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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-22963
BIG DOG HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1868665
(State or jurisdiction of (IRS employer
incorporation or organization) identification no.)
121 GRAY AVENUE
SANTA BARBARA, CALIFORNIA 93101
(Address of principal executive offices) (zip code)
(805) 963-8727
(Registrant's telephone number, including area code)
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.
X Yes No
--- ----
The number of shares outstanding of the registrant's common stock, par value
$.01 per share, at August 1, 2002 was 8,392,648 shares.
BIG DOG HOLDINGS, INC
INDEX TO FORM 10-Q
PAGE
NO.
PART I. FINANCIAL INFORMATION........................................3
ITEM 1: FINANCIAL STATEMENTS (Unaudited)
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and December 31, 2001..........................3
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months and six months ended June 30, 2002 and 2001.....4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2002 and 2001......................5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................7
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..10
PART II. OTHER INFORMATION...........................................11
ITEM 1: LEGAL PROCEEDINGS...........................................11
ITEM 2: CHANGES IN SECURITIES.......................................11
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.............................11
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........11
ITEM 5: OTHER INFORMATION...........................................11
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K............................11
SIGNATURES ............................................................12
PART 1. .........FINANCIAL INFORMATION
ITEM 1: .........FINANCIAL STATEMENTS (Unaudited)
BIG DOG HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2002 2001
------------------ ------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................ $ 1,602,000 $ 3,055,000
Accounts receivable, net......................................... 517,000 812,000
Inventories...................................................... 27,576,000 26,777,000
Prepaid expenses and other current assets........................ 953,000 473,000
Deferred income taxes............................................ 2,989,000 1,954,000
------------ -------------
Total current assets........................................... 33,637,000 33,071,000
PROPERTY AND EQUIPMENT, Net......................................... 5,893,000 6,634,000
INTANGIBLE ASSETS, Net.............................................. 149,000 173,000
OTHER ASSETS........................................................ 353,000 429,000
------------ -------------
TOTAL............................................................... $ 40,032,000 $ 40,307,000
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings............................................ $ 6,953,000 $ 1,767,000
Accounts payable................................................. 2,300,000 2,923,000
Income taxes payable............................................. --- 1,983,000
Accrued expenses and other current liabilities................... 3,060,000 4,137,000
------------ -------------
Total current liabilities...................................... 12,313,000 10,810,000
DEFERRED RENT....................................................... 763,000 683,000
DEFERRED GAIN ON SALE-LEASEBACK..................................... 380,000 406,000
------------ -------------
Total liabilities................................................ 13,456,000 11,899,000
------------ -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 3,000,000 shares authorized, none
issued and outstanding......................................... $ --- $ ---
Common stock, $.01 par value, 30,000,000 shares authorized,
9,698,284 issued at June 30, 2002 and December 31, 2001........ 97,000 97,000
Additional paid-in capital....................................... 20,510,000 20,510,000
Retained earnings................................................ 13,417,000 15,007,000
Treasury stock, 1,305,636 and 1,233,220 shares at
June 30, 2002 and December 31, 2001, respectively.............. (7,448,000) (7,206,000)
------------ -------------
Total stockholders' equity..................................... 26,576,000 28,408,000
------------ -------------
TOTAL............................................................... $ 40,032,000 $ 40,307,000
============ =============
BIG DOG HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- ------------------------------
2002 2001 2002 2001
------------- ------------- ------------ ------------
NET SALES............................................. $ 25,763,000 $ 25,194,000 $ 43,309,000 $ 42,180,000
COST OF GOODS SOLD.................................... 10,755,000 10,763,000 19,035,000 18,722,000
------------ ------------ ------------ ------------
GROSS PROFIT.......................................... 15,008,000 14,431,000 24,274,000 23,458,000
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, marketing and distribution.............. 12,342,000 13,185,000 24,178,000 25,278,000
General and administrative....................... 1,227,000 1,549,000 2,451,000 2,772,000
------------ ------------ ------------ -------------
Total operating expenses...................... 13,569,000 14,734,000 26,629,000 28,050,000
------------ ------------ ------------ -------------
INCOME (LOSS) FROM OPERATIONS......................... 1,439,000 (303,000) (2,355,000) (4,592,000)
OTHER INCOME.......................................... --- (334,000) --- (334,000)
INTEREST EXPENSE, NET................................. 150,000 346,000 231,000 587,000
------------ ------------ ------------ -------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES .................................. 1,289,000 (315,000) (2,586,000) (4,845,000)
PROVISION (BENEFIT) FOR INCOME TAXES.................. 496,000 (171,000) (996,000) (1,915,000)
------------ ------------ ------------ -------------
NET INCOME (LOSS)..................................... $ 793,000 $ (144,000) $ (1,590,000) $ (2,930,000)
============ ============ ============ =============
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED................................ $ 0.09 $ (0.02) $ (0.19) $ (0.35)
============ ============ ============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC............................................ 8,393,000 8,453,000 8,393,000 8,456,000
============ ============ ============ =============
DILUTED.......................................... 8,404,000 8,453,000 8,393,000 8,456,000
============ ============ ============ =============
.
