<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-14987
TOO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 31-1333930
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3885 MORSE ROAD, COLUMBUS, OH 43219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (614) 479-3500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days (or such shorter time as the Company became
effective).
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AT AUGUST 25, 2000
------------ ------------------------------
$.01 Par Value 30,738,914 Shares
1
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TOO, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income for the Thirteen and Twenty-Six Weeks Ended
July 29, 2000 and July 31, 1999................................................................ 3
Consolidated Balance Sheets
July 29, 2000 and January 29, 2000............................................................. 4
Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended
July 29, 2000 and July 31, 1999................................................................ 5
Notes to Consolidated Financial Statements.......................................................... 6
Report of Independent Accountants................................................................... 9
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition........ 10
PART II. Other Information
Item 1. Legal Proceedings............................................................................. 15
Item 4. Matters Submitted to a Vote of Security Holders............................................... 15
Item 6. Exhibits and Reports on Form 8-K.............................................................. 15
Signature ............................................................................................. 16
Index to Exhibits...................................................................................... 17
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
----------------------------------------------------
JULY 29, JULY 31, JULY 29, JULY 31,
2000 1999 2000 1999
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net sales $108,379 $ 86,864 $227,198 $181,912
Costs of goods sold, buying and
occupancy costs 73,448 58,258 152,563 121,582
-------- -------- -------- --------
Gross income 34,931 28,606 74,635 60,330
General, administrative and store
operating expenses 31,333 26,902 65,423 56,004
-------- -------- -------- --------
Operating income 3,598 1,704 9,212 4,326
Interest expense, net 477 -- 849 --
-------- -------- -------- --------
Income before income taxes 3,121 1,704 8,363 4,326
Provision for income taxes 1,200 700 3,300 1,700
-------- -------- -------- --------
Net income $ 1,921 $ 1,004 $ 5,063 $ 2,626
======== ======== ======== ========
Earnings per share:
Basic $ 0.06 $ 0.03 $ 0.16 $ 0.09
======== ======== ======== ========
Diluted $ 0.06 $ 0.03 $ 0.16 $ 0.09
======== ======== ======== ========
Weighted average common shares:
Basic 30,736 30,674 30,733 30,674
======== ======== ======== ========
Diluted 31,818 30,674 31,778 30,674
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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TOO, INC
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
JULY 29, JANUARY 29,
2000 2000
-------- --------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 31,849 $ 59,984
Receivables 4,969 2,863
Inventories 47,421 34,656
Store supplies 7,088 6,171
Deferred income taxes 1,965 2,904
Other 1,920 504
-------- --------
Total current assets 95,212 107,082
Property and equipment, net 70,453 61,874
Deferred income taxes 11,041 7,838
Other assets 1,511 1,799
-------- --------
Total assets $178,217 $178,593
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 20,319 $ 20,754
Accrued expenses 42,556 46,689
Income taxes payable 11,033 13,541
-------- --------
Total current liabilities 73,908 80,984
Long-term debt 50,000 50,000
Other long-term liabilities 2,767 2,142
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, 50 million shares authorized -- --
Common stock, $.01 par value, 100 million shares authorized,
30.7 million issued and outstanding 307 307
Paid in capital 25,422 24,410
Retained earnings since effective date, August 23, 1999 25,813 20,750
-------- --------
Total shareholders' equity 51,542 45,467
-------- --------
Total liabilities and shareholders' equity $178,217 $178,593
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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TOO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
---------------------------
JULY 29, JULY 31,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,063 $ 2,626
IMPACT OF OTHER OPERATING ACTIVITIES ON CASH FLOWS:
Depreciation and amortization 8,507 6,158
CHANGES IN ASSETS AND LIABILITIES:
Inventories (12,765) (14,247)
Accounts payable and accrued expenses (4,568) 4,784
Income taxes (4,547) (10,300)
Other assets and liabilities (3,526) 45
-------- --------
NET CASH USED FOR OPERATING ACTIVITIES (11,836) (10,934)
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (17,086) (16,697)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (17,086) (16,697)
-------- --------
FINANCING ACTIVITIES:
Stock options, restricted stock and other equity changes 787 --
Net increase in net investment by The Limited -- 29,264
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 787 29,264
-------- --------
NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS (28,135) 1,633
Cash and equivalents, beginning of period 59,984 987
-------- --------
Cash and equivalents, end of period $ 31,849 $ 2,620
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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TOO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
Too, Inc. (referred to herein as "the Company") is a specialty retailer
that sells apparel, underwear, sleepwear, swimwear, lifestyle and
personal care products for fashion-aware, trend-setting young girls
ages seven to fourteen years. The consolidated financial statements
include the accounts of Too, Inc. and its wholly owned subsidiaries and
reflect the Company's assets, liabilities, results of operations and
cash flows on a historical cost basis.
