<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 2000 Commission File Number
333-46013
TUESDAY MORNING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2398532
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14621 INWOOD RD., ADDISON, TEXAS 75001
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (972) 387-3562
NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ________
-------
Common stock outstanding as of October 31, 2000: 39,556,545 shares
<PAGE>
Cautionary Statement
The Company is including the following cautionary statements in this document to
make applicable and take advantage of the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
in this quarterly report. Investors are cautioned that actual results may
differ substantially from such forward-looking statements. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance and underlying assumptions and other statement
which are not statements of historical facts, and they may be identified by the
use of words such as "anticipates", "estimates", "expects", "intends", "plans",
"predicts", "projects", and similar expressions. Forward-looking statements
involve risks and uncertainties that could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements. We
express our expectations, beliefs and projections in good faith and believe them
to have a reasonable basis, however, we make no assurance that they will be
achieved or accomplished. The fulfillment of our expectations, beliefs and
projections is subject to a variety of important factors, including, but not
limited to, continued acceptance of the Company's products in the marketplace,
competitive factors, the availability of closeout merchandise, consumer spending
patterns, general economic trends, the availability of new store locations, and
other risks detailed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, and other periodic reports filed with the Securities
and Exchange Commission. The foregoing factors may be in addition to other
factors discussed in other parts of this quarterly report.
<PAGE>
PART I - FINANCIAL INFORMATION
Page No.
--------
Item 1 - Financial Statements
Consolidated Balance Sheets as of September 30, 2000,
September 30, 1999 and December 31, 1999 1
Consolidated Statements of Operations for the
Three Months and Nine Months Ended
September 30, 2000 and 1999 2
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2000 and 1999 3
Notes to Consolidated Financial Statements 4
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk 10
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except for share data)
<TABLE>
<CAPTION>
Unaudited Unaudited Audited
Sept. 30, Sept. 30, Dec. 31
ASSETS 2000 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................................ $ 29,315 $ 11,448 $ 19,795
Inventories.............................................................. 242,296 194,513 141,534
Prepaid expenses......................................................... 2,516 2,476 1,913
Other current assets..................................................... 871 352 1,243
Deferred income taxes.................................................... - 354 -
----------- ----------- -----------
Total current assets................................................ 274,998 209,143 164,485
----------- ----------- -----------
Property and equipment, at cost............................................. 80,188 70,199 71,924
Less accumulated depreciation & amortization............................. (42,407) (37,677) (38,838)
----------- ----------- -----------
Net property and equipment.......................................... 37,781 32,522 33,086
----------- ----------- -----------
Other assets, at cost:
Deferred financing costs................................................. 6,037 6,143 5,818
Other assets............................................................. 372 319 327
----------- ----------- -----------
Total Assets........................................................ $ 319,188 $ 248,127 $ 203,716
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Installments of mortgages................................................ $ 1,617 $ 1,671 $ 1,671
Revolving credit facility................................................ 74,070 55,850 -
Installments of notes payable............................................ 15,966 5,405 11,838
Accounts payable......................................................... 44,401 38,534 39,491
Accrued liabilities:
Sales Tax.............................................................. 2,856 2,039 3,291
Interest............................................................... 4,149 2,999 815
Other.................................................................. 10,639 9,039 8,160
Deferred income taxes.................................................... 546 - 547
Income taxes payable..................................................... 769 2,193 9,168
----------- ----------- -----------
Total current liabilities........................................... 155,013 117,730 74,981
----------- ----------- -----------
Mortgages on land, buildings and equipment.................................. 5,803 7,474 7,056
Notes payable, excluding current portion.................................... 165,492 162,522 155,227
