SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

 

 

FORM 10-K

 

Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

 

For the fiscal year ended February 28, 2004

 

Commission File Number  0-20214

 

BED BATH & BEYOND INC.

(Exact name of registrant as specified in its charter)

 

 

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock (par value $ 0.01 per share)

(Title of class)

 

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    ý     No    o

 

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.                                                           ý

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act).         Yes    ý     No   o

 

As of August 29, 2003, 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 $11,980,757,543.*

 

The number of shares outstanding of the issuer’s common stock (par value $0.01 per share) at May 5, 2004: 300,478,099.

 

Documents Incorporated by Reference

 

Portions of the Registrant’s definitive proxy statement for the 2004 Annual Meeting of Shareholders pursuant to Regulation 14A are incorporated by reference in Part III hereof.

 

*                                         For purposes of this calculation, all outstanding shares of common stock have been considered held by non-affiliates other than the 18,329,441 shares beneficially owned by directors and executive officers, including in the case of the Co-Chairmen 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.

 

 

TABLE OF CONTENTS

 

Form 10-K Item No.		Name of Item
		PART I
Item 1.		Business
Item 2.		Properties
Item 3.		Legal Proceedings
Item 4.		Submission of Matters to a Vote of Security Holders
		PART II
Item 5.		Market for the Registrant’s Common Equity and Related Shareholder Matters
Item 6.		Selected Financial Data
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk
Item 8.		Financial Statements and Supplementary Data
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.		Controls and Procedures
		PART III
Item 10.		Directors and Executive Officers of the Registrant
Item 11.		Executive Compensation
Item 12.		Security Ownership of Certain Beneficial Owners and Management
Item 13.		Certain Relationships and Related Transactions
Item 14.		Principal Accountant Fees and Services
		PART IV
Item 15.		Exhibits, Financial Statement Schedules and Reports on Form 8-K

 

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PART I

 

Unless otherwise indicated, the term “Company” refers collectively to Bed Bath & Beyond Inc. and its subsidiaries as of February 28, 2004.  The Company’s fiscal year is comprised of the 52 or 53 week period ending on the Saturday nearest February 28.  Accordingly, fiscal 2003, 2002 and 2001 represented 52 weeks and ended on February 28, 2004, March 1, 2003 and March 2, 2002, 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 Inc. operates specialty retail stores nationwide, including Bed Bath & Beyond stores (“BBB”), Harmon stores (“Harmon”) and Christmas Tree Shops stores (“CTS”).  The Company believes it is the nation’s largest operator of stores selling predominantly better quality domestics merchandise and home furnishings.

 

BBB stores are almost exclusively of a “big box” format.  BBB 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.  BBB’s domestics merchandise line includes items such as bed linens, bath accessories and kitchen textiles, and BBB’s home furnishings line includes items such as cookware, dinnerware, glassware and basic housewares.  BBB believes that it offers a breadth and depth of selection in most of its product categories that 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  February 28, 2004, BBB operated 575 stores in 44 states and one territory: Alabama (7), Arizona (9), Arkansas (3), California (67), Colorado (14), Connecticut (10), Delaware (1), Florida (48), Georgia (19), Idaho (3), Illinois (25), Indiana (12), Iowa (5), Kansas (6), Kentucky (4), Louisiana (10), Maine (2), Maryland (13), Massachusetts (10), Michigan (24), Minnesota (8), Mississippi (2), Missouri (10), Nebraska (1), Nevada (5), New Hampshire (4), New Jersey (26), New Mexico (2), New York (31), North Carolina (16), North Dakota (2), Ohio (21), Oklahoma (4), Oregon (7), Pennsylvania (22), Rhode Island (3), South Carolina (10), Tennessee (13), Texas (47), Utah (6), Vermont (1), Virginia (19), Washington (15), Wisconsin (6), and Puerto Rico (2).  These stores principally range in size from 20,000 square feet to 50,000 square feet, with some exceeding 80,000 square feet, and carry BBB’s full line of both domestics merchandise and home furnishings.

 

CTS is a retailer of giftware and household items selling a broad assortment of domestics merchandise and home furnishings at low prices in many categories including home décor, giftware, housewares, food, paper goods, and seasonal products. As of February 28, 2004, CTS operated 24 stores in 6 states.

 

Harmon is a health and beauty care retailer, which operated 30 stores in 3 states as of February 28, 2004.

 

History

 

The Company was founded in 1971 by Leonard Feinstein and Warren Eisenberg, the Co-Chairmen of the Company. Each has more than 40 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 sold primarily bed linens and bath accessories.  In 1985, the Company introduced its first store carrying a 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 stores and to distinguish its stores from conventional specialty retail stores offering only domestics merchandise or home furnishings. In March 2002, the Company entered the health and beauty care market with the acquisition of Harmon and in June 2003, the Company added to its domestics merchandise and home furnishings market offerings with the acquisition of CTS.