The accompanying unaudited interim consolidated financial statements as
of July 29, 2000 and for the thirteen and twenty-six week periods ended
July 29, 2000 and July 31, 1999, are presented to comply with the rules
and regulations of the Securities and Exchange Commission. Accordingly,
these consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained
in the Company's 1999 Annual Report on Form 10-K. In the opinion of
management, the accompanying interim consolidated financial statements
reflect all adjustments (which are of a normal, recurring nature)
necessary to present fairly the financial position, results of
operations and cash flows for the interim periods, but are not
necessarily indicative of the results of operations for a full fiscal
year.
Prior to August 23, 1999, the Company operated as a wholly owned
subsidiary of The Limited, Inc. Effective August 23, 1999, The Limited
distributed to its shareholders of record as of August 11, 1999, all of
its interest in Too, Inc. on the basis of one share of Too, Inc. common
stock for each seven shares of The Limited, Inc. common stock (the
"Spin-off"). The Spin-off resulted in 30.7 million shares of Too, Inc.
common stock outstanding as of August 23, 1999. As a result of the
Spin-off, the Company became an independent, separately traded, public
company listed on the New York Stock Exchange.
The consolidated financial statements as of July 29, 2000, and for the
thirteen and twenty-six weeks ended July 29, 2000, and July 31, 1999
included herein have been reviewed by the independent public accounting
firm of PricewaterhouseCoopers LLP and the report of such firm follows
the notes to consolidated financial statements. PricewaterhouseCoopers
LLP is not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for its report on the consolidated financial
statements because that report is not a "report" within the meaning of
Sections 7 and 11 of that Act.
2. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could
occur if stock options or restricted stock were converted to common
stock using the treasury stock method.
Earnings per share, as presented in the Consolidated Statements of
Income, for periods prior to and including the Spin-off was calculated
by dividing net income by the 30.7 million common shares issued in
connection with the Spin-off as if these shares were outstanding for
such periods.
6
<PAGE> 7
The following table shows the amounts used in the computation of basic
and diluted earnings per share (in thousands):
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------ --------------------
JULY 29, JULY 31, JULY 29, JULY 31,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 1,921 $ 1,004 $ 5,063 $ 2,626
======= ======= ======= =======
Weighted average outstanding shares - basic 30,736 30,674 30,733 30,674
Dilutive effect of stock options
and restricted stock 1,082 -- 1,045 --
------- ------- ------- -------
Weighted average outstanding shares - diluted 31,818 30,674 31,778 30,674
======= ======= ======= =======
</TABLE>
Options to purchase 124,000 shares of common shares were not included
in the computation of net income per diluted share for the thirteen and
twenty-six week periods ended July 29, 2000 because the options'
exercise price was greater than the average market price of the common
shares.
3. INVENTORIES
The fiscal year of the Company is comprised of two principal selling
seasons: Spring (the first and second quarters) and Fall (the third and
fourth quarters). Inventories are principally valued at the lower of
average cost or market, on a first-in, first-out basis utilizing the
retail method. Inventory valuation at the end of the first and third
quarters reflects adjustments for inventory markdowns and shrinkage
estimates for the total selling season.
