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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 29, 1995.
[ ] 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 2-83992
WILLIAMS-SONOMA, INC.
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(Exact Name of Registrant as Specified in Its Charter)
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California 94-2203880
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(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
3250 Van Ness Avenue, San Francisco, CA 94109
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's Telephone Number, Including Area Code (415) 421-7900
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Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Indicate by check X 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
--- ---
As of December 12, 1995, there were 25,383,764 shares of the Registrant's Common
Stock outstanding.
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WILLIAMS-SONOMA, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 29, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
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PAGE
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Item 1. Financial Statements: (1)
Condensed Consolidated Balance Sheets
October 29, 1995, January 29, 1995, and October 30, 1994
Condensed Consolidated Statements of Operations
Thirteen weeks ended October 29, 1995, and October 30, 1994
Thirty-nine weeks ended October 29, 1995, and October 30, 1994
Condensed Consolidated Statements of Cash Flows
Thirty-nine weeks ended October 29, 1995, and October 30, 1994
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Results of Operations and (6)
Financial Condition
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (8)
Item 5. Other Information (8)
Item 6. Exhibits and Reports on Form 8-K (8)
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<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
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October 29, January 29, October 30,
1995 1995 1994
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ASSETS
Current assets:
Cash and cash equivalents $ 8,215 $ 17,481 $ 5,957
Accounts receivable 10,449 5,394 5,196
Merchandise inventories 164,827 87,949 109,372
Prepaid expenses and other assets 11,907 5,849 6,838
Prepaid catalog expenses 16,608 11,205 13,611
Deferred income taxes 259 259 2,617
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Total current assets 212,265 128,137 143,591
Deferred income taxes 4,021 4,021 2,968
Investments and other assets 6,210 6,325 3,964
Property and equipment (net) 127,423 79,395 71,120
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$349,919 $217,878 $221,643
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 56,993 $ 49,357 $ 44,806
Accrued expenses 3,475 4,407 4,499
Accrued salaries and benefits 8,348 8,138 4,958
Line of credit 87,300 -- 35,800
Current portion of long-term debt 125 141 141
Customer deposits 6,890 5,631 3,872
Other liabilities 2,775 2,628 2,587
Income taxes payable -- 8,329 2,569
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Total current liabilities 165,906 78,631 99,232
Deferred lease credits and other liabilities 23,625 14,250 12,940
Long-term debt 46,721 6,781 6,832
Shareholders' equity 113,667 118,216 102,639
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$349,919 $217,878 $221,643
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See Notes to Condensed Consolidated Financial Statements.
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WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
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Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
1995 1994 1995 1994
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Net sales $138,363 $113,443 $384,256 $324,299
Costs and expenses:
Cost of goods sold and occupancy 90,233 70,459 248,116 201,067
Selling, general and administrative 52,665 38,536 141,394 111,552
---------- ---------- ---------- ----------
Total costs and expenses 142,898 108,995 389,510 312,619
---------- ---------- ---------- ----------
Earnings (loss) from operations (4,535) 4,448 (5,254) 11,680
Interest expense - net 1,695 520 2,932 1,001
---------- ---------- ---------- ----------
Earnings (loss) before income
taxes (6,230) 3,928 (8,186) 10,679
Income taxes (benefit) (2,561) 1,646 (3,377) 4,485
---------- ---------- ---------- ----------
Net earnings (loss) $ (3,669) $ 2,282 (4,809) 6,194
========== ========== ========== ==========
Earnings (loss) per share:
Primary $(0.14) $.09 $(0.19) $.24
Fully diluted * $.09 * $.24
Average number of common shares outstanding
Primary 25,378 26,156 25,354 26,114
Fully diluted * 26,189 * 26,147
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Note: 1994 shares and per share amounts have been restated to reflect the
3-for-2 stock split in September 1994.
* Incremental shares from assumed exercise of stock options are antidilutive for
primary and fully diluted loss per share, and therefore not presented.
See Notes to Condensed Consolidated Financial Statements.
