8-K/A - BBW - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 10, 2021

Build-A-Bear Workshop, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	001-32320	43-1883836
(State or Other Jurisdiction<br><br> <br>of Incorporation)	(Commission<br><br> <br>File Number)	(IRS Employer<br><br> <br>Identification No.)
415 South 18th St., St. Louis, Missouri	63103
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(Address of Principal Executive Offices)	(Zip Code)

(314) 423-8000

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BBW	New York Stock Exchange

Item 2.02. Results of Operations and Financial Condition.

This Current Report Form 8-K/A of Build-A-Bear Workshop, Inc. (the “Company”) relates to the Current Report on Form 8-K filed on March 10, 2021 (the “Original Report”). In the Original Report, the Company furnished a press release (the “Press Release”) announcing its results for the Company’s 2020 fourth fiscal quarter and full 2020 fiscal year ended January 30, 2021. This amendment describes changes from the Original Report.

After the filing of the Original Report, and in connection with the finalization of its fiscal 2020 audit, the Company identified certain changes to the financial statements filed in the Original Report. These revisions affected the following items on the Company’s Consolidated Balance Sheets: Accounts payable, Accrued expenses, Total current liabilities, Other liabilities, Retained earnings, and Total stockholders’ equity. The revisions also affected the following items on the Company’s Consolidated Statements of Operations: Cost of merchandise sold – retail, Consolidated gross profit, Selling, general and administrative expense, income (loss) before income taxes, and, net (loss) income and (loss) income per common share for the quarter and year ended January 30, 2021. These changes also affected the Company’s Adjusted income (loss) before income taxes (adjusted pre-tax), Adjusted net (loss) income, and Adjusted net (loss) income per diluted share (adjusted EPS). A summary of the revised amounts is set forth below. Amended financial statements giving effect to these changes are reflected in this Report and replace those included in the Press Release. These adjustments have no effect on the Company's previously issued guidance for 2021.

The changes were primarily the result of the following:

●	A reduction in Selling, general and administrative expense of approximately $1.5 million, which was due to a change in estimate of incentive compensation expense because of the significant Loss before income taxes in fiscal 2020, largely driven by negative impact of the pandemic. This change in estimate resulted in a corresponding increase in income (loss) before income taxes, and (loss) income per common share within the Unaudited Condensed Consolidated Statement of Operations. This change also resulted in a decrease in Accrued expenses of the same amount within the Unaudited Condensed Consolidated Balance Sheets.
●	A reduction in Accrued expenses and an increase in Other liabilities of approximately $1.0 million within the Unaudited Condensed Consolidated Balance Sheets was due to a reclassification of the long-term portion of deferred FICA tax payments. This change had no effect on the Unaudited Condensed Consolidated Statements of Operations.
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●	The aggregate effect of certain immaterial adjustments of $0.1 million affecting Cost of goods sold – retail and Selling, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations and Accrued expenses and Accounts payable within the Unaudited Condensed Consolidated Balance Sheets.
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Note Regarding Non-GAAP Financial Measures

In this Current Report on Form 8-K/A, the Company’s financial results are provided both in accordance with generally accepted accounting principles (GAAP) and using certain non-GAAP financial measures. In particular, the Company provides historic income and income per diluted share adjusted to exclude certain costs and accounting adjustments, which are non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying trends in the Company’s business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measure later in this document.

The information furnished in, contained, or incorporated by reference into this Item 2.02, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, this report shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of this Item.

Summary of Changes<br><br> <br>(Dollars in thousands, except per share data or otherwise noted)
	Original	Revised	Change
Consolidated Balance Sheet as of January 30, 2021
Accounts payable	$17,784	$17,901	$117
Accrued expenses	20,326	17,551	(2,775)
Other liabilities	1,323	2,354	1,031
Retained earnings	5,315	6,942	1,627
Company’s Consolidated Statements of Operations for the 13 weeks ended January 30, 2021
Cost of merchandise sold – retail	$45,606	$45,483	($123)
Consolidated gross profit	46,925	47,048	123
Selling, general and administrative expense	37,757	36,253	(1,504)
(Loss) income before income taxes	9,164	10,791	1,627
Net (loss) income	8,843	10,470	1,627
(Loss) income per common share
Basic	$0.59	$0.70	$0.11
Diluted	0.57	0.67	0.10
Company’s Consolidated Statements of Operations for the 52 weeks ended January 30, 2021
Cost of merchandise sold – retail	$147,906	$147,783	($123)
Consolidated gross profit	97,286	97,409	123
Selling, general and administrative expense	119,089	117,585	(1,504)
(Loss) income before income taxes	(21,813)	(20,186)	1,627
Net (loss) income	(24,610)	(22,983)	1,627
(Loss) income per common share
Basic	($1.65)	($1.54)	$0.11
Diluted	(1.65)	(1.54)	0.11