 

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The Company has been engaged in an ongoing expansion program involving the opening of new BBB stores (including 85 in fiscal 2003, 95 in fiscal 2002, and 85 in fiscal 2001) and the expansion and relocation of existing BBB stores (including two in fiscal 2003 and two in fiscal 2002).  As a result of its expansion program, BBB’s store space has increased from approximately 917,000 square feet at the beginning of fiscal 1992 to approximately 19,353,000 square feet at the end of fiscal 2003.  The Company intends to continue its expansion program and currently plans to open new BBB, Harmon and CTS stores in fiscal 2004.

 

Merchandising and Marketing

 

BBB’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 its product categories that 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.

 

BBB stores primarily offer domestics merchandise and home furnishings, which include:

 

Domestics Merchandise

 

•                                          bed linens and related items: sheets, comforters, duvet covers, bedspreads, quilts, window treatments (such as curtains and valances), decorative pillows, blankets, dust ruffles, bed pillows and mattress pads.

•                                          bath items: towels, shower curtains and liners, waste baskets, mirrors, hampers, robes, slippers, scales, bathroom rugs, wall hardware and other bath accessories.

•                                          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, glassware, food storage containers, tea kettles, trash cans and cleaning supplies.

•                                          fine tabletop and giftware: formal dinnerware china, fine crystal stemware and barware, crystal giftware, metal giftware, flatware, decanters and carafes, and decorative vases and bowls.

•                                          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, furniture covers, accent rugs, and clocks) and small electric appliances (such as blenders, food processors, coffee makers, vacuums, irons, toaster ovens, hair dryers, heaters and humidifiers).

•                                          general home furnishings: gift wrap, candles, personal care products (such as soaps, lotions and other health and beauty care items), 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).

 

BBB, 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. BBB 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.

 

BBB’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, BBB generally offers leading brand name merchandise (including Aero, All-Clad, American Pacific, Braun, Calphalon, Cannon, Conair, Croscill,

 

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Cuisinart,  J.A. Henckels, Homedics, KitchenAid, Krups, Laura Ashley, Lenox, Mikasa, Nambe, Nautica, Nicole Miller, Noritake, Oxo, Portmeirion, Rowenta, Rubbermaid, Springs, Villeroy & Boch, Wamsutta, Wedgewood, Westpoint Stevens and Yankee Candle).

 

BBB 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 BBB’s major product lines.  BBB also generally maintains consistent in-stock availability of merchandise in order to reinforce customer perception of wide selection and build customer loyalty.

 

Pricing Policy

 

BBB’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.  BBB regularly monitors price levels at its competitors in order to ensure that BBB’s prices are being maintained in accordance with its pricing policy.  BBB 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 BBB has an everyday low price policy, BBB does not run sales.  However, BBB uses periodic markdowns and semi-annual clearances for merchandise that it has decided to discontinue carrying.  In addition, BBB’s full-color circulars and mailing pieces include a coupon, which may be redeemed at the point-of-sale.  BBB also honors competitor coupons.

 

Merchandise Presentation

 

BBB has developed a distinctive style of merchandise presentation.  In each store, groups of related product lines are presented together in separate areas of the store, creating the appearance that a BBB store 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. BBB 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 BBB stores 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.  BBB believes that its extensive merchandise selection, rather than fixturing, should be the focus of customer attention and, accordingly, typically uses simple modular fixturing throughout the store.  This fixturing is designed so that it can be easily reconfigured to adapt to changes in the store’s merchandise mix and presentation.  BBB believes that its floor to ceiling displays create an exciting and attractive shopping environment that encourages impulse purchases of additional items.

 

Customer Service

 

The Company places great emphasis on customer service and satisfaction and has made 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 seeks to make shopping at its stores as pleasant and convenient as possible.  Each area within a BBB store is staffed with knowledgeable sales associates who are available to assist customers in choosing merchandise, to answer questions and to resolve any issues that may arise.  In order to make checking out convenient, checkout lines are continually monitored and additional cashiers are added as necessary in order to minimize waiting time.  Most BBB stores are open seven days (and six evenings) a week in order to enable

 

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customers to shop at times that are convenient for them.

 

BBB’s website, www.bedbathandbeyond.com, which customers can generally access 24 hours a day, seven days a week, offers a broad range of online services and features, including online shopping and gift registry.  BBB believes that its E-Service efforts have been well received by its customers.

 

Advertising

 

In general, the Company relies on “word of mouth advertising” and its reputation for offering a wide assortment of quality merchandise at everyday low prices, supplemented by the use of paid advertising.  The Company mails full-color circulars and other advertising pieces as its primary vehicles of paid advertising.  Also, to support the opening of new stores, the Company uses “grand opening” full-color circulars and newspaper advertising.  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 new and existing markets and the expansion or relocation of existing stores. In the twelve year period from the beginning of fiscal 1992 to the end of fiscal 2003 the BBB chain has grown from 34 stores to 575 stores.  Total BBB square footage grew from approximately 917,000 square feet at the beginning of fiscal 1992 to approximately 19,353,000 square feet at the end of fiscal 2003.  During fiscal 2003, BBB opened 85 new stores and relocated two stores which resulted in the addition of approximately 2,098,000 square feet of store space.  Harmon has grown from 27 stores, upon acquisition, to 30 stores, with the addition of one store in fiscal 2003, and occupied approximately 204,000 square feet at the end of fiscal 2003. CTS has grown from 23 stores, upon acquisition, to 24 stores, with the addition of one store in fiscal 2003, and occupied approximately 915,000 square feet at the end of fiscal 2003.

