================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{X} Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended July 31, 2004 or
{ } Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to ________________
Commission File Number - 0-26229
BARNEYS NEW YORK, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4040818
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
575 Fifth Avenue, New York, New York 10017
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 339-7300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter 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 { }
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes { } No {X}
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
As of September 10, 2004 there were 14,210,318 shares of Barneys New
York, Inc. common stock, par value $0.01 per share, outstanding.
================================================================================
BARNEYS NEW YORK, INC.
FORM 10-Q
QUARTER ENDED July 31, 2004
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed consolidated statements of operations - Three and six months
ended July 31, 2004 and August 2, 2003 3
Condensed consolidated balance sheets - July 31, 2004 and January 31, 2004 4
Condensed consolidated statements of cash flows - Six months
ended July 31, 2004 and August 2, 2003 5
Notes to condensed consolidated financial statements - July 31, 2004 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 21
ITEM 4. Controls and Procedures 21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 22
ITEM 4. Submission of Matters to a Vote of Security Holders 23
ITEM 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
2
ITEM 1. FINANCIAL STATEMENTS
Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net sales $ 101,964 $ 88,707 $ 214,806 $ 180,092
Cost of sales 53,110 48,164 115,307 98,761
---------- ---------- ---------- ----------
Gross profit 48,854 40,543 99,499 81,331
Expenses:
Selling, general and administrative expenses (including occupancy costs) 40,816 36,975 83,025 74,693
Depreciation and amortization 2,842 2,825 5,622 5,634
Other income - net (1,284) (1,229) (3,302) (3,277)
---------- ---------- ---------- ----------
Operating income 6,480 1,972 14,154 4,281
Interest and financing costs, net of interest income 3,938 3,924 7,838 7,293
---------- ---------- ---------- ----------
Income (loss) before income taxes 2,542 (1,952) 6,316 (3,012)
Income taxes 1,651 150 1,876 300
---------- ---------- ---------- ----------
Net income (loss) $ 891 $ (2,102) $ 4,440 $ (3,312)
========== ========== ========== ==========
Basic net income (loss) per share of common stock $ 0.06 $ (0.15) $ 0.31 $ (0.23)
========== ========== ========== ==========
Diluted net income (loss) per share of common stock $ 0.06 $ (0.15) $ 0.30 $ (0.23)
========== ========== ========== ==========
Weighted average number of shares of common stock outstanding:
Basic 14,126 14,103 14,119 14,103
========== ========== ========== ==========
Diluted 15,033 14,103 14,747 14,103
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(UNAUDITED)
JULY 31, JANUARY 31,
2004 2004
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 19,645 $ 15,566
Receivables, less allowances of $4,267 and $4,077 26,271 28,652
Inventories 71,763 61,535
Other current assets 8,974 9,929
---------- ----------
Total current assets 126,653 115,682
Fixed assets at cost, less accumulated depreciation
and amortization of $54,294 and $48,754 47,868 47,769
Excess reorganization value 147,226 147,226
Other assets 6,913 7,923
---------- ----------
Total assets $ 328,660 $ 318,600
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,334 $ 24,016
Accrued expenses 30,687 32,963
---------- ----------
Total current liabilities 62,021 56,979
Senior secured notes 92,073 90,536
Other long-term liabilities 4,729 4,793
Series A Redeemable Preferred Stock - Aggregate liquidation preference $2,000 500 500
Stockholders' equity:
Common stock--$.01 par value; authorized
25,000,000 shares-- shares issued 14,126,489 and 14,103,227 141 141
Additional paid-in capital 169,187 169,187
Accumulated other comprehensive (loss) income (130) 765
Retained earnings (deficit) 139 (4,301)
---------- ----------
Total stockholders' equity 169,337 165,792
---------- ----------
Total liabilities and stockholders' equity $ 328,660 $ 318,600
========== ==========
The accompanying notes are an integral part of these financial statements.
4
Barneys New York, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
SIX MONTHS ENDED
JULY 31, AUGUST 2,
2004 2003
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,440 $ (3,312)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 8,171 7,460
Write-off of fixed assets 88 -
Write-off of unamortized bank fees - 364
Deferred compensation 212 212
Deferred rent (64) 1,473
Deferred Taxes 1,500 -
(Increase) decrease in:
Receivables 2,381 1,048
Inventories (10,228) (4,248)
Other current assets (1,652) (1,188)
Long-term assets - (1,664)
(Decrease) increase in:
Accounts payable and accrued expenses 5,042 393
---------- ----------
Net cash provided by operating activities 9,890 538
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed asset additions (5,811) (1,937)
---------- ----------
Net cash used in investing activities (5,811) (1,937)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit agreement 374 215,877
Repayments of credit agreement (374) (230,877)
Proceeds from senior note offering - 90,100
Repayment of long term debt - (58,064)
Payment of deferred rent obligation - (12,000)
Debt origination costs - (6,762)
---------- ----------
Net cash used in financing activities - (1,726)
---------- ----------
Net increase (decrease) in cash and cash equivalents 4,079 (3,125)
Cash and cash equivalents - beginning of period 15,566 7,111
---------- ----------
Cash and cash equivalents - end of period $ 19,645 $ 3,986
========== ==========
The accompanying notes are an integral part of these financial statements.
5
BARNEYS NEW YORK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
Barneys New York, Inc. ("Holdings") and subsidiaries (collectively the
"Company") is a leading upscale retailer of men's, women's and children's
apparel and accessories and items for the home. The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six months ended July 31, 2004 are not
necessarily indicative of the results for the entire year.
