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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{X} Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 28, 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 - 0-26229
BARNEYS NEW YORK, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-4040818
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
575 Fifth Avenue, New York, New York 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 339-7300
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.
Yes {X} No { }
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
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.
As of December 8, 2000 there were 13,903,227 shares of Barneys New
York, Inc. common stock, par value $0.01 per share, outstanding.
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21645.0001
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BARNEYS NEW YORK, INC.
FORM 10-Q
QUARTER ENDED OCTOBER 28, 2000
Table of Contents
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Page No.
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed consolidated statements of operations - Three and nine months
ended October 28, 2000 and October 30, 1999 3
Condensed consolidated balance sheets - October 28, 2000 and
January 29, 2000 4
Condensed consolidated statements of cash flows - Nine months
ended October 28, 2000 and October 30, 1999 5
Notes to condensed consolidated financial statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 11
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
INDEX OF EXHIBITS 14
</TABLE>
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 28, OCTOBER 30, OCTOBER 28, OCTOBER 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net sales $ 110,228 $ 100,988 $ 291,091 $ 264,751
Cost of sales 58,540 53,606 153,978 141,128
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Gross profit 51,688 47,382 137,113 123,623
Expenses:
Selling, general and administrative expenses
(including occupancy costs) 42,075 38,516 119,526 112,599
Depreciation and amortization 4,495 4,293 13,321 12,950
Other income - net (1,252) (1,069) (3,464) (3,179)
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Income before interest and financing costs
and income taxes 6,370 5,642 7,730 1,253
Interest and financing costs, net of interest income 3,067 3,472 8,869 9,819
---------------- ----------------- --------------- -----------------
Income (loss) before income taxes 3,303 2,170 (1,139) (8,566)
Income taxes 20 19 101 56
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Net income (loss) $ 3,283 $ 2,151 $ (1,240) $ (8,622)
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Basic and diluted net income (loss) per share of
common stock $ 0.24 $ 0.17 $ (0.09) $ (0.69)
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Weighted average number of shares of common
stock outstanding 13,903 12,500 13,536 12,500
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(UNAUDITED)
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OCTOBER 28, JANUARY 29,
2000 2000
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ASSETS
Current assets:
Cash and cash equivalents $ 17,735 $ 10,333
Restricted cash 974 2,443
Receivables, less allowances of $4,028 and $3,599 30,998 28,134
Inventories 67,460 58,689
Other current assets 7,469 6,454
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Total current assets 124,636 106,053
Fixed assets at cost, less accumulated depreciation
and amortization of $15,084 and $8,406 47,800 48,974
Excess reorganization value, less accumulated amortization of
$15,383 and $8,840 160,427 166,970
Other assets 1,916 2,485
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Total assets $ 334,779 $ 324,482
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,131 $ 15,760
Accrued expenses 33,351 41,746
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Total current liabilities 57,482 57,506
Long-term debt 108,034 105,915
Other long-term liabilities 8,820 6,565
Redeemable Preferred Stock 500 500
Shareholders' equity:
Common stock--$.01 par value; authorized
25,000,000 shares--issued 13,903,227 and 13,076,266 shares 139 131
Additional paid-in capital 166,390 159,211
Accumulated deficit (6,586) (5,346)
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Total shareholders' equity 159,943 153,996
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Total liabilities and shareholders' equity $ 334,779 $ 324,482
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
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<CAPTION>
NINE MONTHS ENDED
OCTOBER 28, OCTOBER 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,240) $ (8,622)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation and amortization 14,120 13,710
Deferred rent 2,255 2,412
Other (65)
Decrease (increase) in:
Receivables (2,864) 1,962
Inventories (8,771) 365
Other current assets (1,015) 1,833
Long-term assets 20
Increase (decrease) in:
Accounts payable and accrued expenses (20) (15,920)
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Net cash provided (used) by operating activities 2,485 (4,325)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed asset additions (5,615) (3,363)
Reduction of restricted cash 1,469 2,665
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Net cash used by investing activities (4,146) (698)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 314,745 286,079
Repayments of debt (312,868) (282,395)
Proceeds from exercise of warrants 7,186 -
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Net cash provided by financing activities 9,063 3,684
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Net increase (decrease) in cash and equivalents 7,402 (1,339)
Cash and equivalents - beginning of period 10,333 6,824
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Cash and equivalents - end of period $ 17,735 $ 5,485
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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BARNEYS NEW YORK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
Barneys New York, Inc. ("Holdings") and subsidiaries (collectively
the "Company") is a leading upscale retailer of men's, women's and children's
apparel and accessories and items for the home. The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The
balance sheet at January 29, 2000 has been derived from the audited financial
statements at that date. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of normal recurring
adjustments) which management considers necessary to present fairly the
financial position of the Company as of October 28, 2000, and the results of its
operations and its cash flows for the three and nine month periods ended October
28, 2000 and October 30, 1999. The results of operations for the three and nine
month periods may not be indicative of the results for the entire year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities, at the date of
the financial statements, and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
These financial statements should be read in conjunction with the
audited financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 29, 2000.
