-----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, Fw0Z36uegYp5hm5kAZDY5a7al7wiNq/J2Vat+hApig2BesFO/G64d/9nkHXkF4K5 TkNjy7HHQho0L3mCXJa2dg== 0001019439-01-500008.txt : 20010514 0001019439-01-500008.hdr.sgml : 20010514 ACCESSION NUMBER: 0001019439-01-500008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 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: 1629922 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 form1q2001_1q-q.txt 1Q2001 1Q-Q 1 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, 2001 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 1, 2001 was 9,686,284 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, 2001 and December 31, 2000...............................3 CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended March 31, 2001 and 2000.........................4 CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2001 and 2000.........................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..................................................9 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K...................................9 SIGNATURES ...........................................................10 PART 1. .........FINANCIAL INFORMATION ITEM 1: .........FINANCIAL STATEMENTS BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2001 2000 ------------------ ------------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents........................................ $ 1,187,000 $ 4,376,000 Accounts receivable, net......................................... 961,000 539,000 Inventories...................................................... 34,685,000 26,759,000 Prepaid expenses and other current assets........................ 381,000 549,000 Deferred income taxes............................................ 3,173,000 1,429,000 ------------------ ------------------ Total current assets........................................... 40,387,000 33,652,000 PROPERTY AND EQUIPMENT, Net......................................... 8,438,000 9,072,000 INTANGIBLE ASSETS, Net.............................................. 149,000 145,000 OTHER ASSETS........................................................ 400,000 411,000 ------------------ ------------------ TOTAL............................................................... $ 49,374,000 $ 43,280,000 ================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings............................................ $ 18,500,000 $ 6,000,000 Accounts payable................................................. 4,590,000 4,553,000 Income taxes payable............................................. 108,000 1,826,000 Accrued expenses and other current liabilities................... 1,997,000 3,720,000 ------------------ ------------------ Total current liabilities...................................... 25,195,000 16,099,000 DEFERRED RENT....................................................... 786,000 863,000 DEFERRED GAIN ON SALE-LEASEBACK..................................... 446,000 459,000 ------------------ ------------------ Total liabilities................................................ 26,427,000 17,421,000 ------------------ ------------------ 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, 9,686,284 issued at March 31, 2001 and December 31, 2000....... 97,000 97,000 Additional paid-in capital....................................... 20,475,000 20,475,000 Retained earnings................................................ 9,581,000 12,367,000 Treasury stock, 1,233,220 and 1,202,200 shares at March 31, 2001 and December 31, 2000........................... (7,206,000) (7,080,000) ------------------ ------------------ Total stockholders' equity..................................... 22,947,000 25,859,000 ------------------ ------------------ TOTAL............................................................... $ 49,374,000 $ 43,280,000 ================== ==================
See accompanying notes. BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ----------------------------------------- 2001 2000 -------------------- ------------------- NET SALES........................................................... $ 16,986,000 $ 16,586,000 COST OF GOODS SOLD.................................................. 7,880,000 7,430,000 -------------------- ------------------- GROSS PROFIT........................................................ 9,106,000 9,156,000 -------------------- ------------------- OPERATING EXPENSES: Selling, marketing and distribution.............................. 12,172,000 11,786,000 General and administrative....................................... 1,223,000 1,329,000 -------------------- ------------------- Total operating expenses....................................... 13,395,000 13,115,000 -------------------- ------------------- LOSS FROM OPERATIONS................................................ (4,289,000) (3,959,000) INTEREST EXPENSE (INCOME), Net...................................... 241,000 (171,000) -------------------- ------------------- LOSS BEFORE BENEFIT FROM INCOME TAXES............................... (4,530,000) (3,788,000) BENEFIT FROM INCOME TAXES........................................... (1,744,000) (1,458,000) -------------------- ------------------- NET LOSS............................................................ $ (2,786,000) $ (2,330,000) ==================== =================== NET LOSS PER SHARE BASIC AND DILUTED................................................ $ (0.33) $ (0.19) ==================== =================== WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED................................................ 8,459,000 12,000,000 ==================== ===================
