<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 25, 2000
COMMISSION FILE NUMBER 0-20214
BED BATH & BEYOND INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-2250488
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
650 LIBERTY AVENUE, UNION, NEW JERSEY 07083
-------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (908) 688-0888
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- -----
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
CLASS OUTSTANDING AT NOVEMBER 25, 2000
Common Stock - $0.01 par value 285,745,226
<PAGE> 2
BED BATH & BEYOND INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
-------
<S> <C>
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
November 25, 2000 and February 26, 2000 3
Consolidated Statements of Earnings
Three Months and Nine Months Ended
November 25, 2000 and November 27, 1999 4
Consolidated Statements of Cash Flows
Nine Months Ended November 25, 2000 and November 27, 1999 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Exhibit Index 11
</TABLE>
-2-
<PAGE> 3
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
November 25, February 26,
2000 2000
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 140,861 $ 144,031
Merchandise inventories 687,143 470,433
Prepaid expenses and other current assets 38,886 32,904
---------- ----------
Total current assets 866,890 647,368
---------- ----------
Property and equipment, net 288,150 208,911
Other assets 11,440 9,521
---------- ----------
$1,166,480 $ 865,800
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 270,045 $ 145,114
Accrued expenses and other current liabilities 131,398 108,079
Income taxes payable 17,509 33,590
---------- ----------
Total current liabilities 418,952 286,783
---------- ----------
Deferred rent 22,450 19,972
---------- ----------
Total liabilities 441,402 306,755
---------- ----------
Shareholders' equity:
Preferred stock - $0.01 par value; authorized -
1,000 shares; no shares issued or
outstanding -- --
Common stock - $0.01 par value; authorized -350,000 shares; issued
and outstanding - November 25, 2000, 285,745
shares and February 26, 2000, 280,812 shares 2,857 2,808
Additional paid-in capital 153,371 94,994
Retained earnings 568,850 461,243
---------- ----------
Total shareholders' equity 725,078 559,045
---------- ----------
$1,166,480 $ 865,800
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE> 4
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
November 25, November 27, November 25, November 27,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 609,519 $ 486,457 $1,669,255 $1,303,415
Cost of sales, including buying,
occupancy and indirect costs 363,452 289,673 994,343 774,847
---------- ---------- ---------- ----------
Gross profit 246,067 196,784 674,912 528,568
Selling, general and administrative expenses 181,475 146,177 503,972 396,366
---------- ---------- ---------- ----------
Operating profit 64,592 50,607 170,940 132,202
Interest income 2,072 1,371 5,465 3,596
---------- ---------- ---------- ----------
Earnings before provision for income taxes 66,664 51,978 176,405 135,798
Provision for income taxes 25,999 20,271 68,798 52,961
---------- ---------- ---------- ----------
Net earnings $ 40,665 $ 31,707 $ 107,607 $ 82,837
========== ========== ========== ==========
Net earnings per share - Basic $ 0.14 $ 0.11 $ 0.38 $ 0.30
Net earnings per share - Diluted $ 0.14 $ 0.11 $ 0.37 $ 0.29
Weighted average shares outstanding - Basic 284,237 280,359 282,944 279,657
Weighted average shares outstanding - Diluted 294,164 288,345 291,828 288,251
</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>
Nine Months Ended
----------------------------
November 25, November 27,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 107,607 $ 82,837
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 32,796 22,367
Tax benefit from exercise of stock options 31,947 8,394
Deferred income taxes (5,798) (3,761)
Increase in assets:
Merchandise inventories (216,710) (162,096)
Prepaid expenses and other current assets (925) (5,203)
Other assets (1,178) (1,994)
Increase (decrease) in liabilities:
Accounts payable 124,931 102,627
Accrued expenses and other current liabilities 23,319 34,480
Income taxes payable (16,081) 4,173
Deferred rent 2,478 2,711
--------- ---------
Net cash provided by operating activities 82,386 84,535
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures (112,035) (74,291)
--------- ---------
Net cash used in investing activities (112,035) (74,291)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 26,479 6,995
--------- ---------
Net cash provided by financing activities 26,479 6,995
--------- ---------
Net (decrease) increase in cash and cash equivalents (3,170) 17,239
Cash and cash equivalents:
Beginning of period 144,031 90,396
--------- ---------
End of period $ 140,861 $ 107,635
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-5-
<PAGE> 6
BED BATH & BEYOND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements, except for the February 26,
2000 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 November 25, 2000 and February 26, 2000 and
the results of their operations for the three months and nine months ended
November 25, 2000 and November 27, 1999, respectively, and their cash flows for
the nine months ended November 25, 2000 and November 27, 1999, 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 26, 2000 for additional disclosures,
including a summary of the Company's significant accounting policies.