 

The table below sets forth information concerning BBB’s expansion program for the periods indicated:

 

								Store Space				Number of Stores
Year		Relocated Stores (1)		New Stores (2)		Closed Stores		Beginning of Year		End of Year		Beginning of Year		End of Year
								(in square feet)
1992		5		4		0		917,000		1,128,000		34		38
1993		4		9		2		1,128,000		1,512,000		38		45
1994		4		16		0		1,512,000		2,339,000		45		61
1995		2		19		0		2,339,000		3,214,000		61		80
1996		2		28		0		3,214,000		4,347,000		80		108
1997		3		33		0		4,347,000		5,767,000		108		141
1998		3		45		0		5,767,000		7,688,000		141		186
1999		4		55		0		7,688,000		9,815,000		186		241
2000		2		70		0		9,815,000		12,204,000		241		311
2001		0		85		0		12,204,000		14,724,000		311		396
2002		2		95		1		14,724,000		17,255,000		396		490
2003		2		85		0		17,255,000		19,353,000		490		575

 

(1)    A relocated store is an existing store that was either expanded or relocated to a new store in the same area.

(2)    Excludes any relocated store.

 

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 stores and, in addition, expects to expand existing stores as opportunities arise.

 

The Company expects to open new stores in new and existing markets.  In determining where to open new BBB stores, the Company evaluates a number of factors, including the availability of prime real estate and

 

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demographic information (such as data relating to income and education levels, age and occupation). The Company believes that because BBB does not use central distribution centers, and since BBB relies on paid advertising to only a limited extent, it has the flexibility to enter a new market with only one or two BBB stores. The Company will consider opening additional stores in that market after the stores have been proven successful. The Company currently plans to open new BBB, Harmon and CTS stores in fiscal 2004.

 

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 BBB’s area managers typically supervises up to three BBB stores and district managers typically supervise four to ten stores.

 

Store Operations

 

Merchandising

 

BBB maintains its own central buying group.  The merchandise mix for each BBB store is initially selected by the central buying group, in consultation with store managers and other local store personnel.  The central buying group is generally responsible for the procurement of merchandise, including: selecting the merchandise, ordering the initial inventory required upon the opening of each BBB store, ordering the first shipment of any new product line that may be subsequently added to a store’s merchandise mix and ordering seasonal merchandise.

 

After a BBB store is opened, local store personnel are primarily responsible for monitoring inventory levels and reordering 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 the reordering function for BBB stores 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.  In addition, this better ensures that in-stock availability will be maintained in accordance with the specific requirements of each store.  The factors taken into account in selecting the merchandise mix for a particular BBB store include store size and configuration and local market conditions such as climate and demographics.

 

The Company purchases its merchandise from more than 3,900 suppliers.  In fiscal 2003, the Company’s largest supplier accounted for approximately 5% of the Company’s merchandise purchases and the Company’s 10 largest suppliers accounted for approximately 23% 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. The Company purchases a small amount of its merchandise directly 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 primarily shipped directly to each BBB store from its vendors, making it unnecessary for BBB to maintain central distribution centers.  As a result of the floor to ceiling displays typically used by BBB, 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 warehouse space within or near the store (with an estimated 10% to 15% of the BBB store space dedicated to warehouse and receiving space).  In the case of a few stores, merchandise

 

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is also stored at nearby supplemental storage space leased by the Company.  At present, the warehouse space included in BBB’s stores provides approximately 88% of BBB’s warehouse space requirements and such nearby supplemental storage space provides the balance.

 

CTS and Harmon maintain central distribution centers of approximately 537,000 and 78,000 square feet, respectively. These distribution centers are responsible for shipping the majority of merchandise to their respective stores.

 

Management

 

The Company encourages 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 encouraging managers to tailor the merchandise mix of each store in response to local sales trends and market conditions.

 

On average, BBB stores are staffed with two assistant managers, one operations manager, and three to six department managers who all report to a store manager.  The store manager, in turn, reports to an area or district manager. Area and district managers report to one of several regional managers or directly to one of five regional Vice Presidents of Stores, who in turn report to the Senior Vice President - Stores.

 

Training

 

The Company places great emphasis on the training of store level management.  All entry-level management personnel are generally required to work in various departments of the store to acquire an overall understanding of store operations.  In addition, all BBB store associates receive formalized training, including sales techniques and product knowledge, through the Bed Bath & Beyond University program.

 

The Company’s policy is to generally 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 incentives to persons to seek and retain employment with the Company, and result in low turnover among its managers.

 

Employees

 

As of February 28, 2004, the Company employed approximately 29,000 persons, of whom approximately 15,000 were full-time employees and approximately 14,000 were part-time employees.  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 within the industry.

 

Seasonality

 

The Company 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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Inflation

 

The Company does not believe that its operating results have been materially affected by inflation during the past year.  There can be no assurance; however, that the Company’s operating results will not be affected by inflation in the future.

