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1
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
For the fiscal year ended March 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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.)
650 LIBERTY AVENUE, UNION, NEW JERSEY 07083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 908/688-0888
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 9, 1997, 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 $1,364,329,887.*
Number of shares outstanding of the issuer's common stock (par value $0.01 per
share) at May 9, 1997: 68,646,640.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement filed on May 16, 1997
pursuant to Regulation 14A are incorporated by reference in Part III hereof.
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year-ended March 1, 1997 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
18,348,764 shares beneficially owned by directors and executive
officers, including in the case of the Co-Chief Executive Officers,
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. Effective
February 26, 1996, the Company changed its fiscal year from the 52 or 53 week
period ending on the Sunday nearest February 28 to the 52 or 53 week period
ending on the Saturday nearest February 28. Accordingly, fiscal 1996 consisted
of 52 weeks and 6 days and ended on March 1, 1997; fiscal 1995 consisted of 52
weeks and ended on February 25, 1996; and fiscal 1994 consisted of 52 weeks and
ended on February 26, 1995. 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.
As of May 9, 1997, the Company operated 114 stores in 26 states:
Alabama (1), Arizona (2), California (14), Colorado (2), Connecticut (3),
Florida (11), Georgia (5), Illinois (8), Indiana (2), Kansas (1), Maryland (4),
Massachusetts (4), Michigan (4), Missouri (1), New Jersey (7), New Mexico (1),
New York (11), North Carolina (2), Ohio (4), Oklahoma (1), Pennsylvania (2),
Tennessee (2), Texas (13), Virginia (7), Washington (1) and Wisconsin (1). 110
of these stores use the superstore format that was pioneered by the Company in
1985. These stores are on average approximately 41,000 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
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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.
The Company has been engaged in an ongoing expansion program involving
the opening of new superstores (including 28 in 1996, 19 in 1995 and 16 in 1994)
and the expansion of existing stores (including two in 1996, two in 1995 and
four in 1994). As a result of its expansion program, the Company's store space
has increased from approximately 917,000 square feet at the beginning of 1992 to
approximately 4,347,000 square feet at the end of 1996. The Company's expansion
program is continuing, and the Company currently anticipates that in 1997 it
will open approximately 30 new superstores, which includes the six new
superstores opened through May 9, 1997.
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 110 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
o bed linens and related items: sheets, comforters, comforter
covers, bedspreads, quilts, window treatments, decorative
pillows, blankets, dust ruffles, bed pillows and mattress
pads.
o bath accessories: towels, shower curtains, waste baskets,
hampers, bathroom rugs and wall hardware.
o kitchen textiles: tablecloths, placemats, cloth napkins, dish
towels and chair pads.
Home Furnishings
o kitchen and tabletop items: cookware, cutlery, kitchen
gadgets, dinnerware, bakeware, flatware, drinkware, serveware
and glassware.
o 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, ready to assemble
furniture, wicker and clocks) and small electric appliances
(such as blenders, coffee makers, vacuums, irons, toaster
ovens and hair dryers).
o general home furnishings: giftwrap, candles, personal care
products, picture frames, wall art, juvenile items (such as
toys and children's books), artificial plants and flowers and
seasonal merchandise (such as summer and holiday related
items).
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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, Calphalon, Mikasa, Krups, J.A. Henckels, All-Clad, Portmeirion,
Rowenta, Black & Decker, Rubbermaid, 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 110 superstores carry in excess of 30,000
stock-keeping units.
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
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.
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 direct mail and newspaper insert advertising includes a
coupon, which is redeemed at the point-of-sale. The Company also honors
competitor coupons.
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 26 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 uses direct
mail and newspaper inserts as its primary vehicles of paid advertising. In
certain instances, paid radio and television advertising may be used. Also, in
connection with the opening of new stores, the Company uses direct mail and
newspaper inserts. 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 less on advertising than a number 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 larger stores. As a result of this program,
the total number of stores has increased from 34 at the beginning of 1992 to 108
at the end of 1996, and the total square footage of store space has increased
from approximately 917,000 square feet at the beginning of 1992 to approximately
4,347,000 square feet at the end of 1996.
