BOOT BARN HOLDINGS, INC., 10-Q filed on 11/6/2017
Quarterly Report
Document and Entity Information
6 Months Ended
Sep. 30, 2017
Nov. 2, 2017
Document and Entity Information
 
 
Entity Registrant Name
Boot Barn Holdings, Inc. 
 
Entity Central Index Key
0001610250 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--03-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
26,667,221 
Document Fiscal Year Focus
2018 
 
Document Fiscal Period Focus
Q2 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Apr. 1, 2017
Current assets:
 
 
Cash and cash equivalents
$ 9,434 
$ 8,035 
Accounts receivable, net
6,253 
4,354 
Inventories
211,750 
189,096 
Prepaid expenses and other current assets
14,138 
22,818 
Total current assets
241,575 
224,303 
Property and equipment, net
85,767 
82,711 
Goodwill
193,095 
193,095 
Intangible assets, net
63,840 
64,511 
Other assets
978 
961 
Total assets
585,255 
565,581 
Current liabilities:
 
 
Line of credit
57,120 
33,274 
Accounts payable
90,191 
77,482 
Accrued expenses and other current liabilities
35,252 
35,983 
Current portion of notes payable, net of unamortized debt issuance costs
 
1,062 
Total current liabilities
182,563 
147,801 
Deferred taxes
10,799 
20,961 
Long-term portion of notes payable, net
182,680 
191,517 
Capital lease obligations
7,578 
7,825 
Other liabilities
18,324 
17,568 
Total liabilities
401,944 
385,672 
Commitments and contingencies (Note 7)
   
   
Stockholders' equity:
 
 
Common stock, $0.0001 par value; September 30, 2017 - 100,000 shares authorized, 26,697 shares issued; April 1, 2017 - 100,000 shares authorized, 26,575 shares issued
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding
   
   
Additional paid-in capital
143,800 
142,184 
Retained earnings
39,666 
37,791 
Less: Common stock held in treasury, at cost, 28 and 14 shares at September 30, 2017 and April 1, 2017, respectively
(158)
(69)
Total stockholders' equity
183,311 
179,909 
Total liabilities and stockholders' equity
$ 585,255 
$ 565,581 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Sep. 30, 2017
Apr. 1, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
Common stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Common stock, shares authorized (in shares)
100,000,000 
100,000,000 
Common Stock, shares issued (in shares)
26,696,547 
26,575,000 
Preferred stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Preferred stock, shares authorized (in shares)
10,000,000 
10,000,000 
Preferred Stock, shares issued (in shares)
Preferred Stock, shares outstanding (in shares)
Common Stock, shares held in treasury (in shares)
28,000 
14,000 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 30, 2017
Sep. 24, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
Net sales
$ 143,072 
$ 133,969 
$ 282,451 
$ 267,382 
Cost of goods sold
101,382 
97,523 
199,369 
190,187 
Gross profit
41,690 
36,446 
83,082 
77,195 
Selling, general and administrative expenses
36,052 
32,003 
72,503 
68,302 
Income from operations
5,638 
4,443 
10,579 
8,893 
Interest expense, net
3,789 
3,651 
7,447 
7,211 
Income before income taxes
1,849 
792 
3,132 
1,682 
Income tax expense
751 
313 
1,257 
579 
Net income
$ 1,098 
$ 479 
$ 1,875 
$ 1,103 
Earnings per share:
 
 
 
 
Basic shares (in dollars per share)
$ 0.04 
$ 0.02 
$ 0.07 
$ 0.04 
Diluted shares (in dollars per share)
$ 0.04 
$ 0.02 
$ 0.07 
$ 0.04 
Weighted average shares outstanding:
 
 
 
 
Basic shares
26,608 
26,427 
26,584 
26,400 
Diluted shares
26,950 
26,897 
26,960 
26,736 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Shares
Total
Balance at Mar. 26, 2016
$ 3 
$ 137,893 
$ 23,594 
 
$ 161,490 
Balance (in shares) at Mar. 26, 2016
26,354,000 
 
 
(4,000)
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net income
 
 
1,103 
 
1,103 
Issuance of common stock related to stock-based compensation
 
739 
 
 
739 
Issuance of common stock related to stock-based compensation (in shares)
143,000 
 
 
(3,000)
 
Tax withholding for net share settlement
 
 
 
(26)
(26)
Tax withholding for net share settlement (in shares)
 
 
 
(3,000)
 
Excess tax deficiency related to stock-based compensation
 
(17)
 
 
(17)
Stock-based compensation expense
 
1,506 
 
 
1,506 
Balance at Sep. 24, 2016
140,121 
24,697 
(26)
164,795 
Balance (in shares) at Sep. 24, 2016
26,497,000 
 
 
(10,000)
 
Balance at Apr. 01, 2017
142,184 
37,791 
(69)
179,909 
Balance (in shares) at Apr. 01, 2017
26,575,000 
 
 
(14,000)
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net income
 
 
1,875 
 
1,875 
Issuance of common stock related to stock-based compensation
 
363 
 
 
363 
Issuance of common stock related to stock-based compensation (in shares)
122,000 
 
 
(3,000)
 
Tax withholding for net share settlement
 
 
 
(89)
(89)
Tax withholding for net share settlement (in shares)
 
 
 
(11,000)
 
Stock-based compensation expense
 
1,253 
 
 
1,253 
Balance at Sep. 30, 2017
$ 3 
$ 143,800 
$ 39,666 
$ (158)
$ 183,311 
Balance (in shares) at Sep. 30, 2017
26,697,000 
 
 
(28,000)
26,668,662 
CONDENSED CONDSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Cash flows from operating activities
 
 
Net income
$ 1,875 
$ 1,103 
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
 
 
Depreciation
7,584 
6,996 
Stock-based compensation
1,253 
1,506 
Amortization of intangible assets
671 
1,100 
Amortization and write-off of debt issuance fees and debt discount
593 
563 
Loss on disposal of property and equipment
61 
126 
Hurricane-related asset write-off
3,222 
 
Insurance recovery receivable
(3,422)
 
Accretion of above market leases
(1)
(24)
Deferred taxes
(371)
140 
Changes in operating assets and liabilities:
 
 
Insurance settlement
700 
 
Accounts receivable, net
823 
(439)
Inventories
(22,124)
(14,425)
Inventories from purchase of Wood's Boots
(2,752)
 
Prepaid expenses and other current assets
(1,083)
(1,728)
Other assets
(17)
1,128 
Accounts payable
12,287 
7,875 
Accrued expenses and other current liabilities
(766)
(963)
Other liabilities
757 
3,718 
Net cash (used in)/provided by operating activities
(710)
6,676 
Cash flows from investing activities
 