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WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
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Thirty-Nine Weeks Ended
October 29, October 30,
1995 1994
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Cash flows from operating activities:
Net earnings (loss) $ (4,809) $ 6,194
Adjustments to reconcile net earnings (loss)
to net cash used in operating activities:
Depreciation and amortization 11,333 8,428
Store closing reserve 2 (445)
Reserve for termination of corporate headquarter leases (605) --
Amortization of deferred lease incentives (1,271) (707)
Change in allowance for doubtful accounts 95 7
Change in deferred rents (3) (211)
Loss on disposal of assets 477 147
Change in:
Accounts receivable (5,150) (2,242)
Merchandise inventories (76,877) (39,933)
Prepaid catalog expenses (5,403) (7,892)
Prepaid expenses and other assets (5,391) (1,960)
Accounts payable 2,202 19,414
Accrued expenses and other liabilities 1,749 (2,506)
Deferred lease incentives 10,746 333
Income taxes payable (8,329) (7,030)
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Net cash used in operating activities (81,234) (28,403)
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Cash flows from investing activities:
Purchases of property and equipment (61,748) (17,689)
Proceeds from sale of subsidiary, net of $541 cash sold -- 18
Other investments 20 67
Proceeds from sale of property and equipment 797 1
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Net cash used in investing activities (60,931) (17,603)
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Cash flows from financing activities:
Change in cash overdrafts 5,433 (2,570)
Borrowings under line of credit 173,500 94,700
Repayments under line of credit (86,200) (58,900)
Proceeds from issuance of long-term debt-private placement 40,000 --
Proceeds from issuance of long-term debt -- 7,000
Repayment of long-term debt (94) (157)
Proceeds from exercise of stock options 260 1,133
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Net cash provided by financing activities 132,899 41,206
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Net decrease in cash and cash equivalents (9,266) (4,800)
Cash and cash equivalents at beginning of period 17,481 10,757
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Cash and cash equivalents at end of period $ 8,215 $ 5,957
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See Notes to Condensed Consolidated Financial Statements.
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WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
During the thirty-nine weeks ended October 30, 1994, in a non-cash transaction,
the Company received a $2.1 million note as partial proceeds from the sale of a
subsidiary.
See Notes to Condensed Consolidated Financial Statements.
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WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirty-nine Weeks Ended October 29, 1995 and October 30, 1994
NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION
The condensed consolidated balance sheets as of October 29, 1995, and October
30, 1994, the condensed consolidated statements of operations for the thirteen
and thirty-nine week periods ended October 29, 1995, and October 30, 1994, and
condensed consolidated statements of cash flows for the thirty-nine week periods
ended October 29, 1995, and October 30, 1994, have been prepared by
Williams-Sonoma, Inc., (the Company) without audit. In the opinion of
management, the financial statements include all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial position
for the thirteen and thirty-nine weeks then ended. These financial statements
include Williams-Sonoma, Inc., and its wholly-owned subsidiaries. Significant
intercompany transactions and accounts have been eliminated. The balance sheet
at January 29, 1995, presented herein, has been prepared from the audited
balance sheet of the Company.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report to Shareholders for the fiscal year ended January 29, 1995.
Certain reclassifications have been made to the prior year financial statements
to conform to classifications used in the current period.
The results of operations for the thirteen and thirty-nine weeks ended October
29, 1995, are not necessarily indicative of the operating results of the full
year.
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PART I -- FINANCIAL INFORMATION, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table shows the results of operations for the periods indicated as
a percentage of total net sales:
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Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 29, October 30, October 29, October 30,
1995 1994 1995 1994
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Net sales
Catalog 41.2% 43.2% 42.4% 42.2%
Retail 58.8 56.8 57.6 56.0
California Closets 0.0 0.0 0.0 1.8
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Total net sales 100.0 100.0 100.0 100.0
Costs and expenses
Cost of goods sold and occupancy 65.2 62.1 64.6 62.0
Selling, general and administrative 38.1 34.0 36.8 34.4
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Earnings (loss) from operations (3.3) 3.9 (1.4) 3.6
Interest expense - net 1.2 .4 .8 .3
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Earnings (loss) before income taxes (4.5) 3.5 (2.2) 3.3
Income taxes (benefit) (1.8) 1.5 (.9) 1.4
Net earnings (loss) (2.7)% 2.0% (1.3)% 1.9%
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SALES
Net Sales in the thirty-nine weeks and thirteen weeks ended October 29, 1995
(the "Year-to-Date" and "Third Quarter", respectively), increased 18.5% and
22.0%, respectively, over the same periods in the prior year. Catalog sales
increased 19.0% for the Year-to-Date and grew 16.3% in the Third Quarter.
Pottery Barn catalog sales for the same periods increased 42.4% and 42.7%,
respectively, over comparable periods in the prior year and accounted for 92.1%
of the increase in catalog sales in the Third Quarter. Retail sales for the
Year-to-Date and Third Quarter increased 21.8% and 26.3%, respectively, over the
same periods in the prior year, primarily as a result of store openings and
store expansions. Comparable store sales increased 1.6% for the
Year-to-Date and decreased .2% in the Third Quarter. Williams-Sonoma and Pottery
Barn reported a change of .3% and (3.2)%, respectively, in comparable store
sales in the Third Quarter.
