyond of Tarzana Inc. California
Bed Bath & Beyond of San Francisco Inc. California
Bed Bath & Beyond of Palm Desert Inc. California
Bed n Bath of Westwood Inc. California
Bed n Bath of Westlake Inc. California
Bed n Bath of Santa Rosa Inc. California
Bed n Bath of Huntington Beach Inc. California
Bed n Bath of Redondo Beach Inc. California
Bed n Bath of Oakland Inc. California
Bed n Bath of Studio City Inc. California
Bed n Bath of Marin Corp. California
Bed n Bath of Woodland Hills Inc. California
Bed n Bath of Santa Ana Inc. California
Bed n Bath of Torrance Inc. California
Bed n Bath of Cupertino Inc. California
Bed n Bath of Lakewood Inc. California
Bed n Bath of Park La Brea Inc. California
Bed & Bath of San Diego Inc. California
Bed & Bath of Topanga Inc. California
Bed Bath & Beyond of Mission Valley Inc. California
Bed Bath & Beyond of Tustin Inc. California
Bed Bath & Beyond of Cherry Creek Inc. Colorado
Bed Bath & Beyond of Park Meadows Inc. Colorado
Bed n Bath Warehouse Corp. Connecticut
Bed n Bath of Stamford Inc. Connecticut
Bed n Bath of Norwalk Inc. Connecticut
Bed n Bath of Danbury Square Inc. Connecticut
Bed n Bath of Hartford Inc. Connecticut
Bed n Bath of Danbury Inc. Connecticut
Bed Bath & Beyond of Ridgeway Inc. Connecticut
</TABLE>
<PAGE> 13
SUBSIDIARIES OF THE COMPANY (CONTINUED)
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of Connecticut Inc. Connecticut
Bed Bath & Beyond of Brandywine Inc. Delaware
Bed Bath & Beyond of Sawgrass Inc. Florida
Bed Bath & Beyond of Orlando Inc. Florida
Bed Bath & Beyond of Kendall Inc. Florida
Bed Bath & Beyond of Hialeah Inc. Florida
Bed Bath & Beyond of West Palm Beach Inc. Florida
Bed Bath & Beyond of Brandon Inc. Florida
Bed Bath & Beyond of Boca Raton Inc. Florida
Bed Bath & Beyond of West Kendall Inc. Florida
Bed Bath & Beyond of Carrollwood Inc. Florida
Bed Bath & Beyond of Dadeland Station Inc. Florida
Bed Bath & Beyond of International Drive Inc. Florida
Bed Bath & Beyond of Alpharetta Inc. Georgia
Bed Bath & Beyond of Buckhead Inc. Georgia
Bed Bath & Beyond of Cobb Place Inc. Georgia
Bed Bath & Beyond of Gwinnett Inc. Georgia
Bed Bath & Beyond of Perimeter Inc. Georgia
Bed Bath & Beyond of Rockford Inc. Illinois
Bed Bath & Beyond of Gurnee Inc. Illinois
Bed Bath & Beyond of Deerfield Inc. Illinois
Bed Bath & Beyond of Schaumburg Inc. Illinois
Bed Bath & Beyond of Oakbrook Terrace Inc. Illinois
Bed Bath & Beyond of Downers Grove Inc. Illinois
Bed Bath & Beyond Lincoln Park Inc. Illinois
Bed Bath & Beyond of Wilmette Inc. Illinois
Bed Bath & Beyond of Indianapolis Inc. Indiana
Bed Bath & Beyond of Hobart Inc. Indiana
Bed Bath & Beyond of Overland Park Inc. Kansas
Bed Bath & Beyond of Columbia Inc. Maryland
Bed Bath & Beyond of Annapolis Inc. Maryland
Bed Bath & Beyond of Rockville Inc. Maryland
Bed Bath & Beyond of Gaithersburg Inc. Maryland
Bed Bath & Beyond of Towson Inc. Maryland
Bed Bath & Beyond of Montgomery Inc. Maryland
Bed Bath & Beyond of Burlington Inc. Massachusetts
Bed Bath & Beyond of Worcester Inc. Massachusetts
Bed Bath & Beyond of Farmington Hills Inc. Michigan
Bed Bath & Beyond of Troy Inc. Michigan
Bed Bath & Beyond of Sterling Heights Inc. Michigan
</TABLE>
<PAGE> 14
SUBSIDIARIES OF THE COMPANY (CONTINUED)
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of Auburn Inc. Michigan
Bed Bath & Beyond of Northville Inc. Michigan
Bed Bath & Beyond of Westland Inc. Michigan
Bed Bath & Beyond of Independence Inc. Missouri
Bed Bath & Beyond of Watchung Inc. New Jersey
Bed Bath & Beyond of Fashion Center Inc. New Jersey
Bed n Bath of Flemington Inc. New Jersey
Bed n Bath of Lawrenceville Inc. New Jersey
Bed n Bath of Secaucus Inc. New Jersey
Bed n Bath of Cherry Hill Inc. New Jersey
Bed n Bath of Short Hills Inc. New Jersey
Bed n Bath of Paramus Inc. New Jersey
B & B of Seventeen Inc. New Jersey
Bed Bath & Beyond of Ellisburg Circle Inc. New Jersey
Bed Bath & Beyond of Albuquerque Inc. New Mexico
Bed Bath & Beyond of Manhasset Inc. New York
Bed Bath & Beyond of Five Towns Inc. New York
Bed Bath & Beyond of Farmingdale Inc. New York
Bed Bath & Beyond of Lake Grove Inc. New York
Bed Bath & Beyond of Colonie Inc. New York
Bed Bath & Beyond of Manhattan, Inc. New York
Bed Bath & Beyond of 110 Inc. New York
Bed Bath & Beyond of West Nyack Inc. New York
Bed n Bath of New York Inc. New York
Bed n Bath of Spring Valley Inc. New York
Bed n Bath of Huntington Inc. New York
Bed n Bath Inc. New York
Bed n Bath of Hartsdale Inc. New York
Bed n Bath Inc. New York
Bed n Bath of White Plains Inc. New York
Bed n Bath of Nanuet Inc. New York
B & B Warehouse Corp. New York
CBH of Great Neck Inc. New York
Bed Bath & Beyond of Beachwood Inc. Ohio
Bed Bath & Beyond of Westlake Inc. Ohio
Bed Bath & Beyond of Fair Lawn Inc. Ohio
Bed Bath & Beyond of Canton Inc. Ohio
Bed Bath & Beyond of Tulsa Inc. Oklahoma
Bed n Bath of Liberty Mills Inc. Pennsylvania
</TABLE>
<PAGE> 15
SUBSIDIARIES OF THE COMPANY (CONTINUED)
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of King of Prussia Inc. Pennsylvania
Bed Bath & Beyond of Memphis Inc. Tennessee
Bed Bath & Beyond of Addison Inc. Texas
Bed Bath & Beyond of Austin Inc. Texas
Bed Bath & Beyond of CP Dallas Inc. Texas
Bed Bath & Beyond of Meyerland Inc. Texas
Bed Bath & Beyond of Plano Inc. Texas
Baybrook Bed Bath & Beyond Inc. Texas
Katy Bed Bath & Beyond Inc. Texas
Stafford Bed Bath & Beyond Inc. Texas
Sunset Valley Bed Bath & Beyond Inc. Texas
West Oaks Bed Bath & Beyond Inc. Texas
Willowbrook Bed Bath & Beyond Inc. Texas
San Antonio Bed Bath & Beyond Inc. Texas
Bed Bath & Beyond of Charlottesville Inc. Virginia
Bed Bath & Beyond of Chesapeake Inc. Virginia
Bed Bath & Beyond of Fairfax Inc. Virginia
Bed Bath & Beyond of Fair City Inc. Virginia
Bed Bath & Beyond of Falls Church Inc. Virginia
Bed n Bath of Baileys Crossroads Inc. Virginia
Bed Bath & Beyond of Tyson's Corner Inc. Virginia
Bed Bath & Beyond of Virginia Beach Inc. Virginia
Bed Bath & Beyond of Auburn Inc. Washington
</TABLE>
<PAGE> 1
Exhibit 11
BED BATH & BEYOND INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
52 WEEKS ENDED 52 WEEKS ENDED
FEBRUARY 25, 1996 FEBRUARY 26, 1995
----------------- -----------------
<S> <C> <C>
Weighted average number of shares outstanding 67,879,779 67,679,536
Dilutive effect of common equivalent shares
(stock options) outstanding 1,532,391 1,459,230
----------- -----------
Weighted average number of shares and dilutive common
equivalent shares (stock options) outstanding 69,412,170 69,138,766
=========== ===========
Net earnings $39,459,000 $30,013,000
=========== ===========
Net earnings per share $ .57 $ .43
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 13
1995
BED BATH & BEYOND
ANNUAL REPORT
BEYOND ANY STORE OF ITS KIND.(R)