 
Purchases of property and equipment
(11,279)
(10,481)
Net cash used in investing activities
(11,279)
(10,481)
Cash flows from financing activities
 
 
Borrowings on line of credit - net
23,846 
8,168 
Repayments on debt and capital lease obligations
(10,212)
(1,208)
Debt issuance fees paid
(520)
 
Tax withholding for net share settlement
(89)
(26)
Proceeds from exercise of stock options
363 
739 
Net cash provided by financing activities
13,388 
7,673 
Net increase in cash and cash equivalents
1,399 
3,868 
Cash and cash equivalents, beginning of period
8,035 
7,195 
Cash and cash equivalents, end of period
9,434 
11,063 
Supplemental disclosures of cash flow information:
 
 
Cash paid for income taxes
393 
1,182 
Cash paid for interest
6,744 
6,697 
Supplemental disclosure of non-cash activities:
 
 
Unpaid purchases of property and equipment
$ 2,323 
$ 3,712 
Description of the Company and Basis of Presentation
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.  Description of the Company and Basis of Presentation

 

Boot Barn Holdings, Inc., formerly known as WW Top Investment Corporation (the “Company”), was formed on November 17, 2011, and is incorporated in the State of Delaware. As of June 8, 2014, the Company held all of the outstanding shares of common stock of WW Holding Corporation, which held 95.0% of the outstanding shares of common stock of Boot Barn Holding Corporation. On June 9, 2014, WW Holding Corporation was merged with and into the Company and then Boot Barn Holding Corporation was merged with and into the Company (“Reorganization”). As a result of this Reorganization, Boot Barn, Inc. became a direct wholly owned subsidiary of the Company. On June 10, 2014, the legal name of the Company was changed from WW Top Investment Corporation to Boot Barn Holdings, Inc. The equity of the Company consists of 100,000,000 authorized shares and 26,696,547 issued and 26,668,662 outstanding shares of common stock as of September 30, 2017. The shares of common stock have voting rights of one vote per share.

 

The Company operates specialty retail stores that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the internet. The Company operated a total of 222 stores in 31 states as of September 30, 2017 and 219 stores in 31 states as of April 1, 2017. As of September 30, 2017, all stores operate under the Boot Barn name, with the exception of two stores which operate under the “American Worker” name.

 

Basis of Presentation

 

The Company’s condensed consolidated financial statements as of and for the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016 are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of the Company and each of its subsidiaries, including Boot Barn, Inc., RCC Western Stores, Inc. (“RCC”), Baskins Acquisition Holdings, LLC (“Baskins”), Sheplers Inc. and Sheplers Holding Corporation (collectively with Sheplers, Inc., “Sheplers”) and Boot Barn International (Hong Kong) Limited (“Hong Kong”). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted.

 

In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company’s financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2018.

 

Fiscal Periods

 

The Company reports its results of operations and cash flows on a 52- or 53-week basis ending on the last Saturday of March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52-week year, each quarter includes thirteen weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. The fiscal year ending on March 31, 2018 (“fiscal 2018”) will consist of 52 weeks; whereas, the fiscal year ended on April 1, 2017 (“fiscal 2017”) consisted of 53 weeks.

 

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2.  Summary of Significant Accounting Policies

 

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 6, 2017. Presented below in the following notes is supplemental information that should be read in conjunction with those consolidated financial statements.

 

Comprehensive Income

 

The Company does not have any components of other comprehensive income recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements.

 

Segment Reporting

 

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company operates in a single operating segment, which includes net sales generated from its retail stores and e-commerce websites. The vast majority of the Company’s identifiable assets are in the U.S.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

 

Inventories

 

Inventory consists primarily of purchased merchandise and is valued at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and includes the cost of merchandise and import related costs, including freight, duty and agent commissions. The Company assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected to be sold is written down to its estimated net realizable value.

 

Fair Value of Certain Financial Assets and Liabilities

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

 

·

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

 

·

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

 

·

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company’s Level 3 assets include certain acquired businesses.

 

Cash and cash equivalents, accounts receivable and accounts payable are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximates their current fair values because of their nature and respective relatively short maturity dates or duration.

 

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 5, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements on a recurring basis as of September 30, 2017.

 

Hurricane-Related Insurance Claims

 

During the thirteen weeks ended September 30, 2017, as a result of Hurricane Harvey, $3.2 million of inventory and property, plant and equipment at certain Houston-area stores were damaged and written off. These assets were insured at the time of the loss. The Company also incurred $0.2 million of repairs and maintenance expense. The Company received cash insurance proceeds of $0.7 million as of September 30, 2017. The Company considers it probable that it will be reimbursed for the entire amount of the loss and has recorded an insurance receivable as of September 30, 2017 for $2.7 million. The insurance receivable is recorded in accounts receivable, net on the condensed consolidated balance sheet. The charges and recoveries are recorded in selling, general and administrative expenses.

 

Recently Adopted Accounting Pronouncements

 

In November 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU No. 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU No. 2015-17 is effective for public entities in annual periods beginning after December 15, 2016, and for interim periods within those annual periods. The amendments for ASU No. 2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The Company adopted this standard prospectively as of April 2, 2017, the first day of the fiscal year ending March 31, 2018. As a result of the prospective adoption, the Company reclassified deferred tax assets of $9.8 million from prepaid expenses and other current assets (a component of current assets), to deferred taxes (a component of long-term liabilities) on its Condensed Consolidated Balance Sheet. Prior periods were not retrospectively adjusted for the accounting change.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company adopted ASU No. 2016-09 beginning April 2, 2017, the first day of the fiscal year ending March 31, 2018. Upon adoption, the Company began to recognize, on a prospective basis, all excess tax benefits and deficiencies as income tax benefit or expense, respectively, in its Condensed Consolidated Statement of Operations. This resulted in the recognition of less than $0.1 million of additional income tax expense associated with net tax deficiencies for awards that were exercised or vested during the thirteen weeks ended July 1, 2017, the period of adoption. Additionally, as of April 2, 2017, excess tax benefits are classified as an operating activity along with deferred tax cash flows in the Condensed Consolidated Statement of Cash Flows. The Company elected to adopt such presentation on a prospective basis. Cash paid by the Company to tax authorities when directly withholding shares for tax withholding purposes will continue to be classified as a financing activity in the consolidated statements of cash flows. Stock-based compensation expense will no longer reflect estimated forfeitures of share-based awards and forfeitures will instead be recorded as they occur. In evaluating the impact of this change, the adjustment to adopt on a modified retrospective basis was immaterial, therefore no adjustment was made to retained earnings as of the beginning of the period presented. Lastly, excess tax benefits are now excluded from assumed future proceeds in the Company’s calculation of diluted shares for purposes of determining diluted earnings per share. This change had an immaterial impact on the Company’s weighted average diluted shares outstanding for the thirteen weeks ended July 1, 2017, the period of adoption.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued a new revenue recognition standard, ASU No. 2014‑09, Revenue From Contracts with Customers, that will supersede nearly all existing revenue recognition guidance under GAAP. The revenue recognition standard will allow for the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard permits the use of either a full retrospective or retrospective with cumulative effect transition method. On August 8, 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 by one year, and permits early adoption as long as the adoption date is not before the original public entity effective date. The standard is effective for public entities for annual periods, and interim periods within that year, beginning after December 15, 2017. While the Company is currently assessing the impact of the new standard, its revenues are primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue for such sales is recognized when the customer obtains control. The timing of revenue recognition for these transactions is not expected to be significantly impacted by the new standard. The Company continues to review the impact of this standard on potential disclosure changes in its financial statements, as well as which transition approach will be applied.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within that year, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. Therefore, the Company expects this adoption will result in a material increase in the assets and liabilities on its consolidated balance sheets. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. The Company plans to adopt the standard in the first quarter of fiscal 2020 and is currently continuing its assessment, which may identify other impacts the revised standard will have on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The amendments in this ASU are effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company plans to adopt the standard in the first quarter of fiscal 2021 and does not expect the revised standard to have a material impact on the consolidated financial statements.

