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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 April 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 - None
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 that the registrant was
required to file such reports), and (2) has been subject to 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 June 9, 2000 there were 13,850,306 shares of Barneys New York,
Inc. common stock, par value $0.01 per share, outstanding.
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BARNEYS NEW YORK, INC.
FORM 10-Q
QUARTER ENDED April 29, 2000
Table of Contents
<TABLE>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed consolidated statements of operations - Three months
ended April 29, 2000 and May 1, 1999 3
Condensed consolidated balance sheets - April 29, 2000 and
January 29, 2000 4
Condensed consolidated statements of cash flows - Three months
ended April 29, 2000 and May 1, 1999 5
Notes to condensed consolidated financial statements - April 29, 2000 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 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
INDEX OF EXHIBITS 13
</TABLE>
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ITEM 1. FINANCIAL STATEMENTS
Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS
ENDED ENDED
4/29/00 5/1/99
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<S> <C> <C>
Net sales $ 96,611 $ 85,841
Cost of sales 52,042 45,775
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Gross profit 44,569 40,066
Expenses:
Selling, general and administrative expenses (including occupancy costs) 39,240 37,414
Depreciation and amortization 4,358 4,316
Other income - net (1,144) (1,012)
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Income (loss) before interest and financing costs
and income taxes 2,115 (652)
Interest and financing costs, net of interest income 3,030 3,120
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Loss before income taxes (915) (3,772)
Income taxes 19 19
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Net loss $ (934) $ (3,791)
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Basic and diluted net loss per share of common stock $ (0.07) $ (0.30)
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Weighted average number of shares of common
stock outstanding 13,076 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)
<TABLE>
<CAPTION>
APRIL 29, JANUARY 29,
2000 2000
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,832 $ 10,333
Restricted cash 2,471 2,443
Receivables, less allowances of $3,789 and $3,599 27,388 28,134
Inventories 56,054 58,689
Other current assets 6,144 6,454
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Total current assets 101,889 106,053
Fixed assets at cost, less accumulated depreciation
and amortization of $10,612 and $8,406 48,175 48,974
Excess reorganization value, less accumulated amortization of $10,987 and $8,840 164,823 166,970
Other assets 2,282 2,485
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Total assets $317,169 $ 324,482
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,550 $ 15,760
Accrued expenses 34,813 41,746
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Total current liabilities 51,363 57,506
Long-term debt 104,912 105,915
Other long-term liabilities 7,332 6,565
Redeemable Preferred Stock 500 500
Shareholders' equity:
Common stock--$.01 par value; authorized
25,000,000 shares--issued 13,076,266 and 13,076,266 shares 131 131
Additional paid-in capital 159,211 159,211
Accumulated deficit (6,280) (5,346)
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Total shareholders' equity 153,062 153,996
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Total liabilities and shareholders' equity $317,169 $ 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)
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS
ENDED ENDED
4/29/00 5/1/99
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (934) $ (3,791)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation and amortization 4,622 4,559
Deferred rent 767 805
Decrease (increase) in:
Receivables 746 2,744
Inventories 2,635 1,623
Other current assets 310 1,242
Long-term assets 20 (9)
Increase (decrease) in:
Accounts payable and accrued expenses (6,143) (17,053)
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Net cash provided (used) by operating activities 2,023 (9,880)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed asset additions (1,413) (232)
Reduction of restricted cash (28) 457
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Net cash (used) provided by investing activities (1,441) 225
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 105,700 96,879
Repayments of debt (106,783) (88,020)
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Net cash (used) provided by financing activities (1,083) 8,859
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Net decrease in cash and equivalents (501) (796)
Cash and equivalents - beginning of period 10,333 6,824
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Cash and equivalents - end of period $ 9,832 $ 6,028
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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 April 29, 2000, and the results of its
operations and its cash flows for the three-month periods ended April 29, 2000
and May 1, 1999. The results of operations for the three-month period may not be
indicative of the results for the entire year.
The preparation of financial statements in conformity with generally
accepted accounting principles 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 April 29, 2000:
(000's)
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Revolving Credit Facility $ 48,094
Isetan note 21,029
Equipment Lessors notes 35,789
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Total $ 104,912
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In addition, under the Company's Revolving Credit Facility, $8,913,000
was committed under unexpired letters of credit. As of April 29, 2000, the
Company was in compliance with each of the covenants contained in the Revolving
Credit Facility.