COST OF GOODS SOLD AND OCCUPANCY
Total cost of goods sold and occupancy expense for the Year-to-Date and Third
Quarter (expressed as a percentage of sales) increased 2.6 and 3.1 percentage
points, respectively, over the same periods in the prior year. Cost of goods
sold for the Year-to-Date and Third Quarter (expressed as a percentage of sales)
increased 1.5 percentage points from the same periods of the prior year,
principally due to clearance markdowns taken in the second and third quarters of
fiscal 1995. Occupancy expense (expressed as a percentage of sales) increased
1.7 and 1.1 percentage points for the Year-to-Date and Third Quarter,
respectively, due to higher occupancy expense in the Williams-Sonoma stores and
non-selling locations.
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SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses (expressed as a percentage of
sales) for the Third Quarter and Year-to-Date increased 4.1 and 2.4 percentage
points, respectively, over the same periods of the prior year. The increase is
principally due to higher employment and advertising expense in the form of
increased postage and paper costs.
INTEREST EXPENSE
Interest expense in the thirty-nine weeks and thirteen weeks ended October 29,
1995, increased $1,931,500 and $1,174,800, respectively, from comparable periods
in 1994 due to higher borrowings used to fund new stores, higher inventory
levels, and the distribution center expansion.
INCOME TAXES
The Company's effective tax rate for the Year-to-Date and Third Quarter was
41.3% and 41.1%, respectively. The rate declined slightly from the 42.0% in the
same periods of 1994 due to the lower aggregate state tax rates based on the mix
of retail and catalog sales in the various states where the Company has sales
and conducts business.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities in the thirty-nine weeks ended October 29,
1995 was $81,234,000 -- a $52,831,000 increase over the comparable period in
1994. The increase in cash used by operating activities is principally due to
an $11,003,000 decline in net earnings and a $36,944,000 increase in merchandise
inventories. Selling square feet in 1995 increased 35% and retail inventories at
the end of the third quarter increased 45%. Delayed fall store openings and an
aggressive mail order holiday sales projection contributed to above plan
inventory levels. In the event that holiday sales activity does not result in
the desired reduction in overall inventory levels, the Company expects to reduce
inventory levels over the normal course of business in the following year.
Net cash used in investing activities (primarily net capital expenditures) in
the thirty-nine weeks ended October 29, 1995, was $60,931,000 -- a $43,328,000
increase over the same period last year. New stores that are in operation
accounted for $28,001,000 and new stores under construction accounted for
$9,428,000. The balance is attributable to the distribution center expansion and
information systems and other corporate expenditures.
Net borrowings under the line of credit have increased to $87,300,000 from
$35,800,000 due to capital and merchandise inventory expenditures. During the
Third Quarter, the Company issued $40,000,000 in principal amount of unsecured,
7.2% Senior Notes.
SEASONALITY
The Company's business is subject to substantial seasonal variations in demand.
Historically, a significant portion of the Company's sales and net income has
been realized during the period from October through December, and levels of net
sales and net income have generally been significantly lower during the period
from February through September. The Company believes this is the general
pattern associated with the catalog and retail industries. In anticipation of
its peak season, the Company hires a substantial number of additional employees
in its retail stores and catalog processing and distribution areas, and incurs
significant fixed catalog production and mailing costs.
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PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There are no material pending legal proceedings against the Company. The
Company is, however, involved in routine litigation arising in the ordinary
course of its business, and, while the results of the proceedings cannot be
predicted with certainty, the Company believes that the final outcome of such
matters will not have a materially adverse effect on the Company's consolidated
financial position or results of operations.
ITEM 5 - OTHER INFORMATION
Dennis Chantland was named Executive Vice President and Chief
Administrative Officer of the Company on November 29, 1995. Mr. Chantland also
has temporarily assumed the responsibilities of Chief Financial Officer. This
position was previously held by Russel E. Solt, who resigned November 30, 1995.
