A Special Dividend Type Situation

@BergenCapital reminded us yesterday of this; per SEC Rule 10b-17 – the last day any public company could declare a dividend that would be paid in 2012 would be Dec 14th – this Friday.

BEBE stores fits the criteria of a company that might pay a special dividend, if they are going to do it, it will be this week.  What’s the criteria?

1. Heavy insider ownership

2. Lots of cash

3. already pays a dividend

 Our working capital requirements vary widely throughout the year and generally peak during the first and second fiscal quarters. As of September 29, 2012, we had approximately $222.4 million of cash and equivalents and investments on hand of which $96.7 million were cash and equivalents, approximately $56.9 million were invested in government treasury bills, approximately $27.5 million were invested in certificates of deposit and approximately $41.4 million, net of impairment charges of $6.7 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 for at least the next twelve months. 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 September 29, 2012, there were no cash borrowings outstanding under the line of credit, and letters of credit outstanding totaled $0.5 million of trade letters of credit as well as a $3.0 million stand-by letter of credit. This credit facility requires us to comply with certain financial covenants, including minimum tangible net worth, unencumbered liquid assets and profitability requirements, and certain restrictions on making loans and investments. As of September 29, 2012, we were in compliance with all covenants.

 


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