<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 26, 1996
------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ -------------
COMMISSION FILE NUMBER 0-20214
-------
BED BATH & BEYOND INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-2250488
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
715 MORRIS AVENUE, SPRINGFIELD, NEW JERSEY 07081
------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (201) 379-1520
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MAY 26, 1996
----- ---------------------------
<S> <C>
Common Stock - $0.01 par value 68,402,678 (Gives effect to a two-for-one
stock split in the form of a 100% stock
dividend effected on April 30, 1996.)
</TABLE>
================================================================================
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of May 26, 1996 and February 25, 1996 3
Consolidated Statements of Earnings
For the Three Months Ended May 26, 1996 and May 28, 1995 4
Consolidated Statements of Cash Flows
For the Three Months Ended May 26, 1996 and May 28, 1995 5
Notes to Consolidated Financial Statements
May 26, 1996 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Exhibit Index 10
</TABLE>
<PAGE> 3
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
May 26, February 25,
1996 1996
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,487 $ 10,267
Merchandise inventories 179,066 148,383
Prepaid expenses and other current assets 2,309 1,630
-------- --------
Total current assets 190,862 160,280
-------- --------
Property and equipment, net 68,785 66,635
Other assets 10,060 8,895
-------- --------
$269,707 $235,810
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 62,062 $ 39,025
Accrued expenses and other current liabilities 29,431 26,947
Income taxes payable 6,863 6,581
-------- --------
Total current liabilities 98,356 72,553
-------- --------
Long-term debt -- 5,000
Deferred rent 7,444 6,811
-------- --------
105,800 84,364
-------- --------
Shareholders' equity:
Preferred stock - $0.01 par value; authorized -
1,000,000 shares; no shares issued or
outstanding -- --
Common stock-$0.01 par value; authorized -
100,000,000 shares; issued and
outstanding - May 26, 1996, 68,402,678 shares
and February 25, 1996, 68,067,972 shares 684 681
Additional paid-in capital 50,998 46,254
Retained earnings 112,225 104,511
-------- --------
Total shareholders' equity 163,907 151,446
-------- --------
$269,707 $235,810
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE> 4
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 26, May 28,
1996 1995
---- ----
<S> <C> <C>
Net sales $ 159,658 $ 113,452
Cost of sales, including buying,
occupancy and indirect costs 93,870 66,588
----------- -----------
Gross profit 65,788 46,864
Selling, general and administrative expenses 53,127 37,077
----------- -----------
Operating profit 12,661 9,787
Interest income (expense), net 142 (193)
----------- -----------
Earnings before provision for income taxes 12,803 9,594
Provision for income taxes 5,089 3,934
----------- -----------
Net earnings $ 7,714 $ 5,660
=========== ===========
Net earnings per share $ 0 .11 $ 0 .08
=========== ===========
Weighted average shares outstanding 70,479,479 68,815,752
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE> 5
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 26, May 28,
1996 1995
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 7,714 $ 5,660
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 2,957 2,260
Increase in assets:
Merchandise inventories (30,683) (19,430)
Prepaid expenses and other current assets (679) (688)
Other assets (1,165) (414)
Increase in liabilities:
Accounts payable 23,037 15,034
Accrued expenses and other current liabilities 2,484 409
Income taxes payable 282 2,823
Deferred rent 633 458
-------- --------
Net cash provided by operating activities 4,580 6,112
-------- --------
Cash Flows from Investing Activities:
Capital expenditures - lease purchases -- (150)
Capital expenditures - leasehold improvements
and furniture and fixtures (5,107) (2,331)
-------- --------
Net cash used in investing activities (5,107) (2,481)
-------- --------
Cash Flows from Financing Activities:
Net decrease in long-term debt (5,000) (4,980)
Proceeds from exercise of stock options 4,747 36
-------- --------
Net cash used in financing activities (253) (4,944)
-------- --------
Net decrease in cash and cash equivalents (780) (1,313)
Cash and cash equivalents:
Beginning of period 10,267 6,463
-------- --------
End of period $ 9,487 $ 5,150
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-5-
<PAGE> 6
BED BATH & BEYOND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 26, 1996
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements, except for the February 25,
1996 consolidated balance sheet, have been prepared without audit. In the
opinion of Management, the accompanying consolidated financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position of Bed Bath & Beyond Inc. and
subsidiaries (the "Company") as of May 26, 1996 and February 25, 1996 and the
results of their operations and their cash flows for the three months ended May
26, 1996 and May 28, 1995, respectively. Because of the seasonality of the
specialty retailing business, operating results of the Company on a quarterly
basis may not be indicative of operating results for the full year.
The accompanying unaudited consolidated financial statements are presented in
accordance with the requirements for Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. Reference should be made to Bed Bath & Beyond Inc.'s Annual Report
for the fiscal year ended February 25, 1996 for additional disclosures,
including a summary of the Company's significant accounting policies and related
matters.
2) STOCK SPLIT
On March 28, 1996, the Board of Directors of the Company approved a two-for-one
split of the Company's common stock effected in the form of a 100% stock
dividend. The stock split was distributed on April 30, 1996 to shareholders of
record on April 10, 1996. Accordingly, all share and per share data have been
adjusted to give effect to the stock split.
-6-
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months May 26, 1996 vs. Three Months May 28, 1995
Net sales for the first quarter ended May 26, 1996 were $159.7 million, an
increase of $46.2 million or approximately 40.7% over net sales of $113.5
million for the corresponding quarter last year. Approximately 81.3% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the first quarter of 1996 was 8.0%.
