<PAGE> 1
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 May 2, 1999.
[ ] 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 000-12704
WILLIAMS-SONOMA, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
California 94-2203880
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3250 Van Ness Avenue, San Francisco, CA 94109
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (415) 421-7900
--------------
- --------------------------------------------------------------------------------
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 June 9, 1999, 55,834,601 shares of the Registrant's Common Stock
were outstanding.
<PAGE> 2
WILLIAMS-SONOMA, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MAY 2, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Financial Statements (3)
Condensed Consolidated Balance Sheets
May 2, 1999, January 31, 1999 and May 3, 1998
Condensed Consolidated Statements of
Operations Thirteen weeks ended May 2, 1999 and May 3, 1998
Condensed Consolidated Statements of Cash
Flows Thirteen weeks ended May 2, 1999 and May 3, 1998
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition (8)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (13)
Item 6. Exhibits and Reports on Form 8-K (13)
</TABLE>
2
<PAGE> 3
WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
May 2, January 31, May 3,
1999 1999 1998
--------- ----------- --------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 42,476 $107,308 $ 52,241
Accounts receivable (net) 22,643 20,082 18,227
Merchandise inventories 197,318 173,160 140,679
Prepaid expenses and other assets 9,855 8,985 8,741
Prepaid catalog expenses 13,215 13,154 12,938
Deferred income taxes 4,077 4,077 3,680
--------- -------- --------
Total current assets 289,584 326,766 236,506
Property and equipment (net) 261,397 243,119 200,038
Investments and other assets (net) 6,723 6,360 5,591
--------- -------- --------
Total assets $ 557,704 $576,245 $442,135
========= ======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 71,420 $ 70,964 $ 43,484
Accrued expenses 20,083 24,003 22,939
Customer deposits 25,789 26,659 18,340
Income taxes payable 3,589 19,529 1,053
Current portion of long-term debt 6,368 6,368 125
Other liabilities 5,874 6,377 5,721
--------- -------- --------
Total current liabilities 133,123 153,900 91,662
Deferred lease credits 74,872 72,327 58,059
Deferred tax liability 3,339 3,339 2,439
Long-term debt and other liabilities 45,175 44,649 50,437
Commitments and contingencies -- -- --
Shareholders' equity
Common stock 105,598 109,708 99,965
Retained earnings 195,597 192,322 139,573
--------- -------- --------
Total shareholders' equity 301,195 302,030 239,538
Total liabilities and shareholders' equity $ 557,704 $576,245 $442,135
========= ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------
May 2, May 3,
1999 1998
-------- --------
<S> <C> <C>
Net sales $258,676 $206,210
Costs and expenses:
Cost of goods sold and occupancy 159,893 127,924
Selling, general and administrative 93,336 74,358
-------- --------
Total costs and expenses 253,229 202,282
-------- --------
Earnings from operations 5,447 3,928
Interest expense (net) 37 289
-------- --------
Earnings before income taxes 5,410 3,639
Income taxes 2,136 1,492
-------- --------
Net earnings $ 3,274 $ 2,147
======== ========
Earnings per share:
Basic and diluted $ 0.06 $ 0.04
Weighted average number of common
shares outstanding:
Basic 55,749 52,193
Diluted 58,454 54,549
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-------------------------
May 2, May 3,
1999 1998
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,274 $ 2,147
Adjustments to reconcile net earnings
to net cash used in operating activities:
Depreciation and amortization 9,320 7,699
Loss on disposal of assets 1,000 --
Amortization of deferred lease credits (1,952) (1,455)
Other 68 192
Change in:
Accounts receivable (2,561) (2,989)
Merchandise inventories (24,158) (8,227)
Prepaid catalog expenses (61) 658
Prepaid expenses and other assets (870) (750)
Accounts payable 456 (15,012)
Accrued expenses and other liabilities (5,116) (10,110)
Deferred lease credits 4,498 3,357
Income taxes payable (15,940) (16,163)
---------- --------
Net cash used in operating activities (32,042) (40,653)
---------- --------
Cash flows from investing activities:
Purchases of property and equipment (28,583) (9,351)
Other 57 --
---------- --------
Net cash used in investing activities (28,526) (9,351)
---------- --------
Cash flows from financing activities:
Repayment of long-term obligations (155) (157)
Proceeds from exercise of stock options 629 5,188
Repurchase of common stock (4,738) --
---------- --------
Net cash provided by (used in) financing activities (4,264) 5,031
---------- --------
Net decrease in cash and cash equivalents (64,832) (44,973)
Cash and cash equivalents at beginning of period 107,308 97,214
---------- --------
Cash and cash equivalents at end of period $ 42,476 $ 52,241
========== ========
Non-cash financing activity: Conversion of Convertible Notes to
equity -- $ 39,004
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen Weeks Ended May 2, 1999 and May 3, 1998
NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION
The condensed consolidated balance sheets as of May 2, 1999 and May 3, 1998 and
the condensed consolidated statements of operations and cash flows for the
thirteen week periods ended May 2, 1999 and May 3, 1998 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
at the balance sheet dates and the results of operations for the thirteen 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 31, 1999, presented herein,
has been derived from the audited balance sheet of the Company included in the
Company's Form 10-K for the fiscal year ended January 31, 1999.