 

Competition

 

The market for domestics merchandise and home furnishings is fragmented and highly competitive.  While the Company believes it is the preeminent marketer in its segment of the home goods industry, its BBB stores compete directly with a small number of store chains selling domestics merchandise and home furnishings. In addition, BBB stores compete with many different types of retail stores that sell many or most of the same products. Such competitors include:  (i) better department stores, which often carry many of the same product lines as BBB stores 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 BBB stores, and (iii) discount and mass merchandise stores. In addition, BBB stores compete, to a more limited extent, with factory outlet stores that typically offer limited quantities or limited lines of better quality merchandise at discount prices.

 

The Company believes that it is the largest operator of stores 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 competitors to imitate BBB stores’ format and methods.  Other retail chains continue to introduce new store concepts that include many of the product lines carried by BBB stores.  There can be no assurance that the operation of store competitors, including those companies operating stores similar to those of BBB, will not have a material effect on the Company.

 

Tradenames and Service Marks

 

The Company uses the nationally recognized “Bed Bath & Beyond” name and logo and the “Beyond any store of its kind” tag line as service marks in connection with retail services.  The Company has registered these marks and others, including names and logos of Harmon and CTS, with the United States Patent and Trademark Office. The Company also has registered or has applications pending with the trademark registries of several foreign countries.  Management believes that its name recognition and service marks are important elements of the Company’s merchandising strategy.

 

Available Information

 

The Company makes available as soon as reasonably practicable after filing with the SEC, free of charge, through its website, www.bedbathandbeyond.com, the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, electronically filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

 

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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		73		Co-Chairman
Leonard Feinstein		67		Co-Chairman
Steven H. Temares		45		President, Chief Executive Officer and Director
Arthur Stark		49		Chief Merchandising Officer and Senior Vice President
Matthew Fiorilli		47		Senior Vice President – Stores
Eugene A. Castagna		38		Vice President-Finance and Assistant Treasurer, Principal Financial Officer and Principal Accounting Officer

 

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 1992, as Chairman and Co-Chief Executive Officer until 1999, as Co-Chairman and Co-Chief Executive Officer until April 2003, thereafter as Co-Chairman).

 

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 1992, as President and Co-Chief Executive Officer until 1999, as Co-Chairman and Co-Chief Executive Officer until April 2003, thereafter as Co-Chairman).

 

Mr. Temares joined the Company in 1992.  Mr. Temares has been Chief Executive Officer of the Company since April 2003.  Additionally, he has been President since January 1999.  Mr. Temares served as Chief Operating Officer from 1997 to 2003.  Mr. Temares served as Executive Vice President from 1997 to 1999 and previously was Director of Real Estate and General Counsel.

 

Mr. Stark joined the Company in 1977.  Mr. Stark has been Chief Merchandising Officer and Senior Vice President since January 1999.  Prior to 1999, Mr. Stark was Vice President - Merchandising from 1998 until 1999, Director of Store Operations - Western Region from 1994 until 1998.

 

Mr. Fiorilli joined the Company in 1973.  Mr. Fiorilli has been Senior Vice President - Stores since January 1999.  Prior to 1999, Mr. Fiorilli was Vice President - Stores from 1998 until 1999, Director of Store Operations - Eastern Region from 1994 until 1998.

 

Mr. Castagna, a certified public accountant, joined the Company in 1994.  Mr. Castagna has been Assistant Treasurer since 2002, Vice President – Finance and Principal Financial Officer since 2001 and Principal Accounting Officer since 2000.  Mr. Castagna was previously Vice President – Controller.

 

The Company’s executive 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 stores are principally located 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 575 BBB stores are located in 44 states and one territory and range in size from approximately 7,000 to 100,000 square feet, but are predominantly between 20,000 square feet and 50,000 square feet.  Approximately 85% to 90% of store space is used for selling areas and the balance for warehouse, receiving and office space.

 

The Company’s 24 CTS stores are located in the Northeast and range in size from approximately 11,000 square feet to 58,000 square feet, but are predominantly between 30,000 square feet and 50,000 square feet.  Approximately 70% of store space is used for selling areas and the balance for warehouse, receiving and office space.

 

The Company’s 30 Harmon stores are located in New York, New Jersey and Connecticut and range in size from approximately 5,000 square feet to 9,000 square feet.  Approximately 85% of store space is used for selling areas and the balance for warehouse, receiving and office space.

 

The tables below set forth the number of BBB, Harmon and CTS stores located in each state or territory as of February 28, 2004:

 

BED BATH & BEYOND

 

Alabama		7
Arizona		9
Arkansas		3
California		67
Colorado		14
Connecticut		10
Delaware		1
Florida		48
Georgia		19
Idaho		3
Illinois		25
Indiana		12
Iowa		5
Kansas		6
Kentucky		4
Louisiana		10
Maine		2
Maryland		13
Massachusetts		10
Michigan		24
Minnesota		8
Mississippi		2
Missouri		10
Nebraska		1
Nevada		5
New Hampshire		4
New Jersey		26
New Mexico		2
New York		31
North Carolina		16
North Dakota		2
Ohio		21
Oklahoma		4
Oregon		7
Pennsylvania		22
Rhode Island		3
South Carolina		10
Tennessee		13
Texas		47
Utah		6
Vermont		1
Virginia		19
Washington		15
Wisconsin		6
Puerto Rico		2
Total		575

 

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CHRISTMAS TREE SHOPS

 

Connecticut		3
Maine		1
Massachusetts		14
New Hampshire		2
New York		2
Rhode Island		2
Total		24

 

HARMON

 

Connecticut		1
New Jersey		22
New York		7
Total		30

 

The Company currently leases primarily all of its existing stores.  The leases provide for original lease terms that generally range from five to twenty 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

 

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contingent rent (based upon store sales exceeding stipulated amounts).