The balance sheet at January 31, 2004 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in Holdings' Annual Report on Form 10-K for the
fiscal year ended January 31, 2004.
(2) Income Taxes
The Company provides income taxes based on an estimated annual
effective tax rate. In the second quarter ended July 31, 2004, the Company
significantly increased its estimate of annual net income resulting in a revised
annual effective tax rate of approximately 30%. The impact of this change in
estimate for the first six months was recorded in the second quarter ended July
31, 2004.
(3) Earnings Per Share ("EPS")
Basic EPS is computed as net income available to common stockholders
divided by the weighted average number of common shares outstanding. Diluted EPS
reflects the incremental increase in common shares outstanding assuming the
exercise of stock options and warrants that would have had a dilutive effect on
EPS. Net income attributed to common stockholders is not materially affected by
the 1% dividend on the 5,000 issued and outstanding shares of preferred stock.
Options and warrants to acquire an aggregate of 1,988,906 shares of
common stock were not included in the computation of diluted earnings per common
share for the three and six months ended August 2, 2003 as including them would
have been anti-dilutive.
6
The following is an analysis of the differences between basic and
diluted earnings per common share in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share".
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(amounts in thousands)
Weighted average common shares outstanding......................... 14,126 14,103 14,119 14,103
Effect of dilutive securities:
Options......................................................... 569 - 290 -
Warrants........................................................ 338 - 338 -
---------- ---------- ---------- ----------
Weighted average common shares outstanding and common
share equivalents.............................................. 15,033 14,103 14,747 14,103
========== ========== ========== ==========
(4) Stock-based Compensation
Pro-forma disclosures, as required by Statement of Financial Accounting
Standard No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure", are computed as if the Company recorded compensation expense based
on the fair value for stock-based awards or grants. The following pro-forma
information includes the effects of the options discussed above.
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- ----------------------
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(amounts in thousands, except per share)
Net income (loss) -as reported..................................... $ 891 $ (2,102) $ 4,440 $ (3,312)
Deduct: Stock-based employee compensation expense
determined under fair value method, net of related
tax effects..................................................... (69) (274) (137) (548)
---------- ---------- ---------- ----------
Pro-forma net income (loss)........................................ $ 822 $ (2,376) $ 4,303 $ (3,860)
========== ========== ========== ==========
Net income (loss) per share:
Basic -- as reported............................................... $ 0.06 $ (0.15) $ 0.31 $ (0.23)
========== ========== ========== ==========
Basic -- pro-forma................................................. $ 0.06 $ (0.17) $ 0.30 $ (0.27)
========== ========== ========== ==========
Diluted -- as reported............................................. $ 0.06 $ (0.15) $ 0.30 $ (0.23)
========== ========== ========== ==========
Diluted -- pro-forma............................................... $ 0.05 $ (0.17) $ 0.29 $ (0.27)
========== ========== ========== ==========
As of July 31, 2004, Holdings' common stock was quoted on the
Over-The-Counter Bulletin Board, but was only traded on a limited or sporadic
basis and there was no established public trading market for such common stock.
7
(5) Comprehensive Income
Comprehensive income includes net income and the effect of changes in
unrealized gains and losses on forward exchange contracts used to hedge
merchandise commitments, which are reported separately in stockholders' equity.
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- ----------------------
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
---------- ---------- ---------- ----------
(amounts in thousands)
Net income (loss).................................................. $ 891 $ (2,102) $ 4,440 $ (3,312)
Other comprehensive income (loss):
Forward exchange contracts, net of tax.......................... 459 (29) (895) (239)
---------- ---------- ---------- ----------
Total comprehensive income (loss).................................. $ 1,350 $ (2,131) $ 3,545 $ (3,551)
========== ========== ========== ==========
(6) New Accounting Pronouncements
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities ("VIE's"), an interpretation of Accounting
Research Bulletin No. 51" ("Interpretation No. 46"). In December 2003, the FASB
issued a revision to Interpretation No. 46 to make certain technical corrections
and address certain implementation issues that had arisen. Interpretation No. 46
requires the consolidation of entities in which an enterprise absorbs a majority
of the entity's expected losses, receives a majority of the entity's expected
residual returns, or both, as a result of ownership, contractual or other
financial interests in an entity. Currently, entities are generally consolidated
by an enterprise when it has a controlling financial interest through ownership
of a majority voting interest in the entity. The provisions of Interpretation
No. 46, as revised, were adopted as of May 1, 2004 and had no impact on the
Company's financial condition or results of operations.
(7) Other
The Company is involved in various legal proceedings which are routine
and incidental to the conduct of its business. Management believes that none of
these proceedings, if determined adversely to the Company, would have a material
effect on its financial condition or results of operations.
The Company has announced that it is currently exploring strategic
alternatives to enhance shareholder value. Any such transaction might involve
the sale of the Company. No decisions have been made regarding which options or
combinations of options, if any, the Company will pursue. Due to the numerous
uncertainties involved in these matters, there can be no assurance that any such
transaction will take place nor can any assurance be given with respect to the
timing or terms of any such transaction.
