-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNEnT5l/czcd10CjaRiAJGHGC5a8qdWo5xqFT3COBNN766j22MCWQLDlE7//W9F7 GIWPkyNlQUgJgPrbVuYxTQ== 0001019439-00-000006.txt : 20000515 0001019439-00-000006.hdr.sgml : 20000515 ACCESSION NUMBER: 0001019439-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIG DOG HOLDINGS INC CENTRAL INDEX KEY: 0001019439 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 521868665 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22963 FILM NUMBER: 628400 BUSINESS ADDRESS: STREET 1: 121 GRAY AVENUE STREET 2: SUITE 300 CITY: SANTA BARBARA STATE: CA ZIP: 93101 BUSINESS PHONE: 8059638727 MAIL ADDRESS: STREET 1: 121 GRAY AVENUE STREET 2: SUITE 300 CITY: SANTA BARBARA STATE: CA ZIP: 93101 10-Q 1 FORM 10-Q FOR PERIOD ENDED 03/31/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-22963 BIG DOG HOLDINGS, INC. (Exact name of registrant as specified in its charter) DELAWARE 52-1868665 (State or jurisdiction of (IRS employer incorporation or organization) identification no.) 121 GRAY AVENUE SANTA BARBARA, CALIFORNIA 93101 (Address of principal executive offices) (zip code) (805) 963-8727 (Registrant's telephone number, including area code) 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. X Yes No --- ---- The number of shares outstanding of the registrant's common stock, par value $.01 per share, at May 12, 2000 was 11,981,350 shares. BIG DOG HOLDINGS, INC INDEX TO FORM 10-Q PAGE ---- NO. --- PART I. FINANCIAL INFORMATION.........................................3 ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS March 31, 2000 and December 31, 1999..........................3 CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended March 31, 2000 and 1999....................4 CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2000 and 1999....................5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS....................6 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.....................................7 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....9 PART II. OTHER INFORMATION.............................................9 ITEM 1: LEGAL PROCEEDINGS.............................................9 ITEM 2: CHANGES IN SECURITIES.........................................9 ITEM 3: DEFAULTS UPON SENIOR SECURITIES...............................9 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........9 ITEM 5: OTHER INFORMATION............................................10 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.............................10 SIGNATURES .............................................................10 PART 1. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS March 31, December 31, 2000 1999 ------------------ ---------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents........................................ $ 991,000 $17,925,000 Accounts receivable, net......................................... 1,378,000 968,000 Inventories...................................................... 27,241,000 19,950,000 Prepaid expenses and other current assets........................ 1,126,000 1,107,000 Deferred income taxes............................................ 2,333,000 875,000 ------------ ----------- Total current assets........................................... 33,069,000 40,825,000 PROPERTY AND EQUIPMENT, Net......................................... 11,465,000 12,037,000 INTANGIBLE ASSETS, Net.............................................. 116,000 117,000 OTHER ASSETS........................................................ 3,422,000 3,434,000 ------------ ----------- TOTAL............................................................... $48,072,000 $56,413,000 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable................................................. $ 1,999,000 $ 3,411,000 Income taxes payable............................................. 36,000 1,768,000 Accrued expenses and other current liabilities................... 1,550,000 3,184,000 ------------ ----------- Total current liabilities...................................... 3,585,000 8,363,000 DEFERRED RENT....................................................... 869,000 878,000 DEFERRED GAIN ON SALE-LEASEBACK..................................... 499,000 512,000 ------------ ----------- Total liabilities................................................ 4,953,000 9,753,000 ------------ ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 3,000,000 shares $ --- $ --- Authorized, none issued and outstanding Common stock, $.01 par value, 30,000,000 shares Authorized, 13,183,550 issued at March 31, 2000 and December 31, 1999.............................................. 132,000 132,000 Additional paid-in capital....................................... 42,417,000 42,417,000 Retained earnings................................................ 8,220,000 11,750,000 Treasury stock, 1,183,200 shares at March 31, 2000 and December 31, 1999.............................................. (7,006,000) (7,006,000) Notes receivable from common stockholders........................ (644,000) (633,000) ------------- ----------- Total stockholders' equity..................................... 43,119,000 46,660,000 ------------- ----------- TOTAL............................................................... $48,072,000 $56,413,000 ============= ===========
See accompanying notes. BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, --------------------------------- 2000 1999 ------------ ------------ NET SALES........................................................... $ 16,586,000 $ 16,743,000 COST OF GOODS SOLD.................................................. 7,430,000 7,856,000 ------------ ------------ GROSS PROFIT........................................................ 9,156,000 8,887,000 ------------ ------------ OPERATING EXPENSES: Selling, marketing and distribution.............................. 11,786,000 11,323,000 General and administrative....................................... 1,329,000 1,215,000 ------------ ------------ Total operating expenses....................................... 13,115,000 12,538,000 ------------ ------------ LOSS FROM OPERATIONS................................................ (3,959,000) (3,651,000) INTEREST INCOME, Net................................................ (171,000) (94,000) ------------ ------------ LOSS BEFORE BENEFIT FROM INCOME TAXES............................... (3,788,000) (3,557,000) BENEFIT FROM INCOME TAXES........................................... (1,458,000) (1,387,000) ------------ ------------ NET LOSS............................................................ $ (2,330,000) $ (2,170,000) ============ ============ NET LOSS PER SHARE BASIC AND DILUTED................................................ $ (0.19) $ (0.18) ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED................................................ 12,000,000 12,100,000 ============ ============