 

The Company also leases merchandise storage space in nine locations totaling approximately 335,000 square feet servicing BBB stores and in one location of approximately 78,000 square feet servicing Harmon stores. This space is used to supplement the warehouse facilities in the Company’s stores in proximity to these locations.  One of these locations also provides fulfillment for BBB’s E-Service activities. In addition, the Company owns a distribution center of approximately 537,000 square feet servicing CTS stores.  See Item 1 “Business—Store Operations—Warehousing.”

 

The Company also leases a combined total of 264,000 square feet in three locations (Union, New Jersey; Farmingdale, New York; and South Yarmouth, Massachusetts) for its corporate office and procurement functions.

 

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 28, 2004.

 

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 closing prices of the Company’s common stock on the NASDAQ National Market System for the periods indicated.

 

 

The common stock is quoted through the NASDAQ National Market System under the symbol BBBY.  On May 5, 2004, there were approximately 727 shareholders of record of the common stock (without including individual participants in nominee security position listings).  On May 5, 2004, the last reported sale price of the common stock was $37.11.

 

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The Company has not paid cash dividends on its common stock since its 1992 initial public offering and does not currently plan 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, business conditions and other factors.  See Item 8 - Financial Statements and Supplementary Data.

 

ITEM 6 - SELECTED FINANCIAL DATA

 

Consolidated Selected Financial Data

 

		Fiscal Year Ended (1)
(in thousands, except per share and selected operating data)		February 28, 2004			March 1, 2003			March 2, 2002			March 3, 2001			February 26, 2000
Statement of Earnings Data:
Net sales		$	4,477,981		$	3,665,164		$	2,927,962		$	2,396,655		$	1,857,505
Gross profit		1,876,664			1,518,547			1,207,566			986,459			766,801
Operating profit		639,343			480,057			346,100			272,838			209,340
Net earnings		399,470			302,179			219,599			171,922			131,229
Net earnings per share - Diluted (2)		$	1.31		$	1.00		$	0.74		$	0.59		$	0.46
Selected Operating Data:
Number of stores open (at period end)		629			519			396			311			241
Total square feet of store space (at period end)		20,472,000			17,452,000			14,724,000			12,204,000			9,815,000
Percentage increase in comparable store sales		6.3		%	7.9		%	7.1		%	5.0		%	9.2		%
Balance Sheet Data (at period end):
Working capital		$	1,199,752		$	914,220		$	715,439		$	532,524		$	360,585
Total assets		2,865,023			2,188,842			1,647,517			1,195,725			865,800
Long-term debt		—			—			—			—			—
Shareholders’ equity		$	1,990,820		$	1,451,921		$	1,094,350		$	817,018		$	559,045

 

(1) Each fiscal year represents 52 weeks, except for fiscal 2000 (ended March 3, 2001) which represents 53 weeks.

 

(2) The net earnings per share amount for fiscal 2000 has been adjusted for a two-for-one stock split of the Company’s common stock (which was effected in the form of a 100% stock dividend), which was distributed in fiscal 2000.  The Company has not declared any cash dividends in any of the fiscal years noted above.

 

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ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

OVERVIEW

 

In fiscal 2003, the Company’s consolidated net sales increased by 22.2% and net earnings increased by 32.2%.  Contributing to this increase was the expansion of Bed Bath & Beyond (“BBB”) store space by 12.2%, from 17,255,000 square feet at fiscal year end 2002 to 19,353,000 square feet at fiscal year end 2003.  The 2,098,000 square feet increase was primarily the result of opening 85 new BBB stores and relocating two existing stores.  In fiscal 2002, the Company expanded BBB store space by 17.2%, or 2,531,000 square feet, from 14,724,000 square feet at fiscal year end 2001.  The 2,531,000 square feet increase was the result of opening 95 new stores offset by the closing of one small store.

 

Also contributing to these increases in fiscal 2003 and 2002 were two acquisitions made by the Company.  In June 2003, the Company acquired Christmas Tree Shops, Inc. (“CTS”) for approximately $194.4 million, net of cash acquired, plus the costs of the acquisition, which includes $175.5 million of cash and $18.9 million in deferred payments payable in cash over the next three years.  CTS is a retailer of giftware and household items selling a broad assortment of domestics merchandise and home furnishings at low prices in many categories including home décor, giftware, housewares, food, paper goods, and seasonal products.  CTS’ results of operations are included in the Company’s consolidated results of operations since the date of acquisition.  In March 2002, the Company acquired Harmon Stores, Inc. (“Harmon”), a health and beauty care retailer, for approximately $24.1 million, net of cash acquired.  Harmon’s results of operations are included in the Company’s consolidated results of operations since the date of acquisition.  On a combined basis, CTS and Harmon store space totaled 1,119,000 square feet at February 28, 2004.