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Company Profile and Store
Locations Inside Front Cover
Selected Financial Data 1
Letter to Shareholders 2-3
Questions & Answers 4-8
Management's Discussion and
Analysis of Financial
Condition and Results of Operations 9-11
Consolidated Financial Statements 12-20
Corporate Data Inside Back Cover
</TABLE>
COMPANY PROFILE
BED BATH & BEYOND IS A NATIONWIDE CHAIN OF "SUPERSTORES" SELLING BETTER QUALITY
DOMESTICS MERCHANDISE AND HOME FURNISHINGS. FOUNDED IN 1971 WITH TWO STORES IN
NEW YORK AND NEW JERSEY THAT PRIMARILY SOLD BED LINENS AND BATH ACCESSORIES, THE
COMPANY ORIGINATED ITS SUPERSTORE FORMAT IN 1985 WITH THE OPENING OF ITS FIRST
FACILITY CARRYING A FULL LINE OF BOTH DOMESTICS MERCHANDISE AND HOME
FURNISHINGS. ALL STORES OPENED BY THE COMPANY SINCE 1985 HAVE ADOPTED THIS
INNOVATIVE AND DYNAMIC FORMAT. TODAY, BED BATH & BEYOND IS THE PREEMINENT
MARKETER IN THE SUPERSTORE SEGMENT OF THE HOME GOODS INDUSTRY. IT CURRENTLY
OPERATES 86 STORES IN 22 STATES ENCOMPASSING NEARLY 3.5 MILLION SQUARE FEET, AND
HAS BEEN EXPANDING ITS SQUARE FOOTAGE BY AT LEAST 30% A YEAR. BED BATH & BEYOND
STORES PRINCIPALLY RANGE FROM 30,000 TO 50,000 SQUARE FEET, WITH SOME STORES AS
LARGE AS 85,000 SQUARE FEET. THEY COMBINE SUPERIOR SERVICE AND A HUGE SELECTION
OF ITEMS AT EVERYDAY LOW PRICES WITHIN A CONSTANTLY EVOLVING SHOPPING
ENVIRONMENT THAT HAS PROVEN TO BE BOTH FUN AND EXCITING FOR CUSTOMERS. BED BATH
& BEYOND'S SHARES ARE TRADED ON THE NASDAQ NATIONAL MARKET SYSTEM UNDER THE
SYMBOL "BBBY."
STORE LOCATIONS
<TABLE>
<CAPTION>
Number
State of Stores
- - - ----- ---------
<S> <C>
Alabama 1
Arizona 2
California 11
Colorado 1
Connecticut 3
Florida 10
Georgia 4
Illinois 6
Indiana 2
Kansas 1
Maryland 4
Massachusetts 2
Michigan 3
Missouri 1
New Jersey 6
New York 8
Ohio 3
Oklahoma 1
Pennsylvania 2
Texas 10
Virginia 4
Washington 1
TOTAL NUMBER OF STORE LOCATIONS 86
</TABLE>
<PAGE> 3
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------------------------
(In thousands, except per share February 25, February 26, February 27, February 28, March 1,
and selected operating data) 1996 1995 1994 1993 1992
======================================================================================================================
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $ 601,252 $ 440,261 $ 305,767 $ 216,712 $167,595
Gross profit 250,036 183,819 127,972 90,528 70,039
Operating profit 67,585 51,685 36,906 26,660 19,973
Net earnings(1) 39,459 30,013 21,887 15,960 11,952
Net earnings per share(1)(2) $ .57 $ .43 $ .32 $ .24 $ .18
- - - ----------------------------------------------------------------------------------------------------------------------
SELECTED OPERATING DATA:
Number of stores open
(at period end) 80 61 45 38 34
Total square feet of store space
(at period end) 3,214,000 2,339,000 1,512,000 1,128,000 917,000
Net sales per average square foot of
total store space $ 217 $ 229 $ 232 $ 212 $ 217
Percentage increase in comparable
store net sales 3.8% 12.0% 10.6% 7.2% 1.1%
- - - ----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (AT PERIOD END):
Working capital $ 87,727 $ 71,902 $ 54,432 $ 34,501 $ 31,955
Total assets 235,810 176,678 121,468 76,654 55,477
Long-term debt 5,000 16,800 13,300 -- 11,780
Shareholders' equity $ 151,446 $ 108,939 $ 77,305 $ 54,643 $ 30,853
</TABLE>
(1) Bed Bath & Beyond Inc. was an S corporation for Federal and certain state
income tax purposes until June 9, 1992. Provision for income taxes and net
earnings in fiscal years 1992 and 1991 reflect a provision for pro forma
income taxes as if the Company and its subsidiaries had been liable for
Federal, state and local income taxes as taxable corporate entities
throughout the periods that the S corporation was in effect.
(2) 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 on June 21, 1993 and April
30, 1996.
<TABLE>
<CAPTION>
91 92 93 94 95
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET SALES ($ IN MILLIONS) 167.6 216.7 305.8 440.3 601.3
NET EARNINGS ($ IN MILLIONS) 12.0 16.0 21.9 30.0 39.5
NET EARNINGS PER SHARE
(IN DOLLARS) 0.18 0.24 0.32 0.43 0.57
</TABLE>
1
<PAGE> 4
TO OUR FELLOW SHAREHOLDERS
Bed Bath & Beyond continued to produce outstanding results in fiscal 1995 thanks
to the skills, hard work and determination of our nationwide family of managers
and associates. At the same time, we took advantage of the public's growing
enthusiasm for our lively, innovative style of merchandising by expanding our
chain of superstores selling better quality domestics merchandise and home
furnishings.
1995 HIGHLIGHTS
Net sales for fiscal 1995 were $601.3 million, an increase of 36.6% from the
prior year's $440.3 million. Comparable store net sales for fiscal 1995 were
3.8% ahead of the prior year.
Net earnings of $39.5 million exceeded fiscal 1994's total of $30.0 million by
31.5%. On a per share basis, net earnings grew from $.43 to $.57.
In order to increase and broaden our shareholder base and improve the liquidity
of our stock, the Company's Board of Directors on March 28, 1996 declared a
two-for-one split of the Company's common stock in the form of a 100% stock
dividend. The stock dividend was distributed on April 30, 1996 to shareholders
of record on April 10, 1996.
GROWING MARKET PENETRATION
We took advantage of our reputation as a desirable anchor tenant in strip
centers and malls by opening nineteen new superstores in fiscal 1995. Total
store space at year-end was 3.2 million square feet, a 37.4% increase over the
2.3 million square feet at the end of the prior fiscal year. Bed Bath & Beyond
plans to open 24 to 26 new stores in both new and existing markets during the
current fiscal year, adding to the 80 stores in 21 states that existed at the
end of fiscal 1995.
We compete successfully against the department stores and national chains that
dominate the domestics and home furnishings industry. Spearheading the effort
for Bed Bath & Beyond is our decentralized team of store managers who apply
their merchandising knowledge and experience to meet the needs of our customers.
[PHOTO OF WARREN EISENBERG AND LEONARD FEINSTEIN]
WARREN EISENBERG AND LEONARD FEINSTEIN
Co-Chief Executive Officers
2
<PAGE> 5
<TABLE>
STORE EXPANSION
91 92 93 94 95
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STORE EXPANSION 34 38 45 61 80
TOTAL SQUARE FOOTAGE
(IN THOUSANDS) 917 1,128 1,512 2,339 3,214
</TABLE>
We are ever mindful of the growing competitive environment. We believe we are
the only chain in our retailing segment that has been able to demonstrate
consistently profitable results. Furthermore, because our share of the total
market is under one and one-half percent, we believe there are many
opportunities for future growth.