2) STOCK SPLIT
In July 2000, the Board of Directors approved a two-for-one split of the
Company's common stock effected in the form of a 100% stock dividend. The stock
dividend was distributed on August 11, 2000 to shareholders of record on July
28, 2000. Accordingly, all shareholders' equity, share and per share amounts for
all periods presented have been retroactively adjusted to give effect to the
stock split.
3) NEW ACCOUNTING PRONOUNCEMENTS
The FASB Emerging Issues Task Force ("EITF") reached a consensus with respect to
the issue of "Accounting for Certain Sales Incentives", including point of sale
coupons, rebates and free merchandise. The concensus provides that the value of
point of sale coupons and rebates, which result in a reduction of the price
paid by the customer, should be recorded as a reduction of sales, and free
merchandise incentives should be recorded as cost of sales. The Company plans
to adopt the concensus in the fourth quarter of the current fiscal year. The
Company currently records its point of sale coupons and rebates in cost of
sales and free merchandise incentives in sales. The reclassifications will not
have an impact on gross profit, operating profit or net earnings.
The EITF also reached a consensus with respect to the issue of "Accounting
for Shipping and Handling Fees and Costs". The consensus provides that amounts
billed to a customer in a sale transaction related to shipping and handling
represent revenues. The Company currently nets such revenues and costs in
selling, general and administrative expenses ("SG&A") and, upon adoption, will
reclassify such shipping and handling revenues to sales and shipping and
handling costs to cost of sales. While Management does not believe the amount
of such reclassifications related to shipping and handling fees and costs is
material, the Company plans to adopt the consensus in the fourth quarter of the
current fiscal year. The reclassifications will not have an impact on operating
profit or net earnings.
-6-
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months November 25, 2000 vs. Three Months November 27, 1999
Net sales for the third quarter ended November 25, 2000 were $609.5 million, an
increase of $123.1 million or approximately 25.3% over net sales of $486.5
million for the corresponding quarter last year. Approximately 84.8% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the third quarter of 2000 was approximately 4.2%. The
increase in net sales reflects a number of factors, including but not limited
to, the continued consumer acceptance of the Company's merchandise offerings and
customer service and the generally favorable retailing environment.
Approximately 55% and 45% of net sales for the third quarter were attributable
to sales of domestics merchandise and home furnishings merchandise,
respectively.
Gross profit for the third quarter of 2000 was $246.1 million or 40.4% of net
sales compared with $196.8 million or 40.5% of net sales during the third
quarter of 1999.
SG&A was $181.5 million in the third quarter of 2000 compared with $146.2
million in the same quarter last year and as a percentage of net sales were
29.8% and 30.0%, respectively. The decrease in SG&A, as a percentage of net
sales, primarily reflects a decrease in costs associated with new store
openings and in occupancy costs, which were partially offset by an increase in
payroll and payroll related items.
