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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event
reported) April 27, 2006
Build-A-Bear Workshop, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 001-32320 43-1883836
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1954 Innerbelt Business Center Drive 63114
St. Louis, Missouri ------------------
- --------------------------------------------------- (Zip Code)
(Address of Principal Executive Offices)
(314) 423-8000
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
- ---------------------------------------------------------------
On April 27, 2006, Build-A-Bear Workshop, Inc. (the "Company") issued a
press release announcing, among other things, total revenue, net income, net
retail sales, gross margin and diluted earnings per share for the first quarter
of fiscal 2006. The press release also included expected earnings and diluted
earnings per share for the full year of fiscal 2006. A copy of the press release
is furnished as Exhibit 99.1 hereto and is incorporated by reference herein. The
description of the press release contained herein is qualified in its entirety
by the full text of such exhibit.
Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits
Exhibit Number Description of Exhibit
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99.1 Press Release dated April 27, 2006
2
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 hereunto duly authorized.
BUILD-A-BEAR WORKSHOP, INC.
Date: April 27, 2006 By: /s/ Tina Klocke
-----------------------------------
Name: Tina Klocke
Title: Chief Financial Bear,
Secretary and Treasurer
3
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
99.1 Press Release dated April 27, 2006
4
Exhibit 99.1
Build-A-Bear Workshop, Inc. Reports Fiscal 2006 First Quarter Results
ST. LOUIS--(BUSINESS WIRE)--April 27, 2006--Build-A-Bear Workshop,
Inc. (NYSE: BBW):
-- First quarter earnings per diluted share were $0.41 including
stock-based compensation expense of $0.02, vs. $0.40 in fiscal
2005.
-- Fiscal 2006 earnings guidance remains $1.44 to $1.53 per
diluted share. Guidance includes UK acquisition impacts of
approximately $0.10 to $0.13 per diluted share, stock-based
compensation expense of approximately $0.08 per diluted share
and distribution center transition cost of approximately $0.04
per diluted share.
Build-A-Bear Workshop, Inc. (NYSE: BBW), an interactive
entertainment retailer of customized stuffed animals, announced that
total revenue for the fiscal 2006 first quarter (13 weeks ended April
1, 2006) increased 14.6% to $98.6 million, compared to $86.1 million
in the prior year's first quarter (13 weeks ended April 2, 2005).
First quarter net income increased 4.7% to $8.3 million, or $0.41
per diluted share. These results, which include the impact of $0.02
per share for stock-based compensation expenses, compare to net income
of $8.0 million, or $0.40 per diluted share in last year's first
quarter.
"We are pleased with our performance and progress in the first
quarter, especially since the first quarter of last year included
sales generated by the Easter Holiday. This year, the Easter holiday
fell in April and is in our second quarter," said Maxine Clark,
chairman and chief executive bear. "Results were in-line with our
plans, and we also made progress on several important strategic
initiatives, including the acquisition of The Bear Factory and our
franchisee in the United Kingdom. In addition, construction of our new
Ohio distribution center remains on schedule and on budget with plans
to become operational this fall. Finally, we added Singapore to our
international franchise family. With new store openings, new ballpark
stadium stores, our first store in a zoo, and over 25 event visits
scheduled for our Build-A-Bear Workshop On Tour mobile store, we
continue to take our brand to wherever families go to have fun."
Fiscal 2006 First Quarter
Fiscal 2006 first quarter total revenue includes net retail sales
of $97.7 million, an increase of $12.0 million or 14.0% compared to
last year's first quarter. Net retail sales growth was primarily
driven by the addition of new stores opened during the past twelve
months and an increase in Internet sales of 16.6% to $2.5 million.
Comparable store sales declined 3.8%. First quarter total revenue
includes revenue from international franchise fees and third-party
licensing totaling $901,000, an increase of $565,000 compared to last
year's first quarter.
First quarter net income growth of $0.4 million, compared to the
fiscal 2005 first quarter, was driven primarily by higher net retail
sales, lower store preopening costs, and higher interest income,
partially offset by higher stock-based compensation expense. Retail
gross margin rate decreased to 49.0%, down from 50.5% in the fiscal
2005 first quarter. Selling, general and administrative expense as a
percent of total revenue increased to 35.9% from 34.7% primarily due
to higher stock-based compensation and performance-based bonus
expenses.