STRONG FINANCIAL BASE
Bed Bath & Beyond continues to be in robust financial health. Long-term debt at
February 25, 1996, the end of our fiscal year, was $5.0 million. This
represented 3.2% of total capitalization, down from 13.4% at the end of the
prior fiscal year. Although our bank credit facility has been expanded to
provide $45.0 million in borrowing capacity, we expect that internally generated
cash flow will fund a major portion of this year's store expansion program.
Working capital at the end of fiscal 1995 amounted to $87.7 million, compared
with $71.9 million at the prior fiscal year-end.
LOOKING AHEAD
Our financial position as we enter the new fiscal year is strong, and getting
stronger, which affords us considerable flexibility to take advantage of
opportunities as they arise.
Enhanced computer systems, which we have installed in our stores and
offices, are enabling us to improve our operations and serve our customers
better.
In the pages that follow, we respond to some of the questions asked by
people interested in Bed Bath & Beyond. We thank you, our fellow shareholders,
for your loyal support over the past year. We are all dedicated to making
fiscal 1996, our Twenty-Fifth Anniversary Year, another year of outstanding
growth for our Company.
Sincerely,
/s/ WARREN EISENBERG /s/ LEONARD FEINSTEIN
- - - --------------------- ------------------------
WARREN EISENBERG LEONARD FEINSTEIN
Chairman and Co-Chief President and Co-Chief
Executive Officer Executive Officer
May 1, 1996
3
<PAGE> 6
QUESTIONS & ANSWERS
ON THE FOLLOWING PAGES, WE RESPOND TO SOME OF THE QUESTIONS WE ARE ASKED ABOUT
BED BATH & BEYOND.
WHAT CURRENT TRENDS IN RETAILING ARE AFFECTING THE GROWTH OF YOUR BUSINESS?
The U.S. population is getting older and spending more time at home, which
creates tremendous opportunities for our market segment -- upscale domestics and
home furnishings. The overriding trend is that people are more willing to spend
money fixing up or improving their homes to enhance their comfort and
convenience levels. If anything, this trend will intensify as the average age of
the population continues to increase.
OTHER COMPANIES HAVE TRIED TO COPY BED BATH & BEYOND. WHY IS IT SO HARD TO
REPLICATE YOUR OPERATING STYLE AND, MORE IMPORTANTLY, YOUR RESULTS?
Competitors can copy an idea here and there, but try as they may they can't copy
an organization or a culture that we've spent 25 years building and perfecting.
They can duplicate our racetrack layout, for example, which features 11
specialty stores under one roof, but they can't copy the enormous selection
within those 11 specialty stores that makes shopping such a rewarding experience
for our customers. What's more, we operate on a decentralized basis, empowering
and challenging our employees to be creative and entrepreneurial. Even as our
competitors improve, Bed Bath & Beyond continues to get better, widening our
leadership position in the industry.
<TABLE>
<CAPTION>
OPERATING PROFIT
($ IN MILLIONS)
91 92 93 94 95
---- ---- ---- ---- ----
<C> <C> <C> <C> <C>
20.0 26.7 36.9 51.7 67.6
</TABLE>
4
<PAGE> 7
[PHOTO OF BEDDING ENSEMBLE]
YOU'RE THE ONLY PUBLICLY-REPORTING COMPANY IN YOUR SEGMENT OF RETAILING THAT HAS
MANAGED TO SHOW A GOOD PROFIT. WHY DO YOU THINK THAT'S SO?
We've proven year after year that we can offer customers everyday low prices and
still earn an attractive operating margin. One way we accomplish this is through
"merchandising the mix." Store managers in our decentralized organization must
be -- and indeed are -- savvy merchants. They know full well that it's not just
buying and pricing an item that controls gross profit, but selling a better mix
of products that results in the higher margin. We also enhance profitability
through our low cost and expense structure. We ship directly to our stores,
eliminating the need for distribution centers or warehouses. Much of our
inventory is displayed in inexpensive, 10 to 14 feet high fixtures on the
selling floor. We further control overhead expense by maintaining an extremely
lean management structure.
HOW DOES YOUR CUSTOMER SERVICE COMPARE WITH THE REST OF THE INDUSTRY?
Consider this: on any Saturday of the year, you'll find our senior managers
working on the selling floor of our stores, waiting on customers and showing
future store managers what we expect of them. That says a lot, we believe, about
the culture at Bed Bath & Beyond where virtually everyone -- from store
assistants to top managers -- wants to and works diligently to ensure that the
customer is well cared for. This means things like friendly and helpful store
personnel, fast and
[PHOTO OF COFFEE POT]
5
<PAGE> 8
[PHOTO OF TOWELS]
convenient checkout lanes and, on the rare occasion when a store doesn't have a
requested item, a pledge to do anything possible to secure it for the customer.
We believe this passion for service clearly sets us apart from most others in
the industry.
HOW HAVE YOU ACHIEVED YOUR OUTSTANDING RESULTS WITH YOUR LOW ADVERTISING BUDGET?
It's true our advertising expenses are unusually low for this industry. Except
to introduce new stores, and except for several multi-store circulars each year,
you won't see us in print, or on TV, or hear about us on the radio. We rely
primarily on word-of-mouth in lieu of advertising. Obviously, this strategy has
worked. Our sales volume keeps growing as people seem to truly enjoy shopping in
our stores. As a result, our nominal advertising expenses have enabled us to
more tightly control costs.
GIVEN YOUR FINANCIAL RESOURCES, ARE YOU PLANNING TO ACCELERATE YOUR STORE
OPENING PROGRAM?
We are exactly where we want to be in terms of growth. Chain-wide, our square
footage at the end of fiscal year 1995 was approximately 3.2 million, an
increase of 37.4% over the prior year. Our plan going forward is to continue to
grow our square footage by at least 30% a year. With a presence in less than
one-third of the country's 112 markets with populations of more than 450,000,
there is obviously tremendous room for expansion. At Bed Bath & Beyond, however,
we absolutely will not open a store unless we have the management talent --
which we groom and promote from within -- available to properly staff it. We
also want to be sure that the corporate infrastructure needed to support our
expansion is firmly in place.
6
<PAGE> 9
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
($ IN MILLIONS)
91 92 93 94 95
---- ---- ---- ----- -----
<S> <C> <C> <C> <C>
30.9 54.6 77.3 108.9 151.4
</TABLE>
WHAT KINDS OF NEW RETAIL OPPORTUNITIES ARE MOST ATTRACTIVE TO YOU? DO YOU HAVE
ANY PLANS TO GO INTERNATIONAL?
We're quite flexible. Because we're a proven success in strip centers, off-price
malls, conventional malls and free-standing buildings, and because we attract
the best customer -- typically an upscale, affluent, sophisticated female
shopper -- we are a very sought after anchor tenant. Increasingly today, doors
are being opened to us as an unconventional anchor tenant in conventional malls.
As for possible international growth, our position is this: though we believe
our format would be successful in other countries, as long as there are so many
opportunities to expand domestically, we will not, in the immediate future at
least, pursue global markets.
WHAT ROLE IS TECHNOLOGY PLAYING IN ENHANCING YOUR BUSINESS?
More and more, integrated computer systems in our stores and offices are helping
us to improve operations, enhance our in-stock position while reducing inventory
investment, control expenses and generally position us for continued growth. In
the Spring of 1995, we completed chain-wide implementation of our new perpetual
inventory system. Coupled with our satellite communications capability (which
links our stores directly to our corporate, administrative and buying offices in
New Jersey and New York), our
[PHOTO OF DINNERWARE]
7
<PAGE> 10
[PHOTO OF PILLOWS]
stores now have an on-line order information capability. We also provide our
associates with the real-time inventory and sales data necessary to support
planned sales and customer service activities. Within the next year or so, we
also plan to implement an automated inventory replenishment system to further
control stock levels and reduce operating expenses, and are developing a number
of client-server applications to provide more useful data at the desktop.
IT SEEMS THAT A BROAD RANGE OF COMPETITION IS REGULARLY ENTERING THE HOME GOODS
FIELD. WHAT IMPACT MIGHT THESE NEW ENTRANTS HAVE ON YOUR FUTURE GROWTH?