Nine Months November 25, 2000 vs. Nine Months November 27, 1999
Net sales for the nine months ended November 25, 2000 were $1.7 billion, an
increase of $365.8 million or approximately 28.1% over net sales of $1.3 billion
for the corresponding period last year. Approximately 83.1% of the increase was
attributable to new store net sales. The increase in comparable store net sales
for the first nine months of 2000 was approximately 5.1%.
Gross profit for the first nine months of 2000 was $674.9 million or 40.4% of
net sales compared with $528.6 million or 40.6% of net sales during the same
period last year. The decrease in gross profit, as a percentage of net sales, as
compared to the same period a year ago, was attributable to a number of factors,
including a different mix of sales as well as a continued emphasis on providing
value pricing to the customer.
SG&A was $504.0 million in the first nine months of 2000 compared with $396.4
million for the same period last year and as a percentage of net sales were
30.2% and 30.4%, respectively. The decrease in SG&A, as a percentage of net
sales, primarily reflects a decrease in costs associated with new store
openings and in occupancy costs, which were partially offset by an increase in
payroll and payroll related items.
-7-
<PAGE> 8
EXPANSION PROGRAM
The Company is engaged in an ongoing expansion program involving the opening of
new stores in both existing and new markets and the expansion or replacement of
existing stores with larger stores. As a result of this program, the total
number of stores has increased to 309 stores at the end of the third quarter of
2000 compared with 237 stores at the end of the corresponding quarter last year.
Total square footage grew to approximately 12.1 million square feet at the end
of the third quarter of 2000, from approximately 9.7 million square feet at the
end of the third quarter of last year. The total number of stores and the total
square footage does not include the Company's electronic service site which was
launched on November 28, 1999.
During the first nine months of fiscal 2000, the Company opened 68 new
superstores and expanded two existing stores resulting in an aggregate addition
of approximately 2.3 million square feet to total store space. The Company
anticipates opening approximately two additional stores by the end of the fiscal
year, aggregating approximately .1 million additional square feet of store space
for the year.
FINANCIAL CONDITION
Total assets at November 25, 2000 were $1.2 billion compared with $865.8 million
at February 26, 2000, an increase of $300.7 million. Of the total increase,
$219.5 million represented an increase in current assets and $81.2 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, changes in merchandising
mix.
Total liabilities at November 25, 2000 were $441.4 million compared with $306.8
million at February 26, 2000, an increase of $134.6 million. The increase was
primarily attributable to an increase in accounts payable, resulting from an
increase in inventories.
Shareholders' equity was $725.1 million at November 25, 2000 compared with
$559.0 million at February 26, 2000. The increase reflects net earnings for the
first nine months of fiscal 2000 and additional paid-in capital from the
exercise of stock options.
Capital expenditures for the first nine months of fiscal 2000 were $112.0
million compared with $74.3 million for the corresponding period last year. The
increase is primarily attributable to expenditures for furniture, fixtures and
leasehold improvements for the 68 new superstores opened and two stores expanded
during the first nine months, compared to furniture, fixtures and leasehold
improvements for the 51 new superstores opened and four stores expanded in the
same period last year, as well as the cost of store renovations and information
technology additions.
The Company believes that it will be able to finance both its normal operations
and its expansion program for the foreseeable future through internally
generated funds.
-8-
<PAGE> 9
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 26, 2000.
-9-
<PAGE> 10
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 November 25, 2000.
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: January 9, 2001 By: /s/ Eugene A. Castagna
---------------------------------
Eugene A. Castagna
Vice President-Finance
and Principal Accounting Officer
-10-
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
---------- ------- --------
<S> <C> <C>
10.1 Amendment to Employment Agreement 12-14
Dated as of June 30, 2000 between
Bed Bath & Beyond Inc. and
Warren Eisenberg
10.2 Amendment to Employment Agreement 15-17
Dated as of June 30, 2000 between
Bed Bath & Beyond Inc. and
Leonard Feinstein
27 Financial Data Schedule 18
(Filed electronically with SEC only)
</TABLE>
-11-