Certain information and footnote disclosures normally included in the annual
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 31,
1999.
Certain reclassifications have been made to the prior period financial
statements to conform to the presentation used in the current period.
The results of operations for the thirteen weeks ended May 2, 1999 are not
necessarily indicative of the operating results of the full year.
NOTE B. DEBT
The Company's amended and restated syndicated line of credit facility, which
expires on May 31, 2001, provides for $50,000,000 in cash advances, and contains
certain restrictive loan covenants, including minimum tangible net worth, a
minimum out-of-debt period, fixed charge coverage requirements and a prohibition
on payment of cash dividends. Additionally, the Company has a one-year
$65,000,000 letter-of-credit agreement expiring on May 31, 2000 with its lead
bank.
At May 2, 1999, the Company had $49,866,000 of outstanding letters of credit and
no borrowings outstanding under the line of credit facility.
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NOTE C. EARNINGS PER SHARE
Basic earnings per share is computed as net income divided by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur from common shares
issuable through stock options, warrants and other convertible securities.
NOTE D. SEGMENT REPORTING
Williams-Sonoma, Inc. has two reportable segments: retail and catalog. The
retail segment sells products for the home through its three retail concepts:
Williams-Sonoma, Pottery Barn and Hold Everything. The catalog segment sells
similar products through its four direct-mail catalogs: Williams-Sonoma, Pottery
Barn (including Pottery Barn Kids), Hold Everything and Chambers. As previously
announced, in May 1999 the Company sold its Gardener's Eden catalog business to
Brookstone, Inc.
These reportable segments are strategic business units that offer similar
home-centered products. They are managed separately because each business unit
utilizes two distinct distribution and marketing strategies. First quarter
results include the Gardener's Eden catalog.
The accounting policies of the segments, where applicable, are the same as those
described in the summary of significant accounting policies detailed in the
Company's most recent annual report on Form 10-K filed with the Securities and
Exchange Commission. Williams-Sonoma uses earnings before unallocated corporate
overhead, interest and taxes to evaluate segment profitability. Unallocated
assets include corporate cash and equivalents, the net book value of corporate
facilities and related information systems, deferred tax amounts and other
corporate long-lived assets.
SEGMENT INFORMATION
Dollars in thousands
<TABLE>
<CAPTION>
Retail Catalog Unallocated Total
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
First Quarter 1999
Revenues $158,351 $100,325 $ -- $258,676
Earnings before income taxes 10,134 11,684 (16,408) 5,410
Segment Assets 359,083 98,934 99,687 557,704
First Quarter 1998
Revenues $129,017 $ 77,193 $ -- $206,210
Earnings before income taxes 9,148 6,809 (12,318) 3,639
Segment Assets 271,891 72,787 97,457 442,135
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
NET SALES
Net sales consists of the following components (dollars in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------------------------------
May 2 , 1999 May 3, 1998
---------------------- -----------------------
<S> <C> <C> <C> <C>
Retail sales $158,351 61.2% $129,017 62.6%
Catalog sales 100,325 38.8% 77,193 37.4%
-------- ------ -------- ------
Total net sales $258,676 100.0% $206,210 100.0%
======== ====== ======== ======
</TABLE>
Net sales for Williams-Sonoma, Inc. and its subsidiaries (the Company) for the
thirteen weeks ended May 2, 1999 (First Quarter of 1999), were $258,676,000 - -
an increase of $52,466,000 (25.4%) over net sales for the thirteen weeks ended
May 3, 1998 (First Quarter of 1998).