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(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 the first quarter of 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 5000 issued
and outstanding shares of preferred stock.
Options and warrants to acquire an aggregate of 1,810,547 and 1,922,338
shares of common stock were not included in the computation of diluted earnings
per common share for the three months ended April 29, 2000 and May 1, 1999,
respectively, as including them would have been anti-dilutive.
As of April 29, 2000, the Company's common stock was not actively
traded.
(5) Subsequent Event
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 $7,178,000.
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
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
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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 April 29, 2000 Compared to the Three Months Ended May 1, 1999
Net Sales for the three months ended April 29, 2000 were $96.6 million
compared to $85.8 million a year ago, an increase of 12.5%. Comparable store
sales increased approximately 14.5%, principally due to double digit comparable
store sales growth in both the full price and outlet stores. Sales have
benefited from a strong economy and strength in certain merchandising
classifications including men's tailored clothing, sportswear and furnishings
and women's ready to wear, accessories and shoes. Additionally, the Company
continues to initiate markdowns in a more timely fashion to maximize inventory
turn.
Gross profit on sales increased 11.2% to $44.6 million for the three
months ended April 29, 2000 from $40.1 million in the three months ended May 1,
1999, primarily due to the sales increase discussed above. As a percentage of
net sales, gross profit declined to 46.1% for the three months ended April 29,
2000 compared to 46.7% in the year ago period.
Selling, general and administrative expenses, including occupancy
expenses, increased 4.9% in the three-month period ended April 29, 2000 to $39.2
million from $37.4 million in the three month period ended May 1, 1999. This
increase is principally driven by higher sales volume generating higher costs,
particularly commission expense and credit card fees. In addition, advertising
costs increased approximately $0.7 million from the year ago period as part of
the Company's continuing efforts to strengthen its brand equity. Selling,
general and administrative expenses declined to 40.6% of sales in the three
months ended April 29, 2000 from 43.6% in the three months ended May 1, 1999
principally due to leveraging of expenses.
Depreciation and amortization increased slightly in the three-month
period ended April 29, 2000 to $4.4 million from $4.3 million in the prior year.
Interest expense decreased in the three months ended April 29, 2000 to
$3.0 million from $3.1 million a year ago. Interest associated with borrowings
under the Company's credit facility declined principally as a result of lower
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average borrowings. Average borrowings under the credit facility for the three
months ended April 29, 2000 and May 1, 1999 were $47.6 million and $63.8
million, respectively, and the effective interest rate on this portion of the
Company's outstanding debt was 11.5% in the three months ended April 29, 2000
compared to 10.6% in the comparable period of the prior year.
The Company's net loss for the first quarter of 2000 was $0.9 million
compared to a net loss of $3.8 million for the first quarter of 1999. Basic and
diluted net loss per common share for the first quarter of 2000 and 1999 was
($0.07) and ($0.30), respectively, per common share.
LIQUIDITY AND CAPITAL
Liquidity and Capital Resources
The Company's cash provided by operations for the three months ended
April 29, 2000 was $2.0 million compared to cash used by operations of $9.9
million in the three months ended May 1, 1999. This increase is being driven
principally by improvement in the Company's earnings before non-cash charges and
tighter inventory management resulting in a $7.9 million reduction in inventory
from the prior year. In addition, the three months ended May 1, 1999 included
payments made for administrative claims and certain assumed pre-petition
liabilities aggregating approximately $9.6 million. Exclusive of such payments
in the prior year, cash used by operating activities approximated $0.3 million.
The Company's working capital was $50.5 million at April 29, 2000 compared to
$48.5 million at January 29, 2000. The Company's dependence on borrowings under
the Revolving Credit Facility as its primary source of liquidity has been
lessened due to the improved operating results and enhanced credit support from
the vendor community.
The Company incurred capital expenditures of $1.4 million during the
three-month period ended April 29, 2000 principally due to the opening of a new
full-price store 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
$7,500,000, 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 April 29, 2000, the Company had approximately $36.8 million of
availability under the Revolving Credit Facility, after considering $48.1
million of revolving loans and $8.9 million of letters of credit outstanding.
The Company believes it can achieve its financial forecast in fiscal
2000, however, no assurances can be given. Any material deviations from the
Company's forecasts could require the Company 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.
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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 2. 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 Form 8-K during the quarter
ended April 29, 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: June 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
27.1 Financial Data Schedule
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