BIG DOG HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
-----------------------------
2002 2001
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................ $(1,590,000) $ (2,930,000)
Adjustments to reconcile net loss to net cash in
operating activities:
Depreciation and amortization............................... 1,349,000 1,793,000
Amortization of deferred financing fees..................... 72,000 21,000
Provision for losses on receivables......................... 34,000 411,000
Gain on disposition of property and equipment............... --- (63,000)
Gain on sale of investment.................................. --- (334,000)
Deferred income taxes....................................... (1,035,000) (1,915,000)
Changes in operating assets and liabilities:
Accounts receivable, net............................... 261,000 (321,000)
Inventories............................................ (799,000) (3,686,000)
Prepaid expenses and other current assets.............. (480,000) (209,000)
Accounts payable....................................... (623,000) (1,033,000)
Income taxes payable................................... (1,983,000) (1,727,000)
Accrued expenses and other current liabilities......... (1,077,000) (1,101,000)
Deferred rent.......................................... 80,000 (152,000)
Deferred gain on sale-leaseback........................ (26,000) (26,000)
----------- ------------
Net cash used in operating activities................ (5,817,000) (11,272,000)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................ (568,000) (509,000)
Proceeds from sale of investment................................ --- 334,000
Proceeds from sale of property and equipment.................... 2,000 130,000
Principal repayments of notes receivable........................ 16,000 32,000
Other........................................................... (30,000) (39,000)
----------- ------------
Net cash used in investing activities................ (580,000) (52,000)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock...................................... (242,000) (126,000)
Short-term borrowings, net...................................... 5,186,000 8,500,000
----------- ------------
Net cash provided by financing activities............ 4,944,000 8,374,000
----------- ------------
NET DECREASE IN CASH................................................. (1,453,000) (2,950,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....................... 3,055,000 4,376,000
----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................. $ 1,602,000 $ 1,426,000
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest........................................................ $ 170,000 $ 592,000
Income taxes.................................................... $ 2,022,000 $ 1,727,000
BIG DOG HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1. Basis of Presentation
The accompanying unaudited 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 Rule 10-01 of
Regulations 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 only of
normal recurring entries necessary for a fair presentation have been included.
Operating results for the six-month period ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. There have been no changes in significant accounting policies
or contractual obligations since the filing of the Company's 10-K for the year
ended December 31, 2001. For further information, refer to the financial
statements and footnotes thereto for Big Dog Holdings, Inc. and its subsidiaries
(the "Company") included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001.
NOTE 2. Short-term Borrowings
In October 2001, the Company entered into a $30.0 million three-year
line of credit facility with Wells Fargo Retail Finance. This facility is
secured by substantially all of the Company's assets and requires daily, weekly
and monthly financial reporting as well as compliance with financial,
affirmative and negative covenants. This facility provides for a performance-
pricing structured interest charge, ranging up to LIBOR plus 1.75% which is
based on excess availability levels. As of June 30, 2002, the Company had
approximately $7.0 million outstanding under this facility. Additionally, the
Company had $0.9 million of letters of credit outstanding as of June 30, 2002.
The letters of credit expire through December 2002.
NOTE 3. Stockholder's Equity
In March 1998, the Company announced that its Board authorized the
repurchase of up to $10,000,000 of its common stock. Between January 1, 2002
and June 30, 2002, the Company repurchased 72,416 shares of common stock
totaling $242,000.
NOTE 4. Subsequent Event
During July 2002, the Company entered into two transactions relating to
the short-sale of $188.6 million of U. S. Treasury Securities. The transactions
were intended to address interest rate exposure and generate capital gains that
could be used to offset previously incurred capital losses. The first
transaction, which represented $93.3 million of U. S. Treasury Securities, is
scheduled to mature on November 15, 2002. In the second transaction, we have an
obligation to repurchase $95.3 million of U. S. Treasury Securities on or
before November 15, 2002. We have placed the proceeds from the short sale into
an interest-bearing collateral account to provide for the repurchase.