8
(8) Condensed Consolidating Financial Information
On April 1, 2003, Barney's, Inc., a subsidiary of Holdings, issued
$106.0 million principal amount of its 9.000% senior secured notes due April 1,
2008. Barney's, Inc. and the guarantor subsidiaries are 100% owned by Holdings.
These notes have been fully and unconditionally, jointly and severally
guaranteed by Holdings and each of the existing and future domestic restricted
subsidiaries of Barney's, Inc. Subject to certain exceptions, Barney's, Inc. is
restricted in its ability to make funds available to Holdings. The following
condensed consolidating financial information of the Company is being provided
pursuant to Article 3-10(d) of Regulation S-X.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2004
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands)
Net sales....................... $ -- $ 88,026 $ 13,938 $ -- $ -- $ 101,964
Cost of sales................... -- 44,272 8,838 -- -- 53,110
---------- ---------- ---------- ---------- ---------- ----------
Gross profit................. -- 43,754 5,100 -- -- 48,854
Expenses:
Selling, general and
administrative expenses
(including occupancy
expense)..................... 106 36,874 3,836 -- -- 40,816
Depreciation and amortization.. -- 2,659 183 -- -- 2,842
Other income -- net............. -- (1,284) -- -- -- (1,284)
---------- ---------- ---------- ---------- ---------- ----------
Operating (loss) income...... (106) 5,505 1,081 -- -- 6,480
Equity in net income of
subsidiary.................. (2,648) -- -- -- 2,648 --
Interest and financing costs,
net of interest income......... -- 3,938 -- -- -- 3,938
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes... 2,542 1,567 1,081 -- (2,648) 2,542
Income taxes.................... 1,651 -- -- -- -- 1,651
---------- ---------- ---------- ---------- ---------- ----------
Net income................... $ 891 $ 1,567 $ 1,081 $ -- $ (2,648) $ 891
========== ========== ========== ========== ========== ==========
THREE MONTHS ENDED AUGUST 2, 2003
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ --------------- ------------ ------------
(In thousands)
Net sales....................... $ -- $ 76,385 $ 12,322 $ -- $ -- $ 88,707
Cost of sales................... -- 40,215 7,949 -- -- 48,164
---------- ---------- ---------- ---------- ---------- ----------
Gross profit................. -- 36,170 4,373 -- -- 40,543
Expenses:
Selling, general and
administrative expenses
(including occupancy
expense)..................... 106 33,329 3,540 -- -- 36,975
Depreciation and amortization.. -- 2,640 185 -- -- 2,825
Other income -- net............. -- (1,229) -- -- -- (1,229)
---------- ---------- ---------- ---------- ---------- ----------
Operating (loss) income...... (106) 1,430 648 -- -- 1,972
Equity in net loss of
subsidiary.................. 1,846 -- -- -- (1,846) --
Interest and financing costs,
net of interest income......... -- 3,924 -- -- -- 3,924
---------- ---------- ---------- ---------- ---------- ----------
(Loss) income before income
taxes....................... (1,952) (2,494) 648 -- 1,846 (1,952)
Income taxes.................... 150 -- -- -- -- 150
---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income............ $ (2,102) $ (2,494) $ 648 $ -- $ 1,846 $ (2,102)
========== ========== ========== ========== ========== ==========
9
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 2004
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands)
Net sales................... $ -- $ 188,145 $ 26,661 $ -- $ -- $ 214,806
Cost of sales............... -- 100,615 14,692 -- -- 115,307
---------- ---------- ---------- ---------- ---------- ----------
Gross profit.............. -- 87,530 11,969 -- -- 99,499
Expenses:
Selling, general and
administrative expenses
(including occupancy
expense).................. 212 75,265 7,548 -- -- 83,025
Depreciation and
amortization.............. -- 5,212 410 -- -- 5,622
Other income -- net........ -- (3,302) -- -- -- (3,302)
---------- ---------- ---------- ---------- ---------- ----------
Operating (loss) income.... (212) 10,355 4,011 -- -- 14,154
Equity in net income of
subsidiary................. (6,528) -- -- -- 6,528 --
Interest and financing
costs, net of interest
income..................... -- 7,838 -- -- -- 7,838
---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes..................... 6,316 2,517 4,011 -- (6,528) 6,316
Income taxes................ 1,876 -- -- -- -- 1,876
---------- ---------- ---------- ---------- ---------- ----------
Net income............... $ 4,440 $ 2,517 $ 4,011 $ -- $ (6,528) $ 4,440
========== ========== ========== ========== ========== ==========
SIX MONTHS ENDED AUGUST 2, 2003
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands)
Net sales................... $ -- $ 157,352 $ 22,740 $ -- $ -- $ 180,092
Cost of sales............... -- 85,823 12,938 -- -- 98,761
---------- ---------- ---------- ---------- ---------- ----------
Gross profit.............. -- 71,529 9,802 -- -- 81,331
Expenses:
Selling, general and
administrative expenses
(including occupancy
expense).................. 212 67,485 6,996 -- -- 74,693
Depreciation and
amortization.............. -- 5,269 365 -- -- 5,634
Other income -- net......... -- (3,277) -- -- -- (3,277)
---------- ---------- ---------- ---------- ---------- ----------
Operating (loss) income.... (212) 2,052 2,441 -- -- 4,281
Equity in net loss of
subsidiary................ 2,800 -- -- -- (2,800) --