Revolving credit facility, excluding current portion........................ 15,000 15,000 -
Deferred income taxes....................................................... 2,400 2,211 2,400
----------- ----------- -----------
Total Liabilities................................................... 343,708 304,937 239,664
----------- ----------- -----------
Shareholders' equity
Common stock par value $.01 per share, authorized 100,000,000
shares; issued 39,548,701 shares at September 30, 2000,
38,810,446 shares at September 30, 1999 and 38,847,326 shares
at December 31,1999...................................................... 395 388 388
Additional paid-in capital............................................... 171,803 171,947 171,789
Retained deficit......................................................... (196,718) (229,145) (208,125)
----------- ----------- -----------
Total Shareholders' Equity........................................ (24,520) (56,810) (35,948)
----------- ----------- -----------
Total Liabilities and Shareholders' Equity.................................. $ 319,188 $ 248,127 $ 203,716
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-1-
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Consolidated Statements of Operations
UnauditedIn thousands, except per share data
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
----------------------------- ----------------------------
2000 1999 2000 1999
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales............................................. $ 141,352 $ 113,493 $ 364,407 $ 292,935
Cost of sales......................................... 93,168 72,141 236,182 187,631
------------ ---------- ------------ ----------
Gross profit.................................. 48,184 41,352 128,225 105,304
Selling, general and administrative expenses.......... 33,962 28,609 93,108 78,144
------------ ---------- ------------ ----------
Operating income.............................. 14,222 12,743 35,117 27,160
Other income (expense):
Interest income.................................... 19 11 51 315
Interest expense................................... (6,886) (5,479) (17,090) (16,345)
Other income....................................... 66 132 321 511
------------ ---------- ------------ ----------
(6,801) (5,336) (16,718) (15,519)
------------ ---------- ------------ ----------
Net earnings before income taxes and
extraordinary item............................ 7,421 7,407 18,399 11,641
Income tax expense.................................... 2,820 2,815 6,992 4,402
------------ ---------- ------------ ----------
Net earnings before extraordinary item........ 4,601 4,592 11,407 7,239
------------ ---------- ------------ ----------
Extraordinary item related to debt extinguishment
(net of tax).......................................... - - - (3,048)
------------ ---------- ------------ ----------
Net earnings.................................. $ 4,601 $ 4,592 $ 11,407 $ 4,191
============ ========== ============ ==========
Earnings Per Share
------------------
Net earnings before extraordinary item................ $ 4,601 $ 4,592 $ 11,407 $ 7,239
Dividends on and accretion of
preferred stocks.............................. - - - (3,748)
Premium on redemption of senior preferred
stock......................................... - - - (4,395)
------------ ---------- ------------ ----------
Earnings (loss) available to common shareholders...... 4,601 4,592 11,407 (904)
Extraordinary item related to debt
extinguishment (net of tax)................... - - - (3,048)
------------ ---------- ------------ ----------
Net earnings (loss) available to common shareholders.. $ 4,601 $ 4,592 $ 11,407 $ (3,952)
============ ========== ============ ==========
Net earnings (loss) per Common Share - Basic
Earnings (loss) available to common
shareholders.................................. $ 0.12 $ 0.12 $ 0.29 $ (0.03)
Extraordinary item related to debt
extinguishment (net of tax)................... - - - (0.09)
------------ ---------- ------------ ----------
Net earnings (loss) available to common shareholders.. $ 0.12 $ 0.12 $ 0.29 $ (0.12)
============ ========== ============ ==========
Net earnings (loss) per Common Share - Diluted
Earnings (loss) available to common
shareholders.................................. $ 0.11 $ 0.11 $ 0.28 $ (0.03)
Extraordinary item related to debt
extinguishment (net of tax)................... - - - (0.09)
------------ ---------- ------------ ----------
Net earnings (loss) available to common shareholders.. $ 0.11 $ 0.11 $ 0.28 $ (0.12)
============ ========== ============ ==========
Weighted average number of common shares and common
share equivalents outstanding:
Basic.............................................. 39,425 38,805 39,183 33,658
Diluted............................................ 40,546 40,641 40,667 33,658
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited In Thousands
Nine Months Ended
September 30,
-------------------
2000 1999
-------- ---------
Net cash flows from operating activities:
Net earnings $ 11,407 $ 4,191
Depreciation and amortization 3,569 3,833
Amortization of financing fees 1,022 1,031
Extraordinary item - 3,048
(Gain) Loss on disposal of fixed assets (3) 13
Change in operating assets and liabilities:
Inventories (100,762) (97,770)
Prepaid expenses (603) (1,362)