NOTE 5. Recently Issued Accounting Standards
In July 2001, the FASB issued SFAS No. 141, "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires
that all business combinations be accounted for under the purchase method. The
statement further requires separate recognition of intangible assets that meet
one of two criteria. The statement applies to all business combinations
initiated after June 30, 2001.
SFAS No. 142 requires that an intangible asset that is acquired shall
be initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount. SFAS No.
142 is effective for fiscal periods beginning after December 15, 2001. The
adoption of SFAS Nos. 141 and 142 did not have a material impact on the
Company's financial statements.
In August 2001, the FASB issued SFAS No.144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed of" and Accounting Principles Board Opinion ("APB") No. 30,
"Reporting the Results of Operations - Reporting the Effects of the Disposal of
a Segment Business and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions." SFAS No.144 establishes a single accounting model for assets
to be disposed of by sale whether previously held and used or newly acquired.
SFAS No. 144 retains the provisions of APB No. 30 for presentation of
discontinued operations in the income statement, but broadens the presentation
to include a component of an entity. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of SFAS No. 144 did not have a
material impact on the Company's financial statements.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis should be read in conjunction with
the Company's financial statements and notes related thereto. Certain minor
differences in the amounts below result from rounding of the amounts shown in
the consolidated financial statements.
This quarterly report on Form 10-Q contains forward-looking statements
within the meaning of federal securities laws, which are intended to be covered
by the safe harbors created thereby. Those statements include, but may not be
limited to, the discussions of the Company's operating and growth strategy.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties including, without limitation, those set forth under the caption
"risk factors" in the business section of the Company's annual report on Form
10-K for the year ended December 31, 2001. Although the Company believes that
the assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could prove to be inaccurate, and therefore,
there can be no assurance that the forward-looking statements included in this
quarterly report on Form 10-Q will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the company will be achieved. The Company undertakes no obligation to
publicly release any revisions to any forward-looking statements contained
herein to reflect events and circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the
Company's unaudited financial statements and notes thereto included elsewhere in
this quarterly report on form 10-Q, and the annual audited financial statements
and notes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 2001 filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2002 and 2001
NET SALES. Net sales consist of sales from the Company's stores,
catalog, internet website, and wholesale accounts, all net of returns and
allowances. Net sales increased to $25.8 million for the three months ended June
30, 2002 from $25.2 million for the same period in 2001, an increase of $0.6
million, or 2.4%. Of the increase, $0.3 million was attributable to an increase
in the Company's wholesale business, $0.3 million was attributable to an
increase in the Company's catalog and internet sales, and $0.7 million was
attributable to new stores (not yet qualifying as comparable stores). This was
offset by a 2.7% decrease in comparable stores sales, or $0.7 million.
GROSS PROFIT. Gross profit increased to $15.0 million for the three
months ended June 30, 2002 from $14.4 million for the same period in 2001, an
increase of $0.6 million, or 4.2%. As a percentage of net sales, gross profit
increased to 58.3% in the three months ended June 30, 2002 from 57.3% in the
same period in 2001. The increase in gross margin percentage is primarily
attributable to a shift in the promotional sales mix from lower margined to
higher margined sales.
SELLING, MARKETING AND DISTRIBUTION EXPENSES. Selling, marketing and
distribution expenses consist of expenses associated with creating, distributing
and selling products through all channels of distribution, including occupancy,
payroll and catalog costs. Selling, marketing and distribution expenses
decreased to $12.3 million for the three months ended June 30, 2002 from $13.2
million for the same period in 2001, a decrease of $0.9 million, or 6.8%. As a
percentage of net sales, these expenses decreased to 47.9% for the three months
ended June 30, 2002 from 52.3% for the same period in 2001, a decrease of 4.4%.