The Company expects to appoint a permanent CFO early next year.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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3.1 Restated Articles of Incorporation
10.2E Third Amendment to Sublease between the Company and Hewson-Memphis
Partners, dated October 24, 1995
10.6K Fourth Amendment to Credit Agreement, dated September 29, 1995
10.6L Fifth Amendment to Credit Agreement, dated October 16, 1995
11 Statement re computation of per share earnings.
27 Financial Data Schedule
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(b) There have been no reports on Form 8-K filed during the quarter for which
this report on Form 10-Q is being filed.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILLIAMS-SONOMA, INC.
By: /s/ DENNIS CHANTLAND
Dennis Chantland
Executive Vice President
Chief Administrative Officer
Dated: December 12, 1995
<PAGE> 1
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
<PAGE> 2
EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
WILLIAMS-SONOMA, INC.
W. Howard Lester and Russell Solt certify that:
1. They are the President and the Secretary, respectively, of Williams-Sonoma,
Inc., a California corporation.
2. The Restated Articles of Incorporation of this corporation are amended and
restated to read as set forth on Exhibit "A" attached hereto.
3. The attached Restated Articles of Incorporation have been duly approved by
the Board of Directors of this corporation.
4. The amendment of Article III(a) set forth in the attached Restated Articles
of Incorporation has been duly approved by the required vote of
shareholders of this corporation in accordance with Section 902 of the
Corporations Code. The total number of outstanding shares of the
corporation as of the record date for the vote was 25,342,577. The number
of shares voting in favor of the amendment equaled or exceeded the vote
required. The percentage vote required was more than 50%.
5. Except for the amendment of Article III(a), the attached Restated Articles
of Incorporation do not require any approval of the outstanding shares in
accordance with Section 910(b) of the Corporations Code.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date: June 20, 1995
/s/ W. HOWARD LESTER
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W. Howard Lester, President
/s/ RUSSELL SOLT
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Russell Solt, Secretary
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Exhibit "A"
RESTATED ARTICLES OF INCORPORATION
OF
WILLIAMS-SONOMA, INC.
ARTICLE I
The name of this corporation is Williams-Sonoma, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
(a) This corporation is authorized to issue two classes of shares:
Common and Preferred. The number of Preferred shares authorized to be issued is
7,500,000, with a par value of one cent ($.01) per share, and the number of
Common shares authorized to be issued is 126,562,500, with a par value of one
cent ($.01) per share.
(b) The Preferred shares may be divided into such number or series as
the board of directors may determine. The board of directors is authorized to
determine and alter the rights, preferences, privileges and restrictions
granted to and imposed upon the Preferred shares or any series thereof with
respect to any wholly unissued class or series of Preferred shares, and to fix
the number of shares of any series of Preferred shares and the designation of
any such series of Preferred shares. The board of directors, within the limits
and restrictions stated in any resolution or resolutions of the board of
directors originally fixing the number of shares of constituting any series,
may increase or decrease (but not below the number of shares of such series
then outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
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ARTICLE IV
Notwithstanding that applicable law would otherwise permit action to be
taken with the approval of a lesser percentage, each of the following actions
shall require the affirmative vote of not less than two-thirds of the
outstanding shares of this corporation entitled to vote:
(a) a merger or consolidation of this corporation or any subsidiary;
(b) the sale or other disposition by this corporation or a subsidiary
of substantially all of the assets of this corporation or a
subsidiary; or
(c) the adoption of any plan or proposal for dissolution or
liquidation of this corporation;
provided that the provisions of this Article IV shall not apply to any such
transaction solely between the corporation and another corporation of which 50%
or more of the outstanding shares entitled to vote are owned, directly or
indirectly, by the corporation.
Notwithstanding any other provision of these Restated Articles of
Incorporation or Bylaws of this corporation and notwithstanding that a lesser
percentage may be specified by law, these Restated Articles of Incorporation or
the Bylaws of this corporation, the affirmative vote of not less than
two-thirds of the outstanding shares of this corporation entitled to vote shall
be required to amend or appeal, or adopt any provision inconsistent with this
Article IV.
ARTICLE V
The liability of the directors of the Company for monetary damages
shall be eliminated to the fullest extent permissible under California law.