(2) Long-Term Debt
Long-Term Debt consisted of the following at October 28, 2000:
(000's)
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Revolving Credit Facility $ 51,046
Isetan note 21,199
Equipment Lessors notes 35,789
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Total $ 108,034
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In addition, under the Company's Revolving Credit Facility,
$11,440,000 was committed under unexpired letters of credit. As of October 28,
2000, the Company was in compliance with each of the covenants contained in the
Revolving Credit Facility.
(3) Income Taxes
The Company provides United States federal income taxes based on its
estimated annual effective tax rate for the fiscal year. A federal income tax
benefit was not recorded in either 2000 or 1999, as the future use of net
operating losses generated in those periods was uncertain. In the respective
periods, however, the Company has provided income taxes principally for state,
local and franchise taxes.
(4) Earnings (loss) Per Share ("EPS")
Basic EPS is computed as net income (loss) available to common
stockholders divided by the weighted average number of common shares
outstanding. Diluted EPS reflects the incremental increase in common shares
outstanding assuming the exercise of stock options and warrants that would have
had a dilutive effect on EPS. Net income (loss) attributed to common
stockholders is not materially affected by the 1% dividend on the 5,000 issued
and outstanding shares of preferred stock.
Options and warrants to acquire an aggregate of 957,724 shares of
common stock were not included in the computation of diluted earnings per common
share for the three and nine months ended October 28, 2000, as including them
would have been anti-dilutive. Options and warrants to acquire an aggregate of
2,667,191 and 2,418,907 shares of common stock were not included in the
computation of diluted earnings per common share for the three and nine months
ended October 30, 1999, respectively, as including them would have been
anti-dilutive.
As of October 28, 2000, the Company's common stock was not actively
traded.
(5) Warrant Exercise
Holders of 826,961 warrants exercised their rights to acquire an
equivalent amount of Holdings common stock prior to the warrants expiration on
May 30, 2000. The total aggregate proceeds received by the Company were
approximately $7.2 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward looking statements are based on management's expectations,
estimates, projections and assumptions. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and variations of such words and
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similar expressions are intended to identify such forward looking statements
which include, but are not limited to, projections of revenues, earnings and
cash flows. These forward looking statements are subject to risks and
uncertainties which could cause the Company's actual results or performance to
differ materially from those expressed or implied in such statements. These
risks and uncertainties include, but are not limited to, the following: general
economic and business conditions, both nationally and in those areas in which
the Company operates; demographic changes; prospects for the retail industry;
competition; changes in business strategy or development plans; the loss of
management and key personnel; the availability of capital to fund the expansion
of the Company's business; changes in consumer preferences or fashion trends;
adverse weather conditions, particularly during peak selling seasons; and
changes in the Company's relationships with designers, vendors and other
suppliers.
Results of Operations
The Company is engaged in three distribution channels which encompass
its various product offerings: the full-price stores, the outlet stores and the
warehouse sale events.
Three Months Ended October 28, 2000 Compared to the Three Months Ended October
30, 1999
Net sales for the three months ended October 28, 2000 were $110.2
million compared to $101.0 million in the three months ended October 30, 1999;
an increase of 9.2%. The sales increase was primarily driven by comparable store
sales growth of 16.4% in our full price and outlet stores offset by reduced
sales in our warehouse sales events resulting in a total company comparable
store sales growth of 9.4%. Sales were strong in many of our merchandise
classifications including men's sportswear and women's ready-to-wear and
continue to be positively impacted by the Company's focus on initiating
markdowns earlier to maximize inventory turn.
Gross profit on sales increased 9.1% to $51.7 million for the three
months ended October 28, 2000 from $47.4 million in the three months ended
October 30, 1999, primarily due to the sales increase mentioned above. As a
percentage of net sales, gross profit was 46.9% in both periods. Improvements in
gross profit from lower shortage expense are being offset, in part, by more
promotional selling as discussed above.
Selling, general and administrative expenses, including occupancy
expenses, increased 9.2% in the three-month period ended October 28, 2000 to
$42.1 million from $38.5 million in the three month period ended October 30,
1999. This increase was principally driven by higher personnel costs associated
with annual wage increases, increased advertising costs and energy costs, as
well as increases in certain expenses, such as commission costs and third party
credit card fees associated with the increased sales volume. Selling, general
and administrative expenses were 38.2% of sales in the three months ended
October 28, 2000 as compared to 38.1% in the three months ended October 30,
1999.
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Depreciation and amortization increased 4.7% in the three months
ended October 28, 2000 to $4.5 million from $4.3 million in the year ago period.
Interest expense decreased 11.7% in the three months ended October
28, 2000 to $3.1 million from $3.5 million in the year ago period. Interest
associated with borrowings under the Company's credit facility declined
principally as a result of lower average borrowings.
Average borrowings under the credit facility for the three months
ended October 28, 2000 and October 30, 1999 were $52.2 million and $68.7
million, respectively, and the effective interest rate on this portion of the
Company's outstanding debt was 11.3% in the three months ended October 28, 2000
compared to 9.4% in the prior year.
