Bed, Bath and Beyond 2004 Annual Report Download - page 21

BED BATH & BEYOND ANNUAL REPORT 2004
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Z. Reclassifications
Certain reclassifications have been made to the fiscal 2003 and 2002 consolidated financial statements to conform to
the fiscal 2004 consolidated financial statement presentation.
2. ACQUISITIONS
On June 19, 2003, the Company acquired CTS. CTS is a retailer of giftware and household items selling a broad assort-
ment of domestics merchandise and home furnishings at value prices in many categories including home décor, gift-
ware, housewares, food, paper goods and seasonal products. The results of CTS’ operations have been included in the
consolidated financial statements since the date of acquisition. At the date of acquisition, CTS, headquartered in
South Yarmouth, Massachusetts, operated 23 stores in 6 states.
The aggregate all cash purchase price, including the costs of the acquisition, was approximately $194.4 million, net of
cash acquired, comprising $175.5 million of cash and $18.9 million in deferred payments payable in cash over three
years. In June 2004, the Company paid the first of these deferred payments of $6.7 million.
The acquisition has been accounted for under the purchase method of accounting in accordance with SFAS No. 141,
“Business Combinations.” The following table summarizes the fair value of the assets acquired and liabilities assumed
at the date of acquisition including a debt prepayment penalty.
(in thousands) June 19, 2003
Current assets $ 73,302)
Property and equipment and other non-current assets 72,390)
Intangible asset 19,898)
Goodwill 132,003)
Total assets acquired 297,593)
Accounts payable and other liabilities (82,027)
Bank debt (21,215)
Total liabilities assumed (103,242)
Net assets acquired $194,351)
The intangible asset acquired represents the CTS tradename and is not subject to amortization. The goodwill and
intangible asset are expected to be deductible for tax purposes.
The pro forma financial information of the Company presented below is unaudited and is based on the Company’s
historical results, adjusted for the impact of certain acquisition related items, such as: the reduction of net interest
income due to the purchase price paid and the prepayment of CTS’ debt, the net reduction of certain selling, general
and administrative expenses directly attributable to the transaction, and the related pro forma income tax effects, in
each case as if they occurred as of the beginning of each respective period.
For the Year Ended
February 28, March 1,
2004 2003
(in thousands, except per share data) (Pro Forma) (Pro Forma)
Net sales $4,582,309 $4,037,956
Net earnings $ 402,479 $ 318,139
Net earnings per share:
Basic $ 1.36 $ 1.09
Diluted $ 1.32 $ 1.06
The unaudited pro forma results of the Company have been prepared for comparative purposes only and in manage-
ment’s opinion, do not purport to be indicative of the Company’s results of operations that would have occurred had
the CTS acquisition been consummated at the beginning of the respective periods. Pro forma results are not intended
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.