Other current assets 372 114
Other assets (45) 152
Accounts payable 4,910 15,453
Accrued liabilities and deferred taxes 5,377 2,131
Income taxes payable (8,399) (5,010)
-------- ---------
Total adjustments (94,562) (78,367)
-------- ---------
Net cash used in operating activities (83,155) (74,176)
-------- ---------
Net cash flows from investing activities:
Repayments of loans from officers - 3,345
Proceeds from sale of assets 8 32
Capital expenditures (8,269) (12,308)
-------- ---------
Net cash used in investing activities (8,261) (8,931)
-------- ---------
Net cash flows from financing activities:
Proceeds from revolving credit facility 89,070 70,850
Debt Financing Costs (1,241) -
Proceed/(payment) of debt and mortgages 13,086 (3,465)
Mortgage on warehouse - 6,500
Partial redemption of Senior Subordinated Note - (34,410)
Principal payments under capital lease obligation - (161)
Proceeds from exercise of common stock options/stock
purchase plan 21 56
Redemption of Junior Preferred Stocks - (7,382)
Redemption of Senior Exchangeable Redeemable Preferred
Stock - (33,855)
Net proceeds from IPO - 76,140
-------- ---------
Net cash provided by financing activities 100,936 74,273
-------- ---------
Net change in cash and cash equivalents 9,520 (8,834)
Cash and cash equivalents at beginning of period 19,795 20,282
-------- ---------
Cash and cash equivalents at end of period $ 29,315 $ 11,448
======== =========
See accompanying notes to consolidated financial statements.
Supplemental cash flow information:
Our Senior Credit Facility and the Senior Subordinated Notes both limit the
Company's ability to pay cash dividends, accordingly dividends have not been
paid in cash. This statement does not reflect the accrual in 1999 of $1,907 for
dividends on the Junior Preferred Stock or the accrual of $951 of additional
Senior Preferred Stock in 1999 as a dividend to the holders of the Senior
Preferred Stock.
Non-cash items:
Conversion of : Jr. perpetual preferred stock - 553
Jr. redeemable preferred stock - 89,903
-3-
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated interim financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These
unaudited financial statements include all adjustments, consisting only of
those of a normal recurring nature, which in the opinion of management, are
necessary to present fairly the results of the Company for the interim
periods presented and should be read in conjunction with the consolidated
financial statements and notes thereto in the Company's Form 10-K filing
for the year ended December 31, 1999.
2. The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
3. Notes payable under the terms of the Company's revolving line of credit
agreement are classified between current and long term in accordance with
the terms of the credit agreement. The credit agreement is discussed in
more detail in Liquidity and Capital Resources on page 6.
4. Certain prior year amounts have been reclassified to conform to the current
period presentation.
5. In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which was amended by SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of SFAS No. 133."
This pronouncement is effective for fiscal years beginning after June 15,
2000. The Company has limited involvement with derivative financial
instruments and only uses them to manage well-defined foreign exchange
risks. Forward foreign exchange contracts are used to hedge the impact of
fluctuations of foreign exchange on inventory purchases. The amount of
foreign exchange contracts outstanding at September 30, 2000 or in place
during fiscal 2000 was immaterial to its financial position. The Company's
year ends December 31, 2000 and it will begin accounting for SFAS No. 133
after that date.
-4-
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following table sets forth certain financial information from the Company's
consolidated statements of operations expressed as a percentage of net sales.
There can be no assurance that the trends in sales growth or operating results
will continue in the future.
<TABLE>
<CAPTION>
Quarter Ended Sept. 30 Year to Date Sept. 30
------------------------ -----------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.9 63.6 64.8 64.0
----- ----- ----- -----
Gross profit 34.1 36.4 35.2 36.0
Selling, general and administrative expense 24.0 25.2 25.6 26.7
----- ----- ----- -----
Operating income 10.1 11.2 9.6 9.3
Net interest expense and other income <4.8> <4.7> <4.6> <5.3>
----- ----- ----- -----
Earnings before income taxes and
extraordinary item 5.3 6.5 5.0 4.0
Net earnings before extraordinary item 3.3 4.1 3.1 2.5
Net earnings 3.3% 4.1% 3.1% 1.4%
</TABLE>
Three Months Ended September 30, 2000
Compared to the Three Months Ended September 30, 1999
During the third quarter of 2000, net sales increased 24.5% compared to the same
quarter of 1999. Same store sales increased 5.5% for the fourth and fifth sales
events, which began August 1 and ended September 16. The increase in third
quarter sales is due to comparable store sales increases of $5.3 million and
$10.6 million of new store sales and $12.0 million of sales for non-comparative
sales days. Average store sales for the fourth and fifth sales events in the
third quarter increased from $261,000 to $270,000 compared to the prior year.
