bebe stores inc. (BEBE, Financial) filed Quarterly Report for the period ended 2009-01-03.
Bebe Stores designs develops and produces a distinctive line of contemporary women's apparel and accessories. They market their products under the bebe bebe moda and bbsp brand names through their retail stores located in Canada and the United Kingdom. Their broad product offering includes suits tops pants skirts dresses logo and other activewear outerwear and handbags and other accessories. Bebe Stores design and develop most of the merchandise in-house. bebe stores inc. has a market cap of $502.88 million; its shares were traded at around $5.59 with a P/E ratio of 7.9 and P/S ratio of 0.73. The dividend yield of bebe stores inc. stocks is 3.54%. bebe stores inc. had an annual average earning growth of 5.1% over the past 10 years.
Our working capital requirements vary widely throughout the year and generally peak during the first and second fiscal quarters. At January 3, 2009, we had approximately $341.5 million of cash and equivalents and long term investments on hand of which approximately $197.5 million, net of impairment charges of $24.8 million, were invested in auction rate securities (ARS). We do not anticipate the lack of liquidity in the ARS to impact our ability to fund our operations in the foreseeable future and believe we have sufficient cash and equivalents to fund ongoing operations. In addition, we have a revolving line of credit, under which we may borrow or issue letters of credit up to a combined total of $25 million. As of January 3, 2009, there were no cash borrowings outstanding under the line of credit, and letters of credit outstanding totaled $2 million.
Net cash provided by operating activities for the six months ended January 3, 2009 was $32.4 million versus $65.3 million for the six months ended January 5, 2008. Cash provided by operating activities for the period was primarily generated by net income of $18 million adjusted for stock compensation of $3.2 million, depreciation of $12.8 million, deferred rent of $0.8 million, loss on ARS written put right of $0.5 million and net loss on disposal of property of $1.4 million, as well as changes in working capital. The changes in working capital were primarily due to an increase in accounts payable of $6.8 million and a decrease in inventory of $5.1 million, offset by an increase in prepaid expenses and other assets of $12.6 million and a decrease in accrued liabilities of $3.0 million.
Net cash provided by investing activities for the six months ended January 3, 2009 was $3.5 million versus $12.5 million for the six months ended January 5, 2008. Cash provided by investing activities for the period was primarily due to proceeds on our auction rate securities of $21.2 million, partially offset by capital expenditures of $17.7 million related to the opening of new stores, IS&T and office equipment. We opened 11 new stores in the six months ended January 3, 2009 and expect to open approximately 14 stores during fiscal 2009. We estimate that total capital expenditures will be approximately $32 million in fiscal 2009.
Net cash used by financing activities was $15.8 million for the six months ended January 3, 2009 versus $78.3 million for the six months ended January 5, 2008. Cash used by financing activities for the period was primarily due to payments of quarterly dividends for the fourth quarter of fiscal 2008 and the first two quarters of fiscal 2009 totaling $13.1 million and stock repurchases of $3.2 million, partially offset by proceeds received from stock option exercises and the related tax benefits of $0.5 million.
As of January 3, 2009, we had a balance of approximately $197.5 million in investments in ARS, with $72.3 million, net of an impairment charge of $12.1 million, classified as trading and $125.2, net of temporary impairment charges of $12.7 million, classified as available for sale. Our ARS portfolio includes approximately 98% federally insured student loan backed securities and 2% municipal authority bonds. Our ARS portfolio is comprised of approximately 57% AAA rated investments, 30% AA rated investments and 13% A rated investments. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The recent uncertainties in the credit markets have affected our holdings in ARS investments and auctions for the majority of our investments in these securities have failed to settle on their respective settlement dates. Consequently, the investments are not currently liquid and we will not be able to access these funds until a future auction of these investments is successful. Maturity dates for these ARS investments range from 2010 to 2044 with principal distributions occurring on certain securities prior to maturity. We currently have the ability to hold these ARS investments until a recovery of the auction process or until maturity.