Interest and financing
costs, net of interest
income..................... -- 7,293 -- -- -- 7,293
---------- ---------- ---------- ---------- ---------- ----------
(Loss) income before income
taxes..................... (3,012) (5,241) 2,441 -- 2,800 (3,012)
Income taxes................ 300 -- -- -- -- 300
---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income......... $ (3,312) $ (5,241) $ 2,441 $ -- $ 2,800 $ (3,312)
========== ========== ========== ========== ========== ==========
10
CONDENSED CONSOLIDATING BALANCE SHEET
JULY 31, 2004
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents.... $ -- $ 19,237 $ 408 $ -- $ -- $ 19,645
Receivables, less allowances
of $4,267................... -- 25,998 273 -- -- 26,271
Inventories.................. -- 59,986 11,777 -- -- 71,763
Other current assets......... 1,458 7,092 424 -- -- 8,974
---------- ---------- ---------- ---------- ---------- ----------
Total current assets...... 1,458 112,313 12,882 -- -- 126,653
Fixed assets at cost, less
accumulated depreciation and
amortization of $54,294...... -- 45,576 2,292 -- -- 47,868
Excess reorganization value... -- 147,226 -- -- -- 147,226
Investment in and advances to
subsidiary................... 171,069 29,286 -- -- (200,355) --
Other assets.................. -- 6,902 11 -- -- 6,913
---------- ---------- ---------- ---------- ---------- ----------
Total assets.............. $ 172,527 $ 341,303 $ 15,185 $ -- $(200,355) $ 328,660
========== ========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............. $ -- $ 30,989 $ 345 $ -- $ -- $ 31,334
Accrued expenses............. 267 23,945 6,475 -- -- 30,687
Net affiliate payable........ -- 126,699 30,871 -- (157,570) --
---------- ---------- ---------- ---------- ---------- ----------
Total current liabilities. 267 181,633 37,691 -- (157,570) 62,021
Long-term debt................ -- 92,073 -- -- -- 92,073
Other long-term liabilities... 2,293 3,629 (1,193) -- -- 4,729
Series A Redeemable Preferred
Stock--Aggregate liquidation
preference $2,000.......... 500 -- -- -- -- 500
Commitments and contingencies
Stockholders' equity:
Preferred stock.............. -- -- 214 -- (214) --
Common stock -- $.01 par
value; authorized
25,000,000 shares --
issued 14,126,489 shares.... 141 -- 341 -- (341) 141
Additional paid-in capital... 169,187 -- 45,176 -- (45,176) 169,187
Accumulated other
comprehensive loss......... -- (130) -- -- -- (130)
Retained earnings (deficit).. 139 64,098 (67,044) -- 2,946 139
---------- ---------- ---------- ---------- ---------- ----------
Total stockholders' equity.. 169,467 63,968 (21,313) -- (42,785) 169,337
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity......... $ 172,527 $ 341,303 $ 15,185 $ -- $(200,355) $ 328,660
========== ========== ========== ========== ========== ==========
11
CONDENSED CONSOLIDATING BALANCE SHEET
JANUARY 31, 2004
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents... $ -- $ 15,029 $ 537 $ -- $ -- $ 15,566
Receivables, less allowances
of $4,077.................. -- 28,354 298 -- -- 28,652
Inventories................. -- 51,337 10,198 -- -- 61,535
Other current assets........ 2,787 6,769 373 -- -- 9,929
---------- ---------- ---------- ---------- ---------- ----------
Total current assets..... 2,787 101,489 11,406 -- -- 115,682
Fixed assets at cost, less
accumulated depreciation and
amortization of $48,754..... -- 45,209 2,560 -- -- 47,769
Excess reorganization value.. -- 147,226 -- -- -- 147,226
Investment in and advances to
subsidiary.................. 165,135 29,660 -- -- (194,795) --
Other assets................. -- 7,912 11 -- -- 7,923
---------- ---------- ---------- ---------- ---------- ----------
Total assets............. $ 167,922 $ 331,496 $ 13,977 $ -- $(194,795) $ 318,600
========== ========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............ $ -- $ 23,747 $ 269 $ -- $ -- $ 24,016
Accrued expenses............ 102 25,997 6,864 -- -- 32,963
Net affiliate payable....... -- 125,045 33,493 -- (158,538) --
---------- ---------- ---------- ---------- ---------- ----------
Total current liabilities 102 174,789 40,626 -- (158,538) 56,979
Long-term debt............... -- 90,536 -- -- -- 90,536
Other long-term liabilities.. 2,293 3,825 (1,325) -- -- 4,793
Series A Redeemable Preferred
Stock -- Aggregate liquidation
preference $2,000.......... 500 -- -- -- -- 500
Commitments and contingencies
Stockholders' equity:
Preferred stock............. -- -- 214 -- (214) --
Common stock -- $.01 par
value; authorized
25,000,000 shares --
issued 14,103,227 shares... 141 -- 341 -- (341) 141
Additional paid-in capital.. 169,187 -- 45,176 -- (45,176) 169,187
Accumulated other
comprehensive income.... -- 765 -- -- -- 765
Retained deficit............ (4,301) 61,581 (71,055) -- 9,474 (4,301)
---------- ---------- ---------- ---------- ---------- ----------
Total stockholders' equity.. 165,027 62,346 (25,324) -- (36,257) 165,792
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity........ $ 167,922 $ 331,496 $ 13,977 $ -- $(194,795) $ 318,600
========== ========== ========== ========== ========== ==========
12
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JULY 31, 2004
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income...................... $ 4,440 $ 2,517 $ 4,011 $ -- $ (6,528) $ 4,440
Adjustments to reconcile net
income to net cash (used in)
provided by operating
activities:
Depreciation and amortization... -- 7,762 409 -- -- 8,171