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The table below sets forth information concerning the Company's
expansion program for the periods indicated:
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)
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
1996 2 28 -- 3,214,000 4,347,000 80 108
(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.
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 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 1996 through May 9, 1997, the Company has opened
six stores which are located in: Naperville, Illinois; Northville, Michigan;
Buffalo, New York; Charlotte, North Carolina; San Antonio, Texas; and Madison,
Wisconsin. During the balance of 1997, the Company currently anticipates that it
will open approximately 24 additional stores. The Company has already leased
sites for 22 additional stores to be located in: Birmingham, Alabama; Mesa,
Arizona; Oceanside and Thousand Oaks, California; Golden, Colorado;
Jacksonville, Florida; Augusta, Georgia; Braintree, Massachusetts; Ballwin,
Kansas City and St. Peters, Missouri; East Hanover and Woodbridge, New Jersey;
New York City (Queens), New York; Tigard, Oregon; Pittsburgh (2) and Wynnewood,
Pennsylvania; Grapevine, Humble and San Antonio, Texas; and Richmond, 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 managers typically supervise from three to five stores. Each of the
Company's district managers typically supervise four to eight stores, even
though the Company believes that each district manager has the capacity to
supervise up to ten stores.
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STORE OPERATIONS
MERCHANDISING
The Company maintains its own central buying staff, comprised of two
general merchandise managers and 11 senior 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 primarily responsible for
monitoring inventory levels and re-ordering 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
reordering performed 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's central buying staff also services two smaller stores
operated by a third party under a franchise arrangement.
The Company purchases its merchandise from approximately 2,200
suppliers. In 1996, the Company's largest supplier accounted for approximately
7% of the Company's merchandise purchases and the Company's 10 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 importers. On a limited basis, the
Company makes 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 to each store from 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 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 85% of the
Company's warehouse space requirements and such nearby supplemental storage
space provides the balance.
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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 Corporate Office.
TRAINING
The Company places great emphasis on the training of store level
management. All entry management personnel are generally required to work in
different departments of the store in order to acquire an overall understanding
of store operations. In addition, entry management personnel are trained in a
number of areas, including sales techniques, management techniques and product
knowledge.
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 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 March 1, 1997, the Company employed approximately 7,000 persons,
of whom approximately 4,500 were full-time employees and 2,500 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.
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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. 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 linens 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. Some of the Company's competitors operate
substantially more stores and have substantially greater financial and other
resources than the Company, including, in a few 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
compete successfully 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 continue to
introduce 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 AND SERVICE MARKS
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 is an important element
of the Company's merchandising strategy. The Company currently operates several
stores under other names. The Company has entered into agreements pursuant to
which it believes it will be able to operate anywhere in the United States under
the Bed Bath & Beyond name.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and business experience of
the executive officers of the Registrant:
NAME AGE POSITIONS
- ---- --- ---------
Warren Eisenberg 66 Chairman, Co-Chief Executive Officer
and Director
Leonard Feinstein 60 President, Co-Chief Executive Officer
and Director
Steven H. Temares 38 Executive Vice President - Chief Operating
Officer
Ronald Curwin 67 Chief Financial Officer and Treasurer
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. Temares was promoted to Executive Vice President - Chief Operating
Officer of the Company in January 1997. He joined the Company in June 1992
serving as Director of Real Estate and General Counsel. Prior to June 1992, Mr.
Temares engaged in the private practice of law.
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. Prior to 1992, Mr. Curwin was 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 114 stores are located in 26 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 9, 1997:
Number Number
State of Stores State of Stores
----- --------- ----- ---------
Alabama 1 Missouri 1
Arizona 2 New Jersey 7
California 14 New Mexico 1
Colorado 2 New York 11
Connecticut 3 North Carolina 2
Florida 11 Ohio 4
Georgia 5 Oklahoma 1
Illinois 8 Pennsylvania 2
Indiana 2 Tennessee 2
Kansas 1 Texas 13
Maryland 4 Virginia 7
Massachusetts 4 Washington 1
Michigan 4 Wisconsin 1
The Company currently leases all of its existing stores. The leases
provide for original lease terms that generally range from five to fifteen years
and certain leases provide for renewal options, that range from five to fifteen
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/or for contingent
rent (based upon store sales exceeding stipulated amounts).
