bebe stores inc. (BEBE, Financial) filed Quarterly Report for the period ended 2009-10-03.
Bebe Stores designs, develops and produces a distinctive line of contemporary women's apparel and accessories. They market their products under the bebe, bebe moda and bbsp brand names through their retail stores located in Canada and the United Kingdom. Their broad product offering includes suits, tops, pants, skirts, dresses, logo and other activewear, outerwear, and handbags and other accessories. Bebe Stores design and develop most of the merchandise in-house. Bebe Stores Inc. has a market cap of $506.8 million; its shares were traded at around $5.84 with a P/E ratio of 194.6 and P/S ratio of 0.9. The dividend yield of Bebe Stores Inc. stocks is 1.7%. Bebe Stores Inc. had an annual average earning growth of 5.1% over the past 10 years.
Net cash used by operating activities for the three months ended October 3, 2009 was $9.9 million versus cash provided by operating activities of $14.6 million for the three months ended October 4, 2008. The decrease of $24.5 million from the comparable period was primarily due to a decrease in net earnings of $15.4 million and decreased changes in working capital of $8.5 million primarily related to lower accounts payable resulting from decreases in finished goods inventory at stores and reduced costs related to new store openings.
Net cash used by investing activities for the three months ended October 3, 2009 was $0.9 million versus $6.6 million for the three months ended October 4, 2008. The decrease of $5.7 million versus the prior year comparable period was primarily due to lower capital expenditures. We expect that total capital expenditures will be below $20 million in fiscal 2010.
Net cash used by financing activities was $6.4 million for the three months ended October 3, 2009 versus $8.5 million for the three months ended October 4, 2008. The decrease of $2.1 million from the prior year comparable period was primarily due to lower dividends paid related to a lower rate declared for the first quarter of fiscal 2010 ($0.025 per share versus $0.05 per share in the prior year).
We hold a variety of interest bearing ARS consisting of federally insured student loan backed securities and insured municipal authority bonds. As of October 3, 2009, our ARS portfolio totaled approximately $189.9 million, $69.5 million (net of an impairment charge of $12.7 million) classified as trading securities and $120.4 million (net of temporary impairment charge of $14.6 million) classified as long-term available for sale securities. Our ARS portfolio includes approximately 98% federally insured student loan backed securities and 2% municipal authority bonds. Our ARS portfolio consists of approximately 46% AAA rated investments, 10% AA rated investments, 33% A rated investments and 11% BBB rated investments. This is a change from our fiscal 2009 portfolio, which consisted of 46% AAA rates investments, 14% AA rated investments, 30% A rated investments and 10% BBB related investments. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The uncertainties in the credit markets that began in February 2008 have affected our holdings in ARS investments and auctions for our investments in these securities have failed to settle on their respective settlement dates. Historically the fair value of ARS investments had approximated par value due to the frequent resets through the auction process. While we continue to earn interest on our ARS investments at the maximum contractual rate, these investments are not currently trading and
In November 2008, we entered into a settlement agreement related to our ARS held with UBS Financial Services, Inc. (UBS) that grants us certain rights related to these ARS (the Right). Beginning June 30, 2010, at our request, UBS has agreed to purchase all of our ARS currently held with them at par value. Conversely, UBS has the right, in its discretion, to purchase or sell our ARS at any time until July 2, 2012, so long as we receive payment at par value upon any sale or disposition. The enforceability of the Right results in a put option which should be recognized as a free standing asset separate from the ARS. Upon acceptance of the offer from UBS, we recorded the put option at fair value of $11.6 million, with a corresponding credit to interest income. Although it is a financial instrument, the put option does not meet the FASBs definition of a derivative instrument, therefore we have elected to measure the put option at fair value. As a result, unrealized gains and losses are included in earnings. At October 3, 2009, the fair value of the put option is $12.1 million, net of a reserve of $0.6 million, of which a gain of $0.02 million has been recognized in the current year.
Read the The complete ReportBEBE is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
Bebe Stores designs, develops and produces a distinctive line of contemporary women's apparel and accessories. They market their products under the bebe, bebe moda and bbsp brand names through their retail stores located in Canada and the United Kingdom. Their broad product offering includes suits, tops, pants, skirts, dresses, logo and other activewear, outerwear, and handbags and other accessories. Bebe Stores design and develop most of the merchandise in-house. Bebe Stores Inc. has a market cap of $506.8 million; its shares were traded at around $5.84 with a P/E ratio of 194.6 and P/S ratio of 0.9. The dividend yield of Bebe Stores Inc. stocks is 1.7%. Bebe Stores Inc. had an annual average earning growth of 5.1% over the past 10 years.