Gross profit for the first quarter of 1996 was $65.8 million or 41.2% of net
sales compared with $46.9 million or 41.3% of net sales during the first quarter
of 1995.
Selling, general and administrative expenses ("SG&A") were $53.1 million in the
first quarter of 1996 compared with $37.1 million in the same quarter last year
and as a percentage of net sales were 33.3% and 32.7%, respectively. The
increase of approximately 0.6% in SG&A, as a percentage of net sales, primarily
reflects increases in occupancy costs and expenses associated with the opening
of six new stores and the expansion of one store, compared with one new store
opened during the same period last year, which were partially offset by a
decrease in payroll and payroll related items. Expenses associated with new,
relocated or expanded stores are charged to earnings as incurred.
Operating profit in the first quarter of 1996 increased to $12.7 million from
$9.8 million in the first quarter of 1995, reflecting primarily the increase in
net sales which was partially offset by increases in cost of sales and SG&A.
EXPANSION PROGRAM
The Company is engaged in an ongoing expansion program involving the opening of
new stores in both existing and new markets and the expansion or replacement of
existing stores with new, larger stores. As a result of this program, the total
number of stores has increased to 86 stores at the end of the first quarter of
1996 compared with 62 stores at the end of the corresponding quarter last year.
Total square footage grew to 3,481,000 square feet at the end of the first
quarter of 1996, from 2,379,000 square feet at the end of the first quarter of
last year.
During the first quarter of fiscal 1996, the Company opened six new stores and
expanded one store resulting in an aggregate addition of 267,000 square feet to
total store space. The Company anticipates opening approximately eighteen to
twenty additional stores by the end of the fiscal year, aggregating
approximately 700,000 to 800,000 square feet of store space.
-7-
<PAGE> 8
FINANCIAL CONDITION
Total assets at May 26, 1996 were $269.7 million compared with $235.8 million at
February 25, 1996, an increase of $33.9 million. Of the total increase, $30.6
million represented an increase in current assets and $3.3 million represented
an increase in non-current assets. The increase in current assets was primarily
attributable to an increase in merchandise inventories, which resulted from new
store space and, to a lesser extent, the expansion of merchandise categories and
assortments, as well as seasonal requirements.
Total liabilities at May 26, 1996 were $105.8 million compared with $84.4
million at February 25, 1996, an increase of $21.4 million. The increase was
primarily attributable to a $23.0 million increase in accounts payable
(resulting from an increase in inventories) and a $2.5 million increase in
accrued expenses and other current liabilities, which was partially offset by a
$5.0 million decrease in long-term debt.
Shareholders' equity was $163.9 million at May 26, 1996 compared with $151.4
million at February 25, 1996. The increase primarily reflects net earnings for
the first three months of fiscal 1996 and additional paid-in capital from the
exercise of stock options.
Capital expenditures for the first three months of fiscal 1996 were $5.1 million
compared with $2.5 million for the corresponding period last year. The increase
is primarily attributable to leasehold improvements for the six new stores
opened and one store expanded during the first quarter compared to leasehold
improvements for the one new store opened in the same period last year.
FORWARD LOOKING STATEMENTS
This Form 10-Q may contain forward looking statements. Important factors which
may affect these statements are contained in the Company's Annual Report to
shareholders for the fiscal year ended February 25, 1996.
-8-
<PAGE> 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits to this report are listed on the Exhibit Index included
elsewhere herein.
(b) No reports on Form 8-K were filed by the Company during the three month
period ended May 26, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BED BATH & BEYOND INC.
----------------------
(Registrant)
Date: June 26, 1996 By: /s/ Ronald Curwin
-----------------
Ronald Curwin
Chief Financial Officer and Treasurer
-9-
<PAGE> 10
EXHIBIT INDEX
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
- ----------- ------- --------
<S> <C> <C>
11 Computation of per share earnings 11
27 Financial data schedule 12
(Filed electronically with SEC only)
</TABLE>
-10-
<PAGE> 1
Exhibit 11
BED BATH & BEYOND INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED
<TABLE>
<CAPTION>
MAY 26, MAY 28,
1996 1995
---- ----
<S> <C> <C>
Weighted average number of shares outstanding 68,193,239 67,770,904
Dilutive effect of common equivalent shares
(stock options) outstanding 2,286,240 1,044,848
----------- -----------
Weighted average number of shares and dilutive common
equivalent shares (stock options) outstanding 70,479,479 68,815,752
=========== ===========
Net earnings $ 7,714,000 $ 5,660,000
=========== ===========
Net earnings per share $ .11 $ .08
=========== ===========
</TABLE>
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets as of May 26, 1996 and February 25, 1996, and the
Consolidated Statements of Earnings for the three months ended May 26, 1996 and
May 28, 1995, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-02-1997
<PERIOD-START> FEB-26-1996
<PERIOD-END> MAY-26-1996
<CASH> 9,487
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 179,066
<CURRENT-ASSETS> 190,862
<PP&E> 100,440
<DEPRECIATION> 31,655
<TOTAL-ASSETS> 269,707
<CURRENT-LIABILITIES> 98,356
<BONDS> 0
0
0
<COMMON> 684
<OTHER-SE> 163,223
<TOTAL-LIABILITY-AND-EQUITY> 269,707
<SALES> 159,658
<TOTAL-REVENUES> 159,658
<CGS> 93,870
<TOTAL-COSTS> 93,870
<OTHER-EXPENSES> 53,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (142)
<INCOME-PRETAX> 12,803
<INCOME-TAX> 5,089
<INCOME-CONTINUING> 7,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,714
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