Write-off of fixed assets....... -- 88 -- -- -- 88
Deferred compensation........... 212 -- -- -- -- 212
Deferred rent................... -- (196) 132 -- -- (64)
Deferred taxes.................. 1,500 -- -- -- -- 1,500
Equity in net income of
subsidiary................... (6,528) -- -- -- 6,528 --
Decrease (increase) in:
Receivables.................... -- 2,356 25 -- -- 2,381
Inventories.................... -- (8,649) (1,579) -- -- (10,228)
Other current assets........... -- (1,601) (51) -- -- (1,652)
Increase (decrease) in:
Accounts payable and accrued
expenses..................... 166 5,189 (313) -- -- 5,042
---------- ---------- ---------- ---------- ---------- ----------
Net cash (used in) provided
by operating activities...... (210) 7,466 2,634 -- -- 9,890
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Fixed asset additions........... -- (5,669) (142) -- -- (5,811)
Investment in and advances to
subsidiary..................... 210 2,411 (2,621) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net cash provided by (used
in) investing activities.... 210 (3,258) (2,763) -- -- (5,811)
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from credit agreement -- 374 -- -- -- 374
Repayments of credit agreement -- (374) -- -- -- (374)
---------- ---------- ---------- ---------- ---------- ----------
Net cash provided by
financing activities........... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents...... -- 4,208 (129) -- -- 4,079
Cash and cash equivalents --
beginning of period........... -- 15,029 537 -- -- 15,566
---------- ---------- ---------- ---------- ---------- ----------
Cash and cash equivalents --
end of period................. $ -- $ 19,237 $ 408 $ -- $ -- $ 19,645
========== ========== ========== ========== ========== ==========
13
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED AUGUST 2, 2003
---------------------------------------------------------------------------------------
BARNEY'S, GUARANTOR NON-GUARANTOR CONSOLIDATED
HOLDINGS INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
---------- ---------- ------------ -------------- ------------ ------------
(In thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income............ $ (3,312) $ (5,241) $ 2,441 $ -- $ 2,800 $ (3,312)
Adjustments to reconcile net
(loss) income to net cash
(used in) provided by
operating activities:
Depreciation and amortization -- 7,095 365 -- -- 7,460
Write-off of unamortized bank
fees........................ -- 364 -- -- -- 364
Deferred compensation........ 212 -- -- -- -- 212
Deferred rent................ -- 1,261 212 -- -- 1,473
Equity in net loss of
subsidiary................... 2,800 -- -- -- (2,800) --
Decrease (increase) in:
Receivables................. -- 915 133 -- -- 1,048
Inventories................. -- (3,603) (645) -- -- (4,248)
Other current assets........ -- (1,130) (58) -- -- (1,188)
Long-term assets............ -- (1,664) -- -- -- (1,664)
Increase (decrease) in:
Accounts payable and accrued
expenses.................. (84) (1,298) 1,775 -- -- 393
---------- ---------- ---------- ---------- ---------- ----------
Net cash (used in) provided by
operating activities...... (384) (3,301) 4,223 -- -- 538
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Fixed asset additions........ -- (1,784) (153) -- -- (1,937)
Investment in and advances to
subsidiary.................. 384 3,699 (4,083) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net cash provided by (used in)
investing activities...... 384 1,915 (4,236) -- -- (1,937)
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from credit agreement -- 215,877 -- -- -- 215,877
Repayments of credit agreement -- (230,877) -- -- -- (230,877)
Proceeds from senior note
offering..................... -- 90,100 -- -- -- 90,100
Repayment of long term debt.. -- (58,064) -- -- -- (58,064)
Payment of deferred rent
obligation................... -- (12,000) -- -- -- (12,000)
Debt origination costs....... -- (6,762) -- -- -- (6,762)
---------- ---------- ---------- ---------- ---------- ----------
Net cash provided by
financing activities......... -- (1,726) -- -- -- (1,726)
---------- ---------- ---------- ---------- ---------- ----------
Net decrease in cash
and cash equivalents........ -- (3,112) (13) -- -- (3,125)
Cash and cash equivalents --
beginning of period......... -- 6,666 445 -- -- 7,111
---------- ---------- ---------- ---------- ---------- ----------
Cash and cash equivalents -- end
of period................... $ -- $ 3,554 $ 432 $ -- $ -- $ 3,986
========== ========== ========== ========== ========== ==========
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements that are not historical facts, including statements about
our beliefs and expectations, are forward-looking statements. Forward-looking
statements include statements preceded by, followed by or that include the words
"may," "could," "would," "should," "believe," "expect," "anticipate," "plan,"
"estimate," "target," "project," "intend," or similar expressions. These
statements include, among others, statements regarding the Company's expected
business outlook, anticipated financial and operating results, the Company's
business strategy and means to implement the strategy, the Company's objectives,
the amount and timing of future store openings and capital expenditures, the
likelihood of the Company's success in expanding its business, financing plans,
working capital needs and sources of liquidity.