Fiscal 2006 first quarter results include the impact of
stock-based compensation expense of $0.5 million pretax ($0.3 million
net of tax or $0.02 per diluted share). Fiscal 2005 first quarter
results include the impact of stock-based compensation expense of
$61,000 pretax ($38,000 net of tax and no per share impact).
During the 2006 first quarter, the company opened two new
Build-A-Bear Workshop(R) retail stores in the United States and
Canada, as planned. This compares to opening three new Build-A-Bear
Workshop stores during the 2005 first quarter. In addition, the
company opened one new ballpark store - in San Francisco's AT&T Park -
the first store in a zoo at the Saint Louis Zoo, and one new friends
2B made store in the newly remodeled and expanded Myrtle Beach South
Carolina Build-A-Bear Workshop store. A second new ballpark store at
the new Busch Stadium - home of the St. Louis Cardinals - in St. Louis
opened in early April along with three ballpark store reopenings in
Philadelphia, Cincinnati and Cleveland.
Build-A-Bear Workshop stores at the end of the first quarter
totaled 193 in the United States and nine in Canada. During the
quarter the international franchisees opened no new international
stores; international stores totaled 30 at the end of the first
quarter.
U.K. Acquisition Update
On April 3, 2006, the company announced that it had completed the
acquisition of The Bear Factory Limited, a United Kingdom-based
stuffed animal retailer, and the acquisition of Amsbra, Ltd., its
franchisee in the U.K.
The acquisition includes 29 Bear Factory stores - 28 stores in the
UK and one in the Irish Republic - and 11 Amsbra stores. The company
will convert the Bear Factory stores to Build-A-Bear Workshop stores
starting in May and complete the store conversion in time for the 2006
holiday season.
International Franchising
In February, the company signed a franchise agreement to open
Build-A-Bear Workshop stores in Singapore. This recent agreement
brings the total number of international countries with franchise
agreements to fourteen. Those countries include Australia, Belgium,
Denmark, France, India, Japan, Luxembourg, the Netherlands, Norway,
the Republic of China (Taiwan), Singapore, South Korea, Sweden and
Thailand. In fiscal 2005, revenue from international franchise fees
totaled $2.0 million. The company expects fiscal 2006 international
franchise fee revenue to total approximately $3.0 million.
International franchise fee revenue excludes U.K.-based stores which
are now reflected in retail sales following the acquisition of Amsbra,
Ltd.
Outlook for 2006
The company reaffirmed its previous guidance for fiscal 2006 (52
weeks ended Dec. 30, 2006) of earnings per share (EPS) to be in the
range of $1.44 to $1.53. This guidance includes the anticipated U.K.
acquisition impacts of approximately $0.10 to $0.13 per diluted share,
stock-based compensation expense of approximately $0.08 per diluted
share ($2.7 million pretax, $1.7 million net of tax) and distribution
center transition costs of approximately $0.04 per diluted share ($1.4
million pretax, $0.9 million net of tax).
The U.K. acquisition impacts primarily reflect costs associated
with rebranding, store conversion, and integration of the Bear Factory
stores, as well as a reduction in franchise fee revenue and lower
interest income.
Build-A-Bear Workshop expects to open approximately 30 new
Build-A-Bear Workshop stores in the United States and Canada and
approximately five new friends 2B made(R) stores in fiscal 2006.
Fourteen of the new U.S. and Canada stores are planned to open in the
second quarter. In the UK, the company plans to open three to five new
Build-A-Bear Workshop stores in fiscal 2006; international franchisees
expect to open up to 20 new stores.
Other News
Build-A-Bear Workshop will host its Annual Meeting of Shareholders
on Thursday, May 11, 2006, at 10:00 a.m. local time (CDT) at the
McDonnell Center at River Camp at the Saint Louis Zoo, in St. Louis,
Missouri. The company will broadcast the meeting over the Internet via
webcast. The webcast will be accessible through the Investor Relations
page of the Build-A-Bear Workshop corporate web site,
http://ir.buildabear.com. Following the live meeting, a replay of the
webcast will be available until the next annual meeting.
