Build-A-Bear Workshop 2012 Annual Report Download - page 40

BUILD-A-BEAR WORKSHOP, INC. 2012 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 2012 Fiscal 2011
(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 $ 96.4 $ 80.4 $ 86.0 $118.1 $ 96.0 $ 81.8 $97.4 $119.1
Retail gross margin(1) 38.0 27.7 30.8 49.2 36.6 28.8 38.4 50.7
Goodwill impairment — — — 33.7 ————
Net (loss) income(2) (1.0) (7.6) (4.3) (36.4) (2.3) (6.7) 0.9 (9.0)
Earnings (loss) per common share:
Basic (0.06) (0.46) (0.26) (2.23) (0.12) (0.37) 0.05 (0.56)
Diluted (0.06) (0.46) (0.26) (2.23) (0.12) (0.37) 0.05 (0.56)
Number of stores (end of quarter) 357 354 351 351 357 354 355 356
(1) Retail gross margin represents net retail sales less cost of retail merchandise sold.
(2) The fourth quarter of 2012 and 2011 included a $4.7 million and a $15.6 million charge, respectively, related to the recording of a valuation allowance
on 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 permanent store closures and temporary
closures for remodels and relocations may result in fluctuations
in quarterly results as a result of the revenues and expenses
associated with each store location. We typically incur most
preopening costs for a store in the three months immediately
preceding the store’s opening or reopening. We also incur
costs to close stores, typically in the three to six months prior
to the closure.
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.
Operating Activities. Cash flows provided by operating
activities were $14.9 million in fiscal 2012 and $16.0 million
in fiscal 2011 and $22.0 million in fiscal 2010. Cash flows
from operating activities decreased in fiscal 2012 as
compared to 2011, primarily due to decreased store
contribution. 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.
Investing Activities. Cash flows used in investing activities
were $15.1 million in fiscal 2012, $13.3 million in fiscal
2011 and $13.8 million in fiscal 2010. Cash used in
investing activities in 2012 related primarily to the continued
installation and upgrades of central office information
technology systems, the opening of five new stores, the
remodeling or relocation of 14 stores, offset by the maturity
of short-term investments. 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.
Financing Activities. Financing activities used cash of
$1.2 million, $14.6 million and $7.2 million in 2012, 2011
and 2010, respectively. Purchases of our stock in fiscal 2012,
2011 and 2010 used cash of $1.3 million, $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 2012.
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