	Original	Revised	Change
Selected Financial and Store data –Other financial data for 13 weeks ended January 30, 2021
Retail gross margin ($)	$46,250	$46,373	$123
Retail gross margin (%)	50.4%	50.5%	0.1%
Selected Financial and Store data –Other financial data for 52 weeks ended January 30, 2021
Retail gross margin ($)	$101,304	$101,427	$123
Reconciliation of GAAP to Non-GAAP Results for 13 weeks ended<br><br> <br>January 30, 2021
Income (loss) before income taxes (pre-tax)	$9,164	$10,791	$1,627
Adjusted income (loss) before income taxes (adjusted pre-tax)	7,638	9,265	1,627
Net (loss) income	$8,843	$10,470	$1,627
Adjusted net (loss) income	7,317	8,944	1,627
Net (loss) income per diluted share (EPS)	$0.57	$0.67	$0.10
Adjusted net (loss) income per diluted share (adjusted EPS)	0.47	0.58	0.11
Reconciliation of GAAP to Non-GAAP Results for 52 weeks ended<br><br> <br>January 30, 2021
Income (loss) before income taxes (pre-tax)	($21,813)	($20,186)	$1,627
Adjusted income (loss) before income taxes (adjusted pre-tax)	(15,068)	(13,441)	1,627
Net (loss) income	($24,610)	($22,983)	$1,627
Adjusted net (loss) income	(15,366)	(13,739)	1,627
Net (loss) income per diluted share (EPS)	($1.65)	($1.54)	$0.11
Adjusted net (loss) income per diluted share (adjusted EPS)	($1.03)	(0.92)	0.11