4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
JULY 29, JANUARY 29,
2000 2000
--------- ------------
<S> <C> <C>
Property and equipment, at cost $ 137,993 $ 121,268
Less accumulated depreciation and amortization (67,540) (59,394)
--------- ---------
Property and equipment, net $ 70,453 $ 61,874
========= =========
</TABLE>
7
<PAGE> 8
5. RELATIONSHIP WITH THE LIMITED
In connection with the Spin-off, the Company entered into a service
agreement with Limited Distribution Services, a wholly owned subsidiary
of The Limited, to provide distribution services to us covering flow of
merchandise from factory to our stores for up to three years after the
date of Spin-off. Most of the merchandise and related materials for the
Company's stores are shipped to a distribution center owned by The
Limited in Columbus, Ohio, where the merchandise is received,
inspected, allocated and packed for shipment to stores. Under the
service agreement, The Limited distributes merchandise and related
materials using common and contract carriers to the Company's stores.
Inbound freight is charged to Too based upon actual receipts and
related charges, while outbound freight is charged based on a
percentage of cartons shipped.
Additionally, The Limited provides to us certain transitional services
principally related to management information systems. Agreements
covering such services were generally effective through the first
anniversary date of the Spin-off. Also, our main offices are owned by
Distribution Land Corp., a wholly owned subsidiary of the Limited and
leased to us with a lease term expiring in August 2002.
Our largest apparel supplier has been Mast Industries, Inc., a wholly
owned subsidiary of The Limited. Mast Industries supplied approximately
33% of the apparel that we purchased in 1999. We believe that all
transactions that we have entered into with Mast Industries have been
on terms that would have been obtained on an arm's length basis since
we treat them as if they were a third party. We were not, and will not
be, obligated to source products through Mast Industries.
Amounts payable to The Limited, including merchandise payables to Mast
Industries, amounted to approximately $11.4 million at July 29, 2000.
8
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Too, Inc.:
We have reviewed the accompanying consolidated balance sheet of Too, Inc. and
its subsidiaries (the "Company") as of July 29, 2000, and the related
consolidated statements of income for the thirteen week and twenty-six week
periods ended July 29, 2000 and July 31, 1999 and the consolidated statements of
cash flows for the twenty-six week periods ended July 29, 2000 and July 31,
1999. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of January 29, 2000, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year then ended (not presented herein), and in our report dated February 17,
2000 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet information as of January 29, 2000, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
August 14, 2000
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the thirteen weeks ended July 29, 2000, were $108.4 million, an
increase of 25%, from $86.9 million for the comparable period of 1999. Gross
income increased 22% to $34.9 million from $28.6 million in 1999 and operating
income more than doubled to $3.6 million from $1.7 million in 1999. Net income
was $1.9 million, an increase of 394%, from $389,000 on an adjusted basis for
the comparable period ended July 31, 1999. The adjusted results for 1999 reflect
interest expense, net of the related tax benefit, on the Company's borrowings
under the credit facility as if it were in place as of the beginning of the
year. Diluted earnings per share increased to $.06, compared to 1999 adjusted
diluted earnings per share of $.01 and 1999 historical diluted earnings per
share of $.03.
Net sales for the twenty-six weeks ended July 29, 2000, increased 25% to $227.2
million from $181.9 million for the comparable period in 1999. Gross income
increased 24% to $74.6 million from $60.3 million in 1999 and operating income
increased 113% to $9.2 million from $4.3 million in 1999. Year-to-date diluted
earnings per share increased to $.16 versus 1999 adjusted diluted earnings per
share of $.04 and 1999 historical diluted earnings per share of $.09.