Today's Conference Call Webcast
Today at 10:00 a.m. EDT, Build-A-Bear Workshop(R) will host a live
audio webcast of its discussion with the investment community
regarding the company's fiscal 2006 first quarter results. The webcast
can be accessed at http://ir.buildabear.com. Following the live
discussion, a replay of the webcast will be available until the next
quarterly conference call.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. is the only global company that offers
an interactive make-your-own stuffed animal retail-entertainment
experience. Founded in St. Louis in 1997, the company currently
operates more than 240 stores in the United States, Canada and the
United Kingdom. The addition of franchise stores in Europe, Asia and
Australia make Build-A-Bear Workshop the leader in interactive retail.
In November 2004, the company expanded the make-your-own concept from
stuffed animals to dolls with the opening of its first friends 2B
made(R) stores, where Guests can make their own doll friends. In April
2006, Build-A-Bear Workshop acquired The Bear Factory Limited and
Amsbra, Ltd. adding company-owned stores in the United Kingdom and
Ireland. Build-A-Bear Workshop (NYSE: BBW) posted total revenue of
$362 million in fiscal 2005. For more information, call 888.560.BEAR
(2327) or visit the company's award-winning Web sites at
www.buildabear.com and www.friends2bmade.com.
Forward-Looking Statements
This press release contains "forward-looking statements" (within
the meaning of the federal securities laws) which represent the
Build-A-Bear Workshop's expectations or beliefs with respect to future
events. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially
from those anticipated. Those factors include, without limitation: we
may not realize some of the expected benefits of the acquisition of
Amsbra and The Bear Factory; we may be unable to construct and/or
effectively run our own warehouse and distribution center; we may be
unable to generate comparable store sales growth; our marketing
initiatives may not generate sufficient brand awareness and sales; we
may be unable to effectively manage our international franchises or
comply with changing laws relating thereto; we may be unable to
generate demand for our retail experience, or to respond to consumer
preferences; customer mall traffic may decrease, as a result of
various factors, including a reduction of consumer confidence because
of terrorism or war; general economic conditions may worsen; our
market share could be adversely affected by competitors; we may lose
key personnel, or be unable to hire qualified additional personnel;
vendor deliveries may be disrupted; the availability and costs of our
products could be impacted by international manufacturing and trade
issues; our warehousing and distribution vendors may perform poorly;
we may fail to protect our intellectual property and may have
infringement, misappropriation or other disputes or litigation with
third parties; we may be unable to open new stores, renew or replace
our store leases, enter into leases for new stores on favorable terms,
or continue to comply with our current leases; we may experience
communications or information systems failures; we may suffer negative
publicity or be sued due to alleged violations of labor laws, employee
regulations or unethical practices, either by the Company or its
merchandise manufacturers; and we may violate or be accused of
violating privacy or security laws by reason of improperly obtaining
or failing to adequately protect Guest information. These and other
applicable risks, cautionary statements and factors that could cause
actual results to differ from the Company's forward-looking statements
are included in the Company's filings with the SEC, including as
described in the Company's annual report on Form 10-K for the fiscal
year ended December 31, 2005. The Company undertakes no obligation to
update or revise any forward- looking statements to reflect subsequent
events or circumstances even if experience or future changes make it
clear that any projected results expressed or implied therein will not
be realized.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
13 Weeks 13 Weeks
Ended Ended
April 1, % of April 2, % of
2006 Total 2005 Total
Revenues Revenues
(1) (1)
----------- --------------- ---- -------
Revenues:
Net retail sales $ 97,730 99.1%$ 85,723 99.6%
Franchise fees 690 0.7 306 0.4
Licensing revenue 211 0.2 30 0.0
----------- ------- ----------- --------
Total revenues 98,631 100.0 86,059 100.0
----------- ------- ----------- --------
Costs and expenses:
Cost of merchandise sold 49,860 51.0 42,397 49.5
Selling, general and
administrative 35,451 35.9 29,845 34.7
Store preopening 615 0.6 1,188 1.4
Interest expense (income),
net (866) (0.9) (368) (0.4)
----------- ------- ----------- --------
Total costs and expenses 85,060 86.2 73,062 84.9
----------- ------- ----------- --------
Income before income taxes 13,571 13.8 12,997 15.1
Income tax expense 5,225 5.3 5,029 5.8
----------- ------- ----------- --------
Net income $ 8,346 8.5 $ 7,968 9.3
=========== ===========
Earnings per common share:
Basic $ 0.42 $ 0.41
=========== ===========
Diluted $ 0.41 $ 0.40
=========== ===========
Shares used in computing common per share amounts:
Basic 20,078,876 19,274,625
Diluted 20,401,378 20,123,927
(1) Selected statement of operations data expressed as a percentage
of total revenues, except cost of merchandise sold which is
expressed as a percentage of net retail sales.