See accompanying notes. BIG DOG HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, -------------------------------------- 2001 2000 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss..................................................................... $ (2,786,000) $ (2,330,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization.............................................. 867,000 993,000 Provision for losses on receivables........................................ 8,000 11,000 Deferred income taxes...................................................... (1,744,000) (1,458,000) Changes in operating assets and liabilities: Receivables.............................................................. (430,000) (421,000) Inventories.............................................................. (7,926,000) (7,291,000) Prepaid expenses and other assets........................................ 168,000 (19,000) Accounts payable......................................................... 37,000 (1,412,000) Income taxes payable..................................................... (1,718,000) (1,732,000) Accrued expenses and other current liabilities........................... (1,723,000) (1,634,000) Deferred rent............................................................ (77,000) (9,000) Deferred gain on sale-leaseback.......................................... (13,000) (13,000) ----------------- ----------------- Net cash used in operating activities.................................. (15,337,000) (15,315,000) ----------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures......................................................... (226,000) (415,000) Other ....................................................................... --- (4,000) ----------------- ----------------- Net cash used in investing activities.................................. (226,000) (419,000) ----------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividend payment............................................................. --- (1,200,000) Repurchase of common stock................................................... (126,000) --- Short-term borrowings, net................................................... 12,500,000 --- ----------------- ----------------- ------------------ ----------------- Net cash provided by (used in) financing activities.................... 12,374,000 (1,200,000) ------------------ ----------------- NET DECREASE IN CASH............................................................ (3,189,000) (16,934,000) CASH, BEGINNING OF PERIOD....................................................... 4,376,000 17,925,000 ----------------- ----------------- CASH, END OF PERIOD............................................................. $ 1,187,000 $ 991,000 ================= ================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for: Interest................................................................... $ 208,000 --- Income taxes............................................................... $ 1,718,000 $ 1,732,000
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, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. 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, 2000. NOTE 2. Short-term Borrowings The Company has a $25.0 million revolving credit facility ("Credit Agreement") with Bank of America and other lenders. The Credit Agreement has a three-year term and has scheduled annual commitment reductions. The maximum commitment balance is $25.0 million, $20.0 million and $15.0 million on December 31, 2001, June 30, 2002 and December 31, 2002, respectively. The Credit Agreement is secured by substantially all assets of the Company, requires the compliance of various financial affirmative and negative covenants and prohibits the payment of dividends. The Company was not in compliance with the debt coverage ratio and has obtained a waiver for such non-compliance for the quarter ended March 31, 2001. This Credit Agreement provides for a performance-pricing structured interest charge, ranging from LIBOR plus 1.75% to 2.75%, based on the results of certain financial ratios. As of March 31, 2001, the Company had $18.5 million outstanding under this Credit Agreement. The Company had no outstanding letters of credit as of March 31, 2001. NOTE 3. 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 January 1, 2001 and May 1, 2001, the Company repurchased 31,020 shares of common stock. NOTE 4. 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 and for hedging activities. The statement requires that the Company recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The Company adopted SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133 did not have an impact on the Company's financial statements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101 which summarizes certain of the staff's views in applying accounting principals generally accepted in the United States of America to revenue recognition in financial statements. The application of SAB No. 101 did not have a material impact on the Company's financial position or results of operations. 