Asset Acuisition
Asset Acquisition

3.  Asset Acquisition

Wood’s Boots

On September 11, 2017, Boot Barn, Inc., a wholly owned subsidiary of the Company, completed the acquisition of assets from Wood’s Boots, a four-store family-owned retailer with stores in Midland and Odessa, Texas. As part of the transaction, Boot Barn, Inc. purchased the inventory, entered into new leases with the stores’ landlord, offered employment to the Wood’s Boots team at all four store locations and assumed certain customer credits. The cash consideration paid for the acquisition was $2.7 million.

In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value. As the acquisition did not meet the definition of a business combination under ASC 805, the Company accounted for the transaction as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets. 

The Company determined the estimated fair values using Level 3 inputs after review and consideration of relevant information, including quoted market prices and estimates made by management. The inventory was valued using the comparative sales method. Based on the fair value analysis of the net assets acquired and liabilities assumed, the inventory was valued at $2.8 million, and the customer credits were valued at less than $0.1 million.

Intangible Assets, Net and Goodwill
Intangible Assets, Net and Goodwill

4.  Intangible Assets, Net and Goodwill

 

Net intangible assets as of September 30, 2017 and April 1, 2017 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2017

 

 

 

Gross

    

 

 

    

 

 

    

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(4,165)

 

$

529

 

4.6

 

Non-compete agreements

 

 

990

 

 

(990)

 

 

 —

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,284)

 

 

2,634

 

11.6

 

Total definite lived

 

 

10,602

 

 

(7,439)

 

 

3,163

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(7,439)

 

$

63,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2017

 

 

 

Gross

 

 

 

 

 

 

 

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(3,810)

 

$

884

 

4.6

 

Non-compete agreements

 

 

990

 

 

(915)

 

 

75

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,043)

 

 

2,875

 

11.6

 

Total definite lived

 

 

10,602

 

 

(6,768)

 

 

3,834

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(6,768)

 

$

64,511

 

 

 

 

Amortization expense for intangible assets totaled $0.3 million for the thirteen weeks ended September 30, 2017 and $0.5 million for the thirteen weeks ended September 24, 2016, and is included in selling, general and administrative expenses.

 

Amortization expense for intangible assets totaled $0.7 million for the twenty-six weeks ended September 30, 2017 and $1.1 million for the twenty-six weeks ended September 24, 2016, and is included in selling, general and administrative expenses.

 

As of September 30, 2017, estimated future amortization of intangible assets was as follows:

 

 

 

 

 

 

Fiscal Year

    

(in thousands)

 

2018

    

$

458

 

2019

 

 

624

 

2020

 

 

477

 

2021

 

 

308

 

2022

 

 

215

 

Thereafter

 

 

1,081

 

Total

 

$

3,163

 

 

The Company performs its annual goodwill impairment assessment on the first day of the fourth fiscal quarter, or more frequently if it believes that indicators of impairment exist. The Company’s Goodwill balance was $193.1 million as of both September 30, 2017 and April 1, 2017. As of September 30, 2017, the Company had identified no indicators of impairment with respect to its goodwill, intangible and long-lived asset balances.

Revolving Credit Facilities and Long-Term Debt
Revolving Credit Facilities and Long-Term Debt

5.  Revolving Credit Facilities and Long-Term Debt

 

On June 29, 2015, the Company, as guarantor, and its wholly-owned primary operating subsidiary, Boot Barn, Inc., entered into the $125.0 million revolving credit facility pursuant to a Credit Agreement, dated as of June 29, 2015, by and among the Company, Boot Barn, Inc., Sheplers, Inc., Wells Fargo Bank, National Association and the other Lenders named therein (as amended from time to time, the “June 2015 Wells Fargo Revolver”) and the $200.0 million term loan Credit Agreement, dated as of June 29, 2015, by and among the Company, Boot Barn, Inc., Golub Capital Markets LLC and the other Lenders named therein (as amended from time to time, the “2015 Golub Term Loan”). The borrowing base of the June 2015 Wells Fargo Revolver is calculated on a monthly basis and is based on the amount of eligible credit card receivables, commercial accounts, inventory, and available reserves. Borrowings under the two credit agreements were initially used to refinance and replace existing credit facilities, pay costs and expenses related to the Sheplers Acquisition and the closing of such credit agreements, and may be used for working capital and other general corporate purposes.

 

Borrowings under the June 2015 Wells Fargo Revolver bear interest at per annum rates equal to, at the Company’s option, either (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin for LIBOR loans, or (ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) one-month LIBOR plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For LIBOR Loans, the applicable margin ranges from 1.00% to 1.25%, and for base rate loans it ranges from 0.00% to 0.25%. The Company also pays a commitment fee of 0.25% per annum of the actual daily amount of the unutilized revolving loans. The interest on the June 2015 Wells Fargo Revolver is payable in quarterly installments ending on the maturity date. On May 26, 2017, the Company entered into an amendment to the June 2015 Wells Fargo Revolver (the “2017 Wells Amendment”), increasing the aggregate revolving credit facility to $135.0 million and extending the maturity date to the earlier of May 26, 2022 or 90 days prior to the maturity of the 2015 Golub Term Loan, which is currently scheduled to mature on June 29, 2021. The amount outstanding under the June 2015 Wells Fargo Revolver as of September 30, 2017 and April 1, 2017 was $57.1 million and $33.3 million, respectively. Total interest expense incurred in the thirteen and twenty-six weeks ended September 30, 2017 on the June 2015 Wells Fargo Revolver was $0.5 million and $0.9 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 30, 2017 was 2.3%. Total interest expense incurred in the thirteen and twenty-six weeks ended September 24, 2016 on the June 2015 Wells Fargo Revolver was $0.4 million and $0.7 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 24, 2016 was 1.8%.