See accompanying notes. BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, ------------------------------------ 2000 1999 --------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss..................................................................... $(2,330,000) $(2,170,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization.............................................. 993,000 993,000 Provision for losses on receivables........................................ 11,000 17,000 Loss on disposition of property and equipment.............................. --- 5,000 Deferred income taxes...................................................... (1,458,000) (1,385,000) Changes in operating assets and liabilities: Receivables.............................................................. (421,000) (482,000) Inventories.............................................................. (7,291,000) (3,103,000) Prepaid expenses and other assets........................................ (19,000) (14,000) Accounts payable......................................................... (1,412,000) 700,000 Income taxes payable..................................................... (1,732,000) (2,477,000) Accrued expenses and other current liabilities........................... (1,634,000) (816,000) Deferred rent............................................................ (9,000) 65,000 Deferred gain on sale-leaseback.......................................... (13,000) --- ----------- ------------ Net cash used in operating activities.................................. (15,315,000) (8,667,000) ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures......................................................... (415,000) (825,000) Other ....................................................................... (4,000) (16,000) ----------- ------------ Net cash used in investing activities.................................. (419,000) (841,000) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Dividend payment............................................................. (1,200,000) (1,210,000) ----------- ------------ Net cash used in financing activities.................................. (1,200,000) (1,210,000) ----------- ------------ NET DECREASE IN CASH............................................................ (16,934,000) (10,718,000) CASH, BEGINNING OF PERIOD....................................................... 17,925,000 13,458,000 ------------ ------------ CASH, END OF PERIOD............................................................. $ 991,000 $ 2,740,000 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for: Interest................................................................... --- --- Income taxes............................................................... $1,732,000 $2,474,000
See accompanying notes. BIG DOG HOLDINGS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Basis of Presentation: The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring entries necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the financial statements and footnotes thereto for Big Dog Holdings, Inc. and its wholly owned subsidiary, Big Dog USA, Inc. (the "Company") included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. NOTE 2. Short-term Borrowings The Company has a borrowing arrangement with a bank whereby the Company may, from time to time and upon approval from the bank, borrow up to $8 million. Such borrowings may be used for cash advances and letters of credit. The borrowing arrangement provides for interest at the bank's prime rate less 3/8% or 250 basis points over the LIBOR rate and is collateralized by substantially all the assets of the Company. As of March 31, 2000, the Company had no advances and $976,000 of letters of credit outstanding. The letters of credit expire through December 31, 2000. NOTE 3. Dividend Paid On March 27, 2000, the Company paid an annual dividend to stockholders of record at the close of business on March 11, 2000, in the amount of $0.10 per share, totaling $1,200,000. NOTE 4. Stockholder's Equity In March 1998, the Company announced that its Board authorized the repurchase of up to $10,000,000 of its common stock. Between April 1, 2000 and May 12, 2000, the Company repurchased 19,000 shares of common stock. NOTE 5. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company will adopt SFAS No. 133 in the year ending December 31, 2000. The Company anticipates that the adoption of SFAS No. 133 will not have a material impact on the Company's financial statements. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis should be read in conjunction with the Company's financial statements and notes related thereto. Certain minor differences in the amounts below result from rounding of the amounts shown in the consolidated financial statements. RESULTS OF OPERATIONS Three Months Ended March 31, 2000 and 1999 NET SALES. Net sales consist of sales from the Company's stores, catalog, internet website, and wholesale accounts, all net of returns and allowances. Net sales decreased to $16.6 million for the three months ended March 31, 2000 from $16.7 million for the same period in 1999, a decrease of $0.1 million or 0.6%. Of the decrease, $0.5 million was attributable to a 3.4% comparable stores sales decrease and $0.5 million from a decrease in the Company's wholesale business, net of $0.9 million from stores not yet qualifying as comparable stores. GROSS PROFIT. Gross profit increased to $9.2 million for the three months ended March 31, 2000 from $8.9 million for the same period in 1999, an increase of $0.3 million or 3.4%. As a percentage of net sales, gross profit increased to 55.2% in the three months ended March 31, 2000 from 53.1% in the same period in 1999. This 2.1% increase was primarily due in part to improved sourcing and purchasing of products. SELLING, MARKETING AND DISTRIBUTION EXPENSES. Selling, marketing and distribution expenses consist of expenses associated with creating, distributing and selling products through all channels of distribution, including occupancy, payroll and catalog costs. Selling, marketing and distribution expenses increased to $11.8 million in the three months ended March 31, 2000 from $11.3 million in the same period for 1999, an increase of $0.5 million, or 4.4%. As a percentage of net sales, these expenses increased to 71.1% in the three months ended March 31, 2000 from 67.6% in the same period in 1999, an increase of 3.5%. The increase in selling, marketing and distribution expenses is primarily attributable to additional operating costs of $0.8 million related to the 15 new stores open in the first quarter 2000, offset by insurance proceeds of approximately $0.3 million. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist of administrative salaries, corporate occupancy costs and other corporate expenses. General and administrative expenses increased to $1.3 million for the three months ended March 31, 2000 from $1.2 million for the same period 1999, an increase of $0.1 million, or 8.3%. As a percentage of net sales, these expenses increased to 8.0% in the three months ended March 31, 2000 from 7.3% in the same period in 1999. The percentage increase in general and administrative expenses is primarily attributable of spreading these expenses over a smaller revenue base. INTEREST INCOME. Interest income increased to $0.2 million in the three months ended March 31, 2000 from $0.1 million in the same period in 1999, principally due to higher average cash balances in 2000. LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 2000, the Company's primary uses of cash were for merchandise inventories, income taxes and dividends paid to stockholders. The Company satisfied its cash requirements primarily from cash flow from operations and excess cash. Cash used in operating activities was $15.3 million and $8.7 million for the first three months ended March 31, 2000 and 1999, respectively. The $6.6 million increase was primarily due to an earlier purchasing of inventory for the first three months in 2000. Cash used in investment activities for the three months ended March 31, 2000 and 1999 were $0.4 million and $0.8 million, respectively. Cash flows used in investment activities in the first quarter of 2000 primarily related to capital additions to the Company's existing stores. Cash flows used in investment activities in the first quarter of 1999 related primarily to the build-out of the second floor mezzanine at the Company's distribution facility and capital additions to the Company's existing stores. Cash used in financing activities in the three months ended March 31, 2000 and 1999 were constant at $1.2 million. In the three months ended March 31, 2000 and 1999, the Company paid an annual dividend of $0.10 per share to stockholders. The Company has a borrowing arrangement with a bank whereby the Company may, from time to time and upon approval from the bank, borrow up to $8 million. Such borrowings may be used for cash advances and letters of credit. The borrowing arrangement provides for interest at the bank's prime rate less 3/8% or 250 basis points over the LIBOR rate and is collateralized by substantially all the assets of the Company. As of March 31, 2000, the Company had no advances and $976,000 of letters of credit outstanding. The letters of credit expire through December 31, 2000. SEASONALITY The Company believes its seasonality is somewhat different than many apparel retailers since a significant number of the Company's stores are located in tourist areas and outdoor malls that have different visitation patterns than urban and suburban retail centers. The third and fourth quarters (consisting of the summer vacation, back-to-school and Christmas seasons) have historically accounted for the largest percentage of the Company's annual sales and profits. The Company has historically incurred operating losses in its first quarter and may be expected to do so in the foreseeable future. YEAR 2000 The Year 2000 issue is the result of computer programs being written to use two digits to define year dates. Computer programs running date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in systems failure or miscalculations causing disruptions of operations. In March 1999, the Company completed the upgrade of its major software systems to a new release which has been certified as Year 2000 compliant. Additionally during 1999, the Company completed the internal testing of its information technology systems and addressed its non-information technology related systems. The Company has requested all significant third-party vendors to certify Year 2000 compliance. The costs of the Company's Year 2000 compliance project were not material to the Company's financial position. The Company has not experienced significant Year 2000-related issues over the Year 2000 transition. Although the Company believes it has taken the appropriate steps to address Year 2000 readiness, there is no guarantee that the Company's efforts will prevent a material adverse impact on the results of operations and financial condition. STATEMENT REGARDING FORWARD LOOKING DISCLOSURE Certain sections of this Quarterly Report on Form 10-Q, including the preceding "Management's Discussion and Analysis of Financial Condition and Results of Operations," contain various forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which represents the Company's expectations or beliefs concerning future events. These forward looking statements involve risk and uncertainties, and the Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements. Primary factors that could cause actual results to differ include those listed in the Company's Form 10-K for the year ended December 31, 1999 filed with the Securities and Exchange Commission. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS Not applicable ITEM 2: CHANGES IN SECURITIES Not applicable ITEM 3: DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5: OTHER INFORMATION Not applicable ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Document Description ----------- -------------------- 27.1 Financial Data Schedule (b) Reports on Form 8-K Not applicable SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BIG DOG HOLDINGS, INC. May 12, 2000 /s/ ANDREW D. FESHBACH ---------------------- Andrew D. Feshbach President and Chief Executive Officer (Principal Executive Officer) May 12, 2000 /s/ ROBERTA J. MORRIS --------------------- Roberta J. Morris Chief Financial Officer and Treasurer (Principal Financial Officer) EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BIG DOG HOLDINGS, INC.'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 1000 3-MOS DEC-31-2000 JAN-1-2000 MAR-31-2000 991 0 1479 (101) 27241 33069 25177 (13712) 48072 3585 0 0 0 132 42987 48072 16586 16586 7430 13115 0 0 (171) (3788) (1458) (2330) 0 0 0 (2330) (0.19) (0.19)
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