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, 2001 and 2000 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 increased to $17.0 million for the three months ended March 31, 2001 from $16.6 million for the same period in 2000, an increase of $0.4 million, or 2.4%. Of the increase, $0.8 million was attributable to stores not yet qualifying as comparable stores and $0.2 million to an increase in catalog and internet sales, net of $0.3 million from a 1.8% comparable stores sales decrease, and $0.3 million from a decrease in the Company's wholesale business. GROSS PROFIT. Gross profit decreased to $9.1 million for the three months ended March 31, 2001 from $9.2 million for the same period in 2000, a decrease of $0.1 million, or 1.1%. As a percentage of net sales, gross profit decreased to 53.6% in the three months ended March 31, 2001 from 55.2% in the same period in 2000. This 1.6% decrease was primarily due to increased sales promotions during the first quarter of 2001. 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 $12.2 million in the three months ended March 31, 2001 from $11.8 million in the same period for 2000, an increase of $0.4 million, or 3.4%. As a percentage of net sales, these expenses increased to 71.7% in the three months ended March 31, 2001 from 71.1% in the same period in 2000, an increase of 0.6%. The increase in selling, marketing and distribution expenses is attributable to additional operating costs of $0.1 million related to the 10 new stores open in the first quarter 2001. Additionally, in the first quarter 2000, these expenses were 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 decreased to $1.2 million for the three months ended March 31, 2001 from $1.3 million for the same period 2000, a decrease of $0.1 million, or 7.7%. As a percentage of net sales, these expenses decreased to 7.2% in the three months ended March 31, 2001 from 8.0% in the same period in 2000. The decrease in general and administrative expenses is primarily attributable of the decrease in depreciation expenses and the reduction of professional service fees. INTEREST EXPENSE. Interest expense increased to $0.2 million in the three months ended March 31, 2001 from $0.2 million interest income in the same period in 2000, principally due to interest on the $18.5 million outstanding short-term borrowings. LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 2001, the Company's primary uses of cash were for merchandise inventories, and income taxes. The Company satisfied its cash requirements primarily from existing cash balances and short-term borrowings under its credit agreement. Cash used in operating activities for the first three months ended March 31, 2001 and 2000 remained constant at $15.3 million. Cash used in investment activities for the three months ended March 31, 2001 and 2000 were $0.2 million and $0.4 million, respectively. Cash flows used in investment activities in the first quarter of 2001 and 2000 primarily related to capital additions to the Company's existing stores. Cash provided by financing activities in the three months ended March 31, 2001 were $12.4 million compared to $1.2 million of cash used in financing activities in the same period in 2000. In the first quarter 2001, the Company borrowed $12.5 million under its borrowing agreement and used $0.1 million to repurchase common stock. In the first quarter of 2000, the Company paid an annual dividend of $0.10 per share to stockholders for a total dividend payment of $1.2 million. The Company has a $25.0 million revolving credit facility ("Credit Agreement") with Bank of America and other lenders. The Credit Agreement has a three-year term and has scheduled annual commitment reductions. The maximum commitment balance is $25.0 million, $20.0 million and $15.0 million on December 31, 2001, June 30, 2002 and December 31, 2002, respectively. The Credit Agreement is secured by substantially all assets of the Company, requires the compliance of various financial affirmative and negative covenants and prohibits the payment of dividends. The Company was not in compliance with the debt coverage ratio and has obtained a waiver for such non-compliance for the quarter ended March 31, 2001. This Credit Agreement provides for a performance-pricing structured interest charge, ranging from LIBOR plus 1.75% to 2.75%, based on the results of certain financial ratios. As of March 31, 2001, the Company had $18.5 million outstanding under this Credit Agreement. The Company had no outstanding letters of credit as of March 31, 2001. 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. 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, 2000 filed with the Securities and Exchange Commission. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not believe it has material exposure to losses from market-rate sensitive instruments. The Company has not invested in derivative financial instruments. The Company has a Credit Agreement with a performance-pricing structured interest charge, ranging from LIBOR plus 1.75% to 2.75%, based on the results of certain financial ratios. See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources." The Company had $18.5 million borrowings under this arrangement as of March 31, 2001. 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 Not applicable... (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 11, 2000 /s/ ANDREW D. FESHBACH ---------------------- Andrew D. Feshbach President and Chief Executive Officer (Principal Executive Officer) May 11, 2000 /s/ ROBERTA J. MORRIS --------------------- Roberta J. Morris Chief Financial Officer and Treasurer (Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----