<TABLE>
<CAPTION>
RETAIL SALES Thirteen Weeks Ended
--------------------------
(Dollars in thousands) May 2, 1999 May 3, 1998
----------- -----------
<S> <C> <C>
Total retail sales $ 158,351 $ 129,017
Retail growth percentage 22.7% 21.4%
Comparable store sales growth 7.1% 5.0%
Number of stores - beginning of year 298 276
Number of new stores 8 9
Number of closed stores 1 9
Number of stores - end of quarter 305 276
Store selling area at quarter-end (sq. ft.) 1,245,714 1,022,719
Store leased area at quarter-end (sq. ft.) 1,928,543 1,564,939
</TABLE>
Retail sales for the First Quarter of 1999 increased 22.7% over retail sales in
the First Quarter of 1998 primarily due to a net increase of 29 stores. During
the First Quarter of 1999, the Company opened 8 stores (5 large format
Williams-Sonoma, 2 large format Pottery Barn and 1 clearance center) and closed
1 smaller Williams-Sonoma store. Pottery Barn accounted for 63.2% of the growth
in selling square footage from the end of the First Quarter of 1998 to the end
of the First Quarter of 1999, and 65.9% of the growth in retail sales as
measured for the same period. For the comparable periods of the prior year,
Pottery Barn accounted for 75.7% of the growth in selling square footage and
66.1% of the growth in retail sales. For the First Quarter of 1998, total retail
sales grew 21.4% over the same period of the prior year, principally due to new
store openings.
Comparable stores are defined as those whose gross square feet did not change by
more than 20% in the previous twelve months and which have been open for at
least twelve months. Comparable store sales are compared monthly for purposes of
this analysis. In any given period, the set of stores comprising comparable
stores may be different than the comparable stores in the previous period,
depending on store opening and closing activity. Comparable store sales grew
7.1% in the First Quarter of 1999 as compared to the same quarter of the
previous year, and were strongest in both Pottery Barn and Williams-Sonoma, the
Company's primary concepts. Total First-Quarter 1998 comparable store sales
increased 5.0% over the same period of 1997.
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The prototypical 1999 large-format stores range from 4,500 - 10,200 selling
square feet (9,000 - 13,300 leased square feet) for Pottery Barn stores and
2,800 - 3,700 selling square feet (4,000 - 7,800 leased square feet) for
Williams-Sonoma stores, and enable the Company to display merchandise more
effectively. At the end of the First Quarter of 1999, 182 stores (103
Williams-Sonoma and 79 Pottery Barn) were in the large format, comprising 74.5%
of the Company's total selling square footage. Large-format stores accounted for
73.9% of total retail sales in the First Quarter of 1999 and 63.7% in the First
Quarter of 1998. During fiscal year 1999, the company plans to increase leased
square footage by approximately 21%.
CATALOG SALES
Catalog sales in the First Quarter of 1999 and 1998 increased 30.0% and 9.8%,
respectively, as compared to the same period of the prior year. While overall
circulation in the First Quarter of 1999 was relatively flat as compared to the
same period of the prior year, there was increased circulation in markets with
stores and decreased circulation in non-store markets. Management believes that
this strategy builds brand recognition and supports new store openings.
The following table reflects catalog sales growth percentages by concept:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------
May 2, 1999 May 3, 1998
----------- -----------
<S> <C> <C>
Williams-Sonoma 3.3% 1.2%
Pottery Barn 59.6% 23.3%
Hold Everything 8.0% 10.6%
Gardeners Eden -23.7% -26.3%
Chambers -9.5% -4.9%
Total catalog 30.0% 9.8%
</TABLE>
In the First Quarter of 1999, Pottery Barn, which includes Pottery Barn Kids,
accounted for 62.2% of total catalog sales as compared to 50.7% in the First
Quarter of 1998. Pottery Barn Kids, which debuted in January of 1999, accounted
for 18.8% of the total growth in Pottery Barn. The growth of Pottery Barn over
the last several years and the initial success of Pottery Barn Kids reflect the
Company's development of the assortment and the enhanced consumer brand
recognition achieved through the Pottery Barn catalog and Design Studio stores.
The number of Pottery Barn catalogs mailed in the First Quarter of 1999 as
compared to the First Quarter of 1998 increased 11.1%, and increased 15.4% in
the same period of the prior years. Additionally, the page count of the Pottery
Barn catalogs increased in excess of 25% in each of these same periods.
For Williams-Sonoma, the Company's other primary concept, the number of catalogs
mailed in the First Quarter of 1999 as compared to the First Quarter of 1998
decreased 13.1%, and increased 5.6% in the First Quarter of 1998 as compared
to the First Quarter of 1997. In 1999, in order to continue to build and
strengthen the Williams-Sonoma brand, the Company intends to redesign this
catalog.
In May 1999 the Company sold its Gardeners Eden catalog to Brookstone, Inc. The
Company decided to sell Gardeners Eden to allow greater focus on the other
Williams-Sonoma, Inc. brands and the Internet. First-quarter results include the
Gardeners Eden catalog.