The net decrease in selling, marketing and distribution expenses is attributable
to a recovery against a loss reserve, retail cost expense reductions,
particularly lease occupancy expenses, and a reduction in general marketing
expenses. Additionally, in the three months ended June 30, 2001, selling,
marketing and distribution expenses included a $0.4 million provision for losses
on wholesale receivables due to the bankruptcy filing of a significant wholesale
account.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses consist of administrative salaries, corporate occupancy costs and other
corporate expenses. General and administrative expenses decreased to $1.2
million for the three months ended June 30, 2002 from $1.5 million for the same
period in 2001, a decrease of $0.3 million, or 20.0%. As a percentage of net
sales, these expenses decreased to 4.8% for the three months ended June 30, 2002
from 6.1% for the same period in 2001. In the three months ended June 30, 2001,
general and administrative expenses included $0.3 million charitable donations
of inventory.
OTHER INCOME. In the three months ended June 30, 2001, other income
resulted from a $0.3 million gain on the sale of PETsMART.com stock. After
careful consideration of the internet and capital markets, the Company wrote-off
its entire $3,000,000 investment in PETsMART.com stock at December 31, 2000.
Subsequently, in June 2001, a proposal and acceptance occurred whereby the
Company sold this stock for $334,000.
INTEREST EXPENSE. Interest expense decreased to $0.2 million for the
three months ended June 30, 2002 from $0.3 million for the same period in 2001,
principally due to interest on the lower average outstanding short-term
borrowings during the period.
Six Months Ended June 30, 2002 and 2001
NET SALES. Net sales increased to $43.3 million for the six months
ended June 30, 2002 from $42.2 million for the same period in 2001, an increase
of $1.1 million, or 2.6%. Of the increase, $0.1 million was attributable to an
increase in the Company's wholesale business, $0.2 million was attributable to
an increase in the Company's catalog and internet sales, and $1.2 million was
attributable to new stores (not yet qualifying as comparable stores). This was
offset by a $0.4 million, or 1.1% decrease in comparable stores sales.
GROSS PROFIT. Gross profit increased to $24.3 million for the six
months ended June 30, 2002 from $23.5 million for the same period in 2001, an
increase of $0.8 million, or 3.4%. This increase is primarily attributable to
higher product sales. As a percentage of net sales, gross profit increased to
56.0% for the six months ended June 30, 2002 from 55.6% for the same period in
2001.
SELLING, MARKETING AND DISTRIBUTION EXPENSES. Selling, marketing and
distribution expenses decreased to $24.2 million for the six months ended June
30, 2002 from $25.3 million for the same period in 2001, a decrease of $1.1
million, or 4.3%. As a percentage of net sales, these expenses decreased to
55.8% for the six months ended June 30, 2002 from 59.9% for the same period in
2001, a decrease of 4.1%. The decrease in selling, marketing and distribution
expenses is attributable to a recovery against a loss reserve, retail cost
expense reductions, particularly lease occupancy expenses, and a reduction in
general marketing expenses. Additionally, in the six months ended June 30, 2001,
selling, marketing and distribution expenses included a $0.4 million provision
for losses on wholesale receivables due to the bankruptcy filing of a
significant wholesale account.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses decreased to $2.5 million for the six months ended June 30, 2002 from
$2.8 million for the same period in 2001, a decrease of $0.3 million, or 10.7%.
As a percentage of net sales, these expenses decreased to 5.7% for the six
months ended June 30, 2002 from 6.6% for the same period in 2001. In the six
months ended June 30, 2001, general and administrative expenses included $0.3
million charitable donations of inventory.
OTHER INCOME. In the six months ended June 30, 2001, other income
resulted from a $0.3 million gain on the sale of PETsMART.com stock. After
careful consideration of the internet and capital markets, the Company wrote-off
its entire $3,000,000 investment in PETsMART.com stock at December 31, 2000.
Subsequently, in June 2001, a proposal and acceptance occurred whereby the
Company sold this stock for $334,000.
INTEREST EXPENSE. Interest expense decreased to $0.2 million for the
six months ended June 30, 2002 from $0.6 million for the same period in 2001,
principally due to interest on the lower average outstanding short-term
borrowings during the period.
LIQUIDITY AND CAPITAL RESOURCES
During the second quarter of 2002, the Company's primary use of cash
was for income taxes, inventory purchases and capital expenditures. The Company
satisfied its cash requirements from existing cash balances and short-term
borrowings under its credit agreement. The Company believes that cash flow from
its operations and available credit line will be sufficient to meet operating
needs and capital spending requirements for the remaining year.
Cash used in operating activities was $5.8 million and $11.3 million
for the six months ended June 30, 2002 and 2001, respectively. In addition to a
lower net loss in the 2002 period, the decrease in net cash utilization for the
2002 period as compared to the 2001 period is primarily due to a reduction in
inventory purchases, as well as a decrease in accounts payable and other current
liabilities.