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
	13 Weeks		****	****	13 Weeks			****	****	****
---	---	---	---	---	---	---	---	---	---	---
	Ended		****	****	Ended			****	****	****
	January 30,		% of Total		February 1,			% of Total
	2021		Revenues ^(1)^		2020			Revenues ^(1)^
Revenues:
Net retail sales	$	91,856		98.1	$	100,654			96.3
Commercial revenue		1,370		1.5		3,385			3.2
International franchising		434		0.4		544			0.5
Total revenues		93,660		100.0		104,583			100.0
Cost of merchandise sold:
Cost of merchandise sold - retail ^(1)^		45,483		49.5		49,930			49.6
Store asset impairment		302		0.3		—			0.0
Cost of merchandise sold - commercial ^(1)^		528		38.5		1,545			45.6
Cost of merchandise sold - international franchising ^(1)^		299		68.9		419			77.0
Total cost of merchandise sold		46,612		49.8		51,894			49.6
Consolidated gross profit		47,048		50.2		52,689			50.4
Selling, general and administrative expense		36,253		38.7		45,107			43.1
Interest (income) expense, net		4		0.0		(6	)		(0.0	)
(Loss) income before income taxes		10,791		11.5		7,588			7.3
Income tax expense		321		0.3		1,426			1.4
Net (loss) income	$	10,470		11.2	$	6,162			5.9
(Loss) Income per common share:
Basic	$	0.70			$	0.42
Diluted	$	0.67			$	0.42
Shares used in computing common per share amounts:
Basic		14,999,786				14,752,560
Diluted		15,524,340				14,808,984
(1)	Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding.
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BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
	52 Weeks			****	****	****	52 Weeks		****	****
---	---	---	---	---	---	---	---	---	---	---
	Ended			****	****	****	Ended		****	****
	January 30,			% of Total			February 1,		% of Total
	2021			Revenues ^(1)^			2020		Revenues ^(1)^
Revenues:
Net retail sales	$	249,210			97.6		$	323,491		95.6
Commercial revenue		4,426			1.7			11,892		3.5
International franchising		1,674			0.7			3,160		0.9
Total revenues		255,310			100.0			338,543		100.0
Costs and expenses:
Cost of merchandise sold - retail ^(1)^		147,783			59.3			176,652		54.6
Store asset impairment ^(2)^		7,346			2.9			—		—
Cost of merchandise sold - commercial^(1)^		1,837			41.5			5,432		45.7
Cost of merchandise sold - international franchising^(1)^		935			55.9			2,836		89.7
Total cost of merchandise sold		157,901			61.8			184,920		54.6
Consolidated gross profit		97,409			38.2			153,623		45.4
Selling, general and administrative expense		117,585			46.1			152,047		44.9
Interest expense, net		10			0.0			15		0.0
Income (loss) before income taxes		(20,186	)		(7.9	)		1,561		0.5
Income tax expense (benefit)		2,797			1.1			1,300		0.4
Net income (loss)	$	(22,983	)		(9.0	)	$	261		0.1
Income (loss) per common share:
Basic	$	(1.54	)				$	0.02
Diluted	$	(1.54	)				$	0.02
Shares used in computing common per share amounts:
Basic		14,923,304						14,711,334
Diluted		14,923,304						14,759,810
(1)	Selected statement of operations data expressed as a percentage of total revenues, except cost of merchandise sold - retail, cost of merchandise sold - commercial and cost of merchandise sold - international franchising that are expressed as a percentage of net retail sales, commercial revenue and international franchising, respectively. Percentages will not total due to cost of merchandise sold being expressed as a percentage of net retail sales, commercial revenue or international franchising and immaterial rounding.
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(2)	Due to the charges primarily in the 52 weeks ended January 30, 2021, a separate line item was disclosed and expressed as a percentage of net retail sales.
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BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data)
			February 1,
---	---	---	---	---	---
			2020
ASSETS
Current assets:
Cash and cash equivalents	34,840		$	26,726
Inventories, net	46,947			53,381
Receivables, net	8,295			11,526
Prepaid expenses and other current assets	10,111			7,117
Total current assets	100,193			98,750
Operating lease right-of-use asset	104,825			126,144
Property and equipment, net	52,973			65,855
Deferred tax assets	-			3,411
Other assets, net	3,381			3,102
Total Assets	261,372		$	297,262
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	17,901		$	15,680
Accrued expenses	17,551			16,536
Operating lease liability short term	32,402			30,912
Gift cards and customer deposits	19,029			20,231
Deferred revenue and other	2,445			2,605
Total current liabilities	89,328			85,964
Operating lease liability long term	101,462			119,625
Deferred franchise revenue	920			1,325
Other liabilities	2,354			1,717
Stockholders' equity:
Common stock, par value 0.01 per share	159			152
Additional paid-in capital	72,822			70,633
Accumulated other comprehensive loss	(12,615	)		(12,079	)
Retained earnings	6,942			29,925
Total stockholders' equity	67,308			88,631
Total Liabilities and Stockholders' Equity	261,372		$	297,262

All values are in US Dollars.

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Unaudited Selected Financial and Store Data
(dollars in thousands)
	13 Weeks			13 Weeks			52 Weeks			52 Weeks
---	---	---	---	---	---	---	---	---	---	---	---	---
	Ended			Ended			Ended			Ended
	January 30,			February 1,			January 30,			February 1,
	2021			2020			2021			2020
Other financial data:	****	****	****	****	****	****	****	****	****	****	****	****
Retail gross margin ($)^(1)^	$	46,373		$	50,724		$	101,427		$	146,839
Retail gross margin (%) ^(1)^		50.5	%		50.4	%		40.7	%		45.4	%
Capital expenditures ^(2)^	$	1,017		$	2,285		$	5,046		$	12,384
Depreciation and amortization	$	3,332		$	3,346		$	13,237		$	13,705
Store data ^(3)^ :	****	****	****	****	****	****	****	****	****	****	****	****
Number of corporately-managed retail locations at end of period
North America								305			316
Europe								48			55
Asia								1			1
Total corporately-managed retail locations								354			372
Number of franchised stores at end of period								71			92
Corporately-managed store square footage at end of period^(4)^
North America								712,287			719,078
Europe								71,609			78,786
Asia								1,750			1,750
Total square footage								785,646			799,614
(1)	Retail gross margin represents net retail sales less cost of merchandise sold - retail. Retail gross margin percentage represents retail gross margin divided by net retail sales. Store impairment is excluded from retail gross margin.
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(2)	Capital expenditures represents cash paid for property, equipment, other assets and other intangible assets.
(3)	Excludes e-commerce. North American stores are located in the United States, Canada and Puerto Rico. In Europe, stores are located in the United Kingdom, Ireland and Denmark. In Asia, the store is located in China. Seasonal locations not included in store count.
(4)	Square footage for stores located in North America is leased square footage. Square footage for stores located in Europe is estimated selling square footage. Seasonal locations not included in the store count.