Williams-Sonoma launched its first fully-integrated Internet application in June
of 1999 with a Wedding and Gift Registry. The registry is tied to its retail
registry system and allows couples to check and update their registries. Guests
are also able to view the registry and to make purchases for registrants on the
Internet.
9
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COST OF GOODS SOLD AND OCCUPANCY EXPENSE
Cost of goods sold and occupancy expenses expressed as a percentage of net sales
for the First Quarter of 1999 decreased 0.2 percentage points as compared to the
same quarter of the prior year, to 61.8% from 62.0%. An improvement in the
occupancy expense rate primarily as a result of increased sales volume was
partially offset by an increase in the cost of goods sold. This increase in the
cost of goods sold rate was principally due to increased out-bound freight
expense to the retail stores.
Cost of goods sold and occupancy expenses expressed as a percentage of net sales
in the First Quarter of 1998 decreased 0.3 percentage points to 62.0% from
62.3%. An improvement in the merchandise margin of 0.6 percentage points as a
result of lower cost of merchandise was partially offset by an increased
occupancy expense rate.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expenses expressed as a percent of net sales
remained unchanged in the First Quarter of 1999 as compared to the First Quarter
of 1998 at 36.1%.
In the First Quarter of 1998, selling, general and administrative expenses
expressed as a percentage of net sales increased 0.2 percentage points as
compared to the same period of the prior year. The increase was primarily
attributable to increased operating expenses associated with systems
development, including work related to the Year 2000 issue.
INTEREST EXPENSE
Net interest expense for the First Quarter of 1999 decreased $252,000, to
$37,000 from $289,000 for the First Quarter of 1998, primarily as a result of
the conversion of the Company's $40,000,000 Convertible Notes. Partially
offsetting this was a decrease in the Company's short-term investment income.
Net interest expense in the First Quarter of 1998 as compared to the First
Quarter of 1997 decreased $485,000, from $774,000 to $289,000, principally as a
result of increased short-term investment income.
INCOME TAXES
The Company's effective tax rate was 39.5% for the First Quarter of 1999 and
41.0% for the First Quarter of 1998. The reduction in the tax rate reflects the
Company's commitment to legal entity restructuring in order to minimize its
state tax liability.
LIQUIDITY
For the First Quarter of 1999, net cash used in operating activities was
$32,042,000, primarily for the purchase of merchandise inventories. The growth
in the level of merchandise inventories reflects the Company's investment in
additional inventory to support new stores, the new Pottery Barn Kids catalog,
Internet initiatives and strong sales in both Pottery Barn retail and catalog
businesses. The Company expects inventory levels to continue to increase in the
next two quarters.
Cash used in investing activities was $28,526,000 in the First Quarter of 1999,
which includes approximately $10,207,000 for new stores, $2,631,000 for the
Internet and $9,873,000 for
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equipment in a new leased distribution facility in Olive Branch, Mississippi.
The facility is scheduled to open in the second quarter of 1999, at a total
estimated cost of $21,000,000, primarily for warehouse and computer equipment.
For the 1999 fiscal year, the Company is planning approximately $116,000,000 of
gross capital expenditures.
For the First Quarter of 1999, cash used in financing activities was $4,264,000,
which was composed primarily of cash used to repurchase shares of common stock.
For the First Quarter of 1998, cash provided by financing activities was
$5,031,000, comprised primarily of proceeds from the exercise of stock options.
The Company's amended and restated syndicated line of credit facility which
expires on May 31, 2001, provides for $50,000,000 in cash advances, and contains
certain restrictive loan covenants, including minimum tangible net worth, a
minimum out-of-debt period, fixed charge coverage requirements and a prohibition
on payment of cash dividends. Additionally, the Company has a one-year
$65,000,000 letter-of-credit agreement expiring on May 31, 2000 with its lead
bank.
On May 2, 1999, the Company had $49,866,000 of outstanding letters of credit and
no borrowings outstanding under the line of credit facility.
YEAR 2000 COMPLIANCE
As is the case with most other companies using computers in their operations,
the Company is in the process of addressing the "Year 2000" problem. The Company
has conducted a review of its information technology ("IT") and non-IT systems
to identify those areas that could be affected by the Year 2000 issue, and has
developed a comprehensive, risk-based plan. This plan addresses IT and non-IT
systems and products, as well as dependencies on those with whom the Company
does significant business.
In connection with the plan, the Company has completed an inventory and
risk-assessment of its computer systems and related technology, and has
completed the remediation process of its non-compliant programs. The Company is
executing its comprehensive testing process which is expected to be completed by
September 30, 1999. The Company can not guarantee that its compliant systems
will not encounter difficulties when attempting to interface or interconnect
with third party systems, whether or not those systems are claimed to be
"compliant", and the Company can not guarantee that such failure to interface or
interconnect will not have a materially adverse effect on the Company's
operations.