ADJUSTED EARNINGS PER DILUTED SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
----------------------------- -----------------------------
JULY 29, JULY 31, JULY 29, JULY 31,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings per share - diluted $ 0.06 $ 0.03 $ 0.16 $ 0.09
====== ====== ====== ======
ADJUSTED EARNINGS PER DILUTED SHARE:
Net income $ 1,004 $ 2,626
Adjusted interest expense (1) (1,115) (2,108)
Adjusted tax benefit (2) 500 900
------- -------
Adjusted net income $ 389 $ 1,418
======= =======
Adjusted earnings per diluted share $ 0.01 $ 0.04
======= =======
Weighted average diluted shares outstanding (3) 31,818 31,778
======= =======
</TABLE>
1) Adjusted net income and adjusted earnings per diluted share include
interest expense and financing fees, net of the related tax benefit,
on approximately $52 million of average indebtedness representing debt
incurred under the credit facility which was used to pay a $50 million
dividend to The Limited in connection with the Spin-off.
2) The tax benefit is related to adjusted interest expense arising from
the credit facility at an estimated effective tax rate of
approximately 40%.
3) As no shares were outstanding prior to the Spin-off, weighted average
diluted shares as calculated during the current period were used in
comparable prior periods to determine adjusted earnings per diluted
share.
10
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FINANCIAL SUMMARY
The following summarized financial and statistical data compares the thirteen
and twenty-six week periods ended July 29, 2000, to the comparable 1999 period:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
---------------------------------------- ----------------------------------------
JULY 29, JULY 31, PERCENT JULY 29, JULY 31, PERCENT
2000 1999 CHANGE 2000 1999 CHANGE
------------ ------------ --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales (millions) $ 108.4 $ 86.9 25 % $ 227.2 $ 181.9 25 %
Comparable store sales increases (1) 9 % 8 % 10 % 9 %
Retail sales per average square foot (2) $ 71 $ 66 8 % $ 153 $ 138 11 %
Retail gross square feet at end of
quarter (thousands) 1,529 1,352 13 %
Stores with "Girl Power" format 116 58
Percentage of stores in "Girl Power"
format 31 % 17 %
NUMBER OF STORES:
Beginning of period 359 321 352 319
Opened 14 11 23 20
Closed - - (2) (7)
--------- ------- ------- ------
End of period 373 332 373 332
========= ======= ======= ======
</TABLE>
(1) A store is included in our comparable store sales calculation once it
has completed 52 weeks of operation. Further, stores that are expanded
more than 20% in square feet are treated as new stores for purposes of
this calculation.
(2) Retail sales per average square foot is the result of dividing net
sales for the fiscal quarter by average gross square feet, which
reflects the impact of opening and closing stores throughout the
quarter.
NET SALES
Net sales for the second quarter of 2000 increased 25% to $108.4 million from
$86.9 million in 1999. The net sales increase was attributable to a 9% increase
in comparable store sales, with the balance due to the net addition of 41 new
stores since the end of the second quarter 1999, remodeled stores and
approximately $1.5 million in sales from the catalog and e-commerce sales
channels.
Year-to-date net sales were $227.2, a 25% increase over 1999 year-to-date sales
of $181.9. The increase was due to a 10% increase in comparable store sales, the
net addition of 41 new stores, remodeled stores and approximately $3.4 million
in sales from the catalog and e-commerce sales channels.
Within merchandise categories for both the quarter and year-to-date periods,
Active pants, shorts, jackets and graphic tees all showed significant sales
increases as did the Add-on category (principally underwear/bras, sleepwear and
swimwear).
11
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GROSS INCOME
Gross income, expressed as a percentage of sales, was 32.2%, a decline of 70
basis points from a gross income rate of 32.9% for the second quarter of 1999.
This decrease in rate was due to catalog costs, which were not incurred during
the second quarter of 1999, being partially offset by higher merchandise
margins. Merchandise margins increased as higher initial mark-ups were partially
offset by higher markdowns.
For the year-to-date period, the gross income rate decreased 30 basis points to
32.9% in 2000 from a 33.2% rate in 1999 as the impact of Catalog costs, which
were not incurred in 1999, were only partially offset by higher merchandise
margins.