 

Comparable store sales for fiscal 2003 increased by approximately 6.3% as compared with an increase of approximately 7.9% and 7.1% in fiscal 2002 and 2001, respectively.  The fiscal 2003 increase in comparable store sales reflected a number of factors, including but not limited to, the continued consumer acceptance of the Company’s merchandise offerings, a strong focus on customer service and the continued success of the Company’s advertising program.

 

The Company plans to continue to expand its operations and invest in its infrastructure to reach its long-term objectives.

 

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RESULTS OF OPERATIONS

 

The following table sets forth for the periods indicated (i) selected statement of earnings data of the Company expressed as a percentage of net sales and (ii) the percentage change in dollar amounts from the prior year in selected statement of earnings data:

 

		Fiscal Year Ended
		Percentage of Net Sales						Percentage Change from Prior Year
		February 28, 2004		March 1, 2003		March 2, 2002		February 28, 2004		March 1, 2003
Net sales		100.0	%	100.0	%	100.0	%	22.2	%	25.2	%
Cost of sales		58.1		58.6		58.8		21.2		24.8
Gross profit		41.9		41.4		41.2		23.6		25.8
Selling, general and administrative expenses		27.6		28.3		29.4		19.1		20.5
Operating profit		14.3		13.1		11.8		33.2		38.7
Earnings before provision for income taxes		14.5		13.4		12.2		32.2		37.6
Net earnings		8.9		8.2		7.5		32.2		37.6

 

Net Sales

 

Net sales in fiscal 2003 increased $812.8 million to $4.478 billion, representing an increase of 22.2% over the $3.665 billion of net sales in fiscal 2002, which increased $737.2 million or 25.2% over net sales of $2.928 billion in fiscal 2001. Approximately 41% of the increase in fiscal 2003 was attributable to BBB new store sales and 34% of the increase was attributable to the net sales of CTS, which was acquired in June 2003.  The increase in comparable store sales for fiscal 2003 of 6.3% was due to a number of factors, including but not limited to, the continued consumer acceptance of the Company’s merchandise offerings, a strong focus on customer service and the continued success of the Company’s advertising program.  For fiscal 2002, new store sales contributed approximately 68% to the increase in net sales and the balance to an increase in comparable store sales and the acquisition of Harmon in March 2002.

 

Sales of domestics merchandise accounted for approximately 51%, 55% and 54% of net sales in fiscal 2003, 2002 and 2001, respectively, of which the Company estimates that bed linens accounted for approximately 16%, 19% and 19% of net sales in fiscal 2003, 2002 and 2001, respectively.  The remaining net sales in fiscal 2003, 2002 and 2001 of 49%, 45% and 46%, respectively, represented sales of home furnishings.  The change in the product mix between fiscal 2003 and 2002 is primarily the result of the acquisition of CTS.  No other individual product category accounted for 10% or more of net sales during fiscal 2003, 2002 or 2001.

 

Gross Profit

 

Gross profit in fiscal 2003, 2002 and 2001 was $1.877 billion or 41.9% of net sales, $1.519 billion or 41.4% of net sales and $1.208 billion or 41.2% of net sales, respectively.  The increase in gross profit between fiscal 2003 and 2002 as a percentage of net sales was primarily attributable to improvements in both the markup and in markdowns taken.  The slight increase in gross profit between fiscal 2002 and 2001 was the result of

 

16

 

improvements in markup on the mix of product purchased in fiscal 2002 offset by the relative increase in markdowns recorded in fiscal 2002 as compared to fiscal 2001.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses (“SG&A”) were $1.237 billion or 27.6% of net sales in fiscal 2003 compared to $1.038 billion or 28.3% of net sales in fiscal 2002.  The decrease in SG&A as a percentage of net sales primarily reflects a decrease in occupancy costs, other store expenses and costs associated with new store openings, partially offset by an increase in litigation expense and net advertising costs.  Store opening and expansion costs are charged to earnings as incurred.

 

SG&A as a percentage of net sales decreased to 28.3% in fiscal 2002 from 29.4% in fiscal 2001 primarily as a result of a decrease in occupancy costs and costs associated with new store openings, partially offset by an increase in payroll and payroll related items.  SG&A in fiscal 2002 was $1.038 billion as compared to $861.5 million in fiscal 2001.

 

Interest income

 

Interest income decreased to $10.2 million in fiscal 2003 compared to $11.3 million in fiscal 2002 due to a decrease in the average investment interest rate partially offset by an increase in cash invested.  However, interest income increased in fiscal 2002 from $11.0 million in fiscal 2001 due to the increase in invested cash partially offset by a decrease in the average investment rate.

 

Income taxes

 

The effective tax rate was 38.5% for fiscal 2003, 2002 and 2001 due to the weighted average effective tax rate remaining consistent in the states and territory in which the Company currently conducts business.