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Bebe Stores designs develops and produces a distinctive line of contemporary women's apparel and accessories. They market their products under the bebe bebe moda and bbsp brand names through their retail stores located in Canada and the United Kingdom. Their broad product offering includes suits tops pants skirts dresses logo and other activewear outerwear and handbags and other accessories. Bebe Stores design and develop most of the merchandise in-house. bebe stores inc. has a market cap of $502.88 million; its shares were traded at around $5.59 with a P/E ratio of 7.9 and P/S ratio of 0.73. The dividend yield of bebe stores inc. stocks is 3.54%. bebe stores inc. had an annual average earning growth of 5.1% over the past 10 years.
Highlight of Business Operations:
For the six months ended January 3, 2009, selling, general and administrative expenses increased to $120.6 million from $118.9 for the comparable period of the prior year, an increase of $1.7 million, or 1.4%. As a percentage of net sales, selling, general and administrative expenses increased to 34.9% from 32.6% in the comparable period of the prior year. The decrease in selling, general and administrative expenses was primarily due to lower total compensation expense offset by an increase in depreciation expense and approximately $1.4 million in impairment charges and fixed asset write-offs related to underperforming stores and store closures.Our working capital requirements vary widely throughout the year and generally peak during the first and second fiscal quarters. At January 3, 2009, we had approximately $341.5 million of cash and equivalents and long term investments on hand of which approximately $197.5 million, net of impairment charges of $24.8 million, were invested in auction rate securities (ARS). We do not anticipate the lack of liquidity in the ARS to impact our ability to fund our operations in the foreseeable future and believe we have sufficient cash and equivalents to fund ongoing operations. In addition, we have a revolving line of credit, under which we may borrow or issue letters of credit up to a combined total of $25 million. As of January 3, 2009, there were no cash borrowings outstanding under the line of credit, and letters of credit outstanding totaled $2 million.
Net cash provided by operating activities for the six months ended January 3, 2009 was $32.4 million versus $65.3 million for the six months ended January 5, 2008. Cash provided by operating activities for the period was primarily generated by net income of $18 million adjusted for stock compensation of $3.2 million, depreciation of $12.8 million, deferred rent of $0.8 million, loss on ARS written put right of $0.5 million and net loss on disposal of property of $1.4 million, as well as changes in working capital. The changes in working capital were primarily due to an increase in accounts payable of $6.8 million and a decrease in inventory of $5.1 million, offset by an increase in prepaid expenses and other assets of $12.6 million and a decrease in accrued liabilities of $3.0 million.
Net cash provided by investing activities for the six months ended January 3, 2009 was $3.5 million versus $12.5 million for the six months ended January 5, 2008. Cash provided by investing activities for the period was primarily due to proceeds on our auction rate securities of $21.2 million, partially offset by capital expenditures of $17.7 million related to the opening of new stores, IS&T and office equipment. We opened 11 new stores in the six months ended January 3, 2009 and expect to open approximately 14 stores during fiscal 2009. We estimate that total capital expenditures will be approximately $32 million in fiscal 2009.
Net cash used by financing activities was $15.8 million for the six months ended January 3, 2009 versus $78.3 million for the six months ended January 5, 2008. Cash used by financing activities for the period was primarily due to payments of quarterly dividends for the fourth quarter of fiscal 2008 and the first two quarters of fiscal 2009 totaling $13.1 million and stock repurchases of $3.2 million, partially offset by proceeds received from stock option exercises and the related tax benefits of $0.5 million.
As of January 3, 2009, we had a balance of approximately $197.5 million in investments in ARS, with $72.3 million, net of an impairment charge of $12.1 million, classified as trading and $125.2, net of temporary impairment charges of $12.7 million, classified as available for sale. Our ARS portfolio includes approximately 98% federally insured student loan backed securities and 2% municipal authority bonds. Our ARS portfolio is comprised of approximately 57% AAA rated investments, 30% AA rated investments and 13% A rated investments. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The recent uncertainties in the credit markets have affected our holdings in ARS investments and auctions for the majority of our investments in these securities have failed to settle on their respective settlement dates. Consequently, the investments are not currently liquid and we will not be able to access these funds until a future auction of these investments is successful. Maturity dates for these ARS investments range from 2010 to 2044 with principal distributions occurring on certain securities prior to maturity. We currently have the ability to hold these ARS investments until a recovery of the auction process or until maturity.
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