Percentages will not total due to cost of merchandise sold being
expressed as a percentage of net retail sales and rounding.
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
April 1, December
31,
2006 2005
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ASSETS
Current assets:
Cash and cash equivalents $43,398 $90,950
Cash in escrow 36,893 -
Inventories 43,591 40,157
Receivables 7,297 6,629
Prepaid expenses and other current assets 7,344 6,839
Deferred tax assets 3,347 3,232
--------- ---------
Total current assets 141,870 147,807
Property and equipment, net 95,194 89,973
Note receivable from franchisee 4,517 4,518
Other intangible assets, net 1,340 1,454
Other assets, net 2,443 2,356
--------- ---------
Total Assets $245,364 $246,108
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $32,265 $34,996
Accrued expenses 12,371 15,792
Gift cards and customer deposits 16,116 22,865
Deferred revenue 7,795 7,508
--------- ---------
Total current liabilities 68,547 81,161
--------- ---------
Deferred franchise revenue 2,740 2,306
Deferred rent 33,116 30,687
Other liabilities 550 586
Deferred tax liabilities 278 1,011
Stockholders' equity:
Common stock, par value $0.01 per share 204 201
Additional paid-in capital 85,246 85,259
Treasury stock (211) -
Retained earnings 55,046 46,700
Notes receivable from officers (152) (151)
Unearned compensation - (1,652)
--------- ---------
Total stockholders' equity 140,133 130,357
--------- ---------
Total Liabilities and Stockholders' Equity $245,364 $246,108
========= =========
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
13 Weeks 13 Weeks
Ended Ended
April 1, April 2,
2006 2005
---------- ----------
Cash flows from operating activities:
Net income $8,346 $7,968
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 4,782 4,165
Deferred taxes (847) (686)
Tax benefit from stock option exercises (405) 2,095
Loss (gain) on disposal of property and
equipment (13) 112
Stock-based compensation 493 61
Change in assets and liabilities:
Inventories (3,435) (28)
Receivables (667) 319
Prepaid expenses and other assets (504) 289
Accounts payable (2,731) (3,884)
Accrued expenses and other liabilities (6,772) (5,240)
---------- ----------
Net cash provided by (used in) operating
activities (1,753) 5,171
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (9,662) (5,501)
Purchases of other assets (301) (270)
Escrow deposit (36,893) -
---------- ----------
Net cash used in investing activities (46,856) (5,771)
---------- ----------
Cash flows from financing activities:
Exercise of employee stock options and employee
stock purchases 652 2,237
Collection of note receivable from officer - 1,645
Tax benefit from stock option exercises 405 -
---------- ----------
Net cash provided by financing activities 1,057 3,882
---------- ----------
Net increase (decrease) in cash and cash
equivalents (47,552) 3,282
Cash and cash equivalents, beginning of period 90,950 67,327
---------- ----------
Cash and cash equivalents, end of period $43,398 $70,609
========== ==========
BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data
(dollars in thousands, except square foot data)
13 Weeks 13 Weeks
Ended Ended
April 1, April 2,
2006 2005
---------- ---------
Other financial data:
Gross margin ($) (1) $ 47,870 43,326
Gross Margin (%) (1) 48.98% 50.54%
Capital expenditures $ 9,662 5,501
Depreciation and amortization $ 4,782 4,165
Store data (2):
Number of stores at end of period 202 173
Store square footage at end of period 623,360 522,630
Comparable store sales change (%) (3) (3.8)% 5.4%
(1) Gross margin represents net retail sales less cost of merchandise
sold. Gross margin percentage represents gross margin divided by
net retail sales.
(2) Excludes our webstore and seasonal and event-based locations.
(3) Comparable store sales percentage changes are based on net retail
sales and stores are considered comparable beginning in their
thirteenth full month of operation.
CONTACT: Build-A-Bear Workshop Inc., St. Louis
Investors:
Molly Salky, 314.423.8000 x5353
or
Media:
Jill Saunders, 314.423.8000 x5293