* Non-GAAP Financial Measures

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Results
(dollars in thousands, except per share data)
	13 Weeks			13 Weeks			52 Weeks			52 Weeks
---	---	---	---	---	---	---	---	---	---	---	---	---
	Ended			Ended			Ended			Ended
	January 30,			February 1,			January 30,			February 1,
	2021			2020			2021			2020
Income (loss) before income taxes (pre-tax)	$	10,791		$	7,588		$	(20,186	)	$	1,561
Income (loss) before income tax adjustments:
United Kingdom Lockdown Business Grants ^(1)^		(756	)		-			(756	)		-
COVID-19 activity ^(2)^		30			-			142			-
Ohio Bureau of Workers' Compensation dividend ^(3)^		(332	)		-			(332	)		-
Impairment, bad debt, and lease modification ^(4)(5)^		328			(244	)		7,956			(1,016	)
Foreign exchange (gains) losses ^(6)^		(798	)		(261	)		(601	)		71
Other ^(7)^		2			202			336			370
Adjusted income (loss) before income taxes (adjusted pre-tax)		9,265			7,285			(13,441	)		986
Income tax (expense) benefit		(321	)		(1,426	)		(2,797	)		(1,300	)
Tax adjustments:
Income tax impact: adjustments ^(8)(9)^		-			64			-			121
Income tax impact: CARES Act ^(10)^		-			-			(773	)		-
Valuation allowance ^(11)^		-			-			3,272			449
Adjusted income tax (expense) benefit		(321	)		(1,362	)		(298	)		(730	)
Net (loss) income		10,470			6,162			(22,983	)		261
Adjustments		(1,526	)		(239	)		9,244			(5	)
Adjusted net (loss) income	$	8,944		$	5,923		$	(13,739	)	$	256
Net (loss) income per diluted share (EPS)	$	0.67		$	0.42		$	(1.54	)	$	0.02
Adjusted net (loss) income per diluted share (adjusted EPS)	$	0.58		$	0.40		$	(0.92	)	$	0.02
Fiscal 2023 forecast reconciliation of Non-GAAP figure
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(dollars in millions)
Income before before income taxes (pre-tax)	7 - 17
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Interest
Depreciation and Amortization
Earnings before interest, taxes, depreciation and amortization (EBITDA)	20 - 30

All values are in US Dollars.

(1)	Represents the business grants received from the United Kingdom government for business in the retail, hospitality and leisure sectors. These grants were provided on a per-property basis to support businesses through the latest lockdown restrictions as a result of the COVID-19 pandemic.
(2)	Represents COVID-19 related expenses at our stores, warehouse, and headquarters.
(3)	Represent a dividend distribution received from the Ohio Bureau of Workers' Compensation in the fourth quarter.
(4)	Represents non-cash adjustments including asset impairment charges related to store fixed assets and right-of-use operating lease assets and bad debt expense in the 13 and 52 weeks ending January 30, 2021 and February 1, 2020.
(5)	Represents the lease modification impacts of exercising early termination options in leases offset by non-cash impairment charges related to store fixed assets, receivables, and inventory in the 13 and 52 weeks ended February 1, 2020
(6)	Represents the consolidated impact of foreign exchange rates on the re-measurement of balance sheet items not denominated in functional currency recorded under the provisions of U.S. GAAP. This does not include any impact on margin associated with the translation of revenues or the foreign subsidiaries' purchase of inventory in U.S. dollars.
(7)	Represents severance and other non-recurring changes in reserves and charges.
(8)	As a result of the Company's full, global valuation allowance, the Company cannot realize an income tax benefit on these adjustments for the fourth quarter or full year fiscal 2020.
(9)	Represents the aggregate tax impact of the pre-tax adjustments for the fourth quarter and full year fiscal 2019.
(10)	Represents the impact of the technical correction related to qualified leasehold improvements resulting from the CARES Act occurring in the first quarter of fiscal 2020
(11)	Represents the valuation allowance recorded on its net deferred tax assets in North America in the first quarter of fiscal 2020 and the United Kingdom in the fourth quarter of fiscal 2019.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit<br><br> <br>Number	Description of Exhibit
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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 hereunto duly authorized.

	BUILD-A-BEAR WORKSHOP, INC.
Date: April 8, 2021	By:	/s/ Voin Todorovic
	Name:	Voin Todorovic
		Title: Chief Financial Officer