 

Borrowings under the 2015 Golub Term Loan bear interest at per annum rates equal to, at the Company’s option, either (a) LIBOR plus an applicable margin for LIBOR loans with a LIBOR floor of 1.0%, or (b) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the greater of (i) the higher of (x) the prime rate and (y) the federal funds rate plus 0.5% and (ii) the sum of one-month LIBOR plus 1.0%. The applicable margin is 4.5% for LIBOR Loans and 3.5% for base rate loans. The principal and interest on the 2015 Golub Term Loan is payable in quarterly installments ending on June 29, 2021, the maturity date. Quarterly principal payments of $500,000 are due for each quarter; however, on June 2, 2017, the Company prepaid $10.0 million on the 2015 Golub Term Loan, which included all of the required quarterly principal payments until the maturity date of the loan. Total interest expense incurred in the thirteen and twenty-six weeks ended September 30, 2017 on the 2015 Golub Term Loan was $2.7 million and $5.5 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 30, 2017 was 5.8%. Total interest expense incurred in the thirteen and twenty-six weeks ended September 24, 2016 on the 2015 Golub Term Loan was $2.7 million and $5.5 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 24, 2016 was 5.5%.

 

All obligations under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver are unconditionally guaranteed by the Company and each of its direct and indirect domestic subsidiaries (other than certain immaterial subsidiaries) which are not named as borrowers under the 2015 Golub Term Loan or the June 2015 Wells Fargo Revolver, as applicable.

 

The priority with respect to collateral under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver is subject to the terms of an intercreditor agreement among the lenders under the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver.

 

Each of the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default. In addition, the terms of the June 2015 Wells Fargo Revolver require the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio of at least 1.00:1.00 during such times as a covenant trigger event shall exist. On May 26, 2017, the Company entered into an amendment to the 2015 Golub Term Loan (the “2017 Golub Amendment”). The 2017 Golub Amendment changed the maximum Consolidated Total Net Leverage Ratio requirements to 4.75:1.00 as of September 30, 2017, stepping down to 4.50:1.00 as of December 30, 2017 and 4.00:1.00 as of December 29, 2018 and for all subsequent periods. The June 2015 Wells Fargo Revolver and 2015 Golub Term Loan also require the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate upon an event of default is an embedded derivative. As of September 30, 2017, the fair value of these embedded derivatives was not significant.

 

Debt Issuance Costs and Debt Discount

 

Debt issuance costs totaling $1.0 million were incurred under the June 2015 Wells Fargo Revolver and 2017 Wells Amendment and are included as assets on the condensed consolidated balance sheets in prepaid expenses and other current assets. Total unamortized debt issuance costs were $0.6 million as of both September 30, 2017 and April 1, 2017. These amounts are being amortized to interest expense over the term of the June 2015 Wells Fargo Revolver.

 

Debt issuance costs and debt discount totaling $6.0 million were incurred under the 2015 Golub Term Loan and 2017 Golub Amendment and are included as a reduction of the current and non-current note payable on the condensed consolidated balance sheets. Total unamortized debt issuance costs and debt discount were $3.8 million and $3.9 million as of September 30, 2017 and April 1, 2017, respectively. These amounts are being amortized to interest expense over the term of the 2015 Golub Term Loan.

 

The following sets forth the balance sheet information related to the term loan:

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

April 1,

 

(in thousands)

    

2017

      

2017

 

Term Loan

 

$

186,500

$

196,500

 

Unamortized value of the debt issuance costs and debt discount

 

 

(3,820)

 

 

(3,921)

 

Net carrying value

 

$

182,680

 

$

192,579

 

 

Total amortization expense of $0.3 million and $0.6 million related to the June 2015 Wells Fargo Revolver and 2015 Golub Term Loan is included as a component of interest expense in both the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016.

 

Aggregate Contractual Maturities

 

Aggregate contractual maturities for the Company’s long-term debt as of September 30, 2017 are as follows:

 

 

 

 

 

 

Fiscal Year

 

 

(in thousands)

 

2018

    

$

 —

 

2019

 

 

 —

 

2020

 

 

 —

 

2021

 

 

 —

 

2022

 

 

186,500

 

Total

 

$

186,500

 

 

Stock-Based Compensation
Stock-Based Compensation

6.  Stock-Based Compensation

 

Equity Incentive Plans

 

On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan authorized the Company to issue options to employees, consultants and directors exercisable for up to a total of 3,750,000 shares of common stock. As of September 30, 2017, all awards granted by the Company under the 2011 Plan have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan.

 

On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of August 24, 2016 (as amended, the “2014 Plan”). The 2014 Plan authorizes the Company to issue awards to employees, consultants and directors for up to a total of 3,600,000 shares of common stock. As of September 30, 2017, all awards granted by the Company under the 2014 Plan to date have been nonqualified stock options, restricted stock awards or restricted stock units. Options granted under the 2014 Plan have a life of eight years and vest over service periods of five years or in connection with certain events as defined by the 2014 Plan. Restricted stock awards granted vest over one or four years, as determined by the Compensation Committee of the Board of Directors. Restricted stock units vest over service periods of one or five years, as determined by the Compensation Committee of the Board of Directors.

 

Non-Qualified Stock Options

 

During the thirteen weeks ended September 30, 2017, the Company granted options to purchase a total of 4,907 shares under the 2014 Plan. The total grant date fair value of stock options granted during the thirteen weeks ended September 30, 2017 was less than $0.1 million, with a grant date fair value of $2.91 per share. The Company is recognizing the expense on a straight-line basis over the five-year service period. The exercise price is $8.33 per share.

 

During the twenty-six weeks ended September 30, 2017, the Company granted certain members of management options to purchase a total of 392,522 shares under the 2014 Plan. The total grant date fair value of stock options granted during the twenty-six weeks ended September 30, 2017 was $0.8 million, with grant date fair values ranging from $2.11 to $2.91 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $6.15 and $8.33 per share.