The increase in comparable sales was comprised of a 3.0% increase in the number
of transactions and a 2.4% increase in the average transaction amount. A primary
factor in our comparable store sales growth included our buying organization's
experience in providing value to customers. Our unique niche as the nation's
only high-end closeout retailer of home furnishings and gifts and the strong
economy also contributed.
Gross profit increased $6.8 million from $41.4 million for last year's third
quarter to $48.2 million, primarily as a result of the increased sales mentioned
above. Our gross profit percentage decreased 2.3% compared with last year due to
a shift in the timing of markdowns to the third quarter and the expensing of
increased distribution costs related to the goods sold.
Selling, general, and administrative expenses increased $5.4 million compared to
the third quarter of 1999 due primarily to the addition of new stores, variable
store level expenses, and inflationary increases. These expenses, as a
percentage of sales, decreased to 24.0% from 25.2% for the prior year due to the
leverage resulting from increased sales.
-5-
<PAGE>
The income tax provision for both of the three-month periods ended September 30,
2000 and 1999 was $2.8 million, reflecting an effective tax rate of 38%.
Interest expense increased due to higher interest rates and increase in
borrowing resulting from early receipt of inventory and increased distribution
expenses.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased from $13.9 million to $15.5 million due to the sales growth factors
mentioned above.
Nine Months Ended September 30, 2000
Compared to the Nine Months Ended September 30, 1999
During the first nine months of 2000, net sales increased 24.4% from the prior
year due primarily to comparable store sales increases of $29.6 million and
$29.9 million of sales from new store sales and $12.0 million from non-
comparative sales days. Average store sales for the same period increased to
$829,000 from $759,000. The increase in comparable sales was comprised of a
7.9% increase in the number of transactions and a 3.3% increase in the average
transaction amount. The increase was primarily the result of continued
improvement in merchandise selection, pricing, and mix.
Gross profit increased $22.9 million over last year's first three quarters from
$105.3 million to $128.2 million, primarily as a result of the increased sales
mentioned above. The gross profit percentage decreased by 0.8% due to the
timing of markdowns with the fourth quarter and increased buying and
distribution costs.
Selling, general, and administrative expense increased $15.0 million due to the
addition of new stores and inflationary increases. These expenses as a
percentage of sales decreased to 25.6% from 26.7% for the prior year due to the
leverage resulting from comparable store sales increases.
The income tax provision for the nine-month periods ended September 30, 2000 and
1999 was $7.0 million and $4.4 million, respectively, reflecting an effective
tax rate of 38.0% and 37.8%, respectively.
Interest expense increased due to increased interest rates and increased
borrowing resulting from early receipt of inventory and increased distribution
expenses.
EBITDA increased from $31.9 million to $39.1 million due to the sales growth
factors mentioned above.
Liquidity and Capital Resources
We have historically financed our operations with funds generated from operating
activities and borrowings under our revolving credit facilities. In July 2000,
the Term A Loan of the Senior Credit Facility was increased $25.0 million.
These additional funds were used to help finance our operations, as further
discussed below.
Net cash used in operating activities for the nine months ended September 2000
and 1999, was $83.2 million and $74.2 million, respectively. The major component
of these amounts was the seasonal buildup of inventory. Cash and cash
equivalents as of September 30, 2000 and 1999 were $29.3 million and $11.4
million, respectively.
-6-
<PAGE>
Capital expenditures principally associated with new store openings and
warehouse equipment were $8.3 million and $12.3 million for the nine months
ending September 2000 and 1999, respectively. In June of 1999, we purchased a
warehouse that we had been leasing for $6.5 million. This acquisition was
financed through a ten-year mortgage with a floating interest rate, currently at
8.47% per annum. We expect to spend approximately $1.5 million for capital
expenditures for the remainder of 2000.