The Company also leases merchandise storage space in five locations
amounting to approximately 96,000 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 located in 63,500 square feet of
office space that the Company leases in Union, New Jersey. The Company's Buying
Office is located in 26,400 square feet of office space that the Company leases
in Farmingdale, New York.
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.
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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 March 1, 1997.
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.
HIGH LOW
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 $ 31 1/2 $ 19 11/16
2nd Quarter 31 18 1/4
3rd Quarter 29 3/4 20 3/8
4th Quarter 31 3/4 24 1/8
Fiscal 1997:
1st Quarter (through May 9, 1997) 29 1/4 22 7/8
The common stock is quoted through the NASDAQ National Market System
under the symbol "BBBY". On May 9, 1997, there were approximately 500
shareholders of record of the common stock (without including individual
participants in nominee security position listings). On May 9, 1997, the last
reported sale price of the common stock was $27 1/8.
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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".
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 March 1, 1997 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 March 1, 1997 on pages 10
through 13 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 March 1, 1997 on
pages 14 through 24 and are incorporated herein by reference. These financial
statements are indexed under Item 14(a)(1).
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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 26, 1997 filed
with the Commission pursuant to Regulation 14A. The Compensation Report of the
Board of Directors and the performance graph included in such Proxy Statement
shall not be deemed incorporated herein by reference.
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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 14 through 24 of the Company's Annual Report to
Shareholders for the fiscal year ended March 1, 1997:
Consolidated Balance Sheets as of March 1, 1997 and February 25, 1996
Consolidated Statements of Earnings for the fiscal years ended March 1,
1997, February 25, 1996 and February 26, 1995
Consolidated Statements of Changes in Shareholders' Equity for the
fiscal years ended March 1, 1997, February 25, 1996 and February 26,
1995
Consolidated Statements of Cash Flows for the fiscal years ended March
1, 1997, February 25, 1996 and February 26, 1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) (2) FINANCIAL STATEMENT SCHEDULES
All schedules are omitted because they are not required, not applicable
or the information is included in the financial statements or notes
thereto.
(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.
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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.
SIGNATURE CAPACITY DATE
- --------- -------- ----
Chairman, Co-Chief
/s/ WARREN EISENBERG Executive Officer and Director
- ----------------------------------- (principal executive officer) May 28, 1997
WARREN EISENBERG
President, Co-Chief
/s/ LEONARD FEINSTEIN Executive Officer and Director May 28, 1997
- -----------------------------------
LEONARD FEINSTEIN
Chief Financial Officer
and Treasurer (principal financial
/s/ RONALD CURWIN and accounting officer) May 28, 1997
- -----------------------------------
RONALD CURWIN
/s/ KLAUS EPPLER
- ----------------------------------- Director May 28, 1997
KLAUS EPPLER
/s/ ROBERT S. KAPLAN
- ----------------------------------- Director May 28, 1997
ROBERT S. KAPLAN
/s/ ROBERT J. SWARTZ
- ----------------------------------- Director May 28, 1997
ROBERT J. SWARTZ
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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)
EXHIBIT
NO. EXHIBIT PAGE
- ------- ------- ----
3.1 Restated Certificate of Incorporation --
3.2 Certificate of Amendment to the Company's Certificate of Incorporation (incorporated by reference --
to Exhibit 3 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended August 25, 1996)
3.3 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* 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)
10.6* 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)
10.7* 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
10.8* 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
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EXHIBIT
NO. EXHIBIT Page
- ------ ------- ----
10.9 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
10.10 Company's 1996 Stock Option Plan (incorporated by reference to the Company's --
Form S-8 dated December 16, 1996, Commission File No. 333-18011)
10.11** Second 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 February 24, 1997
11** Computation of per share earnings
13** Company's 1996 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.)
* This is a management contract or compensatory plan or arrangement.
** Filed herewith.
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