We've always lived with competition, and managed to do very well in spite
of it. Our competitors not only include department stores, national chains and
other superstore operators, but also category-specific specialty stores which
carry some, but not all of the types of merchandise that we offer. Regardless of
the retailing format, we strongly believe that Bed Bath & Beyond offers a
greater breadth and depth of merchandise -- and customer service -- than do our
competitors. Department stores, for example, typically devote 20,000 square feet
to home furnishings. We offer customers double, triple or even quadruple the
shoppable area. In addition, Bed Bath & Beyond's everyday prices are generally
lower than department store sale prices. We're not so naive to think, however,
that our results over the past 25 years guarantee our success over the next 25
years. For that reason, we're working harder than ever to build a stronger, more
profitable business.
<TABLE>
<CAPTION>
TOTAL ASSETS
($ IN MILLIONS)
<S> <C>
1991 55.5
1992 76.7
1993 121.5
1994 176.7
1995 235.8
</TABLE>
8
<PAGE> 11
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
income statement data of the Company expressed as a percentage of net sales and
(ii) the percentage change from the prior year in selected income statement
data:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------------------------------------
PERCENTAGE OF NET SALES PERCENTAGE CHANGE FROM PRIOR YEAR
-------------------------------------------------------------------------------------------
FEBRUARY 25, FEBRUARY 26, FEBRUARY 27, FEBRUARY 25, FEBRUARY 26,
1996 1995 1994 1996 1995
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 36.6% 44.0%
Cost of sales, including buying,
occupancy and indirect costs 58.4 58.2 58.1 37.0 44.2
Gross profit 41.6 41.8 41.9 36.0 43.6
Selling, general and
administrative expenses 30.3 30.0 29.8 38.1 45.1
Operating profit 11.2 11.7 12.1 30.8 40.0
Earnings before provision
for income taxes 11.1 11.6 12.1 31.5 37.7
Net earnings 6.6 6.8 7.2 31.5 37.1
</TABLE>
FISCAL 1995 COMPARED WITH
FISCAL 1994
In 1995, the Company expanded store space by 37.4%, from 2,339,000 square
feet at fiscal year-end 1994 to 3,214,000 square feet at fiscal year-end 1995.
The 875,000 square feet increase was the result of opening nineteen new
superstores and expanding two existing stores.
Net sales in 1995 increased $161.0 million to $601.3 million, representing
an increase of 36.6% over the $440.3 million net sales volume of 1994.
Approximately 91% of the increase is attributable to new store net sales and the
balance to an increase in comparable store net sales. The Company estimates that
bed linens accounted for approximately 21% and 20% of net sales during fiscal
1995 and fiscal 1994, respectively. No other individual product category
accounted for 10% or more of net sales during either fiscal year.
Gross profit for 1995 was $250.0 million or 41.6% of net sales compared
with $183.8 million or 41.8% 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 1995 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 3.8% in fiscal
1995 compared with 12.0% in fiscal 1994. The slower rate of growth in comparable
store net sales relative to the prior year primarily reflects the general
slowdown in the retail sector.
Net sales per average square foot of store space declined to $217 from $229
in fiscal 1994, due principally to the timing of the significant new store space
added in fiscal 1995.
Selling, general and administrative expenses ("SG&A"), were $182.5 million
or 30.3% of net sales in 1995 compared to $132.1 million (restated to include
franchise fee income) or 30.0% of net sales in 1994. 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.
The costs associated with the Company's computer systems, including
personnel costs, hardware leasing costs and software costs, were approximately
$6.9 million in 1995, $4.8 million in 1994 and $2.9 million in 1993, and the
Company estimates will be approximately $9.6 million in 1996.
Operating profit was $67.6 million in 1995, an increase of $15.9 million or
30.8% from 1994, reflecting primarily the increase in net sales which was
partially offset by increases in cost of sales and SG&A.
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS, CONTINUED
FISCAL 1994 COMPARED WITH
FISCAL 1993
In 1994, the Company expanded store space by 54.7%, from 1,512,000 square
feet at fiscal year-end 1993 to 2,339,000 square feet at fiscal year-end 1994.
The 827,000 square feet increase was the result of opening sixteen new
superstores and expanding four existing stores.
Net sales in 1994 were $440.3 million, representing an increase of 44.0%
over the $305.8 million net sales volume of 1993. Of the $134.5 million
year-to-year net sales increase, approximately 78% is attributable to new stores
and the balance to an increase in comparable store net sales. The Company
estimates that bed linens accounted for approximately 20% of net sales during
fiscal 1994 and fiscal 1993. During fiscal 1993, towels accounted for 10% of net
sales. No other individual product category accounted for 10% or more of net
sales during either fiscal year.
Gross profit for 1994 was $183.8 million or 41.8% of net sales compared
with $128.0 million or 41.9% of net sales in the prior year. The decrease in
gross profit as a percentage of net sales was primarily attributable to
increases in freight costs and in coupons redeemed associated with the five
circulars that were distributed in 1994 compared with four in the prior year,
which was partially offset by decreases in buying, occupancy and indirect costs.
The percentage increase in comparable store net sales was 12.0% in fiscal
1994 compared with 10.6% in fiscal 1993. The increases in comparable store net
sales can be primarily attributable to store maturation and expansion of the
circular marketing program.
Net sales per average square foot of store space was $229 compared with
$232 in fiscal 1993, due principally to the significant new store space added in
fiscal 1994.
SG&A was $132.1 million or 30.0% of net sales in 1994 compared to $91.1
million or 29.8% of net sales in 1993 (restated to include franchise fee
income). The increase in SG&A as a percentage of net sales reflects increases in
rent expense, and depreciation and amortization, which were partially offset by
a decrease in salary costs.
Operating profit was $51.7 million in 1994, up $14.8 million or 40.0% from
1993, reflecting primarily the increase in net sales which was partially offset
by the increase in SG&A.
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 new, larger stores. In the five year period
from the beginning of fiscal 1991 to the end of fiscal 1995, the chain has grown
from 27 stores to 80 stores. Total square footage grew from 625,000 square feet
at the beginning of fiscal 1991 to 3,214,000 square feet at the end of fiscal
1995.
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 91%, 78%, 75%, 70% and 96% of the increase in
net sales in fiscal 1995, 1994, 1993, 1992 and 1991, respectively.
The Company intends to continue its expansion program and currently
anticipates that in fiscal 1996 it will open approximately 24 to 26 new stores
(see details under "Liquidity and Capital Resources" below). The Company
believes that a predominant portion of any increase in the Company's net sales
in 1996 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 $75.0 million at the end
of 1993 to $108.4 million at the end of 1994, and to $148.4 million at the end
of 1995. In each of the fiscal years, the increase in merchandise inventories
was attributable to the addition of new store space.
The Company's working capital increased from $54.4 million at the end of
1993 to $71.9 million at the end of 1994, and to $87.7 million at the end of
1995. The increase between the end of 1994 and the end of 1995 was primarily
reflected in an increase in merchandise inventories, which was partially offset
by increases in accounts payable and accrued expenses and other current
liabilities. The increase between the end of 1993 and the end of 1994 was
primarily reflected in an increase in merchandise inventories and cash and cash
equivalents, which was 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 $24.5 million, $24.5
million and $19.7 million during 1995, 1994 and 1993, respectively. The
Company's capital expenditures included $150,000 and $233,000 for lease
purchases in 1995 and 1993, respectively. No lease purchases were made in 1994.
Under a credit agreement (the "Credit Agreement") concluded in November
1994, and subsequently amended in October 1995, the company may borrow up to
$45.0 million under a revolving credit
10
<PAGE> 13
commitment 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 have materially affected its business or
will affect its expansion program as currently planned.
The Company borrowed under the Credit Agreement primarily in order to meet
seasonal cash requirements as well as capital expenditures and inventory
requirements for new store space opened during the year. The outstanding amounts
of indebtedness under the Credit Agreement were $5.0 million, $16.8 million and
$13.3 million and the weighted average interest rates on such indebtedness were
7.27%, 6.96% and 5.41% at the end of 1995, 1994 and 1993, respectively. During
fiscal 1995, the outstanding amount of indebtedness did not exceed $30.1
million.
