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) February 25, 2005
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 ------------------
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(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 4.02. Non-Reliance on Previously Issued Financial Statements or a
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Related Audit Report or Completed Interim Review.
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(a) On February 25, 2005, management of Build-A-Bear Workshop, Inc. (the
"Company") discussed with the Audit Committee of the Board of Directors of the
Company a February 7, 2005 clarification of existing generally accepted
accounting principles ("GAAP") applicable to leases and leasehold improvements
articulated by the Office of the Chief Accountant of the Securities and Exchange
Commission ("SEC"). The Company has determined it will restate certain prior
period financial statements in order to correct its current method of accounting
for rent holidays and landlord allowances. The Audit Committee concluded that
the Company's previously issued audited consolidated financial statements should
no longer be relied upon because of the errors described above.
Historically, the Company has recognized rent expense for leases on a
straight-line basis beginning on the earlier of the store opening date or lease
commencement date, which had the effect of excluding the build-out period (or
"rent holiday") from the calculation of the period over which rent is expensed.
Based on internal review and discussions with the Audit Committee and the
Company's independent public accountants, the Company has determined that it
will correct its accounting practices to include the build-out period in the
calculation of the period over which rent is expensed.
Furthermore, the Company has historically accounted for landlord allowances
as a reduction of the cost of leasehold improvements. Based on internal review
and discussions with the Audit Committee and the Company's independent public
accountants, the Company has determined that it will now account for landlord
allowances as a deferred credit that will be recognized over the term of the
lease as a reduction of rent expense. The term of the lease, as mentioned above,
will now include the build-out period. The corrections to lease accounting
methods will not have an impact on the cash flow and total rent expense over the
periods of the underlying leases.
Authorized officers of the Company have discussed with the Company's
independent registered public accounting firm the Company's determination that
previously issued financial statements should no longer be relied upon because
of the errors described above. The Company is currently working with its
independent accountants to quantify the error and the impacted periods.
The Company issued a press release in connection with the foregoing on
February 28, 2005. The Company anticipates concluding its review in conjunction
with announcing fiscal 2004 financial results on March 10, 2005. 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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(c) Exhibits
Exhibit Number Description of Exhibit
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99.1 Press Release dated February 28, 2005
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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.
(Registrant)
Date: February 28, 2005 /s/ Tina Klocke
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Name: Tina Klocke
Title: Chief Financial Bear, Secretary and
Treasurer
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
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99.1 Press Release dated February 28, 2005
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Exhibit 99.1
Build-A-Bear Workshop, Inc. Announces Review of Lease Related Accounting Methods
ST. LOUIS--(BUSINESS WIRE)--Feb. 28, 2005--Build-A-Bear Workshop,
Inc. (NYSE:BBW), an interactive, entertainment retailer of customized
stuffed animals, announced that it is reviewing its lease related
accounting methods.
Like many companies in the retail and restaurant industries, the
company is reviewing its lease accounting methods in light of the new
clarification of generally accepted accounting principles provided by
the Office of the Chief Accountant of the Securities and Exchange
Commission on Feb. 7, 2005.
At this time, the company has determined it will restate certain
prior period financial statements in order to correct its current
method of accounting for rent holidays and landlord allowances. The
company's review is in process and includes consultations with its
independent auditor and audit committee of the board of directors. The
company anticipates completing its review in conjunction with
announcing fiscal 2004 financial results on March 10, 2005.
As previously announced, Build-A-Bear Workshop plans to release
fiscal 2004 fourth quarter and full year financial results before the
market opens on March 10, 2005. The company will host a conference
call to discuss the results at 9:00 a.m. Eastern Time that same
morning. Speakers on the call include Maxine Clark, chairman and chief
executive bear, Barry Erdos, president and chief operating officer
bear and Tina Klocke, chief financial bear.
About Build-A-Bear Workshop, Inc.
Build-A-Bear Workshop, Inc. (NYSE:BBW) is the leading and only
national, company providing a make-your-own stuffed animal interactive
entertainment retail experience. The first store opened in St. Louis
in 1997 and as of January 2005 the company operated 170 stores in 40
states and Canada. With the opening of its international store in
Sheffield, England in the fall of 2003, and the addition of
international stores in Japan, Denmark and Australia in 2004,
Build-A-Bear Workshop has become the global leader in the teddy bear
business. In November 2004, the company also opened two friends 2B
made(R) stores, the newest concept launch from Build-A-Bear Workshop.
For more information about the company and its products call (888)
560-BEAR (2327) or visit the company's award-winning website at
www.buildabear.com.
Forward-Looking Statements
Statements in this news release expressing or indicating the
beliefs and expectations of management regarding future performance
are forward-looking statements including, without limitation, lease
accounting methods, expected financial restatements, future earnings
release dates, and any other plans, objectives, expectations and
intentions contained in this release that are not historical facts.
These statements reflect our current views with respect to future
events and are based on assumptions and subject to risks and
uncertainties. These risks and uncertainties include, without
limitation, those detailed in our final prospectus dated October 28,
2004 under the caption "Risk Factors" and the following: (1) we may be
unable to maintain our current comparable store sales growth; (2) our
marketing initiatives may not be effective in generating sufficient
levels of brand awareness and guest traffic; (3) we may be unable open
new stores to effectively manage our growth; (4) we may be unable to
effectively manage our international franchises or laws relating to
those franchises may change; (5) we may be unable to generate interest
in and demand for our interactive retail experience, or to identify
and respond to consumer preferences in a timely fashion; (6) customer
traffic may decrease in the shopping malls where we are located, on
which we depend to attract guests to our stores; (7) general economic
conditions may decrease, which could lead to reduced consumer demand
for our products; (8) our market share could be adversely affected by
a significant number of competitors; (9) we may lose key personnel, be
unable to hire qualified additional personnel, or experience turnover
of our management team; (10) the ability of our principal vendors to
deliver merchandise may be disrupted; (11) the availability and costs
of our products could be adversely affected by risks associated with
international manufacturing and trade; (12) third parties that manage
our warehousing and distribution functions may perform poorly; (13) we
may fail to renew, register or otherwise protect our trademarks or
other intellectual property; (14) we may have disputes with, or be
sued by, third parties for infringement or misappropriation of their
proprietary rights; (15) we may be unable to renew or replace our
store leases, or enter into leases for new stores on favorable terms,
or may violate the terms of our current leases; (16) we may experience
failures in our communications or information systems; (17) terrorism
or the uncertainty of future terrorist attacks or war could reduce
consumer confidence and mall traffic; (18) we may become subject to
challenges relating to overtime pay or other regulations relating to
our employees; (19) we may suffer negative publicity or be sued due to
violations of labor laws or unethical practices by manufacturers of
our merchandise, and (20) we may improperly obtain or be unable to
protect information from our guests in violation of privacy or
security laws or expectations.
These risks, uncertainties and other factors may adversely affect
our business, growth, financial condition or profitability, or subject
us to potential liability, and cause our actual results, performance
or achievements to be materially different from those expressed or
implied by our forward-looking statements. We do not undertake any
obligation or plan to update these forward-looking statements, even
though our situation may change.
CONTACT: Build-A-Bear Workshop, Inc.
Investors:
Molly Salky, 314-423-8000 x5353
or
Media:
Jill Saunders, 314-423-8000 x5293