Williams Sonoma

Annual Report

Justin KovacsikACG 2021 080

Executive Summary

Williams Sonoma met or exceeded their financial goals in every quarter. In addition, the company recorded a 26.9% increase in earnings.

http://www.williams-sonomainc.com/inv/anr/WS_03AR.pdf

Part A. Introduction

CEO Edward A. Mueller Home Office: 3250 Van Ness

Avenue, San Francisco CA End of fiscal year: February

1, 2004 A provider of specialty home

products including cookware, tableware, and home furnishings

512 retail stores in 42 US states and Canada

Part A. Audit Report

Deloitte & Touche LLC.

The consolidated financial statements have been audited in accordance with standards generally accepted in the United States of America

Part A. Stock Market Information

$33.65 per share as of January 21, 2005 Twelve month trading range: $28.48 - $41.72 Dividend per share: $1.32 Date Information: February 1, 2004 In the current situation it would be best to hold the stock due to its current

price per share lying in the median of the 52 week trading range.

Part B. Industry Situation and Company Plans

In 2004, Williams Sonoma will strive to “Own the Home” by way of 3 long term

strategic initiatives:

Driving top line profitable sales growth through multi-channel retailing,

Increasing the pre tax operating margin,

and Enhancing shareholder value.

Part C. Income Statement

2004 2003Gross Margin 1,110,577 951,601Operating Income 255,638 202,282Net Income 157,211 124,403

•Williams Sonoma uses a Multi Step Income Statement•Gross Margin, Operating Income, and Net Income all increased from 2003 to 2004.

Part C. Balance Sheet

Assets = Liabilities + Stockholders Equity2004 1,470,735 666,144 804,5912003 1,264,455 620,477 643,978

Part C. Statement of Cash Flows

Cash Provided by Operating Activities was greater than Net Income in 2003 and 2004.Williams Sonoma will continue to grow by opening 30 new stores in the United States and adding square footage to its existing stores. The company’s primary source of financing was the proceeds from exercise of stock options.Between 2003 and 2004 Net Cash has decreased due to an increased investment in new store locations and the repurchase of common stock.

Part D. Accounting Policies

Financial statements are prepared according to the Generally Accepted Accounting Principles.Inventories are stated at the lower of cost or weighted average method.Investments are made in high quality, short term instruments to achieve maximum yield while maintaining a level of liquidity consistent with our needs.Property and Equipment are stated at cost. Depreciation is computed using the straight line method over the estimated useful lives of the assets.

Part E. Financial AnalysisLiquidity Ratios

  2004 2003

Working Capital 245,005 200,556

Current Ratio 1.6 times 1.5 times

Receivable Turnover 83.6 times 71.7 times

Average Days Sales Uncollected 4.4 days 5.1 days

Inventory Turnover 4.5 times 3.9 times

Average Days Inventory on Hand 81.1 days 93.6 days

Part E. Financial AnalysisProfitability Ratios

  2004 2003

Profit Margin 5.70% 5.40%

Asset Turnover 2.01 1.73

Return on Assets 11% 10%

Return on Equity 22% 17%

Part E. Financial AnalysisSolvency Ratio

 

2004 2003 Debt to Equity .8 times .96 times

Part E. Financial AnalysisMarket Strength Ratios

2004 2003

Price / Earnings Ratio 24.74 times 22.57 times

Dividends Yield Williams Sonoma has never declared or paid, and do not currently intend to pay a cash dividend on our common stock.