With regards to outside vendors, the company believes the greatest Year 2000
exposure is with its service providers (customs broker, logistics providers,
etc.). The Company believes the Year 2000 risk with its merchandise suppliers is
low because no vendor accounts for more than 3% of purchases and many of the
vendors are small artisan manufacturers with simple business systems. The
Company has completed its compliance review of major vendors and will resolve
any outstanding issues by the end of the third quarter 1999. Despite this
approach, there can be no guarantee that the systems of other companies on which
the Company is reliant will be converted timely, or that a failure by another
company to convert would not have a materially adverse effect on the Company.
The Company is using both internal and external resources to complete this
project. In total, the estimated remaining cost for the remediation and testing
of computer applications and related products in fiscal 1999 is $.4 million.
Approximately $2.2 million has been expensed to date.
The Company presently believes, with modification to existing software and
converting to new software, the Year 2000 problem will not pose significant
operational risk. While the Company can not accurately
11
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predict a "worst case scenario" with regard to its Year 2000 issues, the failure
by the Company and or vendors to complete Year 2000 compliance work in a timely
manner could have a materially adverse effect on the Company's operations. In
order to minimize the potential adverse impact of such risks, the Company is in
the process of updating its contingency procedures consistent with its disaster
recovery plan. These procedures include: completion of business impact analysis
for major systems, developing work-around procedures, defining emergency roles
and responsibilities and implementing hotlines to handle problem escalation and
resolution procedures.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is exposed to market risks, which include changes in U.S. interest
rates and, to a lesser extent, foreign exchange rates. The Company does not
engage in financial transactions for trading or speculative purposes.
Interest Rate Risk: The interest payable on the Company's bank line of credit is
based on variable interest rates and therefore affected by changes in market
interest rates. If interest rates on existing variable rate debt rose .78
percentage points (a 10% change from the bank's reference rate as of May 2,
1999), the Company's results from operations and cash flows would not be
materially affected. In addition, the Company has fixed and variable income
investments consisting of cash equivalents and short-term investments, which are
also affected by changes in market interest rates. The Company does not use
derivative financial investments in its investment portfolio.
Foreign Currency Risks: The Company enters into a significant amount of purchase
obligations outside of the U.S. which are settled in U.S. Dollars, and,
therefore, has only minimal exposure to foreign currency exchange risks. The
Company does not hedge against foreign currency risks and believes that foreign
currency exchange risk is immaterial.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the matters discussed in
this quarterly report are forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those set forth in such forward-looking statements. Such risks and
uncertainties include, without limitation, the Company's ability to continue to
improve planning and control processes and other infrastructure issues, the
potential for construction and other delays in store openings, the potential for
changes in consumer spending patterns, consumer preferences and overall economic
conditions, the Company's dependence on foreign suppliers, and increasing
competition in the specialty retail business. Other factors that could cause
actual results to differ materially from those set forth in such forward-looking
statements include the risks and uncertainties detailed in the Company's most
recent annual report on Form 10-K and its other filings with the Securities and
Exchange Commission.
12
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WILLIAMS-SONOMA, INC. AND SUBSIDIARIES
FORM 10-Q
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 material adverse effect on the Company's consolidated
financial position or results of operations.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
11 Statement re computation of per share earnings
27 Financial Data Schedule
</TABLE>
(b) There have been no reports on Form 8-K filed during the quarter for which
this report is being filed.
13
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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 A. Chantland
-----------------------------------
Dennis A. Chantland
Executive Vice President
Chief Administrative Officer
Secretary
Dated: June 15, 1999
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<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
11 Statement re computation of per share earnings
27 Financial Data Schedule
</TABLE>
15
<PAGE> 1
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Weighted
Net Average Per-Share
Earnings Shares Amount
---------- ---------- ---------
<S> <C> <C> <C>
Thirteen weeks ended May 2, 1999:
Basic $3,274,000 55,749,184 $ 0.06
---------- ---------- ======
Effect of dilutive stock options -- 2,704,797
---------- ----------
Diluted $3,274,000 58,453,981 $ 0.06
========== ========== ======
Thirteen weeks ended May 3, 1998:
Basic $2,147,000 52,193,341 $ 0.04
---------- ---------- ======
Effect of dilutive stock options -- 2,355,274
---------- ----------
Diluted $2,147,000 54,548,615 $ 0.04
========== ========== ======
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THIRTEEN WEEKS ENDED MAY 2, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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0
0
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</TABLE>