The Company is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
Company and its shareholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
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EXHIBIT 10.2E
THIRD AMENDMENT TO SUBLEASE BETWEEN THE COMPANY AND HEWSON-MEMPHIS
PARTNERS
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EXHIBIT 10.2E
THIRD AMENDMENT TO SUBLEASE
This Third Amendment to Sublease (the "Third Amendment") is made and
entered into as of the ____ day of October, 1995 by and between Hewson-Memphis
Partners, a California general partnership composed of W. Howard Lester, James
A. McMahan, Gary J. Hewson and Robert K. Earley (the "Landlord") and
Williams-Sonoma, Inc., a California corporation (the "Tenant"), and amends that
certain Sublease dated as of the 1st day of August, 1990 (the "Sublease"), that
certain First Amendment to Sublease dated as of the 22nd day of December, 1993
(the "First Amendment") and that certain Second Amendment to Sublease dated as
of September 1, 1995 (the "Second Amendment") between Landlord and Tenant (the
Sublease, the First Amendment, and the Second Amendment, collectively, the
"Existing Sublease"), based upon the following facts:
A. The parties agree that capitalized terms used herein and not
otherwise defined herein have the meanings set forth in that certain Lease
Agreement, as amended concurrently herewith, (the "Lease" or "Lease Agreement")
between (a) The Industrial Development Board of the City of Memphis and County
of Shelby, Tennessee and (b) Landlord and that:
(i) All references to documents amended concurrently herewith
shall mean and refer to such documents, as amended, unless otherwise expressly
provided herein to the contrary; and
<PAGE> 3
(ii) All references to the "Sublease" shall mean and refer
to the Existing Sublease as amended by this Third Amendment, unless otherwise
expressly provided herein to the contrary.
B. Pursuant to the terms of the Existing Sublease, (i) the New
Improvements (as defined therein) have been completed, and (ii) the New
Occupancy Commencement Date (as defined therein) has occurred.
C. Landlord and Tenant desire to amend the Existing Sublease to
(i) memorialize the New Occupancy Commencement Date and other matters relative
thereto and (ii) amend the definition of the Property and the New Property in
the Sublease to include Parcel 2 of the Site (1994 Project), located in the
County of Shelby, State of Tennessee as described in Exhibit A-1 attached
hereto and made a part hereof.
Based upon the foregoing, and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Landlord and Tenant
hereby agree as to the foregoing recitals and as follows:
1. The New Occupancy Commencement Date is August 17, 1995.
2. Landlord and Tenant agree that (i) the amount payable by
Landlord to the Trustee pursuant to Section 2.9 (II) (A)
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is $48,967.39 and (ii) the amount payable by Tenant to the Trustee pursuant to
Section 2.9(II)(B)(i) is $232,595.11 and (iii) the amount payable by Tenant to
Landlord pursuant to Section 2.9(II)(B)(ii) is $26,608.00.
3. The definitions of the terms Property and New Property in the
Sublease are each amended to include Parcel 2 of the Site (1994 Project).
4. In all other respects, the Existing Sublease shall remain
unmodified and in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment to Sublease as of the day and year first above written.
WILLIAMS-SONOMA, INC., a HEWSON-MEMPHIS PARTNERS, a
California corporation California General Partnership
By: ____________________________ By: ____________________________
_______________ W. Howard Lester, General
Title: _________________________ Partner
TENANT
By: ________________________
Robert K. Earley,
Attorney-in-Fact
By: ____________________________
James A. McMahan, General
Partner
By: ________________________
Robert K. Earley,
Attorney-in-Fact
By: ____________________________
Gary J. Hewson, General
Partner
By: ________________________
Robert K. Earley,
Attorney-in-Fact
By: ____________________________
Robert K. Earley, General
Partner
LANDLORD
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EXHIBIT "A-1"
TO
THIRD AMENDMENT TO SUBLEASE AGREEMENT
The Industrial Development Board of the City of Memphis and County of Shelby
property as recorded in Instrument __________________ at the Shelby County
Register's Office and being more particularly described as follows:
BEGINNING at a point on the southwest right-of-way line of Lamar Avenue (U.S.
Highway 78) (right-of-way varies), said point being S37 degrees 20' 02"E -
251.00 feet, along the southwest line of said Lamar Avenue, from the
intersection of the said southwest line of Lamar Avenue and the southeast line
of Sonoma Cove (68.00 foot right-of-way); thence continuing S37 degrees 20'02"E
along the southwest line of said Lamar Avenue a distance of 518.51 feet to the
northeast corner of the Hewson-Memphis Partners property as recorded in
Instrument EN-7006 at said Register's Office; thence S83 degrees 14'59"W along
the north line of the said Hewson-Memphis Partners property a distance of
1104.64 feet to the northwest corner of said property; thence N55 degrees
17'13"E along the south line of the Industrial Development Board of the City of
Memphis and County of Shelby, Tennessee property as recorded in Instrument
BV-6542 at said Registers's Office a distance of 951.97 feet to the point of
beginning and containing 246,544 square feet or 5.660 acres.