The Company believes that during fiscal 1996, internally generated funds,
supplemented by borrowings under the Credit Agreement, will be sufficient to
fund both its normal operations and its expansion program.
As of March 22, 1996, the Company had already leased sites for sixteen new
superstores planned for opening in fiscal 1996, including four new stores
already opened in Independence, Missouri (the Company's first store in that
state); Northridge, California; Alpharetta, Georgia; and Houston, Texas. Other
new stores expected to open during fiscal 1996 will be located in Ontario and
Tustin, California; Denver, Colorado; Atlanta, Georgia; Rockford, Illinois;
Burlington, Massachusetts; Munsey Park, New York; Canton, Ohio; Memphis,
Tennessee; and Charlottesville, Chesapeake and Virginia Beach, Virginia.
Approximate aggregate costs for the sixteen leased stores are $38.5 million
for merchandise inventories, $11.0 million for furniture and fixtures and
leasehold improvements, and $3.9 million for preopening expenses (which will be
expensed as incurred). In addition to the foregoing sixteen locations, the
Company expects to open an additional eight to ten locations. 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.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued. SFAS 123
encourages companies to adopt a fair value based method of accounting for
stock-based compensation plans in place of the intrinsic value based method
provided for by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Companies which continue to apply the
provisions of APB 25 must make pro forma disclosures in the notes to their
financial statements of net income and earnings per share as if the fair value
based method of accounting defined in SFAS 123 had been applied. The Company
plans to adopt SFAS 123 in fiscal 1996 on a pro forma disclosure basis.
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121) was issued. SFAS 121 establishes accounting standards
for the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used, or to be disposed of. The
Company does not believe the adoption of SFAS 121 in fiscal year 1996 will have
a significant impact on the Company's financial condition or results of
operations.
FORWARD LOOKING STATEMENTS
This Annual Report contains 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: overall economic conditions, changes in the retail
environment, demographics and other macroeconomic factors that may impact the
level of spending for the types of merchandise sold by the Company; unusual
weather patterns; pricing pressures; competition from existing and potential
competitors; the availability of trained qualified management personnel to
support the Company's expansion; 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.
11
<PAGE> 14
CONSOLIDATED BALANCE SHEETS
BED BATH & BEYOND INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
FEBRUARY 25, FEBRUARY 26,
(IN THOUSANDS, EXCEPT SHARE DATA) 1996 1995
=================================================================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,267 $ 6,463
Merchandise inventories 148,383 108,388
Prepaid expenses and other current assets 1,630 3,160
- - - ---------------------------------------------------------------------------------------------------------------------------------
Total current assets 160,280 118,011
- - - ---------------------------------------------------------------------------------------------------------------------------------
Property and equipment, net (note 2) 66,635 52,201
Other assets (notes 5 and 6) 8,895 6,466
- - - ---------------------------------------------------------------------------------------------------------------------------------
$235,810 $176,678
=================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,025 $ 27,503
Accrued expenses and other current liabilities (note 3) 26,947 14,824
Income taxes payable 6,581 3,782
- - - ---------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 72,553 46,109
- - - ---------------------------------------------------------------------------------------------------------------------------------
Long-term debt (note 4) 5,000 16,800
Deferred rent 6,811 4,830
- - - ---------------------------------------------------------------------------------------------------------------------------------
84,364 67,739
- - - ---------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (notes 4, 7 and 9)
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 - 100,000,000 shares; issued
and outstanding - February 25, 1996, 68,067,972 shares and
February 26, 1995, 67,768,882 shares 681 339
Additional paid-in capital 46,254 43,548
Retained earnings 104,511 65,052
- - - ---------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 151,446 108,939
- - - ---------------------------------------------------------------------------------------------------------------------------------
$235,810 $176,678
=================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
12
<PAGE> 15
CONSOLIDATED STATEMENTS OF EARNINGS
BED BATH & BEYOND INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------------------
FEBRUARY 25, FEBRUARY 26, FEBRUARY 27,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1996 1995 1994
===============================================================================================================================
<S> <C> <C> <C>
Net sales $ 601,252 $ 440,261 $ 305,767
Cost of sales, including buying, occupancy
and indirect costs 351,216 256,442 177,795
- - - -------------------------------------------------------------------------------------------------------------------------------
Gross profit 250,036 183,819 127,972
Selling, general and administrative expenses 182,451 132,134 91,066
- - - -------------------------------------------------------------------------------------------------------------------------------
Operating profit 67,585 51,685 36,906
Interest (expense) income, net (705) (816) 34
- - - -------------------------------------------------------------------------------------------------------------------------------
Earnings before provision for
income taxes 66,880 50,869 36,940
Provision for income taxes (note 5) 27,421 20,856 15,053
- - - -------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 39,459 $ 30,013 $ 21,887
===============================================================================================================================
Net earnings per share $ .57 $ .43 $ .32
===============================================================================================================================
Weighted average shares outstanding 69,412,170 69,138,766 68,820,980
===============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
13
<PAGE> 16
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
BED BATH & BEYOND INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED
(IN THOUSANDS) SHARES AMOUNT CAPITAL EARNINGS TOTAL
===================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1993 67,500 $169 $41,322 $ 13,152 $ 54,643
Net earnings 21,887
Shares sold under employee stock option
plan (note 9) 92 775
Reclassification of additional paid-in
capital to common stock in connection
with the 2 for 1 stock split (note 1 (i)) 169 (169)
- - - -------------------------------------------------------------------------------------------------------------------
Balance at February 27, 1994 67,592 338 41,928 35,039 77,305
Net earnings 30,013
Shares sold under employee stock option
plan (note 9) 177 1 1,620
- - - -------------------------------------------------------------------------------------------------------------------
Balance at February 26, 1995 67,769 339 43,548 65,052 108,939
Net earnings 39,459
Shares sold under employee stock option
plan (note 9) 299 2 3,046
Reclassification of additional paid-in
capital to common stock in connection
with the 2 for 1 stock split (note 1 (i)) 340 (340)
- - - -------------------------------------------------------------------------------------------------------------------
BALANCE AT FEBRUARY 25, 1996 68,068 $681 $46,254 $104,511 $151,446
===================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
14
<PAGE> 17
CONSOLIDATED STATEMENTS OF CASH FLOWS
BED BATH & BEYOND INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------
FEBRUARY 25, FEBRUARY 26, FEBRUARY 27,
(IN THOUSANDS) 1996 1995 1994
======================================================================================================
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 39,459 $ 30,013 $ 21,887
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 9,902 7,193 4,200
Loss from disposal of property and equipment 192 29 288
(Increase) decrease in assets:
Merchandise inventories (39,995) (33,406) (31,893)
Prepaid expenses and other current assets 1,530 1,163 (3,651)
Other assets (2,429) (1,875) (1,438)
Increase (decrease) in liabilities:
Accounts payable 11,522 10,498 7,201
Accrued expenses and other current liabilities 12,123 5,673 3,450
Income taxes payable 2,799 2,393 (2,461)
Deferred rent 1,981 1,512 662
- - - ------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 37,084 23,193 (1,755)
- - - ------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures-leasehold purchases (150) -- (233)
Capital expenditures-leasehold improvements and
furniture and fixtures (24,378) (24,523) (19,510)
- - - ------------------------------------------------------------------------------------------------------
Net cash used in investing activities (24,528) (24,523) (19,743)
- - - ------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from long-term debt 55,060 64,500 35,250
Repayment of long-term debt (66,860) (61,000) (21,950)
Proceeds from exercise of stock options 3,048 1,621 775
- - - ------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (8,752) 5,121 14,075
- - - ------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 3,804 3,791 (7,423)
Cash and cash equivalents:
Beginning of period 6,463 2,672 10,095
- - - ------------------------------------------------------------------------------------------------------
End of period $ 10,267 $ 6,463 $ 2,672
======================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
15
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
A. PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Bed Bath & Beyond Inc. and its subsidiaries, all of which are wholly owned.
All significant intercompany balances and transactions have been eliminated
in consolidation.
B. FISCAL YEAR
The Company's fiscal year is the 52 or 53 week period ending the Sunday
nearest February 28. Fiscal years 1995, 1994 and 1993 (all 52 week periods)
ended on February 25, 1996, February 26, 1995 and February 27, 1994,
respectively.
C. CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with maturities
of three months or less to be cash equivalents.
D. MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost or market, determined
by means of the retail inventory method of accounting.
E. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of furniture,
fixtures and equipment is computed primarily by the straight-line method over
the estimated useful lives of the assets, generally five to ten years. Leasehold
costs are amortized by the straight-line method over the life of the lease and
leasehold improvements are amortized by 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 $6.9 million, $4.7 million and $3.1 million for fiscal 1995, 1994
and 1993, respectively.
F. PREOPENING EXPENSES
Expenses associated with new, relocated or expanded stores are charged to
earnings as incurred.
G. OCCUPANCY COSTS
The Company accounts for scheduled rent increases contained in its leases on
a straight-line basis over the noncancelable lease term. At February 25, 1996
and February 26, 1995, the accompanying consolidated balance sheets include
deferred rent liabilities of $6.8 million and $4.8 million, respectively,
relating to such scheduled rent increases.
H. 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.
Effective March 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
The cumulative effect of the adoption of SFAS No. 109 was not material to the
Company's consolidated financial statements and, therefore, not presented
separately.
Under the asset and liability method of SFAS No. 109, 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. Under SFAS No.
109, 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.
I. STOCK SPLITS
On June 7, 1993, 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 July 8, 1993, to shareholders of record on June
21, 1993.
On March 28, 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.
Share and per share data have been adjusted to give effect to the stock
splits.
16
<PAGE> 19
J. EARNINGS PER SHARE
Earnings per share is calculated using the weighted average shares and
dilutive common equivalent shares (stock options) outstanding during the period.
K. FAIR VALUE OF FINANCIAL INSTRUMENTS
In fiscal 1994, the Company adopted SFAS No. 107 "Disclosures about Fair
Value of Financial Instruments" which requires all entities to disclose the fair
value of financial instruments for which it is practicable to estimate fair
value.
The Company's financial instruments include cash and cash equivalents,
accounts payable, accrued expenses and other current liabilities, and long-term
debt. 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. The book value of the
Company's long-term debt is considered to approximate its fair value, based on
current market rates and conditions.
L. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) 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.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 25, FEBRUARY 26,
(IN THOUSANDS) 1996 1995
================================================================================
<S> <C> <C>
Furniture, fixtures and equipment $ 47,495 $ 33,505
Leasehold improvements 43,507 33,729
Leasehold purchases 4,331 4,181
- - - --------------------------------------------------------------------------------
95,333 71,415
Less: Accumulated depreciation and
amortization (28,698) (19,214)
- - - --------------------------------------------------------------------------------
$ 66,635 $ 52,201
================================================================================
</TABLE>
Depreciation and amortization expense was $9.9 million, $7.2 million and $4.2
million for fiscal 1995, 1994 and 1993, respectively.
3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 25, FEBRUARY 26,
(IN THOUSANDS) 1996 1995
================================================================================
<S> <C> <C>
Sales and payroll taxes payable $ 4,934 $ 2,989
Merchandise credits 2,945 2,044
Other 19,068 9,791
- - - --------------------------------------------------------------------------------
$26,947 $14,824
================================================================================
</TABLE>
4. LONG-TERM DEBT
Under a credit agreement (the "Credit Agreement") concluded in November 1994,
and subsequently amended in October 1995, the Company may borrow up to $45.0
million under a revolving credit commitment 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.
During fiscal 1995, 1994 and 1993, interest rates on outstanding debt ranged
from 5.92% to 9.00%, 5.00% to 9.00% and 4.88% to 6.25%, respectively. As of
February 25, 1996, there was $5.0 million in outstanding borrowings and
approximately $125,000 in outstanding letters of credit.
The Credit Agreement contains certain covenants which, among other things,
place limitations on payment of dividends, capital expenditures and certain
expenses; restrict additional borrowings; and require maintenance of certain
financial ratios.
Under the terms of these covenants approximately $20.0 million was available
for the payment of dividends at February 25, 1996.
17
<PAGE> 20
5. PROVISION FOR INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS
--------------------------------------
(IN THOUSANDS) 1995 1994 1993
================================================================================
<S> <C> <C> <C>
Historical income taxes:
Current:
Federal $22,383 $17,156 $13,019
State and local 6,901 5,410 3,459
- - - --------------------------------------------------------------------------------
29,284 22,566 16,478
- - - --------------------------------------------------------------------------------
Deferred:
Federal (1,635) (1,557) (1,244)
State and local (228) (153) (181)
- - - --------------------------------------------------------------------------------
(1,863) (1,710) (1,425)
- - - --------------------------------------------------------------------------------
Income taxes $27,421 $20,856 $15,053
================================================================================
</TABLE>
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:
<TABLE>
<CAPTION>
FEBRUARY 25, FEBRUARY 26,
(IN THOUSANDS) 1996 1995
================================================================================
<S> <C> <C>
Deferred tax assets:
Deferred rent $2,816 $2,028
Inventories 2,679 1,870
Other 1,200 935
- - - --------------------------------------------------------------------------------
Deferred tax assets $6,695 $4,833
================================================================================
</TABLE>
Reconciliations of the Federal statutory income tax rate to the effective tax
rates are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS
----------------------------------
(IN THOUSANDS) 1995 1994 1993
================================================================================
<S> <C> <C> <C>
Federal statutory income tax rate 35.00% 35.00% 35.00%
State income taxes, net of
Federal tax benefit 6.48 6.72 5.77
Other (.48) (.72) (.02)
- - - --------------------------------------------------------------------------------
Effective tax rate 41.00% 41.00% 40.75%
================================================================================
</TABLE>
6. 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 25,
1996 and February 26, 1995, other assets include $1.8 million and $1.3 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 $161,000, $121,000 and $95,000 for fiscal
years 1995, 1994 and 1993, 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
$190,000, $179,000 and $115,000 for fiscal 1995, 1994 and 1993, respectively.
The Eisenberg Foundation and the Feinstein Foundation are each not-for-profit
corporations of which Messrs. Eisenberg and Feinstein and their family members
are the trustees and officers.
7. LEASES
The Company leases retail stores, as well as warehouses, office facilities,
and equipment under agreements expiring at various dates through 2013. Certain
leases provide for contingent rents (based upon store sales exceeding stipulated
amounts), scheduled rent increases and renewal options 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.
18
<PAGE> 21
As of February 25, 1996, future minimum lease payments under noncancelable
operating leases are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR (IN THOUSANDS) AMOUNTS
================================================================================
<S> <C>
1996 $ 40,140
1997 38,648
1998 37,511
1999 35,900
2000 34,814
Thereafter 226,273
- - - --------------------------------------------------------------------------------
Total minimum lease payments $413,286
================================================================================
</TABLE>
As of March 22, 1996, the Company had executed leases for sixteen stores
planned for opening in fiscal 1996.
Expenses for all operating leases were $37.3 million, $26.1 million and $17.5
million for fiscal years 1995, 1994 and 1993, respectively.
8. EMPLOYEE BENEFIT PLAN
Effective January 1, 1991, the Company established 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
$9,500, $9,240 and $9,240 for calendar years 1996, 1995 and 1994, 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 25, 1996, the Company has made no contributions
to the Plan.
9. EMPLOYMENT AGREEMENTS AND STOCK OPTION PLAN
A. EMPLOYMENT AGREEMENTS
Under terms of employment agreements with its Chairman and President
extending through June 1997, 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.
B. STOCK OPTION PLAN
The 1992 Stock Option Plan (the "Stock Option Plan"), provides for the
granting of options to purchase not more than an aggregate of 5,600,000 shares
of the Company's common stock, subject to adjustment under certain
circumstances. Some or all of such options 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 with the date of grant, or one or two years
thereafter.