Forward-looking statements are only estimates or predictions and are
not guarantees of performance. These statements are based on the Company's
management's beliefs and assumptions, which in turn are based on currently
available information. Important assumptions relating to the forward-looking
statements include, among others, assumptions regarding demand for the
merchandise the Company sells, the introduction of new merchandise, store
opening costs, expected pricing levels, the timing and cost of planned capital
expenditures, competitive conditions and general economic conditions. These
assumptions could prove inaccurate. Forward-looking statements also involve
risks and uncertainties, which could cause actual results to differ materially
from those contained in any forward-looking statement. Many of these factors are
beyond the Company's ability to control or predict. Such factors include, among
others, the following:
o the continued appeal of luxury apparel and merchandise;
o economic conditions and their effect on consumer spending;
o the Company's dependence on its relationships with certain designers;
o the Company's ability and the ability of its designers to design and
introduce new merchandise that appeals to consumer tastes and demands;
o events and conditions in the New York City area;
o new competitors entering the market or existing competitors expanding
their market presence;
o the Company's ability to accurately predict its sales;
o the continued service of the Company's key executive officers and
managers;
o the Company being controlled by its principal stockholders;
15
o the effects of the strategic alternatives that the Company is
currently exploring;
o the Company's ability to enforce its intellectual property rights and
defend infringement claims;
o interruptions in the supply of the merchandise the Company sells;
o changing preferences of the Company's customers;
o the Company's ability to borrow additional funds;
o the Company's substantial indebtedness;
o significant operating and financial restrictions placed on the Company
by the indenture governing Barney's, Inc.'s 9.000% senior secured
notes and the Company's credit facility; and
o other factors referenced in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2004, including those set forth
under "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Forward-Looking Statements."
The Company believes the forward-looking statements in this Form 10-Q
are reasonable. Forward-looking statements speak only as of the date they are
made, and the Company undertakes no obligation to update publicly any of them in
light of new information or future events.
Strategic Alternatives
The Company has announced that it is currently exploring strategic
alternatives to enhance shareholder value. Any such transaction might involve
the sale of the Company. No decisions have been made regarding which options or
combinations of options, if any, the Company will pursue. Due to the numerous
uncertainties involved in these matters, there can be no assurance that any such
transaction will take place nor can any assurance be given with respect to the
timing or terms of any such transaction.
Results of Operations
GENERAL
Fiscal 2004 year to date comparable store sales and overall operating
results reflect the continued execution of our core business strategies and the
current momentum in the high-end retail sector, driven in part by stronger
financial markets and consumer confidence. In contrast, fiscal 2003 sales and
overall operating results during the same period were negatively impacted by
unusually harsh winter weather in the Northeast, as well as other external
factors including the threat of and eventual war in Iraq, continued weakness in
the economy and soft financial markets.
Comparable Store Net Sales. The Company sells to consumers through
three inter-related distribution channels consisting of full-price stores,
outlet stores and warehouse sale events. We determine comparable store net sales
increases or decreases using the net sales of all stores that are open as of the
beginning and end of the pertinent fiscal period, regardless of store relocation
or expansion of existing square footage. Net sales of all stores closed during a
fiscal period are excluded from the determination of the comparable store net
sales increases (decreases) effective with the date of closing.
16
Expense classification. Cost of sales includes the cost of merchandise
sold as well as costs associated with the purchase of that merchandise,
primarily including inbound freight and duty costs, buying agent costs, foreign
exchange gains and losses on settlement of foreign denominated purchases, sample
costs and label costs. All other expenses, except depreciation and amortization,
interest and income taxes, but including internal transfer costs and warehousing
and distribution expenses, are included in selling, general and administrative
expenses, because the predominant costs associated with these expenses, most
notably occupancy costs and personnel costs, are general and administrative in
nature. Based on these classifications, our gross margins may not be comparable
to those of other entities, since some entities include the costs related to
their distribution network and retail store rent expenses in cost of sales,
whereas others, like us, exclude these costs from gross margin, including them
instead in selling, general and administrative expenses.
Three Months Ended July 31, 2004 Compared to the Three Months Ended August 2,
2003
Net sales for the three months ended July 31, 2004 were $102.0 million
compared to $88.7 million for the three months ended August 2, 2003, an increase
of 14.9%. Comparable store sales increased 13.8%.
Gross profit on sales increased 20.5% to $48.9 million for the three
months ended July 31, 2004 from $40.5 million in the three months ended August
2, 2003. This net increase is primarily attributable to the following: the sales
increase discussed above impacted our gross profit by approximately $5.6 million
and decreased promotional selling impacted our gross profit by approximately
$2.3 million. As a result, gross profit as a percentage of net sales was 47.9%
for the three months ended July 31, 2004 compared to 45.7% for the three months
ended August 2, 2003.
Selling, general and administrative expenses, including occupancy
expenses, increased 10.4% in the three months ended July 31, 2004 to $40.8
million from $37.0 million in the three months ended August 2, 2003. Personnel
and related costs increased in the aggregate approximately $2.7 million. This
increase resulted primarily from wage increases, higher employee benefit costs,
and increased variable personnel costs in line with the increased sales
discussed above. Other more significant variable costs impacted by the sales
increase were third party credit card fees and our loyalty program expense with
aggregate increases of approximately $250,000. Occupancy costs increased
approximately $900,000 primarily related to contractual inflationary
adjustments, increased real estate taxes, principally related to our New York
City properties and to a lesser extent, the costs of operating one new Co-Op
store. Selling, general and administrative expenses declined as a percentage of
sales to 40.0% in the three months ended July 31, 2004 from 41.7% in the prior
year period.
17
Income taxes increased to $1.7 million in the three months ended July
31, 2004 from $150,000 in the three months ended August 2, 2003. The significant
increase in expense during the second quarter reflects the Company's annual
effective tax rate which presently is being estimated at approximately 30%.
Given the sustained, strong improvement in the operating results this year, this
rate is principally being driven by estimated changes in expected net income,
partially offset by the elimination of the tax valuation allowance provided in
prior years. In addition, the effective rate includes a current provision
principally for state and local taxes.
