Bed, Bath and Beyond 2004 Annual Report Download

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2004 Annual Report • Notice of Annual Meeting • Proxy Statement
To Our Fellow Shareholders:
Through hard work, good fortune and a relentless focus on our customer, we have enjoyed great success
over the past thirty-four years. For that we are thankful. We have also learned that keeping our focus on
the customer isn’t only about merchandise and service. Sometimes, taken just one step further, we can do
things with and for our customers that serve not only them, but others in our community as well. For
example:
• Responding to a specific customer request this past year, we offered our customers an opportunity
to truly “Support Our Troops” through the purchase of magnetic ribbons, and through this effort we
have raised over $400,000 for the United Service Organizations (www.uso.org).
• We have partnered with the National Women’s Health Resource Center, a non-profit, independent
organization dedicated to educating women about their health (www.healthywomen.org), and we
have become a member of its Corporate Advisory Board. Together, we are planning informational
programs for our stores and website, and we are sponsoring various educational events at certain
women’s tennis tournaments on the Sony Ericsson WTA Tour, all so as to heighten the awareness of
women’s health and wellness among our customers and the public. Hopefully we can play a role in
encouraging women of all ages to embrace a healthy, active lifestyle.
In these undertakings, as in all things, we are enormously grateful to our associates, who throw themselves
into whatever is placed before them with confidence, enthusiasm and ability. If we have made one
customer happy, if we have touched the life of one soldier or encouraged one woman to a more serious
consideration of her and her family’s health, it should be credited to our people. We’ve always said it,
and it remains true.
Continued on page 1

Table of contents

  • Page 1
    ... with the National Women's Health Resource Center, a non-profit, independent organization dedicated to educating women about their health (www.healthywomen.org), and we have become a member of its Corporate Advisory Board. Together, we are planning informational programs for our stores and website...

  • Page 2
    ... 30,013 .11 $ 2004 (2) Feb. 27, Feb. 28, 1993 2005 S T A T ...Operating profit 792,414 Net earnings 504,964 Net earnings per share- Diluted (3) $ 1.65 $ S E L E C T E D O P E R A T I N G Number...Company acquired Christmas Tree Shops, Inc. (see Note 2 to the Consolidated Financial Statements...

  • Page 3
    ... you this annual information in as straightforward and cost efficient a manner as possible. So once more we have combined our Annual Report, Notice of Annual Meeting and Proxy Statement into this single booklet. Fiscal 2004 was our 34th year of operations, and our 13th as a public company. As set...

  • Page 4
    ... future proxy statements and annual reports over the Internet, you will receive an e-mail message next year containing the Internet address to access Bed Bath & Beyond's proxy statement and annual report. You do not have to elect Internet access each year. To view, cancel or change your enrollment...

  • Page 5
    ... Bed Bath & Beyond ("BBB"), Harmon Stores, Inc. ("Harmon") and Christmas Tree Shops, Inc. ("CTS"), primarily selling predominantly better quality domestics merchandise and home furnishings. The Company's objective is to be a customer's first choice for products and services in the categories offered...

  • Page 6
    ... of inventory acquisition costs of the Company's current merchandise offerings. 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. BED BATH & BEYOND ANNUAL REPORT 2004 4

  • Page 7
    ...exercise of stock options. Inventory per square foot was $50.21 as of February 26, 2005 and $49.45 as of February 28, 2004. The Company continues to focus on optimizing inventory productivity while maintaining appropriate in-store merchandise levels to support sales growth. BED BATH & BEYOND ANNUAL...

  • Page 8
    ... defined benefit pension plan for CTS employees who meet specified age and length of service requirements. The Company intends to make a minimum contribution of approximately $2.3 million during fiscal 2005. SEASONALITY The Company exhibits less seasonality than many other retail businesses...

  • Page 9
    ... 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"). SFAS No. 123R will require companies to measure all employee stock-based compensation awards using a fair value method and record...

  • Page 10
    ... where the ultimate tax outcome is uncertain. Additionally, the Company's tax returns are subject to audit by various tax authorities. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates. BED BATH & BEYOND ANNUAL REPORT 2004 8

  • Page 11
    ... competitors; competition from other channels of distribution; pricing pressures; the ability to find suitable locations at acceptable occupancy costs to support the Company's expansion program; and the cost of labor, merchandise and other costs and expenses. BED BATH & BEYOND ANNUAL REPORT 2004 9

  • Page 12
    ...) 491,508) 2,059,377) (350,151) 2,203,762) $3,199,979) 3,003 433,404 1,554,413 - 1,990,820 $2,865,023 See accompanying Notes to Consolidated Financial Statements. BED BATH & BEYOND ANNUAL REPORT 2004 10

  • Page 13
    ... 302,179 $ $ 1.03 1.00 292,927 301,147 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Bed Bath & Beyond Inc. and Subsidiaries (in thousands) Balance at March 2, 2002 Net earnings Shares sold under employee stock option plans, including tax benefit Balance at March 1, 2003 Net earnings Shares sold...

  • Page 14
    ...STATEMENTS OF CASH FLOWS Bed Bath & Beyond Inc. and Subsidiaries (in thousands) Cash Flows from Operating Activities: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Amortization of bond premium Tax benefit from exercise...