 

During the thirteen weeks ended September 24, 2016, the Company did not grant options to purchase shares under the 2014 Plan.

 

During the twenty-six weeks ended September 24, 2016, the Company granted certain members of management options to purchase a total of 560,892 shares under the 2014 Plan. The total grant date fair value of stock options granted during the twenty-six weeks ended September 24, 2016 was $1.5 million, with grant date fair values ranging from $2.50 to $2.95 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $7.11 and $8.38 per share.

 

On October 29, 2014, the Company granted its Chief Executive Officer (“CEO”) options to purchase 99,650 shares of common stock under the 2014 Plan. These options contain both service and market conditions. Vesting of the options occurs if the market price of the Company’s stock achieves stated targets through the third anniversary of the date of grant. As of March 26, 2016, the market price targets were achieved, and the options will vest in equal amounts on the third, fourth and fifth anniversaries of the grant date. The fair value of the options was estimated using a Monte Carlo simulation model. The following significant assumptions were used as of October 29, 2014:

 

 

 

 

 

 

 

Stock price

    

$

16.00

 

Exercise price

 

$

16.00

 

Expected option term

 

 

6.0

years

Expected volatility

 

 

55.0

%

Risk-free interest rate

 

 

1.8

%

Expected annual dividend yield

 

 

0

%

 

The stock option awards discussed above, with the exception of options awarded to the Company’s CEO on October 29, 2014, were measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility of the Company’s stock price over the option’s expected term, the risk-free interest rate over the option’s expected term and the Company’s expected annual dividend yield, if any. The Company’s estimate of pre-vesting forfeitures, or forfeiture rate, was based on its internal analysis, which included the award recipients’ positions within the Company and the vesting period of the awards. The Company will issue shares of common stock when the options are exercised.

 

The fair values of stock options granted during the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016 were estimated on the grant dates using the following assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

    

 

 

 

 

September 30,

 

 

September 24,

 

September 30,

 

September 24,

 

 

    

 

 

2017

 

    

2016

  

2017

    

2016

 

Expected option term(1)

 

 

 

5.5

years  

 

 

 

 

N/A

 

 

 

 

 

 

5.5

years  

 

 

 

 

5.5

years

 

Expected volatility factor(2)

 

 

 

34.6

%  

 

 

 

 

N/A

 

 

 

34.0

%

-

34.6

%  

 

35.8

%

-

36.0

%

 

Risk-free interest rate(3)

 

 

 

1.8

%  

 

 

 

 

N/A

 

 

 

 

 

 

1.8

%  

 

 

 

 

1.4

%

 

Expected annual dividend yield

 

 

 

0

%

 

 

 

 

N/A

 

 

 

 

 

 

0

%

 

 

 

 

0

%

 


(1)

The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.

(2)

Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s competitors’ common stock over the most recent period equal to the expected option term of the Company’s awards.

(3)

The risk-free interest rate is determined using the rate on treasury securities with the same term.

 

Intrinsic value for stock options is defined as the difference between the market price of the Company’s common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period.

 

The following table summarizes the stock award activity for the twenty-six weeks ended September 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

 

 

Grant Date

 

Average

 

 

 

 

 

 

 

 

Weighted

 

Remaining

 

Aggregate

 

 

 

Stock

 

Average

 

Contractual

 

Intrinsic

 

 

    

Options

    

Exercise Price

    

Life (in Years)

    

Value

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Outstanding at April 1, 2017

 

2,543,660

 

$

9.29

 

 

 

 

 

 

Granted

 

392,522

 

$

6.18

 

 

 

 

 

 

Exercised

 

(73,850)

 

$

4.92

 

 

 

$

267

 

Cancelled, forfeited or expired

 

(65,011)

 

$

9.95

 

 

 

 

 

 

Outstanding at September 30, 2017

 

2,797,321

 

$

8.96

 

5.7

 

$

5,230

 

Vested and expected to vest after September 30, 2017

 

2,797,321

 

$

8.96

 

5.7

 

$

5,230

 

Exercisable at September 30, 2017

 

1,487,391

 

$

8.10

 

5.0

 

$

3,256

 

 

A summary of the status of non-vested stock options as of September 30, 2017 including changes during the twenty-six weeks ended September 30, 2017 is presented below:

 

 

 

 

 

 

 

 

 

    

 

    

Weighted-

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

    

Shares

    

Fair Value

 

Nonvested at April 1, 2017

 

1,148,500

 

$

4.84

 

Granted

 

392,522

 

$

2.12

 

Vested

 

(170,766)

 

$

4.74

 

Nonvested shares forfeited

 

(60,326)

 

$

4.31

 

Nonvested at September 30, 2017

 

1,309,930

 

$

4.06

 

 

Restricted Stock

 

During the thirteen and twenty-six weeks ended September 30, 2017, the Company granted 21,491 and 108,043 restricted stock units, respectively, to various directors and employees under the 2014 Plan. The shares granted to employees vest in five equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates. The shares granted to the Company’s directors vest on the first anniversary of the date of grant. The grant date fair value of these awards for the thirteen and twenty-six weeks ended September 30, 2017 totaled $0.2 million and $0.7 million, respectively. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award, commencing on the date of grant.

 

During the thirteen and twenty-six weeks ended September 24, 2016, the Company granted 20,000 and 136,732  restricted stock units, respectively, to various directors and employees under the 2014 Plan. The shares granted to employees vest in five equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates. The shares granted to the Company’s directors vest on the first anniversary of the date of grant. The grant date fair value of these awards for the thirteen and twenty-six weeks ended September 24, 2016 totaled $0.3 million and $1.1 million, respectively. The Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award, commencing on the date of grant.

 

Stock-Based Compensation Expense

 

Stock-based compensation expense was $0.7 million and $0.8 million for the thirteen weeks ended September 30, 2017 and September 24, 2016, respectively. Stock-based compensation expense was $1.3 million and $1.5 million for the twenty-six weeks ended September 30, 2017 and September 24, 2016, respectively. Stock-based compensation expense of $0.1 million was recorded in cost of goods sold in the condensed consolidated statements of operations for both the thirteen weeks ended September 30, 2017 and September 24, 2016. Stock-based compensation expense of $0.2 million was recorded in cost of goods sold in the condensed consolidated statements of operations for both the twenty-six weeks ended September 30, 2017 and September 24, 2016. All other stock-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations.

 

As of September 30, 2017, there was $3.8 million of total unrecognized stock-based compensation expense related to unvested stock options, with a weighted-average remaining recognition period of 2.96 years. As of September 30, 2017, there was $2.1 million of total unrecognized stock-based compensation expense related to restricted stock, with a weighted-average remaining recognition period of 3.56 years.