 

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 relocation of existing stores.  In the twelve year period from the beginning of fiscal 1992 to the end of fiscal 2003, the chain has grown from 34 to 575 BBB stores. Total BBB stores’ square footage grew from 917,000 square feet at the beginning of fiscal 1992 to 19,353,000 square feet at the end of fiscal 2003.  There were 30 Harmon stores with 204,000 square feet at the end of fiscal 2003.  There were 24 CTS stores with 915,000 square feet at the end of fiscal 2003.

 

The Company intends to continue its expansion program and currently plans to open new BBB, Harmon and CTS stores in fiscal 2004 (see details under “Liquidity and Capital Resources” below).  The Company believes that a predominant portion of any increase in its net sales in fiscal 2004 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 its operations, including its expansion program, through internally generated funds.  Net cash provided by operating activities in fiscal 2003 was $548.4 million, compared with $419.3 million in fiscal 2002.  The increase in net cash provided by operating activities was primarily attributable to an increase in net income, an increase in the tax benefit received from the exercise of stock options and improved management of working capital, partially offset by a decrease in income taxes payable due to an increase in tax payments.

 

17

 

Net cash used in investing activities in fiscal 2003 was $292.5 million compared with $357.4 million in fiscal 2002.  The change in net cash used in investing activities was primarily attributable to an increase in the redemption of investment securities partially offset by the acquisition of CTS.  The aggregate all cash purchase price of CTS, including the cost of the acquisition, was approximately $194.4 million, net of cash acquired, which includes $175.5 million of cash and $18.9 million in deferred payments payable in cash over the next three years.  The acquisition has been accounted for under the purchase method of accounting in accordance with SFAS No. 141, “Business Combinations.”

 

Net cash provided by financing activities in fiscal 2003 was $53.4 million, compared with $24.2 million in fiscal 2002. The change in net cash provided by financing activities was attributable to an increase in proceeds from the exercise of stock options partially offset by the prepayment of CTS’ debt in conjunction with the acquisition.

 

At February 28, 2004, the Company maintained two uncommitted lines of credit of $75 million and $50 million, which expire in September 2004 and November 2004, respectively.  These uncommitted lines of credit are currently used for letters of credit in the ordinary course of business.  It is the Company’s intent to maintain an uncommitted line of credit for these purposes.  During fiscal 2003, the Company did not have any direct borrowings under the uncommitted lines of credit.  As of February 28, 2004, there was approximately $15.0 million in outstanding letters of credit.  In addition, at February 28, 2004, the Company maintained unsecured standby letters of credit of $40 million, primarily for certain insurance programs, of which approximately $35.8 million was outstanding. The Company believes that during fiscal 2004, internally generated funds will be sufficient to fund its operations, including its expansion program.

 

The Company has contractual obligations consisting mainly of operating leases for store, office and other facilities and equipment and purchase obligations which are payable as of February 28, 2004 as follows:

 

(in thousands)		Total			Less than 1 year			1-3 years			4-5 years			After 5 years
Operating Lease Obligations		$	2,727,162		$	273,934		$	842,674		$	514,046		$	1,096,508
Purchase Obligations		643,994			643,994			—			—			—
Total Contractual Obligations		$	3,371,156		$	917,928		$	842,674		$	514,046		$	1,096,508

 

As of February 28, 2004, the Company has leased sites for 57 new stores planned for opening in fiscal 2004 or 2005, which are included in the table above.  Approximate aggregate costs for the 57 leased stores are estimated at $79.9 million for merchandise inventories, $43.1 million for furniture and fixtures and leasehold improvements and $11.8 million for store opening expenses (which will be expensed as incurred).

 

Purchase obligations consist of purchase orders for merchandise and capital expenditures.  Typically, these purchase orders, which are not included in the Company’s consolidated balance sheet as of February 28, 2004, allow the Company to cancel the orders without recourse.

 

SEASONALITY

 

The Company 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.

 

INFLATION

 

The Company does not believe that its operating results have been materially affected by inflation during the past year.  There can be no assurance, however, that the Company’s operating results will not be affected by inflation in the future.

 

18

 

CRITICAL ACCOUNTING POLICIES

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Company bases its estimates on historical experience and on other assumptions that it believes to be relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in areas such as the provision for sales returns, inventory valuation, impairment of long-lived assets, goodwill and other indefinitely lived intangible assets, vendor allowances and accruals for self insurance, litigation and store opening, expansion, relocation and closing costs.  Actual results could differ from these estimates.

 

Sales Returns: Sales returns, which are reserved for based on historical experience, are provided for in the period that the related sales are recorded.

 

Inventory Valuation: Merchandise inventories are stated at the lower of cost or market, generally using the retail inventory method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories. In addition, the Company estimates a reserve for expected shrinkage throughout the year, based on historical shrinkage.  Actual shrinkage is recorded at year-end based on the results of the Company’s physical inventory count. At any one time, inventories include items that have been marked down to the Company’s best estimate of their fair market value. Actual markdowns required could differ from this estimate.