The Company's net income for the three months ended July 31, 2004 was
$891,000 compared to a net loss of $2.1 million for the three months ended
August 2, 2003. Basic and diluted net income per common share for the three
months ended July 31, 2004 was $0.06. Basic and diluted net loss per common
share for the three months ended August 2, 2003 was $0.15.
Six Months Ended July 31, 2004 Compared to the Six Months Ended August 2, 2003
Net sales for the six months ended July 31, 2004 were $214.8 million
compared to $180.1 million for the six months ended August 2, 2003, an increase
of 19.3%. Comparable store sales increased 18.0%. Sales were strong across all
of our store formats, particularly in our flagship and Co-Op stores, and in
substantially all merchandise categories.
Gross profit on sales increased 22.3% to $99.5 million for the six
months ended July 31, 2004 from $81.3 million in the six months ended August 2,
2003. This net increase is primarily attributable to the following: the sales
increase discussed above impacted our gross profit by approximately $15.4
million; decreased promotional selling impacted our gross profit by
approximately $3.5 million; and reduced initial mark-up and foreign exchange
gains on settlement of foreign denominated purchases, impacted our gross profit
by approximately $500,000. As a result, gross profit as a percentage of net
sales was 46.3% for the six months ended July 31, 2004 compared to 45.2% for the
six months ended August 2, 2003.
Selling, general and administrative expenses, including occupancy
expenses, increased 11.2% in the six months ended July 31, 2004 to $83.0 million
from $74.7 million in the six months ended August 2, 2003. Personnel and related
costs increased in the aggregate approximately $5.2 million. This increase
resulted primarily from wage increases, higher employee benefit costs, and
increased variable personnel costs in line with the increased sales discussed
above. Other more significant variable costs impacted by the sales increase were
third party credit card fees and our loyalty program expense with aggregate
increases of approximately $700,000. Occupancy costs increased approximately
$2.1 million primarily related to contractual inflationary adjustments,
increased real estate taxes, principally related to our New York City properties
and to a lesser extent, the costs of operating one new Co-Op store. Selling,
general and administrative expenses declined as a percentage of sales to 38.7%
in the six months ended July 31, 2004 from 41.5% in the prior year period.
18
Interest and financing costs, net increased 7.5% in the six months
ended July 31, 2004 to $7.8 million from $7.3 million in the six months ended
August 2, 2003, as a result of the increased cost of capital associated with
Barney's, Inc.'s senior notes issuance on April 1, 2003.
Other income, net, which primarily includes finance charge income in
connection with the Company's private label credit card operations, also
includes $750,000 in the six months ended July 31, 2004 and August 2, 2003
related to cash payments received by the Company in connection with a prior
amendment to our trademark license agreement with an affiliate of Isetan and the
granting of our consent to matters relating to the establishment of an
additional Barneys New York store in Japan.
Income taxes increased to $1.9 million in the six months ended July 31,
2004 from $300,000 in the six months ended August 2, 2003. The significant
increase in expense during the six months reflects the Company's annual
effective tax rate which presently is being estimated at approximately 30%.
Given the sustained, strong improvement in the operating results this year, this
rate is principally being driven by estimated changes in expected net income,
partially offset by the elimination of the tax valuation allowance provided in
prior years. In addition, the effective rate includes a current provision
principally for state and local taxes.
The Company's net income for the six months ended July 31, 2004 was
$4.4 million compared to a net loss of $3.3 million for the six months ended
August 2, 2003. Basic and diluted net income per common share for the six months
ended July 31, 2004 was $0.31 and $0.30, respectively. Basic and diluted net
loss per common share for the six months ended August 2, 2003 was $0.23.
LIQUIDITY AND CAPITAL
Liquidity and Capital Resources
At July 31, 2004, the Company had cash and cash equivalents of $19.6
million compared to $4.0 million at August 2, 2003. Cash provided by operations
for the six months ended July 31, 2004 and August 2, 2003 was approximately $9.9
million and $538,000, respectively. This increase from the prior year period is
principally a result of a $7.8 million improvement in net income. The Company's
working capital was $64.6 million at July 31, 2004 compared to $58.7 million at
January 31, 2004. At July 31, 2004, the largest changes in our working capital
pertained to inventory and accounts payable and accrued expenses. Inventory
increased approximately $10.2 million to $71.8 million from $61.5 million at
January 31, 2004. The increase in the current year is primarily attributed to
meeting the needs of the current sales trend. At July 31, 2004, accounts payable
and accrued expenses increased approximately $5.0 million to $62.0 million from
$57.0 million at January 31, 2004. Accounts payable and accrued expenses is
higher this year principally as a result of increased inventory purchases and
continued improvements in vendor terms, including conversion of some vendors
from letters of credit to open terms.
19
The Company incurred capital expenditures of $5.8 million during the
six months ended July 31, 2004. Of the total capital expenditures, $3.9 million
was spent on leasehold improvements, $1.6 million was spent on furniture,
fixtures and equipment and $341,000 was spent on management information systems.
Pursuant to the covenants contained in the Company's credit facility, the
Company's total capital expenditures for fiscal year 2004 were established at a
base level of $10 million subject to certain permitted adjustments. The Company
will principally fund its capital expenditures through cash generated from
operations or through borrowings under its credit facility.
Cash provided by financing activities was $0 in the six months ended
July 31, 2004 compared to usage of $1.7 million in the six months ended August
2, 2003. In the prior year period, excess cash was provided through the senior
notes issuance which was utilized for working capital requirements. As a result
of the long term debt structure resulting from the senior notes offering and the
improved operating results in the current and prior year, the Company's primary
source of liquidity has been cash generated from operations.