GENERAL, ADMINISTRATIVE AND STORE OPERATING EXPENSES
General, administrative and store operating expense, expressed as a percentage
of net sales, decreased to 28.9% in the second quarter of 2000 from 31.0% for
the same period in 1999. On a year-to-date basis, general, administrative and
store operating expense decreased by 200 basis points to 28.8% in 2000 from
30.8% in 1999. The decrease during the quarter and year-to-date periods was due
to the leveraging of store expenses arising from higher per store productivity
as well as lower cost allocations from The Limited. These decreases in expenses
were partially offset by higher distribution center costs.
OPERATING INCOME
Operating income, expressed as a percentage of net sales, increased to 3.3% in
2000 compared to 2.0% in 1999. Year-to-date operating income increased to 4.1%
in 2000 compared to 2.4% in 1999. The increase in operating income for both the
quarter and year-to-date periods was primarily due to the decrease in general,
administrative and store operating expenses.
NET INTEREST EXPENSE
Net interest expense amounted to $477,000 and $849,000 for the quarter and
year-to-date periods ending July 29, 2000, respectively. No net interest expense
was recorded in the comparable periods of 1999. Interest expense, including the
amortization of financing fees, amounted to $1,245,000 and $2,479,000 for the
quarter and year-to-date periods ending July 29, 2000, respectively. Interest
expense was partially offset by interest income of $768,000 and $1,630,000 for
the quarter and year-to-date periods, respectively. Interest income was earned
on short-term investments in commercial paper and money market instruments.
INCOME TAXES
Income tax expense amounted to $1.2 million and $3.3 million for the quarter and
year-to-date periods ending July 29, 2000, respectively, compared to $700,000
and $1.7 million for the comparable periods in 1999. We anticipate that the
annual effective tax rate will remain unchanged at 40% in fiscal 2000.
12
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FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities and the revolving portion of our $100
million credit facility provide the resources to support operations, including
projected growth, seasonal working capital requirements and capital
expenditures.
Net cash used in operating activities amounted to $11.8 million for the
twenty-six weeks ended July 29, 2000 versus net cash used for operating
activities of $10.9 million for the same period in 1999. The change in net cash
used for operating activities was primarily driven by a net decrease in accounts
payable and accrued expenses versus the comparable period in 1999. These
decreases were partially offset by cash provided by higher net income and an
increase in depreciation and amortization.
Investing activities represented capital expenditures, which were primarily for
new and remodeled stores.
Financing activities principally represented proceeds from employee stock option
exercises and the issuance of restricted stock.
A summary of the Company's working capital position and capitalization follows
(thousands).
<TABLE>
<CAPTION>
JULY 29, JANUARY 29,
2000 2000
------- ---------
<S> <C> <C>
Working capital $ 21,304 $ 26,098
======== ========
Capitalization:
Long-term debt 50,000 50,000
Shareholders' equity 51,542 45,467
-------- --------
Total capitalization $101,542 $ 95,467
======== ========
Amounts authorized under revolving portion
of credit facility $ 50,000 $ 50,000
======== ========
</TABLE>
In August 1999, we entered into a five-year, $100 million collateralized Credit
Facility. The Credit Facility consists of a $50 million five-year term loan and
a $50 million, five-year annual revolving credit commitment. The Credit
Facility's interest rates, which reflect matrix pricing, are based on the London
Interbank Offered Rate or Prime plus a spread as defined in the agreement. The
term loan is interest only until the end of the third year at which time the
amortization of the outstanding principle balance will begin. The Credit
Facility contains customary representations and warranties as well as certain
affirmative, negative and financial covenants.
No amounts were borrowed against the $50 million revolving credit commitment
during the quarter ended July 29, 2000.