The following table summarizes stock option transactions:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
================================================================================
<S> <C> <C>
Balance at February 28, 1993 1,855,800 $ 4.13 -$ 7.94
Options granted 1,015,400 7.38 - 16.38
Options exercised (91,770) 4.13 - 6.00
Options canceled (136,920) 4.25 - 15.38
- - - --------------------------------------------------------------------------------
Balance at February 27, 1994 2,642,510 4.13 - 16.38
- - - --------------------------------------------------------------------------------
Options granted 848,800 12.19 - 16.00
Options exercised (177,080) 4.13 - 11.00
Options canceled (201,140) 4.25 - 15.88
- - - --------------------------------------------------------------------------------
Balance at February 26, 1995 3,113,090 4.13 - 16.38
- - - --------------------------------------------------------------------------------
Options granted 1,121,500 9.47 - 20.03
Options exercised (299,090) 4.13 - 16.38
Options canceled (279,640) 4.25 - 15.88
- - - --------------------------------------------------------------------------------
Balance at February 25, 1996 3,655,860 $ 4.13 -$20.03
================================================================================
Options exercisable
at February 25, 1996 679,540 $ 4.13 -$16.38
================================================================================
</TABLE>
The stock option committees appointed pursuant to the Stock Option Plan
determine the number of shares and the option price per share for any additional
options issued under the Stock Option Plan.
10. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes of $25.2 million, $19.5 million and $18.6
million in fiscal 1995, 1994 and 1993, respectively.
The Company also paid interest of $991,000, $823,000 and $103,000 in fiscal
1995, 1994 and 1993, respectively.
19
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
11. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL 1995 QUARTER ENDED
----------------------------------------------------------
MAY 28, AUGUST 27, NOVEMBER 26, FEBRUARY 25,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1995 1995 1995 1996
=======================================================================================================
<S> <C> <C> <C> <C>
Net sales $113,452 $150,110 $161,789 $175,901
Gross profit 46,864 62,224 66,944 74,004
Operating profit 9,787 18,936 17,101 21,761
Earnings before provision
for income taxes 9,594 18,602 16,959 21,725
Provision for income taxes 3,934 7,627 6,953 8,907
Net earnings $ 5,660 $ 10,975 $ 10,006 $ 12,818
Net earnings per share $ .08 $ .16 $ .14 $ .19
<CAPTION>
FISCAL 1994 QUARTER ENDED
----------------------------------------------------------
MAY 29, AUGUST 28, NOVEMBER 27, FEBRUARY 26,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1994 1994 1994 1995
=======================================================================================================
<S> <C> <C> <C> <C>
Net sales $ 85,853 $111,535 $115,024 $127,849
Gross profit 35,503 46,503 47,821 53,992
Operating profit 7,955 14,820 13,071 15,839
Earnings before provision
for income taxes 7,833 14,660 12,799 15,577
Provision for income taxes 3,212 6,010 5,248 6,386
Net earnings $ 4,621 $ 8,650 $ 7,551 $ 9,191
Net earnings per share $ .07 $ .12 $ .11 $ .13
=======================================================================================================
</TABLE>
INDEPENDENT AUDITORS' REPORT
[KPMG LOGO]
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 25, 1996 and February 26, 1995, and
the related consolidated statements of earnings, changes in shareholders' equity
and cash flows for each of the fiscal years in the three-year period ended
February 25, 1996. 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 25, 1996 and February 26, 1995, and
the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended February 25, 1996 in conformity with
generally accepted accounting principles.
New York, New York Sig. KPMG PEAT MARWICK LLP
March 22, 1996
20
<PAGE> 23
CORPORATE DATA
EXECUTIVE OFFICERS & DIRECTORS
Warren Eisenberg
Chairman, Co-Chief Executive Officer and Director
Leonard Feinstein
President, Co-Chief Executive Officer and Director
Ronald Curwin
Chief Financial Officer and Treasurer
Klaus Eppler
Director - Partner, Proskauer Rose Goetz & Mendelsohn LLP, New York, New York
Robert S. Kaplan
Director - General Partner, Goldman, Sachs & Co., New York, New York
Robert J. Swartz
Director - Independent Consultant
KEY MANAGERS
Matthew Fiorilli
Director of Store Operations - Eastern Region
Harold Kislik
General Merchandise Manager - Domestics Merchandise
Phillip Kornbluh
Director of Store Planning
Jonathan Rothstein
General Merchandise Manager - Home Furnishings
Arthur Stark
Director of Store Operations - Western Region
Steven H. Temares
Director of Real Estate and General Counsel
CORPORATE HEADQUARTERS
Bed Bath & Beyond Inc.
715 Morris Avenue
Springfield, New Jersey 07081
Telephone: 201/379-1520
SHAREHOLDER INFORMATION
You may obtain, at no cost, copies of Bed Bath & Beyond Inc.'s 1995 Form 10-K
report (excluding exhibits) and quarterly reports by writing to:
Chief Financial Officer and Treasurer
Bed Bath & Beyond Inc.
650 Liberty Avenue
Union, New Jersey 07083
Telephone: 908/688-0888
Fax: 908/810-8813
STOCK LISTING
The Common Stock of Bed Bath & Beyond Inc. is traded through the NASDAQ National
Market System under the symbol "BBBY."
STOCK ACTIVITY
This table sets forth by fiscal quarter the high and low reported sales prices
of the Company's Common Stock on the NASDAQ National Market System during fiscal
1994 and fiscal 1995.
<TABLE>
<CAPTION>
HIGH LOW
========================================================
<S> <C> <C>
FISCAL 1994
First Quarter $16 3/8 $11 1/2
Second Quarter 16 1/2 12 1/2
Third Quarter 15 3/8 11 3/8
Fourth Quarter 15 3/4 12 7/8
FISCAL 1995
First Quarter 13 1/4 9
Second Quarter 16 1/2 10 5/16
Third Quarter 18 7/16 12 1/2
Fourth Quarter 22 7/16 15
</TABLE>
At April 10, 1996, there were approximately 380 shareholders of record. This
number excludes individual shareholders holding stock under nominee security
position listings.
TRANSFER AGENT
The Transfer Agent should be contacted on questions of change of address, name
or ownership, lost certificates and consolidation of accounts.
Chemical Mellon Shareholder Services
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
Telephone: 800/851-9677
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. Thursday, June 27,
1996, at the Headquarters Plaza Hotel, Three Headquarters Plaza, Morristown, New
Jersey.
Designed and produced by Frankston Associates
<PAGE> 24
[BED BATH & BEYOND LOGO]
715 MORRIS AVENUE
SPRINGFIELD, NEW JERSEY 07081
201/379-1520
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE COMPANY
This list does not include certain subsidiaries which in the aggregate are not
significant.