The instrument constituting the source of the Lessor's interest in the
foregoing Parcel 4 is recorded under Instrument No. ____________ in the
Register's Office of Shelby County, Tennessee.
<PAGE> 1
EXHIBIT 10.6K
FOURTH AMENDMENT TO CREDIT AGREEMENT
<PAGE> 2
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Amendment dated as of September 29, 1995, is between Bank of
America National Trust and Savings Association (the "Bank") and
Williams-Sonoma, Inc. (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Amended and
Restated Credit Agreement dated as of October 13, 1994 (as previously amended,
the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 Paragraph 1.1(a) of the Agreement is amended by changing
the amount of the Facility 1 Commitment as follows:
Period Commitment Amount
------ -----------------
From the date of this
Amendment through 12/16/95 $87,000,000
12/17/95 through 04/30/96 $45,000,000
05/01/96 through the Expiration Date $65,000,000
2.2 The first sentence of Paragraph 2.2 of the Agreement is
amended to read as follows:
The amount of the letters of credit and shipside bonds
outstanding at any one time (including the drawn and
unreimbursed amounts of the letters of credit) may not exceed
the following: (a) from the date of this Amendment through
December 16, 1995, Thirteen Million Dollars ($13,000,000);
and (b) thereafter, Twenty Five Million Dollars
($25,000,000).
3. REPRESENTATIONS AND WARRANTIES. When the Borrower signs this
Amendment, the Borrower represents and warrants to the Bank that:
(a) There is no event which is, or with notice or lapse of
time or both would be, an event of default under the Agreement, as
hereby amended;
-1-
<PAGE> 3
(b) The representations and warranties in the Agreement are
true and correct as of the date of this Amendment as if made on the
date of this Amendment;
(c) This Amendment is within the Borrower's powers, has been
duly authorized, and does not conflict with any of the Borrower's
organizational papers; and
(d) This Amendment does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
4. EFFECT OF AMENDMENT. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date first stated above.
Bank of America National Williams-Sonoma, Inc.
Trust and Savings Association
By /s/ HAGOP V. BOULDOUKIAN By /s/ W. HOWARD LESTER
--------------------------- ------------------------------
Hagop V. Bouldoukian W. Howard Lester
Vice President Chairman and Chief Executive
Officer
By /s/ RUSSELL SOLT
------------------------------
Russell Solt
Senior Vice President
-2-
<PAGE> 1
EXHIBIT 10.6L
FIFTH AMENDMENT TO CREDIT AGREEMENT
<PAGE> 2
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Amendment dated as of October 16, 1995, is between Bank of
America National Trust and Savings Association (the "Bank") and
Williams-Sonoma, Inc. (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Amended and
Restated Credit Agreement dated as of October 13, 1994 (as previously amended,
the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 Paragraph 1.1(a) of the Agreement is amended by changing
the amount of the Facility 1 Commitment as follows:
Period Commitment Amount
------ -----------------
From the date of this
Amendment through 12/16/95 $97,000,000
12/17/95 through 04/30/96 $45,000,000
05/01/96 through the Expiration Date $65,000,000
2.2 Subparagraph (a) of Paragraph 1.5 ("Optional Interest
Rates") is amended to read as follows:
(a) Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect to have all or portions
of the line of credit bear interest at the following rate
during an interest period agreed to by the Bank and the
Borrower: the Offshore Rate plus seven-eights of one (0.875)
percentage point; provided, however, that the interest rate
applicable to any advances outstanding hereunder which exceed
Eighty Seven Million Dollars ($87,000,000) shall be the
Offshore Rate plus one and one-eighth (1.125) percentage
points.
2.3 Paragraph 7.3 of the Agreement ("Tangible Net Worth") is
amended by changing the table therein to read as follows:
-1-
<PAGE> 3
Fiscal Quarter Ended Amount
-------------------- ------
07/30/95 104,000,000
10/29/95 107,000,000
01/28/96 128,000,000
04/30/96 126,000,000
2.4 Paragraph 7.4 of the Agreement is amended to read as
follows:
7.4 DEBT TO TANGIBLE NET WORTH. To maintain on a
consolidated basis, as of the end of each fiscal quarter, a
ratio of total liabilities to tangible net worth (exclusive of
the proceeds of any stock sold by the Borrower after the date
of this Agreement) not exceeding the amounts indicated for
each date specified below:
Fiscal Quarter Ended Ratio
-------------------- ------
07/30/95 1.50:1
10/29/95 2.15:1
01/28/96 1.50:1
04/28/96 1.50:1
"Total liabilities" means the sum of current liabilities plus
long term liabilities, including the amount of tax credits
booked by the Borrower as negative liabilities.