Cash used in investing activities was $0.6 million and $0.1 million for
the six months ended June 30, 2002 and 2001, respectively. Cash used in
investing activities in the first six months of 2002 primarily related to 5 new
store openings and capital additions to the Company's existing stores. Cash used
in investing activities for the first six months of 2001 primarily related to 4
new store openings and capital additions to the Company's existing stores, and
was offset by proceeds received from the sale of investments, property, and
equipment.
Cash provided by financing activities decreased to $4.9 million in the
six months ended June 30, 2002 from $8.4 million for the same period in 2001. In
the six months ended June 30, 2002, the Company had net borrowings of $5.2
million under its borrowing agreement and used $0.2 million to repurchase common
stock. In the six months ended June 30, 2001, the Company borrowed $8.5 million
under its revolving credit facility and used $0.1 million to repurchase common
stock.
In October 2001, the Company entered into a $30.0 million three-year
line of credit facility with Wells Fargo Retail Finance. This facility is
secured by substantially all of the Company's assets and requires daily, weekly
and monthly financial reporting as well as compliance with financial,
affirmative and negative covenants. This facility provides for a
performance-pricing structured interest charge, ranging up to LIBOR plus 1.75%
which is based on excess availability levels. As of June 30, 2002, the Company
had approximately $7.0 million outstanding under this facility. Additionally,
the Company had $0.9 million of letters of credit outstanding as of June 30,
2002. The letters of credit expire through December 2002.
SEASONALITY
The Company believes its seasonality is somewhat different than many
apparel retailers since a significant number of the Company's stores are located
in tourist areas and outdoor malls that have different visitation patterns than
urban and suburban retail centers. The third and fourth quarters (consisting of
the summer vacation, back-to-school and Christmas seasons) have historically
accounted for the largest percentage of the Company's annual sales and profits.
The Company has historically incurred operating losses in its first quarter and
may be expected to do so in the foreseeable future.
ITEM 3:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not believe it has material exposure to losses from
market-rate sensitive instruments. The Company has a credit facility with a
performance-pricing structured interest charge, ranging up to LIBOR plus 1.75%
based on excess availability levels. See "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources."
During July 2002, the Company entered into two transactions relating
to the short-sale of $188.6 million of U. S. Treasury Securities. The
transactions were intended to address interest rate exposure and generate
capital gains that could be used to offset previously incurred capital losses.
The first transaction, which represented $93.3 million of U. S. Treasury
Securities, is scheduled to mature on November 15, 2002. In the second
transaction, we have an obligation to repurchase $95.3 million of U. S.
Treasury Securities on or before November 15, 2002. We have placed the proceeds
from the short sale into an interest-bearing collateral account to provide for
the repurchase. See "Note 4. Subsequent Event."
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company is involved from time to time in litigation incidental to
its business. The Company believes that the outcome of such litigation
will not have a material adverse effect on its operation or financial
condition.
ITEM 2: CHANGES IN SECURITIES
Not applicable
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant's Annual Meeting of Stockholders was held on May 31,
2002.
Proxies for the Annual Meeting were solicited pursuant to Regulation
14 under the Securities Exchange Act of 1934, as amended. There was no
solicitation in opposition to management's nominees as listed in the
Proxy Statement.
The matters voted upon at the Annual Meeting and the results thereof
were as follows:
1. To elect Class II Directors Robert Schnell and David Walsh, each
to hold office for a three-year term and until each of their
successors are elected and qualified.
2. To approve and adopt an amendment to the Amended and Restated 1997
Performance Award Plan to increase by 1,000,000 shares the shares
available under the Plan.
3. To ratify the election of Deloitte & Touche LLP as independent
certified public accountants for the year ending December 31, 2002.
More than the number of shares required for approval voted in favor of
each of the above matters and each was therefore approved.
ITEM 5: OTHER INFORMATION
Not applicable
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
None
(b) Reports on Form 8-K
Not applicable
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.
BIG DOG HOLDINGS, INC.
August 14, 2002 /s/ ANDREW D. FESHBACH
----------------------
Andrew D. Feshbach
President and Chief Executive Officer
(Principal Executive Officer)
August 14, 2002 /s/ ROBERTA J. MORRIS
---------------------
Roberta J. Morris
Chief Financial Officer and Treasurer
(Principal Financial Officer)