Build-A-Bear Workshop 2011 Annual Report Download - page 40

BUILD-A-BEAR WORKSHOP, INC. 2011 FORM 10-K
SEASONALITY AND QUARTERLY RESULTS
The following is a summary of certain unaudited quarterly results of operations data for each of the last two fiscal years.
Fiscal 2011 Fiscal 2010
(Dollars in millions, except per share data)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total revenues $ 96.0 $ 81.8 $97.4 $119.1 $101.4 $ 74.1 $100.1 $125.8
Retail gross margin(1) 36.6 28.8 38.4 50.7 41.0 22.4 35.4 56.3
Net (loss) income(2) (2.3) (6.7) 0.9 (9.0) 1.7 (8.5) (1.4) 8.3
Earnings (loss) per common share:
Basic (0.12) (0.37) 0.05 (0.56) 0.09 (0.45) (0.07) 0.42
Diluted (0.12) (0.37) 0.05 (0.56) 0.09 (0.45) (0.07) 0.42
Number of stores (end of quarter) 342 342 344 346 345 346 347 344
(1) Retail gross margin represents net retail sales less cost of retail merchandise sold.
(2) The 2011 fourth quarter included a $15.6 million charge related to the recording of a valuation allowance on all US deferred tax assets.
As a toy retailer, our sales are highest in our fourth
quarter, followed by the first quarter. The timing of holidays
and school vacations can impact our quarterly results. Our
European-based stores have historically been more heavily
weighted in the fourth quarter as compared to our North
American stores. We cannot ensure that this will continue to
be the case.
Our operating results for one period may not be
indicative of results for other periods, and may fluctuate
significantly because of a variety of factors, including those
discussed under “Risk Factors — Risks Related to Owning Our
Common Stock —Fluctuations in our quarterly results of
operations could cause the price of our common stock to
substantially decline.”
The timing of new store openings may result in fluctuations
in quarterly results as a result of the revenues and expenses
associated with each new store location. We typically incur
most preopening costs for a new store in the three months
immediately preceding the store’s opening. We expect our
growth, operating results and profitability to depend in some
degree on our ability to increase our number of stores.
For accounting purposes, the quarters of each fiscal year
consist of 13 weeks, although we will have a 14-week quarter
approximately once every six years. The fiscal 2008 fourth
quarter was a 14-week quarter. Quarterly fluctuations and
seasonality may cause our operating results to fall below the
expectations of securities analysts and investors, which could
cause our stock price to fall.
LIQUIDITY AND CAPITAL RESOURCES
Our cash requirements are primarily for the opening of new
stores, installation and upgrades of information systems and
working capital. Over the past several years, we have met
these requirements through capital generated from cash flow
provided by operations. We have access to additional cash
through a revolving line of credit that has been in place since
2000. From our inception to December 2001, we raised at
various times a total of $44.9 million in capital from several
private investors. In 2004, we raised $25.7 million from the
initial public offering of our common stock.
Operating Activities. Cash flows provided by operating
activities were $16.0 million in fiscal 2011 and $22.0 million
in fiscal 2010 and $24.0 million in fiscal 2009. Cash flows
from operating activities decreased in fiscal 2011 as
compared to 2010 as accounts payable and accrued
expenses increased due to the timing of inventory shipments
and payments were offset by higher inventory levels. Cash
flows from operating activities decreased slightly in fiscal
2010 as compared to 2009 as improved net income and an
increase in accounts payable and accrued expenses due to
the timing of inventory shipments and payments were offset by
higher inventory levels.
Investing Activities. Cash flows used in investing activities
were $13.3 million in fiscal 2011, $13.8 million in fiscal
2010 and $8.9 million in fiscal 2009. Cash used in investing
activities in 2011 related primarily to the continued
installation and upgrades of central office information
technology systems, the opening of eight new stores, the
relocation of four stores and the purchase of short-term
investments, offset by the maturity of those investments. Cash
used in investing activities in 2010 related primarily to the
continued installation and upgrades of central office
information technology systems, acquisition of intangible
assets, the opening of four new stores and 11 temporary
locations and the relocation of one store, offset by cash
received for the sale of key money from one of our French
stores. Cash used in investing activities in 2009 related
primarily to the continued installation and upgrades of central
office information technology systems, acquisition of
intangible assets, repurposing existing Friends 2B Made
locations to Build-A-Bear Workshop stores, the opening of one
new store and the relocation of one store.
Financing Activities. Financing activities used cash of
$14.6 million and $7.2 million in fiscal 2011 and fiscal
2010, respectively. There was no cash from financing
activities in 2009. Purchases of our stock in fiscal 2011 and
2010 used cash of $15.0 million and $7.3 million,
respectively. In fiscal 2011 and 2010, exercises of employee
stock options and related tax benefits provided cash of
$0.4 million and $0.1 million, respectively. No employee
stock options were exercised in fiscal 2009.
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