3. REPRESENTATIONS AND WARRANTIES. When the Borrower signs this
Amendment, the Borrower represents and warrants to the Bank that:
(a) There is no event which is, or with notice or lapse of
time or both would be, an event of default under the Agreement, as
hereby amended;
(b) The representations and warranties in the Agreement are
true and correct as of the date of this Amendment as if made on the
date of this Amendment;
(c) This Amendment is within the Borrower's powers, has been
duly authorized, and does not conflict with any of the Borrower's
organizational papers; and
(d) This Amendment does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
4. EFFECT OF AMENDMENT. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
-2-
<PAGE> 4
This Amendment is executed as of the date first stated above.
Bank of America National Williams-Sonoma, Inc.
Trust and Savings Association
By /s/ HAGOP V. BOULDOUKIAN By /s/ W. HOWARD LESTER
--------------------------- ------------------------------
Hagop V. Bouldoukian W. Howard Lester
Vice President Chairman and Chief Executive
Officer
By /s/ RUSSELL SOLT
------------------------------
Russell Solt
Senior Vice President
-3-
<PAGE> 5
===============================================================================
[LOGO] BANK OF AMERICA Corporate Resolutions to Obtain Credit
- -------------------------------------------------------------------------------
RESOLVED, that this corporation, Williams-Sonoma, Inc., may:
1. borrow money from BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION ("Bank");
2. obtain for the account of this corporation commercial and standby
letters of credit issued by Bank;
3. obtain for the account of this corporation Bank's acceptance of
drafts and other instruments; and
4. discount with or sell to Bank notes, acceptances, drafts,
receivables and other evidences of indebtedness, and assign or
otherwise transfer to Bank any security interest or lien for such
obligations;
from time to time, in such amount or amounts as in the judgement of the
Authorized Officers (as hereinafter defined) this corporation may require (the
credit facilities described in the first part of this resolution are
collectively referred to herein as the "Credit Facilities"); provided, however,
that the aggregate principal amount outstanding at any one time under the
Credit Facilities authorized by this resolution shall not exceed the sum of One
Hundred Twenty Million Dollars ($120,000,000), which sum shall be in addition
to such other amount or amounts as otherwise may be authorized.
RESOLVED FURTHER, that the Authorized Officers are hereby authorized
and directed, as security for any obligation or obligations of this corporation
to Bank, whether arising pursuant to these Resolutions or otherwise, to grant
in favor of Bank a security interest in or lien on any real or personal
property belonging to or under the control of this corporation.
RESOLVED FURTHER, that
1. If only one signature is obtained, any one of the
following:
a. W. Howard Lester, Chief Executive Officer
b. Russell Solt, Senior Vice President/Secretary
c.
d.
e.
f.
2. If two signatures are obtained, any one of the following:
a.
b.
c.
d.
e.
f.
together with any one of the following:
g.
h.
i.
j.
k.
l.
of this corporation, acting individually or in any combination as may be set
forth above (the "Authorized Officers"), are hereby authorized and directed,
in the name of this corporation, to execute and deliver to Bank, and Bank is
requested to accept:
a. the notes, credit agreements, advance account agreements,
acceptance agreements, letter of credit applications and agreements, purchase
agreements or other instruments, agreements and documents which evidence the
obligations of this corporation under the Credit Facilities obtained or to be
obtained pursuant to these resolutions;
b. any and all security agreements, deeds of trust, mortgages,
financing statements, fixture filings or other instruments, agreements and
documents with respect to any security interest or lien authorized to be given
pursuant to these resolutions; and
c. any other instruments, agreements and documents as Bank may require
and the Authorized Officers may approve.
- -----------------------------------------------------------------------------
N-243 11-87 (Reprint 12-87) -1- 000310-11049
<PAGE> 6
- -------------------------------------------------------------------------------
RESOLVED FURTHER, that the Authorized Officers are hereby authorized
and directed, in the name of this corporation, to endorse, assign to Bank, and
deliver to Bank, any and all notes, acceptances, drafts, receivables and other
evidences of indebtedness discounted with or sold to Bank, together with any
security interest or lien for such obligations, and to guarantee the payment of
the same to Bank.