  • Page 15
    ... of Bed Bath & Beyond ("BBB"), Harmon Stores, Inc. ("Harmon") and Christmas Tree Shops, Inc. ("CTS") primarily selling predominantly better quality domestics merchandise and home furnishings. As the Company operates in the retail industry, its results of operations are affected by general economic...

  • Page 16
    .... The Company previously classified auction rate securities as cash and cash equivalents. The Company reclassified $530.5 million of auction rate securities reported as cash and cash equivalents as of February 28, 2004 to short term investment securities. BED BATH & BEYOND ANNUAL REPORT 2004 14

  • Page 17
    ... the impairment occurs. Included within other assets in the accompanying consolidated balance sheets as of February 26, 2005 and February 28, 2004 is $19.9 million for the tradename of CTS (see Note 2 - Acquisitions) which is not subject to amortization. BED BATH & BEYOND ANNUAL REPORT 2004 15

  • Page 18
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) N. Self Insurance The Company utilizes a combination of insurance and self insurance for a number of risks including workers compensation, general liability, automobile liability and employee related health care benefits (a portion of which is...

  • Page 19
    ...of common shares as of the fiscal years ended 2004, 2003 and 2002 were not included in the computation of diluted earnings per share as the effect would be anti-dilutive. These consisted of options totaling 2,766,430, 543,750 and 158,925 shares, respectively. BED BATH & BEYOND ANNUAL REPORT 2004 17

  • Page 20
    ... $17.15 On December 16, 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"). SFAS No. 123R will require companies to measure all employee stockbased compensation awards using a fair value method and record such expense in...

  • Page 21
    ... to be a projection of future results. On March 5, 2002, the Company acquired Harmon, a health and beauty care retailer, which did not have a material effect on its consolidated results of operations or financial condition in fiscal 2004, 2003 or 2002. BED BATH & BEYOND ANNUAL REPORT 2004 19

  • Page 22
    ...primarily for certain insurance programs. The Company maintained two uncommitted lines of credit of $75 million and $50 million at February 28, 2004. These uncommitted lines of credit were utilized for letters of credit in the ordinary course of business. During fiscal 2003, the Company did not have...

  • Page 23
    ... tax rate is comprised of the Federal statutory income tax rate of 35.00% in each fiscal year, the State income tax rate, net of Federal benefit, of 2.60% for fiscal 2004, 3.50% for fiscal 2003 and 2002, and other income tax effects of 0.15% for fiscal 2004. BED BATH & BEYOND ANNUAL REPORT 2004 21

  • Page 24
    ... 2009 Thereafter Total future minimum lease payments (in thousands) Amount $ 308,698 322,034 316,674 308,370 289,813 1,438,176 $2,983,765 Expenses for all operating leases were $288.9 million, $251.0 million and $219.8 million for fiscal 2004, 2003 and 2002, respectively. BED BATH & BEYOND ANNUAL...

  • Page 25
    ... the Bed Bath & Beyond 2004 Incentive Compensation Plan ("the 2004 Plan"). The 2004 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options, stock appreciation rights, restricted stock awards and performance awards, including cash awards...

  • Page 26
    ... to to to to to to to to 2.37 5.01 8.94 14.19 22.06 30.73 33.98 38.19 43.40 43.40 NUMBER OUTSTANDING 196,460 433,560 1,014,810 4,726,312 2,586,795 4,393,355 3,645,420 3,457,790 4,380,950 24,835,452 BED BATH & BEYOND ANNUAL REPORT 2004 24

  • Page 27
    ... stock. Vesting of the restricted stock awarded to these employees will be based solely on time vesting with no performance test. The Company will record an expense related to the restricted stock program in fiscal 2005 in accordance with APB No. 25. BED BATH & BEYOND ANNUAL REPORT 2004 25

  • Page 28
    ... Organizations of the Treadway Commission (COSO), and our report dated May 11, 2005 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting. New York, New York May 11, 2005 BED BATH & BEYOND ANNUAL REPORT 2004 26

  • Page 29
    ... General Counsel G. William Waltzinger, Jr. Vice President - Bed Bath & Beyond Inc. Corporate Development President - Harmon Stores, Inc. Chuck Bilezikian Chief Executive Officer - Christmas Tree Shops, Inc. Donna Steele President - Christmas Tree Shops, Inc. Michael Honeyman Chief Operating Officer...

  • Page 30
    ...0888 Christmas Tree Shops, Inc. 261 White's Path South Yarmouth, Massachusetts 02664 Telephone: 508/394-1225 Bed Bath & Beyond Procurement Co. Inc. 110 Bi-County Boulevard, Suite 114 Farmingdale, New York 11735 Telephone: 631/420-7050 Shareholder Information A copy of the Company's 2004 Form 10-K as...

  • Page 31
    ... New Jersey New York Total 2 25 8 35 For exact Harmon locations, visit us at www.harmondiscount.com. For exact Christmas Tree Shops 4 locations, visit us at 8 www.christmastreeshops.com. 25 3 12 14 55 9 1 21 15 7 Puerto Rico Total 3 660 For exact Bed Bath & Beyond locations, visit...

  • Page 32
    650 Liberty Avenue Union, NJ 07083 908-688-0888