Build-A-Bear Workshop 2009 Annual Report Download - page 65

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
Notes to Consolidated Financial Statements (continued)
expected life of 0.25 years. The assumptions used in the
option pricing model for fiscal 2007 were: (a) dividend yield
of 0%; (b) volatility of 50%; (c) risk-free interest rate of 6.0%;
and (d) an expected life of 0.25 years.
The ASPP was terminated, effective December 31, 2008.
(13) STOCKHOLDERS’ EQUITY
The following table summarizes the changes in outstanding
shares of common stock for fiscal 2006, 2007 and 2008:
Common
Stock
Shares as of December 30, 2006 20,537,421
Shares issued under employee stock plans, net of
shares withheld in lieu of tax withholding 315,436
Repurchase of shares (176,500)
Shares as of December 29, 2007 20,676,357
Shares issued under employee stock plans, net of
shares withheld in lieu of tax withholding 487,465
Repurchase of shares (1,685,072)
Shares as of January 3, 2009 19,478,750
Shares issued under employee stock plans, net of
shares withheld in lieu of tax withholding 968,593
Shares as of January 2, 2010 20,447,343
(14) EMPLOYEE BENEFIT PLANS
401(k) Savings Plan
During 2000, the Company established a defined
contribution plan that conforms to IRS provisions for 401(k)
plans. The Build-A-Bear Workshop, Inc. Employees Savings
Trust covers associates who work 1,000 hours or more in a
year and have attained age 21. The Company, at the
discretion of its board of directors, can provide for a
Company match on the first 6% of employee deferrals. For
2009 and 2008, the Company provided a match of 15% on
the first 6% of employee deferrals totaling $0.2 million in
each year. For 2007, the Company provided a match of 30%
on the first 6% of employee deferrals totaling $0.3 million.
The Company match vests over a five-year period.
(15) RELATED-PARTY TRANSACTIONS
The Company bought fixtures for new stores and furniture for
the corporate offices from a related party. The total payments
to this related party for fixtures and furniture amounted to
$0.1 million, $1.6 million and $2.5 million, in 2009, 2008
and 2007, respectively. No amounts were due to this related
party as of January 2, 2010 or January 3, 2009.
The Company made charitable contributions of $0.9
million, $1.2 million and $0.8 million in 2009, 2008 and
2007, respectively, to charitable foundations controlled by the
executive officers of the Company. The foundations support a
variety of children’s causes, domestic animal shelters, disaster
relief and other concerns. The foundations distribute grants to
qualifying charitable organizations based upon decisions of
their respective contribution committees most of whose
members are employees of the Company. The total due to the
charitable foundations as of January 2, 2010 and January 3,
2009 was $0.7 million and $0.3 million, respectively.
(16) INVESTMENT IN AFFILIATE
The Company holds a minority interest in Ridemakerz, LLC,
which is accounted for under the equity method. Ridemakerz
is an early-stage company that has developed an interactive
retail concept that allows children and families to build and
customize their own personalized cars. In 2006, the
Company invested $0.6 million, which represented an
ownership interest of approximately 10%. The Company
invested an additional $2.4 million in 2007 and $2.5 million
in 2008. The Company also entered into a series of
agreements whereby the Company agreed to perform
advisory and operational support services for Ridemakerz in
exchange for additional equity. The Company received $0.7
million, $0.9 million and $1.2 million in equity in exchange
for support services provided in fiscal 2009, 2008 and
2007, respectively. The Company also purchased a call
option from a group of other Ridemakerz investors for
$150,000 for 1.25 million Ridemakerz common units at an
exercise price of $1.25 per unit. The call option was
immediately exercisable and expires April 30, 2012.
Simultaneously, the Company granted a put option to the
same group of investors for 1.25 million common units at an
exercise price of $0.50 per unit. The put option was
exercisable on April 30, 2008 and expires on April 30,
2012.
Under current agreements, the Company is the sole
member of an equity class that is allocated losses only
following the allocation of losses to all other common and
preferred equity holders to the extent of their capital
contributions. All of the priority equity members’ capital was
reduced to zero in the fiscal 2009 second quarter. As a
result, for fiscal 2009, the Company recorded non-cash
pre-tax losses of $7.5 million. In the 2009 fourth quarter, the
Company determined that its investment in Ridemakerz had
experienced an other than temporary decline in its fair value
due to continued significant losses and uncertainty as to the
ultimate results of their restructuring. Accordingly, an
additional non-cash charge of $1.0 million was recorded.
Additionally, the Company wrote-off $1.1 million in
receivables from Ridemakerz. All charges related to
Ridemakerz are included in “Losses from investment in
affiliate” in the Consolidated Statements of Operations and
are part of the Retail segment. As of January 2, 2010, the
book value of the Company’s investment in Ridemakerz had
been reduced to zero. No income or loss allocations,
impairments or other charges related to Ridemakerz were
recorded in fiscal 2008 or 2007. The Company still retains
an ownership interest of approximately 25%. Under the
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