As part of the recapitalization, discussed in detail in the December 31, 1999
financial statements, the Company entered into the Senior Credit Facility, which
was originally comprised of the $110.0 million Term Loans and the $90.0 million
Revolving Credit Facility. Subject to compliance with the terms of the Senior
Credit Facility and the Indenture, borrowings under the Revolving Credit
Facility may be increased by $25.0 million to accommodate future growth and for
certain other purposes. The Term Loan A loans and the Revolving Credit Facility
loans mature in five years, and the Term Loan B loans mature in seven years.
For 30 consecutive days during each twelve-month period, beginning April 1999,
the aggregate principal amount of loans outstanding under the Revolving Credit
Facility is not to exceed $15.0 million. On July 5, 2000, the Company amended
and restated its Senior Credit Facility by increasing the Term A loan
commitments by $25.0 million and the availability under the Revolving Credit
Facility by $35.0 million (from $90.0 million to $125.0 million.) The remaining
terms of the indebtedness did not change, however, new financial covenants were
established and interest rates were adjusted to reflect current market rates. At
September 30, 2000, the Company had $112.5 million outstanding under the Term
Loans and $89.3 million outstanding under the Revolving Credit Facility, with
$35.7 million of remaining availability thereunder.
The Senior Subordinated Notes ("Notes") bear interest at 11.0% and are due on
December 15, 2007. The Notes are subordinated to any amounts outstanding under
the Senior Credit Facility. Interest is payable on June 15 and December 15 of
each year.
Upon consummation of the recapitalization, our total debt and interest charges
increased significantly. Interest payments on the Notes, under the Senior
Credit Facility and on the Exchange Debentures, represent significant liquidity
requirements. The Notes require semi-annual interest payments, and interest on
the loans under the Senior Credit Facility is due quarterly. We anticipate that
cash flow generated from operations and borrowings under the Senior Credit
Facility will be sufficient to fund our working capital needs, planned capital
expenditures, and scheduled interest payments (including interest payments on
the Notes and amounts outstanding under the Senior Credit Facility).
The instruments governing the Company's indebtedness, the Senior Credit Facility
and the Indenture for the Notes contain financial and other covenants that
restrict, among other things, the ability of the Company and its subsidiaries to
incur additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, merge or consolidate with any other person or
sell, assign, transfer, lease, convey or otherwise dispose of substantially all
of the assets of the Company. Such limitations, together with our highly
leveraged nature could limit corporate and operating activities, including our
ability to invest in opening new stores.
-7-
<PAGE>
Inventory
The Company's inventory increased from $141.5 million at year-end to $242.3
million at September 30, 2000, for an increase of $100.8 million from December
31, 1999.
As reflected in the chart, the increase in warehouse inventory is due to the
seasonal nature of our business in which inventory levels increase from the
beginning of the year to September 30, 2000. Higher levels of inventory are
also necessary to support our level of growth. In addition, inventories
continue to arrive early to allow adequate time for processing and shipment to
our stores..