REVOLVING CREDIT AGREEMENT
The Company's restated credit facility, entered into with General
Electric Capital Corporation, as Administrative Agent, provides for a $70.0
million revolving credit facility pursuant to which the Company may borrow up to
$66.0 million, with a $40.0 million sub-limit for the issuance of letters of
credit, subject to a borrowing base test. With the consent of the required
lenders under the restated credit facility, the maximum borrowing amount may be
increased to up to $70.0 million. This facility matures on July 15, 2006.
Availability under the restated credit facility is calculated as a
percentage of eligible inventory and receivables, including finished inventory
covered by undrawn documentary letters of credit and Barneys private label
credit card receivables, less certain reserves. At July 31, 2004, prior to the
$8.0 million minimum excess borrowing base availability covenant, we had
approximately $44.6 million of availability under this facility.
At July 31, 2004, there were no loans outstanding under the restated
credit facility, and approximately $16.5 million was committed under unexpired
letters of credit. Additionally, as collateral for performance on certain leases
and as credit guarantees, Barney's, Inc. is contingently liable under standby
letters of credit under the restated credit facility in the amount of
approximately $12.0 million.
As of July 31, 2004, the Company was in compliance with all of the
financial covenants contained in its restated credit facility. Management
believes that it will be in compliance with the financial covenants contained in
the restated credit facility for the fiscal year ending January 29, 2005.
However, any material deviations from the Company's forecasts could require the
Company to seek waivers or amendments of covenants, alternative sources of
financing or to reduce expenditures. There can be no assurance that such
waivers, amendments or alternative financing could be obtained, or if obtained,
would be on terms acceptable to the Company.
20
CRITICAL ACCOUNTING POLICIES
Our condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States.
Preparation of these statements requires management to make significant
judgments and estimates. A summary of significant accounting policies which have
a significant impact on our financial statements, and a description of
accounting policies that are considered critical, can be found in Note 2 of the
notes to consolidated financial statements and the Critical Accounting Policies
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations, respectively, in our 2003 Annual Report on Form 10-K.
NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities ("VIE's"), an interpretation of Accounting
Research Bulletin No. 51" ("Interpretation No. 46"). In December 2003, the FASB
issued a revision to Interpretation No. 46 to make certain technical corrections
and address certain implementation issues that had arisen. Interpretation No. 46
requires the consolidation of entities in which an enterprise absorbs a majority
of the entity's expected losses, receives a majority of the entity's expected
residual returns, or both, as a result of ownership, contractual or other
financial interests in an entity. Currently, entities are generally consolidated
by an enterprise when it has a controlling financial interest through ownership
of a majority voting interest in the entity. The provisions of Interpretation
No. 46, as revised, were adopted as of May 1, 2004 and had no impact on our
financial condition or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the reported market risks since
the end of the most recent fiscal year.
ITEM 4. CONTROLS AND PROCEDURES
Holdings' management evaluated, with the participation of Holdings'
principal executive and principal financial officers, the effectiveness of
Holdings' disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), as of July 31, 2004. Based on their evaluation, Holdings' principal
executive and principal financial officer concluded that Holdings' disclosure
controls and procedures were effective as of July 31, 2004.
There has been no change in Holdings' internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
that occurred during Holdings' fiscal quarter ended July 31, 2004, that has
materially affected, or is reasonably likely to materially affect, Holdings'
internal control over financial reporting.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings which are routine
and incidental to the conduct of its business. Management believes that none of
these proceedings, if determined adversely to the Company, would have a material
effect on its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Holdings was held on June 17, 2004.
(b) Each of the Directors listed in item (c) below was elected a Director of
Holdings at the Annual Meeting for a one-year term.
(c) Voting for the election of directors of Holdings to serve until the next
Annual Meeting:
FOR WITHHELD
(including broker
non-votes)
Shelley F. Greenhaus 11,730,831 34
John Halpern 11,730,831 34
Allen I. Questrom 11,730,831 34
Howard Socol 11,730,831 34
Carl Spielvogel 11,730,831 34
David A. Strumwasser 11,730,831 34
Robert J. Tarr, Jr. 11,730,831 34
Douglas P. Teitelbaum 11,730,831 34
Steven A. Van Dyke 11,730,831 34
Other Matters:
11,730,831 shares were voted in favor of the proposal to ratify the appointment
of Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending January 29, 2005, with 23,474 shares voted against, 264 abstentions and
no broker non-votes. Reference is made to Holdings' Proxy Statement dated May
10, 2004 for its 2004 Annual Meeting for additional information concerning the
matters voted on at the meeting.
22
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Description
No.
31.1 Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The following Reports on Form 8-K were filed or furnished
during the three months ended July 31, 2004:
A Form 8-K was furnished on May 24, 2004, under Item 12,
relating to Holdings' May 24, 2004 press release setting forth
Holdings' first quarter fiscal 2004 earnings.
A Form 8-K was filed on June 30, 2004, under Item 5,
relating to Holdings' June 30, 2004 press release announcing the
retention of investment bankers to explore strategic alternatives to
enhance shareholder value.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 14, 2004
BARNEYS NEW YORK, INC.
By: /s/ Steven M. Feldman
-------------------------------------
Name: Steven M. Feldman
Title: Executive Vice President and
Chief Financial Officer
24
EXHIBIT INDEX
Exhibit Description
No.
31.1 Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
25