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of Riverchase Inc. Alabama
Bed Bath & Beyond of Tucson Inc. Arizona
Bed Bath & Beyond of Paradise Valley Inc. Arizona
Bed Bath & Beyond of Chandler Inc. Arizona
Bed Bath & Beyond of Beverly Center Inc. California
Bed Bath & Beyond of Northridge Inc. California
Bed Bath & Beyond of La Jolla Inc. California
Bed Bath & Beyond of Tarzana Inc. California
Bed Bath & Beyond of San Francisco Inc. California
Bed Bath & Beyond of Palm Desert Inc. California
Bed n Bath of Westlake Inc. California
Bed n Bath of Santa Rosa Inc. California
Bed n Bath of Huntington Beach Inc. California
Bed n Bath of Redondo Beach Inc. California
Bed n Bath of Oakland Inc. California
Bed n Bath of Studio City Inc. California
Bed n Bath of Woodland Hills Inc. California
Bed & Bath of San Diego Inc. California
Bed & Bath of Topanga Inc. California
Bed Bath & Beyond of Mission Valley Inc. California
Bed Bath & Beyond of Lake Forest Inc. California
Bed Bath & Beyond of Citrus Heights Inc. California
Bed Bath & Beyond of Cherry Creek Inc. Colorado
Bed Bath & Beyond of Park Meadows Inc. Colorado
Bed n Bath Warehouse Corp. Connecticut
Bed n Bath of Stamford Inc. Connecticut
Bed n Bath of Norwalk Inc. Connecticut
Bed n Bath of Danbury Square Inc. Connecticut
Bed n Bath of Hartford Inc. Connecticut
Bed n Bath of Danbury Inc. Connecticut
Bed Bath & Beyond of Ridgeway Inc. Connecticut
Bed Bath & Beyond of Connecticut Inc. Connecticut
BBBTX, Inc. Delaware
BBBL, Inc. Delaware
Bed Bath & Beyond of Brandywine Inc. Delaware
Bed Bath & Beyond of Sawgrass Inc. Florida
Bed Bath & Beyond of Orlando Inc. Florida
Bed Bath & Beyond of Kendall Inc. Florida
Bed Bath & Beyond of Hialeah Inc. Florida
Bed Bath & Beyond of West Palm Beach Inc. Florida
</TABLE>
<PAGE> 2
SUBSIDIARIES OF THE COMPANY, continued
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed Bath & Beyond of Brandon Inc. Florida
Bed Bath & Beyond of Boca Raton Inc. Florida
Bed Bath & Beyond of West Kendall Inc. Florida
Bed Bath & Beyond of Carrollwood Inc. Florida
Bed Bath & Beyond of Dadeland Station Inc. Florida
Bed Bath & Beyond of International Drive Inc. Florida
Bed Bath & Beyond of Naples Inc. Florida
Bed Bath & Beyond of Cobb Place Inc. Georgia
Bed Bath & Beyond of Gwinnett Inc. Georgia
Bed Bath & Beyond of Perimeter Inc. Georgia
Bed Bath & Beyond of Buckhead Inc. Georgia
Bed Bath & Beyond of Alpharetta Inc. Georgia
Bed Bath & Beyond of Gurnee Inc. Illinois
Bed Bath & Beyond of Deerfield Inc. Illinois
Bed Bath & Beyond of Schaumburg Inc. Illinois
Bed Bath & Beyond of Downers Grove Inc. Illinois
Bed Bath & Beyond Lincoln Park Inc. Illinois
Bed Bath & Beyond of Wilmette Inc. Illinois
Bed Bath & Beyond of Rockford Inc. Illinois
Bed Bath & Beyond of Indianapolis Inc. Indiana
Bed Bath & Beyond of Hobart Inc. Indiana
Indiana Bed Bath & Beyond L.P. Indiana
Bed Bath & Beyond of Overland Park Inc. Kansas
Bed Bath & Beyond of Columbia Inc. Maryland
Bed Bath & Beyond of Annapolis Inc. Maryland
Bed Bath & Beyond of Rockville Inc. Maryland
Bed Bath & Beyond of Gaithersburg Inc. Maryland
Bed Bath & Beyond of Towson Inc. Maryland
Bed Bath & Beyond of Montgomery Inc. Maryland
Bed Bath & Beyond of Worcester Inc. Massachusetts
BB & Beyond of Burlington Inc. Massachusetts
BB & Beyond of Framingham Inc. Massachusetts
Bed Bath & Beyond of Farmington Hills Inc. Michigan
Bed Bath & Beyond of Troy Inc. Michigan
Bed Bath & Beyond of Sterling Heights Inc. Michigan
Bed Bath & Beyond of Auburn Inc. Michigan
Bed Bath & Beyond of Northville Inc. Michigan
Bed Bath & Beyond of Westland Inc. Michigan
Bed Bath & Beyond of Independence Inc. Missouri
Bed Bath & Beyond of Fashion Center Inc. New Jersey
Bed n Bath of Flemington Inc. New Jersey
Bed n Bath of Lawrenceville Inc. New Jersey
Bed n Bath of Secaucus Inc. New Jersey
Bed n Bath of Cherry Hill Inc. New Jersey
</TABLE>
<PAGE> 3
SUBSIDIARIES OF THE COMPANY, continued
<TABLE>
<CAPTION>
NAME STATE
<S> <C>
Bed n Bath of Short Hills Inc. New Jersey
Bed n Bath of Paramus Inc. New Jersey
B & B of Seventeen Inc. New Jersey
Bed Bath & Beyond of Ellisburg Circle Inc. New Jersey
New Jersey Bed Bath & Beyond L.P. New Jersey
BBBY Management Corp. New Jersey
Bed n Bath Stores, Inc. New Jersey
Bed Bath & Beyond of Edgewater Inc. New Jersey
Bed Bath & Beyond of Watchung Inc. New Jersey
Bed Bath & Beyond of Five Towns Inc. New York
Bed Bath & Beyond of Farmingdale Inc. New York
Bed Bath & Beyond of Lake Grove Inc. New York
Bed Bath & Beyond of Colonie Inc. New York
Bed Bath & Beyond of Manhattan Inc. New York
Bed Bath & Beyond of 110 Inc. New York
Bed n Bath of New York Inc. New York
Bed n Bath of Spring Valley Inc. New York
Bed n Bath of Huntington Inc. New York
Bed n Bath of Hartsdale Inc. New York
Bed n Bath Inc. New York
Bed n Bath of White Plains Inc. New York
Bed n Bath of Nanuet Inc. New York
B & B Warehouse Corp. New York
CBH of Great Neck Inc. New York
Bed Bath & Beyond of West Nyack Inc. New York
Bed Bath & Beyond of Manhasset Inc. New York
Bed Bath & Beyond of Munsey Park Inc. New York
Bed Bath & Beyond of Pittsford Inc. New York
Bed Bath & Beyond of Beachwood Inc. Ohio
Bed Bath & Beyond of Westlake Inc. Ohio
Bed Bath & Beyond of Fair Lawn Inc. Ohio
Bed Bath & Beyond of Canton Inc. Ohio
Bed Bath & Beyond of Tulsa Inc. Oklahoma
Bed n Bath of Liberty Mills Inc. Pennsylvania
Bed Bath & Beyond of King of Prussia Inc. Pennsylvania
Bed Bath & Beyond of Memphis Inc. Tennessee
Bed Bath & Beyond of Meyerland Inc. Texas
Bed Bath & Beyond of Plano Inc. Texas
Katy Bed Bath & Beyond Inc. Texas
Willowbrook Bed Bath & Beyond Inc. Texas
Baybrook Bed Bath & Beyond Inc. Texas
Bed Bath & Beyond of Addison Inc. Texas
Bed Bath & Beyond of Austin Inc. Texas
Bed Bath & Beyond of CP Dallas Inc. Texas
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SUBSIDIARIES OF THE COMPANY, continued
NAME STATE
<S> <C>
Stafford Bed Bath & Beyond Inc. Texas
Sunset Valley Bed Bath & Beyond Inc. Texas
Texas Bed Bath & Beyond L.P. Texas
West Oaks Bed Bath & Beyond Inc. Texas
San Antonio Bed Bath & Beyond Inc. Texas
South Arlington Bed Bath & Beyond Inc. Texas
Bed Bath & Beyond of Fairfax Inc. Virginia
Bed Bath & Beyond of Fair City Inc. Virginia
Bed Bath & Beyond of Falls Church Inc. Virginia
Bed n Bath of Baileys Crossroads Inc. Virginia
Bed Bath & Beyond of Tyson's Corner Inc. Virginia
Bed Bath & Beyond of Virginia Beach Inc. Virginia
Bed Bath & Beyond of Charlottesville Inc. Virginia
Bed Bath & Beyond of Chesapeake Inc. Virginia
Bed Bath & Beyond of Auburn Inc. Washington
</TABLE>
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Bed Bath & Beyond Inc.:
We consent to incorporation by reference in the registration statements (No.
33-63902 and 33-87602) on Forms S-8 of Bed Bath & Beyond Inc. of our report
dated March 22,1996, relating to the consolidated balance sheets of Bed Bath &
Beyond Inc. and subsidiaries as of February 25, 1996 and February 26, 1995, and
the related consolidated statements of earnings, changes in shareholders'
equity, and cash flows for each of the fiscal years in the three-year period
ended February 25, 1996, which report appears in the February 25, 1996 annual
report on Form 10-K of Bed Bath & Beyond Inc.
/S/ KPMG PEAT MARWICK LLP
New York, New York
May 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-25-1996
<PERIOD-END> FEB-25-1996
<CASH> 10,267
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 148,383
<CURRENT-ASSETS> 160,280
<PP&E> 95,333
<DEPRECIATION> 28,698
<TOTAL-ASSETS> 235,810
<CURRENT-LIABILITIES> 72,553
<BONDS> 0
0
0
<COMMON> 681
<OTHER-SE> 150,765
<TOTAL-LIABILITY-AND-EQUITY> 235,810
<SALES> 601,252
<TOTAL-REVENUES> 601,252
<CGS> 351,216
<TOTAL-COSTS> 351,216
<OTHER-EXPENSES> 182,451
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 705
<INCOME-PRETAX> 66,880
<INCOME-TAX> 27,421
<INCOME-CONTINUING> 39,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,459
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