Commitments and Contingencies
Commitments and Contingencies

7.  Commitments and Contingencies

 

The Company is involved, from time to time, in litigation that is incidental to its business. The Company has reviewed these matters to determine if reserves are required for losses that are probable and reasonable to estimate in accordance with FASB ASC Topic 450, Contingencies. The Company evaluates such reserves, if any, based upon several criteria, including the merits of each claim, settlement discussions and advice from outside legal counsel, as well as indemnification of amounts expended by the Company’s insurers or others pursuant to indemnification policies or agreements, if any.

 

On April 28, 2016, two employees, on behalf of themselves and all other similarly situated employees, filed a wage-and-hour class action, which includes claims for penalties under California’s Private Attorney General Act, in the Fresno County Superior Court, Case No. 16 CE CG 01330, alleging violations of California’s wage and hour, overtime, meal break and statement of wages rules and regulations, among other things. On April 10, 2017, the Company reached a settlement with the employees for an amount that is not material to the consolidated financial statements. The amount of the settlement has been accrued.

 

The Company is also subject to certain other pending or threatened litigation matters incidental to its business. In management's opinion, none of these legal matters, individually or in the aggregate, will have a material effect on the Company's financial position, results of operations, or liquidity.

 

During the normal course of its business, the Company has made certain indemnifications and commitments under which the Company may be required to make payments for certain transactions. These indemnifications include those given to various lessors in connection with facility leases for certain claims arising from such facility leases, and indemnifications to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. The majority of these indemnifications and commitments do not provide for any limitation of the maximum potential future payments the Company could be obligated to make, and their duration may be indefinite. The Company has not recorded any liability for these indemnifications and commitments in the condensed consolidated balance sheets as the impact is expected to be immaterial.

Captial Lease and Financing Transactions
Capital Lease and Financing Transactions

8.  Capital Leases and Financing Transactions

 

As of September 30, 2017, the Company had non-cancelable capital leases for property and equipment rentals with principal and interest payments due monthly. The liability under capital lease arrangements as of September 30, 2017 totals $0.8 million.

 

During fiscal 2016, the Company acquired leases related to two retail stores, two office buildings,  one distribution center facility and land as part of the Sheplers Acquisition. On July 30, 2007, Sheplers sold these properties to an unrelated third-party real estate company and simultaneously entered into an arrangement with the third-party real estate company to lease back these properties. Sheplers maintained continuing involvement in these properties such that this sale did not qualify for sale-leaseback accounting treatment. This transaction is recorded as a financing transaction with the assets and related financing obligation recorded on the balance sheet. The lease expires in fiscal 2028 and includes renewal options and certain default provisions requiring the Company to perform repairs and maintenance, make timely rent payments and insure the buildings and equipment. The liability under the financing transaction as of September 30, 2017 totals $7.3 million.

 

The total liability under capital lease and financing transactions as of September 30, 2017 is $8.1 million and is included as capital lease obligations in the condensed consolidated balance sheet. The current portion of the capital lease arrangements is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The interest rates range from 6.1% to 10.9%.  

 

The net property and equipment involved in the Company’s capital leases and financing transaction are included in property and equipment as follows:

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

April 1,

 

(in thousands)

    

2017

    

2017

 

Buildings

 

$

7,588

 

$

7,588

 

Land

 

 

2,530

 

 

2,530

 

Site improvements

 

 

410

 

 

410

 

Equipment

 

 

63

 

 

63

 

Property and equipment, gross

 

 

10,591

 

 

10,591

 

Less: accumulated depreciation

 

 

(1,626)

 

 

(1,272)

 

Property and equipment, net

 

$

8,965

 

$

9,319

 

 

As of September 30, 2017, future minimum capital lease and financing transaction payments are as follows:

 

 

 

 

 

 

Fiscal Year

 

(in thousands)

 

2018

 

 

642

 

2019

 

 

1,296

 

2020

 

 

1,307

 

2021

 

 

1,331

 

2022

 

 

1,356

 

Thereafter

 

 

6,857

 

Total

 

 

12,789

 

Less: Imputed interest

 

 

(4,729)

 

Present value of capital leases and financing transaction

 

 

8,060

 

Less: Current capital leases and financing transaction

 

 

(482)

 

Noncurrent capital leases and financing transaction

 

$

7,578

 

 

Income Taxes
Income Taxes

9.  Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). In accordance with ASC 740, the Company recognizes deferred tax assets and liabilities based on the liability method, which requires an adjustment to the deferred tax asset or liability to reflect income tax rates currently in effect. When income tax rates increase or decrease, a corresponding adjustment to income tax expense is recorded by applying the rate change to the cumulative temporary differences. ASC 740 prescribes the recognition threshold and measurement principles for financial statement disclosure of tax positions taken or expected to be taken on a tax return. ASC 740 requires the Company to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recognized. Additionally, ASC 740 provides guidance on recognition measurement, derecognition, classification, related interest and penalties, accounting in interim periods, disclosure and transition.

 

The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for discrete events occurring in a particular period. The income tax rate was 40.6% and 39.5% for the thirteen weeks ended September 30, 2017 and September 24, 2016, respectively, and 40.1% and 34.4% for the twenty-six weeks ended September 30, 2017 and September 24, 2016, respectively. The effective tax rate for the thirteen and twenty-six weeks ended September 30, 2017 is higher than the comparable periods in fiscal 2017 due to additional income tax expense of less than $0.1 million resulting from the adoption of ASU No. 2016-09 in the thirteen and twenty-six weeks ended September 30, 2017 compared to the thirteen and twenty-six weeks ended September 24, 2016. Discrete items also contributed to the lower tax rate in the twenty-six weeks ended September 24, 2016. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. To this end, the Company has considered and evaluated its sources of taxable income, including forecasted future taxable income, and the Company has concluded that a valuation allowance is required for certain state net operating losses and credits it expects to expire unused. The Company will continue to evaluate the need for a valuation allowance at each period end.

 

The Company’s policy is to accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense. At September 30, 2017 and April 1, 2017, the Company had no accrued liability for penalties and interest.

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. At September 30, 2017, the Company is not aware of tax examinations (current or potential) in any tax jurisdictions.

Related Party Transactions
Related Party Transactions

10.  Related Party Transactions

 

During both the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016, the Company had capital expenditures with a specialty retail vendor in the flooring market that as of September 30, 2017 is 23.3% owned by Freeman Spogli, our majority stockholder. These capital expenditures amounted to less than $0.1 million in both the thirteen weeks ended September 30, 2017 and September 24, 2016. These capital expenditures amounted to $0.1 million and less than $0.1 million in the twenty-six weeks ended September 30, 2017 and September 24, 2016, respectively, and were recorded as property and equipment, net on the condensed consolidated balance sheet.

