Big Dog Holdings Inc. Announces Third-Quarter 2001 Results.Business Editors & Retail Writers SANTA BARBARA Santa Barbara (săn'tə bär`brə, –bərə), city (1990 pop. 85,571), seat of Santa Barbara co., S Calif., on the Pacific Ocean; inc. 1850. , Calif.--(BUSINESS WIRE)--Oct. 31, 2001 Big Dog Holdings Inc. (Nasdaq:BDOG) (www.bigdogs.com), a developer, marketer and retailer of branded, lifestyle consumer products, today reported the financial results for the third quarter ended Sept. 30, 2001. Results for the Quarter Ended Sept. 30, 2001 Earnings per share increased 5% to $.22, as compared with $.21 for the same period last year. The increase in earnings per share reflects the effect of the company's repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 3.5 million of its shares in a self tender offer that closed in early September 2000. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased 4.1% to $30.2 million for the third quarter 2001, as compared with $31.5 million for third quarter 2000. The decline in sales was attributable to a 7.0% decrease in comparative store sales for the period. The company had 201 stores open at Sept. 30, 2001, compared to 199 at Sept. 30, 2000. Gross margin for the third quarter declined to 57.3%, as compared to 58.8% for the same period last year. The decline in gross margin was partially offset by improved expense control as operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined to $13.9 million from $14.6 million in the third quarter 2000. Net income was $1.9 million, as compared with $2.3 million for the third quarter 2000. Commenting on the results, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Andrew Feshbach stated: "The third quarter was very up and down for us. Initially, we saw traffic declines and overall price competition requiring us to be more promotionally driven. However, this negative trend was reversed with a strong back-to-school business beginning in August. This positive trend continued into September, when we experienced a strong decline as an immediate result of the terrorist attack on September 11th. "Fortunately, our business began to recover in later September, and that trend has continued through October. Of particular note was how fast we were able to respond to the demand for `Stars and Stripes' products, mainly T-shirts, featuring patriotic themes and positive American attitudes. Big Dogs Big Dogs, based in Santa Barbara, California, is a chain of stores in the United States which features clothing and apparel holding the "Big Dogs" brand name. The Company has always had a strong All-American theme in its brand image, and we are proud to support the increase in public spirit with our merchandise." Other Business On Sept. 10, the company announced its agreement to buy Crazy Shirts Inc., a Honolulu-based retailer of T-shirts and casual sportswear currently operating in bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . However, with Crazy Shirts' focus on Hawaii and other tourist destinations A tourist destination is a city, town or other area the economy of which is dependent to a significant extent on the revenues accruing from tourism. It may contain one or more tourist attractions or visitor attractions and possibly some "tourist traps". , its store chain was severely negatively impacted by the subsequent September 11 tragedy, as the drop-off in air travel to Hawaii and tourism in general caused already declining company sales to further fall. Accordingly, Big Dogs withdrew its original offer but continued to pursue the purchase through negotiation to reduce the purchase price. However, in a recently concluded bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. hearing and resulting auction, another company overbid o·ver·bid v. o·ver·bid, o·ver·bid·den or o·ver·bid, o·ver·bid·ding, o·ver·bids v.tr. 1. To outbid (a person) for something, as at an auction. 2. Big Dogs and ultimately paid more for Crazy Shirts than the approximately $9.2 million price that Big Dogs had agreed to pay before the events of September 11. Big Dogs did not believe the investment in Crazy Shirts prudent at that level and declined to match the bid. Commented Feshbach: "We simply did not see the value at the levels the bidding eventually reached for a company that was already in bankruptcy and under tremendous pressure as a result of the events of September 11th. The sharp drop in tourism made the requirements for turning around Crazy Shirts' business that more expensive and risky. "We believe there are a number of more promising acquisition opportunities in the current market on which we can spend our resources, and we will continue to explore them in order to increase growth and profitability." Big Dogs also announced that it was successful in recently closing a new three-year, $30 million credit facility with Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. Retail Finance. This new facility was put in place to help finance the Crazy Shirts acquisition and will provide greater borrowing flexibility to the company and makes it better positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. new growth opportunities. Big Dog Holdings Inc. develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular-priced consumer products, including activewear, casual sportswear, accessories and gifts. The BIG DOGS brand image is one of quality, fun and a sense of humor Noun 1. sense of humor - the trait of appreciating (and being able to express) the humorous; "she didn't appreciate my humor"; "you can't survive in the army without a sense of humor" sense of humour, humor, humour . The BIG DOGS brand is designed to appeal to people of all ages and demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , particularly baby boomers See generation X. and their kids, big and tall customers, and pet owners. The company is in the process of extending its brand equity through selective licensing, cross promotions and the building of an Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the enterprise for its market. In addition to its 201 retail stores, Big Dogs markets its products through its catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. , better wholesale accounts and Internet sales. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: With the exception of historical information, the matters discussed in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties. Further information on the company's risk factors is contained in the company's quarterly and annual reports as filed with the Securities and Exchange Commission.
BIG DOG HOLDINGS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30,
2001 2000
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 250,000 $ 989,000
Account receivable, net 533,000 555,000
Inventories 38,269,000 36,989,000
Prepaid expenses and other current assets 1,356,000 1,158,000
Deferred income taxes 2,170,000 1,552,000
Total current assets 42,578,000 41,243,000
PROPERTY AND EQUIPMENT, Net 6,959,000 10,028,000
INTANGIBLE ASSETS, Net 170,000 143,000
OTHER ASSETS 193,000 3,603,000
TOTAL $49,900,000 $55,017,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $16,500,000 $19,875,000
Accounts payable 5,321,000 5,356,000
Income taxes payable 93,000 1,475,000
Accrued expenses and other
current liabilities 2,233,000 1,932,000
Total current liabilities 24,147,000 28,638,000
DEFERRED RENT 656,000 853,000
DEFERRED GAIN ON SALE-LEASEBACK 419,000 472,000
Total liabilities 25,222,000 29,963,000
STOCKHOLDERS' EQUITY 24,678,000 25,054,000
TOTAL $49,900,000 $55,017,000
BIG DOG HOLDINGS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
NET SALES $30,204,000 $31,505,000 $72,384,000 $74,296,000
COST OF GOODS SOLD 12,884,000 12,974,000 31,606,000 31,086,000
GROSS PROFIT 17,320,000 18,531,000 40,778,000 43,210,000
OPERATING EXPENSES:
Selling, marketing
and distribution 12,720,000 13,350,000 37,998,000 37,673,000
General and
administrative 1,181,000 1,252,000 3,953,000 3,923,000
Total operating
expenses 13,901,000 14,602,000 41,951,000 41,596,000
INCOME (LOSS)
FROM OPERATIONS 3,419,000 3,929,000 (1,173,000) 1,614,000
OTHER INCOME -- -- (334,000) --
INTEREST EXPENSE
(INCOME), NET 370,000 144,000 957,000 (71,000)
INCOME (LOSS) BEFORE
PROVISION (BENEFIT)
FOR INCOME TAXES 3,049,000 3,785,000 (1,796,000) 1,685,000
PROVISION (BENEFIT)
FOR INCOME TAXES 1,174,000 1,506,000 (741,000) 698,000
NET INCOME (LOSS) $ 1,875,000 $ 2,279,000 $(1,055,000) $ 987,000
NET INCOME (LOSS)
PER SHARE
BASIC $ 0.22 $ 0.21 $ (0.12) $ 0.09
DILUTED $ 0.22 $ 0.21 $ (0.12) $ 0.08
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