13
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CAPITAL EXPENDITURES
Capital expenditures, primarily for new and remodeled stores, totaled $17.1
million for the twenty-six weeks ended July 29, 2000 compared to $16.7 million
for the comparable period of 1999. The Company anticipates spending
approximately $40 to $50 million in 2000 for capital expenditures principally
for the construction of approximately 55 new stores and the remodel of 10
existing stores along with $12 to $15 million for our new Home Office and
Distribution Center facilities. Our store expansion and remodel program should
add approximately 210,000 to 230,000 gross square feet during 2000 representing
a 15% to 16% increase over year-end 1999. The Company expects that capital
expenditures will be funded principally by net cash provided by operating
activities.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
this Form 10-Q or made by management of the Company involve risks and
uncertainties and are subject to change based on various important factors, many
of which may be beyond the Company's control. Forward-looking statements are
indicated by words such as "anticipate," "estimate," "expect," "intend," "risk,"
"could," "may," "will," "pro forma," "likely," "possible," "potential," and
similar words and phrases and the negative forms and variations of these words
and phrases, and include statements in this Management's Discussion and Analysis
relating to anticipated capital expenditures in 2000 for new stores and the
remodeling or expansion of existing stores, and the related funding. The
following factors, among others, in some cases have affected, and in the future
could affect, the Company's financial performance and actual results and could
cause future performance and financial results to differ materially from those
expressed or implied in any forward-looking statements included in this Form
10-Q or otherwise made by management: changes in consumer spending patterns,
consumer preferences and overall economic conditions; the impact of competition
and pricing; changes in weather patterns; currency and exchange risks; changes
in existing or potential trade restrictions, duties, tariffs or quotas; changes
in political or financial stability; changes in postal rates and charges and
paper and printing costs; availability of suitable store locations at
appropriate terms; ability to develop new merchandise; ability to hire and train
associates; and/or other risk factors that may be described in the Risk Factors
section of the Company's Form 10, filed August 18, 1999, as well as other
filings with the Securities and Exchange Commission. Future economic and
industry trends that could potentially impact revenue and profitability are
difficult to predict. The Company assumes no obligation to publicly update or
revise its forward-looking statements even if experience or future changes make
it clear that any projected results expressed or implied therein will not be
realized.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
(a) Too, Inc. held its Annual Meeting of Stockholders on May 16, 2000, for
the purpose of electing three directors.
(b) At the Annual Meeting of Stockholders, all directors nominated were
elected.
(c) The table below shows the voting tabulation for each matter voted upon
at the Annual Meeting of Stockholders.
<TABLE>
<CAPTION>
ACTION FOR AGAINST ABSTAINED
------------------------------------ ---------------- --------------- ---------------
<S> <C> <C> <C>
Election of directors:
Kent A. Kleeberger 24,360,976 0 121,242
Nancy J. Kramer 24,360,976 0 121,242
James U. McNeal 24,360,976 0 121,242
</TABLE>
ITEM 6. EXHIBITS
(a) Exhibits
10.1 Too, Inc. First Amended and Restated Savings and Retirement
Plan
10.2 Too, Inc. First Amended and Restated Supplemental Retirement
and Deferred Compensation Plan
10.3 Too, Inc. First Amended and Restated 1999 Stock Plan for
Non-Associate Directors
10.4 Too, Inc. First Amended and Restated 1999 Stock Option and
Performance Incentive Plan
15. Letter re: Unaudited Interim Financial Information to
Securities and Exchange Commission re: Incorporation of Report
of Independent Accountants.
27. Financial Data Schedule.
(b) Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURE
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 thereunto duly authorized.
TOO, INC.
(Registrant)
By /S/ KENT A. KLEEBERGER
------------------------
Kent A. Kleeberger,
Senior Vice President - Chief Financial
Officer, Secretary and Treasurer
(duly authorized officer and Principal
Financial and Accounting Officer)
Date: September 11, 2000
16
<PAGE> 17
EXHIBIT INDEX
EXHIBIT
NO. DOCUMENT
------ --------
10.1 Too, Inc. First Amended and Restated Savings and Retirement Plan
10.2 Too, Inc. First Amended and Restated Supplemental Retirement and
Deferred Compensation Plan
10.3 Too, Inc. First Amended and Restated 1999 Stock Plan for Non-Associate
Directors
10.4 Too, Inc. First Amended and Restated 1999 Stock Option and Performance
Incentive Plan
15 Letter re: Unaudited Interim Financial Information to Securities and
Exchange Commission re: Incorporation of Report of Independent
Accountants.
27. Financial Data Schedule.
17