Earnings Per Share
Earnings Per Share

11.  Earnings Per Share

 

Earnings per share is computed under the provisions of FASB ASC Topic 260, Earnings Per Share. Basic earnings per share is computed based on the weighted average number of outstanding shares of common stock during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential shares of common stock outstanding during the period using the treasury stock method, whereby proceeds from such exercise and unamortized compensation, if any, on share-based awards, are assumed to be used by the Company to purchase the shares of common stock at the average market price during the period. The dilutive effect of stock options and restricted stock is applicable only in periods of net income.

 

The components of basic and diluted earnings per share of common stock, in aggregate, for the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

    

 

 

September 30,

 

September 24,

 

September 30,

 

September 24,

 

(in thousands, except per share data)

    

2017

    

2016

    

2017

    

2016

 

Net income

 

$

1,098

 

$

479

 

$

1,875

 

 

1,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding

 

 

26,608

 

 

26,427

 

 

26,584

 

 

26,400

 

Dilutive effect of options and restricted stock

 

 

342

 

 

470

 

 

376

 

 

336

 

Weighted average diluted shares outstanding

 

 

26,950

 

 

26,897

 

 

26,960

 

 

26,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.04

 

$

0.02

 

$

0.07

 

$

0.04

 

Diluted earnings per share

 

$

0.04

 

$

0.02

 

$

0.07

 

$

0.04

 

 

Options to purchase 2,049,351 shares and 713,748 shares of common stock were outstanding during the thirteen weeks ended September 30, 2017 and September 24, 2016, respectively, but were not included in the computation of weighted average diluted shares of common stock outstanding as the effect of doing so would have been anti-dilutive.

 

Options to purchase 1,485,256 shares and 1,220,740 shares of common stock were outstanding during the twenty-six weeks ended September 30, 2017 and September 24, 2016, respectively, but were not included in the computation of weighted average diluted shares of common stock outstanding as the effect of doing so would have been anti-dilutive.

Summary of Significant Accounting Policies (Policies)

Comprehensive Income

 

The Company does not have any components of other comprehensive income recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements.

 

Segment Reporting

 

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company operates in a single operating segment, which includes net sales generated from its retail stores and e-commerce websites. The vast majority of the Company’s identifiable assets are in the U.S.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

 

Inventories

 

Inventory consists primarily of purchased merchandise and is valued at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and includes the cost of merchandise and import related costs, including freight, duty and agent commissions. The Company assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected to be sold is written down to its estimated net realizable value.

 

Fair Value of Certain Financial Assets and Liabilities

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

 

·

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

 

·

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

 

·

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company’s Level 3 assets include certain acquired businesses.

 

Cash and cash equivalents, accounts receivable and accounts payable are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximates their current fair values because of their nature and respective relatively short maturity dates or duration.

 

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 5, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements on a recurring basis as of September 30, 2017.

 

Hurricane-Related Insurance Claims

 

During the thirteen weeks ended September 30, 2017, as a result of Hurricane Harvey, $3.2 million of inventory and property, plant and equipment at certain Houston-area stores were damaged and written off. These assets were insured at the time of the loss. The Company also incurred $0.2 million of repairs and maintenance expense. The Company received cash insurance proceeds of $0.7 million as of September 30, 2017. The Company considers it probable that it will be reimbursed for the entire amount of the loss and has recorded an insurance receivable as of September 30, 2017 for $2.7 million. The insurance receivable is recorded in accounts receivable, net on the condensed consolidated balance sheet. The charges and recoveries are recorded in selling, general and administrative expenses.

 

Recently Adopted Accounting Pronouncements

 

In November 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU No. 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU No. 2015-17 is effective for public entities in annual periods beginning after December 15, 2016, and for interim periods within those annual periods. The amendments for ASU No. 2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The Company adopted this standard prospectively as of April 2, 2017, the first day of the fiscal year ending March 31, 2018. As a result of the prospective adoption, the Company reclassified deferred tax assets of $9.8 million from prepaid expenses and other current assets (a component of current assets), to deferred taxes (a component of long-term liabilities) on its Condensed Consolidated Balance Sheet. Prior periods were not retrospectively adjusted for the accounting change.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company adopted ASU No. 2016-09 beginning April 2, 2017, the first day of the fiscal year ending March 31, 2018. Upon adoption, the Company began to recognize, on a prospective basis, all excess tax benefits and deficiencies as income tax benefit or expense, respectively, in its Condensed Consolidated Statement of Operations. This resulted in the recognition of less than $0.1 million of additional income tax expense associated with net tax deficiencies for awards that were exercised or vested during the thirteen weeks ended July 1, 2017, the period of adoption. Additionally, as of April 2, 2017, excess tax benefits are classified as an operating activity along with deferred tax cash flows in the Condensed Consolidated Statement of Cash Flows. The Company elected to adopt such presentation on a prospective basis. Cash paid by the Company to tax authorities when directly withholding shares for tax withholding purposes will continue to be classified as a financing activity in the consolidated statements of cash flows. Stock-based compensation expense will no longer reflect estimated forfeitures of share-based awards and forfeitures will instead be recorded as they occur. In evaluating the impact of this change, the adjustment to adopt on a modified retrospective basis was immaterial, therefore no adjustment was made to retained earnings as of the beginning of the period presented. Lastly, excess tax benefits are now excluded from assumed future proceeds in the Company’s calculation of diluted shares for purposes of determining diluted earnings per share. This change had an immaterial impact on the Company’s weighted average diluted shares outstanding for the thirteen weeks ended July 1, 2017, the period of adoption.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) jointly issued a new revenue recognition standard, ASU No. 2014‑09, Revenue From Contracts with Customers, that will supersede nearly all existing revenue recognition guidance under GAAP. The revenue recognition standard will allow for the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard permits the use of either a full retrospective or retrospective with cumulative effect transition method. On August 8, 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 by one year, and permits early adoption as long as the adoption date is not before the original public entity effective date. The standard is effective for public entities for annual periods, and interim periods within that year, beginning after December 15, 2017. While the Company is currently assessing the impact of the new standard, its revenues are primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue for such sales is recognized when the customer obtains control. The timing of revenue recognition for these transactions is not expected to be significantly impacted by the new standard. The Company continues to review the impact of this standard on potential disclosure changes in its financial statements, as well as which transition approach will be applied.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for annual periods, and interim periods within that year, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. Therefore, the Company expects this adoption will result in a material increase in the assets and liabilities on its consolidated balance sheets. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. The Company plans to adopt the standard in the first quarter of fiscal 2020 and is currently continuing its assessment, which may identify other impacts the revised standard will have on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The amendments in this ASU are effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company plans to adopt the standard in the first quarter of fiscal 2021 and does not expect the revised standard to have a material impact on the consolidated financial statements.