 

Impairment of Long-Lived Assets: The Company reviews long-lived assets for impairment by comparing the carrying value of the assets with their estimated future undiscounted cash flows when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values.  If it is determined that an impairment loss has occurred, the loss would be recognized during that period.  The impairment loss is calculated as the difference between asset carrying values and the present value of the estimated net cash flows.  The Company does not believe that any material impairment currently exists related to its long-lived assets.

 

Goodwill and Other Indefinitely Lived Intangible Assets: The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually and otherwise when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values.  Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value.  The Company does not believe that any material impairment currently exists related to its goodwill and indefinitely lived intangible assets.

 

Vendor Allowances: The Company receives various types of allowances from our merchandise vendors, which are based on negotiated terms.  These allowances are recorded when earned as a reduction of cost of sales or as a reduction of other costs in accordance with the provisions of the FASB’s Emerging Issues Task Force Issue No. 02-16 “Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor.”

 

Self Insurance: The Company uses self insurance for a number of risks including worker’s compensation, general liability, automobile liability and employee related health care benefits (a portion of which is paid by our employees).  Liabilities associated with these risks are estimated by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions.

 

Litigation: The Company records an estimated liability related to various claims and legal actions arising in the ordinary course of business which is based on available information and advice from outside counsel, where appropriate.  As additional information becomes available, the Company reassesses the potential liability related to its pending litigation and revises its estimates as appropriate.

 

19

 

Store Opening, Expansion, Relocation and Closing Costs: Store opening, expansion, relocation and closing costs are charged to earnings as incurred.  Prior to the adoption of SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which was effective for any exit or disposal activity initiated after December 31, 2002, costs related to store relocations and closings were provided for in the period in which management approved the relocation or closing of a store.  Actual costs related to store relocations and closings could differ from these estimates.

 

FORWARD LOOKING STATEMENTS

 

This Form 10-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Shareholder Letter, contain forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s actual results 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 outside the Company’s control. Such factors include, without limitation: general economic conditions, changes in the retailing environment and consumer spending habits, demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by the Company; unusual weather patterns; competition from existing and potential competitors; competition from other channels of distribution; pricing pressures; the ability to find suitable locations at reasonable occupancy costs to support the Company’s expansion program; and the cost of labor, merchandise and other costs and expenses.

 

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment securities. The Company is adverse to loss of principal and seeks to preserve its invested funds by limiting market risk. The Company’s investment securities consist of fixed rate instruments.  The Company’s investments include cash and cash equivalents of $825.0 million, short term investment securities of $41.6 million and long term investment securities of $210.8 million at weighted average interest rates as of February 28, 2004 of 1.02%, 2.52% and 2.10%, respectively.

 

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The following are included herein:

 

1)              Consolidated Balance Sheets as of February 28, 2004 and March 1, 2003

 

2)              Consolidated Statements of Earnings for the fiscal years ended February 28, 2004, March 1, 2003 and March 2, 2002

 

3)              Consolidated Statements of Shareholders’ Equity for the fiscal years ended February 28, 2004, March 1, 2003 and March 2, 2002

 

4)              Consolidated Statements of Cash Flows for the fiscal years ended February 28, 2004, March 1, 2003 and March 2, 2002

 

5)              Notes to Consolidated Financial Statements

 

6)              Independent Auditors’ Report

 

20

 

BED BATH & BEYOND INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except per share data)

 

		February 28, 2004			March 1, 2003
Assets
Current assets:
Cash and cash equivalents		$	825,015		$	515,670
Short term investment securities		41,580			100,927
Merchandise inventories		1,012,334			915,671
Other current assets		90,357			62,123
Total current assets		1,969,286			1,594,391
Long term investment securities		210,788			148,005
Property and equipment, net		516,164			423,907
Goodwill		147,269			15,556
Other assets		21,516			6,983
		$	2,865,023		$	2,188,842
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	398,650		$	362,965
Accrued expenses and other current liabilities		337,039			246,198
Income taxes payable		33,845			71,008
Total current liabilities		769,534			680,171
Deferred rent and other liabilities		104,669			56,750
Total liabilities		874,203			736,921
Commitments and contingencies (notes 4, 8 and 10)
Shareholders’ equity:
Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding		—			—
Common stock - $0.01 par value; authorized - 900,000 shares; issued and outstanding - February 28, 2004, 300,278 shares and March 1, 2003, 294,430 shares		3,003			2,944
Additional paid-in capital		433,404			294,034
Retained earnings		1,554,413			1,154,943
Total shareholders’ equity		1,990,820			1,451,921
		$	2,865,023		$	2,188,842

 

See accompanying Notes to Consolidated Financial Statements.

 

21

 

Consolidated Statements of Earnings

Bed Bath & Beyond Inc. and Subsidiaries

 

		FISCAL YEAR ENDED
(in thousands, except per share data)		February 28, 2004			March 1, 2003			March 2, 2002
Net sales		$	4,477,981		$	3,665,164		$	2,927,962
Cost of sales		2,601,317			2,146,617			1,720,396
Gross profit		1,876,664			1,518,547			1,207,566
Selling, general and administrative expenses		1,237,321			1,038,490			861,466