Highlight of Business Operations:
Our working capital requirements vary widely throughout the year and generally peak during the first and second fiscal quarters. As of October 3, 2009, we had approximately $309.1 million of cash and equivalents and investments on hand of which approximately $40.0 million were invested in government treasury bills (of these, $10.0 million are classified as cash equivalents), approximately $8.5 million were invested in guaranteed investment certificates, and approximately $189.9 million, net of impairment charges of $27.3 million, were invested in auction rate securities (ARS). We do not anticipate the lack of liquidity in the ARS to impact our ability to fund our operations in the foreseeable future and believe we have sufficient cash and equivalents to fund ongoing operations. In addition, we have a revolving line of credit, under which we may borrow or issue letters of credit up to a combined total of $25 million. As of October 3, 2009, there were no cash borrowings outstanding under the line of credit, and letters of credit outstanding totaled $2.7 million. This credit facility requires us to maintain a $2.5 million compensating balance and to comply with certain financial covenants, including amounts for minimum tangible net worth, unencumbered liquid assets and profitability, and certain restrictions on making loans and investments. As of October 3, 2009, we were not in compliance with one covenant of the agreement requiring specified quarterly income levels. We obtained a waiver as of October 3, 2009, with respect to this covenant for the quarter ended October 3, 2009.Net cash used by operating activities for the three months ended October 3, 2009 was $9.9 million versus cash provided by operating activities of $14.6 million for the three months ended October 4, 2008. The decrease of $24.5 million from the comparable period was primarily due to a decrease in net earnings of $15.4 million and decreased changes in working capital of $8.5 million primarily related to lower accounts payable resulting from decreases in finished goods inventory at stores and reduced costs related to new store openings.
Net cash used by investing activities for the three months ended October 3, 2009 was $0.9 million versus $6.6 million for the three months ended October 4, 2008. The decrease of $5.7 million versus the prior year comparable period was primarily due to lower capital expenditures. We expect that total capital expenditures will be below $20 million in fiscal 2010.
Net cash used by financing activities was $6.4 million for the three months ended October 3, 2009 versus $8.5 million for the three months ended October 4, 2008. The decrease of $2.1 million from the prior year comparable period was primarily due to lower dividends paid related to a lower rate declared for the first quarter of fiscal 2010 ($0.025 per share versus $0.05 per share in the prior year).
We hold a variety of interest bearing ARS consisting of federally insured student loan backed securities and insured municipal authority bonds. As of October 3, 2009, our ARS portfolio totaled approximately $189.9 million, $69.5 million (net of an impairment charge of $12.7 million) classified as trading securities and $120.4 million (net of temporary impairment charge of $14.6 million) classified as long-term available for sale securities. Our ARS portfolio includes approximately 98% federally insured student loan backed securities and 2% municipal authority bonds. Our ARS portfolio consists of approximately 46% AAA rated investments, 10% AA rated investments, 33% A rated investments and 11% BBB rated investments. This is a change from our fiscal 2009 portfolio, which consisted of 46% AAA rates investments, 14% AA rated investments, 30% A rated investments and 10% BBB related investments. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The uncertainties in the credit markets that began in February 2008 have affected our holdings in ARS investments and auctions for our investments in these securities have failed to settle on their respective settlement dates. Historically the fair value of ARS investments had approximated par value due to the frequent resets through the auction process. While we continue to earn interest on our ARS investments at the maximum contractual rate, these investments are not currently trading and
In November 2008, we entered into a settlement agreement related to our ARS held with UBS Financial Services, Inc. (UBS) that grants us certain rights related to these ARS (the Right). Beginning June 30, 2010, at our request, UBS has agreed to purchase all of our ARS currently held with them at par value. Conversely, UBS has the right, in its discretion, to purchase or sell our ARS at any time until July 2, 2012, so long as we receive payment at par value upon any sale or disposition. The enforceability of the Right results in a put option which should be recognized as a free standing asset separate from the ARS. Upon acceptance of the offer from UBS, we recorded the put option at fair value of $11.6 million, with a corresponding credit to interest income. Although it is a financial instrument, the put option does not meet the FASBs definition of a derivative instrument, therefore we have elected to measure the put option at fair value. As a result, unrealized gains and losses are included in earnings. At October 3, 2009, the fair value of the put option is $12.1 million, net of a reserve of $0.6 million, of which a gain of $0.02 million has been recognized in the current year.
Read the The complete ReportBEBE is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