RESOLVED FURTHER, that any and all of the instruments, agreements and
documents referred to above may contain such recitals, covenants, agreements
and other provisions as Bank may require and the Authorized Officers may
approve, and the execution of such instruments, agreements and documents by the
Authorized Officers shall be conclusive evidence of such approval, and that the
Authorized Officers are authorized from time to time to execute renewals or
extensions of any and all such instruments, agreements and documents.
RESOLVED FURTHER, that Bank is authorized to act upon the foregoing
resolutions until written notice of revocation is received by Bank, and that
the authority hereby granted shall apply with equal force and effect to the
successors in office of the Authorized Officers.
CORPORATE SECRETARY'S CERTIFICATE
I, Russell Solt, Secretary of Williams-Sonoma, Inc., a corporation
organized and existing under the laws of the State of California (the
"Corporation"), hereby certify that the foregoing is a full, true and correct
copy of resolutions of the Board of Directors of the Corporation, duly and
reqularly adopted by the Board of Directors of the Corporation in all respects
as required by law and the by-laws of the Corporation on July 28, 1995, at a
meeting at which a quorum of the Board of Directors of the Corporation was
present and the requisite number of such directors voted in favor of said
resolutions, or by the unanimous consent in writing of all members of the Board
of Directors of the Corporation to the adoption of said resolutions.
I further certity that said resolutions are still in full force and
effect and have not been amended or revoked, and that the specimen signatures
appearing below are the signatures of the officers authorized to sign for the
Corporation by virtue of such resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of the
Corporation, and affixed the corporate seal of the Corporation, on ___________.
AUTHORIZED SIGNATURES:
X /s/ W. HOWARD LESTER X /s/ RUSSELL SOLT
- ---------------------------------- ----------------------------------
W. Howard Lester, Chief Executive Russell Solt, Secretary of
Officer Williams-Sonoma, Inc.
a California Corporation
X /s/ RUSSELL SOLT
- ----------------------------------
Russell Solt, Senior Vice
President/Secretary
Affix Corporate Seal Here:
X
- ----------------------------------
X
- ----------------------------------
X
- ----------------------------------
X
- ----------------------------------
- -------------------------------------------------------------------------------
N-243 11-87 (Reprint 12-87) -2- 000310-11049
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<PAGE> 2
EXHIBIT 11: STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
------------------------- -------------------------
OCTOBER 29, OCTOBER 30, OCTOBER 29, OCTOBER 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings (loss) $(3,669,200) $ 2,282,000 $(4,809,000) $ 6,194,000
Average shares of common stock
outstanding during the period 25,377,608 25,091,000 25,353,623 25,139,000
Incremental shares from assumed
exercise of stock options (primary) * 1,065,000 * 975,000
----------- ----------- ----------- -----------
25,377,608 26,156,000 25,353,623 26,114,000
----------- ----------- ----------- -----------
Primary earnings (loss) per share $(0.14) $0.09 $(0.19) $0.24
========== ========== ========== ==========
Average shares of common stock
outstanding during the period 25,377,608 25,074,000 25,353,623 25,139,000
Incremental shares from assumed
exercise of stock options (fully diluted) * 1,115,000 * 1,008,000
----------- ----------- ----------- -----------
25,377,608 26,189,000 25,353,623 26,147,000
----------- ----------- ----------- -----------
Fully diluted earnings (loss) per share $(0.14) $0.09 $(0.19) $0.24
========== ========== ========== ==========
</TABLE>
Note: 1994 amounts are adjusted to reflect the 3-for-2 stock split in September
1994.
* Incremental shares from assumed exercise of stock options are antidilutive for
primary and fully diluted loss per share, and therefore not presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 29, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-START> JAN-30-1995
<PERIOD-END> OCT-29-1995
<CASH> 8,215
<SECURITIES> 0
<RECEIVABLES> 10,449
<ALLOWANCES> 334
<INVENTORY> 164,827
<CURRENT-ASSETS> 212,265
<PP&E> 187,606
<DEPRECIATION> 60,182
<TOTAL-ASSETS> 349,919
<CURRENT-LIABILITIES> 165,906
<BONDS> 46,687
<COMMON> 47,676
0
0
<OTHER-SE> 65,991
<TOTAL-LIABILITY-AND-EQUITY> 349,919
<SALES> 384,256
<TOTAL-REVENUES> 384,256
<CGS> 248,116
<TOTAL-COSTS> 248,116
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 95
<INTEREST-EXPENSE> 2,932
<INCOME-PRETAX> (8,186)
<INCOME-TAX> (3,377)
<INCOME-CONTINUING> (4,809)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,809)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