Net income for the three months ended October 28, 2000 was $3.3
million compared to net income of $2.2 million for the three months ended
October 30, 1999. Basic and diluted net income per common share for the three
months ended October 28, 2000 and October 30, 1999 were $0.24 and $0.17,
respectively.
Nine Months Ended October 28, 2000 Compared to the Nine Months Ended October 30,
1999
Net sales for the nine months ended October 28, 2000 were $291.1
million compared to $264.8 million in the nine months ended October 30, 1999; an
increase of 10.0%. The sales increase was primarily driven by comparable store
sales growth of 16.1% in our full price and outlet stores offset by reduced
sales in our warehouse sales events resulting in a total company comparable
store sales growth of 12.1%.
Gross profit on sales increased 10.9% to $137.1 million for the nine
months ended October 28, 2000 from $123.6 million in the nine months ended
October 30, 1999, primarily due to the sales increase discussed above. The
Company experienced reduced shortage expense in the nine months ended October
28, 2000 as compared to the prior year. On a comparative basis, this reduction
in expense was partially offset by more promotional selling in the current year
as compared to the prior year. As a percentage of net sales, gross profit was
47.1% for the nine months ended October 28, 2000 compared to 46.7% in the prior
year.
Selling, general and administrative expenses, including occupancy
expenses, increased 6.2% in the nine months ended October 28, 2000 to $119.5
million from $112.6 million in the nine months ended October 30, 1999. This
increase was principally driven by higher personnel costs associated with annual
wage increases, higher energy costs, and increases in certain expenses, such as
commission costs and third party credit card fees associated with the increased
sales volume. In addition, advertising costs increased $1.8 million from the
year ago period as part of the Company's continuing efforts to strengthen its
brand equity. Selling, general and administrative expenses were 41.1% of sales
in the nine months ended October 28, 2000 as compared to 42.5% in the nine
months ended October 30, 1999, principally due to leveraging of expenses.
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Depreciation and amortization increased 2.9% in the nine months ended
October 28, 2000 to $13.3 million from $13.0 million in the prior year.
Interest expense decreased in the nine months ended October 28, 2000
to $8.9 million from $9.8 million in the year ago period. Interest associated
with borrowings under the Company's credit facility declined principally as a
result of lower average borrowings.
Average borrowings under the credit facility for the nine months
ended October 28, 2000 and October 30, 1999 were $46.5 million and $66.2
million, respectively, and the effective interest rate on this portion of the
Company's outstanding debt was 11.7% in the nine months ended October 28, 2000
compared to 9.6% in the prior year.
The Company's net loss for the nine months ended October 28, 2000 was
$1.2 million compared to a net loss of $8.6 million for the nine months ended
October 30, 1999. Basic and diluted net loss per common share for the nine
months ended October 28, 2000 and October 30, 1999 were $0.09 and $0.69,
respectively.
LIQUIDITY AND CAPITAL
Liquidity and Capital Resources
Cash provided by operations for the nine months ended October 28,
2000 was approximately $2.5 million compared to cash used by operations of $4.3
million in the prior year. This increase is being driven principally by
improvement in the Company's operating results before non-cash charges. In
addition, the nine months ended October 30, 1999 included non-recurring payments
related to administrative claims and certain other current liabilities
aggregating approximately $11.1 million. The Company's working capital was $67.2
million at October 28, 2000 compared to $48.5 million at January 29, 2000. The
Company's primary source of liquidity has been borrowings under the Revolving
Credit Facility.
The Company incurred capital expenditures of $5.6 million during the
nine months ended October 28, 2000 principally due to the opening of a new
full-price store, the opening of two new outlet stores and improvements in its
existing stores. Pursuant to the covenants contained in the Revolving Credit
Facility, the Company's total capital expenditures for fiscal year 2000 may not
exceed a base level of $7.5 million, subject to adjustment for unused
expenditures from the prior year as well as additional capital contributions.
The Company will fund its capital expenditures through a combination of
borrowings under the Revolving Credit Facility and proceeds received in
connection with the exercise of the Plan Investors options and the exercise of
certain of the outstanding warrants.
At October 28, 2000, the Company had approximately $46.0 million of
availability under the Revolving Credit Facility, after considering $51.0
million of revolving loans and $11.4 million of letters of credit outstanding.
The Company believes that it will have sufficient liquidity for the balance of
fiscal year 2000.
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Should there be a material deviation from anticipated revenues, the
Company might be required to seek alternative sources of financing or to reduce
expenditures. There can also be no assurance that alternative financing could be
obtained, or if obtained, that it would be on terms acceptable to the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the reported market risks
since the end of the most recent fiscal year.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
27.1 Financial Data Schedule
(b) The Company did not file any reports on 8-K during the three months
ended October 28, 2000.
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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 thereunto duly authorized.
Date: December 12, 2000
BARNEYS NEW YORK, INC.
By: /s/ Steven M. Feldman
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Name: Steven M. Feldman
Title: Executive Vice President,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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27.1 Financial Data Schedule
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