Williams Sonoma Annual Report Justin Kovacsik ACG

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

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: $ $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 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

Part C. Statement of Cash Flows  Cash Provided by Operating Activities was greater than Net Income in 2003 and  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 Analysis Liquidity Ratios Working Capital245,005200,556 Current Ratio1.6 times1.5 times Receivable Turnover83.6 times71.7 times Average Days Sales Uncollected4.4 days5.1 days Inventory Turnover4.5 times3.9 times Average Days Inventory on Hand81.1 days93.6 days

Part E. Financial Analysis Profitability Ratios Profit Margin5.70%5.40% Asset Turnover Return on Assets11%10% Return on Equity22%17%

Part E. Financial Analysis Solvency Ratio Debt to Equity. 8 times.96 times

Part E. Financial Analysis Market Strength Ratios Price / Earnings Ratio times times Dividends Yield Williams Sonoma has never declared or paid, and do not currently intend to pay a cash dividend on our common stock.