Intangible Assets, Net and Goodwill (Tables)

Net intangible assets as of September 30, 2017 and April 1, 2017 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2017

 

 

 

Gross

    

 

 

    

 

 

    

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(4,165)

 

$

529

 

4.6

 

Non-compete agreements

 

 

990

 

 

(990)

 

 

 —

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,284)

 

 

2,634

 

11.6

 

Total definite lived

 

 

10,602

 

 

(7,439)

 

 

3,163

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(7,439)

 

$

63,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2017

 

 

 

Gross

 

 

 

 

 

 

 

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(3,810)

 

$

884

 

4.6

 

Non-compete agreements

 

 

990

 

 

(915)

 

 

75

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,043)

 

 

2,875

 

11.6

 

Total definite lived

 

 

10,602

 

 

(6,768)

 

 

3,834

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(6,768)

 

$

64,511

 

 

 

 

Net intangible assets as of September 30, 2017 and April 1, 2017 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2017

 

 

 

Gross

    

 

 

    

 

 

    

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(4,165)

 

$

529

 

4.6

 

Non-compete agreements

 

 

990

 

 

(990)

 

 

 —

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,284)

 

 

2,634

 

11.6

 

Total definite lived

 

 

10,602

 

 

(7,439)

 

 

3,163

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(7,439)

 

$

63,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2017

 

 

 

Gross

 

 

 

 

 

 

 

Weighted

 

 

 

Carrying

 

Accumulated

 

 

 

 

Average

 

 

    

Amount

    

Amortization

    

Net

    

Useful Life

 

 

 

(in thousands, except for weighted average useful life)

 

Customer lists

 

$

4,694

 

$

(3,810)

 

$

884

 

4.6

 

Non-compete agreements

 

 

990

 

 

(915)

 

 

75

 

4.8

 

Below-market leases

 

 

4,918

 

 

(2,043)

 

 

2,875

 

11.6

 

Total definite lived

 

 

10,602

 

 

(6,768)

 

 

3,834

 

 

 

Trademarks—indefinite lived

 

 

60,677

 

 

 —

 

 

60,677

 

 

 

Total intangible assets

 

$

71,279

 

$

(6,768)

 

$

64,511

 

 

 

 

As of September 30, 2017, estimated future amortization of intangible assets was as follows:

 

 

 

 

 

 

Fiscal Year

    

(in thousands)

 

2018

    

$

458

 

2019

 

 

624

 

2020

 

 

477

 

2021

 

 

308

 

2022

 

 

215

 

Thereafter

 

 

1,081

 

Total

 

$

3,163

 

 

Revolving Credit Facilities and Long-Term Debt (Tables)

The following sets forth the balance sheet information related to the term loan:

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

April 1,

 

(in thousands)

    

2017

      

2017

 

Term Loan

 

$

186,500

$

196,500

 

Unamortized value of the debt issuance costs and debt discount

 

 

(3,820)

 

 

(3,921)

 

Net carrying value

 

$

182,680

 

$

192,579

 

 

Aggregate contractual maturities for the Company’s long-term debt as of September 30, 2017 are as follows:

 

 

 

 

 

 

Fiscal Year

 

 

(in thousands)

 

2018

    

$

 —

 

2019

 

 

 —

 

2020

 

 

 —

 

2021

 

 

 —

 

2022

 

 

186,500

 

Total

 

$

186,500

 

 

Stock-Based Compensation (Tables)

The fair values of stock options granted during the thirteen and twenty-six weeks ended September 30, 2017 and September 24, 2016 were estimated on the grant dates using the following assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

    

 

 

 

 

September 30,

 

 

September 24,

 

September 30,

 

September 24,

 

 

    

 

 

2017

 

    

2016

  

2017

    

2016

 

Expected option term(1)

 

 

 

5.5

years  

 

 

 

 

N/A

 

 

 

 

 

 

5.5

years  

 

 

 

 

5.5

years

 

Expected volatility factor(2)

 

 

 

34.6

%  

 

 

 

 

N/A

 

 

 

34.0

%

-

34.6

%  

 

35.8

%

-

36.0

%

 

Risk-free interest rate(3)

 

 

 

1.8

%  

 

 

 

 

N/A

 

 

 

 

 

 

1.8

%  

 

 

 

 

1.4

%

 

Expected annual dividend yield

 

 

 

0

%

 

 

 

 

N/A

 

 

 

 

 

 

0

%

 

 

 

 

0

%

 


(1)

The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.

(2)

Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s competitors’ common stock over the most recent period equal to the expected option term of the Company’s awards.

(3)

The risk-free interest rate is determined using the rate on treasury securities with the same term.

 

The following table summarizes the stock award activity for the twenty-six weeks ended September 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

 

 

Grant Date

 

Average

 

 

 

 

 

 

 

 

Weighted

 

Remaining

 

Aggregate

 

 

 

Stock

 

Average

 

Contractual

 

Intrinsic

 

 

    

Options

    

Exercise Price

    

Life (in Years)

    

Value

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Outstanding at April 1, 2017

 

2,543,660

 

$

9.29

 

 

 

 

 

 

Granted

 

392,522

 

$

6.18

 

 

 

 

 

 

Exercised

 

(73,850)

 

$

4.92

 

 

 

$

267

 

Cancelled, forfeited or expired

 

(65,011)

 

$

9.95

 

 

 

 

 

 

Outstanding at September 30, 2017

 

2,797,321

 

$

8.96

 

5.7

 

$

5,230

 

Vested and expected to vest after September 30, 2017

 

2,797,321

 

$

8.96

 

5.7

 

$

5,230

 

Exercisable at September 30, 2017

 

1,487,391

 

$

8.10

 

5.0

 

$

3,256

 

 

A summary of the status of non-vested stock options as of September 30, 2017 including changes during the twenty-six weeks ended September 30, 2017 is presented below:

 

<

 

 

 

 

 

 

 

 

    

 

    

Weighted-

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

    

Shares

    

Fair Value

 

Nonvested at April 1, 2017

 

1,148,500

 

$

4.84

 

Granted

 

392,522

 

$

2.12

 

Vested

 

(170,766)

 

$

4.74

 

Nonvested shares forfeited