Total Inventory Levels by Location
($ millions)
9/30/00 9/30/99 9/30/98 12/31/99 12/31/98
-------- -------- -------- --------- ---------
Stores $ 117.8 $ 105.4 $ 108.6 $ 72.8 $ 58.8
Warehouse 124.5 89.1 60.2 68.7 37.9
-------- -------- -------- --------- ---------
Total $ 242.3 $ 194.5 $ 168.8 $ 141.5 $ 96.7
======== ======== ======== ========= =========
Per Store Inventory Levels by Location
($ thousands)
9/30/00 9/30/99 9/30/98 12/31/99 12/31/98
-------- -------- -------- --------- ---------
Stores $ 284 $ 287 $ 326 $ 191 $ 169
Warehouse 300 242 181 180 109
-------- -------- -------- --------- ---------
Total $ 584 $ 529 $ 507 $ 371 $ 278
======== ======== ======== ========= =========
Store Openings/Closings
Nine Months Nine Months
Ending Ending FYE
9/30/ 2000 9/30/1999 12/31/1999
---------- --------- ----------
Stores Open at
Beginning of Period 382 347 347
Stores Opened 38 30 44
Stores Closed (5) (9) (9)
---------- --------- ----------
Stores Open at End
of Period 415 368 382
========== ========= ==========
-8-
<PAGE>
Tuesday Morning Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
<TABLE>
<CAPTION>
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
--------------------------- --------------------------
2000 1999 2000 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Earnings Per Common Share
Net earnings $ 4,601 $ 4,592 $ 11,407 $ 4,191
Add: Extraordinary item related to debt
extinguishment (net of tax) - - - 3,048
---------- --------- --------- ---------
Net earnings before extraordinary item $ 4,601 $ 4,592 $ 11,407 $ 7,239
Less:
Junior preferred dividends $ - $ - $ - $ (2,469)
Senior preferred dividends - - - (1,269)
Senior preferred accretion - - - (10)
Premium on redemption of senior
preferred stock - - - (4,395)
---------- --------- --------- ---------
Earnings (loss) available to common shareholders $ 4,601 $ 4,592 $ 11,407 $ (904)
Extraordinary item related to debt
extinguishment (net of tax) - - - (3,048)
---------- --------- --------- ---------
Net earnings (loss) available to common
shareholders $ 4,601 $ 4,592 $ 11,407 $ (3,952)
========== ========= ========= =========
Net earnings (loss) per Common Share - Basic
Earnings (loss) available to common shareholders $ 0.12 $ 0.12 $ 0.29 $ (0.03)
Extraordinary item related to debt
extinguishment (net of tax) - - - (0.09)
---------- --------- --------- ---------
Net earnings (loss) available to common
shareholders $ 0.12 $ 0.12 $ 0.29 $ (0.12)
========== ========= ========= =========
Net earnings (loss) per Common Share - Diluted
Earnings (loss) available to common shareholders $ 0.11 $ 0.11 $ 0.28 $ (0.03)
Extraordinary item related to debt
extinguishment (net of tax) - - - (0.09)
---------- --------- --------- ---------
Net earnings (loss) available to common
shareholders $ 0.11 $ 0.11 $ 0.28 $ (012)
========== ========= ========= =========
Effect of dilutive securities:
Weighted average common equivalent shares
from stock options 1,121 1,836 1,484 1,816 (1)
Weighted average common shares outstanding 39,425 38,805 39,183 33,658
---------- --------- --------- ---------
Weighted average common shares and common
stock equivalents outstanding 40,546 40,641 40,667 33,658
========== ========= ========= =========
</TABLE>
(1) Not included in calculation, because of anti-dilutive effect
-9-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
2000 1999 2000 1999
---------- -------- --------- --------
<S> <C> <C> <C> <C>
Pro forma Earnings Per Common Share
Net earnings before extraordinary item $ 4,601 $ 4,592 $ 11,407 $ 7,239
Add: Reduction from interest expense from
$31million notes payment, net of tax $ - $ - $ - $ 852
---------- -------- --------- --------
Net earnings available to common shareholders $ 4,601 $ 4,592 $ 11,407 $ 8,091
========== ======== ========= ========
Net earnings per Common Share
Basic $ 0.12 $ 0.12 $ 0.29 $ 0.21
---------- -------- --------- --------
Diluted $ 0.11 $ 0.11 $ 0.28 $ 0.20
========== ======== ========= ========
Weighted average number of common shares
And common share equivalents outstanding
Basic 39,425 38,155 39,183 38,146
Diluted 40,546 39,991 40,667 39,962
</TABLE>
Quantitative and Qualitative Disclosures about Market Risk
The market risk of the Company's financial instruments as of September 30, 2000
has not materially changed since December 31, 1999. The market risk profile on
December 31, 1999 is disclosed in the Company's annual report on Form 10-K for
the year ended December 31, 1999.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(i) First Amended and Restated Credit Agreement,
(ii) Employment Contract Between Tuesday Morning
Corporation and Kathleen Mason
(b) Reports on Form 8-K: None
-10-
<PAGE>
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.
TUESDAY MORNING CORPORATION
(Registrant)
DATE: November 7, 2000 /s/ Mark E. Jarvis
--------------
Mark E. Jarvis, Executive Vice President
