-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, F83UDzfgkNLXs3Xmu+XCwn8gPR80cL6cyB7x+SbWsuEkDgncLbAtE6JdDir9ld1u jcnJQvSvEpdHn1RWRF7lrg== 0000014707-95-000010.txt : 19950613 0000014707-95-000010.hdr.sgml : 19950613 ACCESSION NUMBER: 0000014707-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950429 FILED AS OF DATE: 19950612 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN GROUP INC CENTRAL INDEX KEY: 0000014707 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 430197190 STATE OF INCORPORATION: NY FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02191 FILM NUMBER: 95546488 BUSINESS ADDRESS: STREET 1: 8400 MARYLAND AVE STREET 2: P O BOX 29 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148544000 MAIL ADDRESS: STREET 1: P O BOX 29 CITY: ST LOUIS STATE: MO ZIP: 63166 FORMER COMPANY: FORMER CONFORMED NAME: BROWN SHOE CO INC DATE OF NAME CHANGE: 19720327 10-Q 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________ FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 29, 1995 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ ____________ Commission file number 1-2191 ____________ BROWN GROUP, INC. (Exact name of registrant as specified in its charter) New York 43-0197190 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 8300 Maryland Avenue St. Louis, Missouri 63105 (Address of principal executive offices) (Zip Code) (314) 854-4000 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] As of May 27, 1995, 17,945,902 shares of the registrant's common stock were outstanding. 2 BROWN GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands)
(Unaudited) --------------------- April 29, April 30, January 28, 1995 1994 1995 --------- --------- ----------- ASSETS Current Assets Cash and Cash Equivalents $ 20,457 $ 21,264 $ 18,922 Receivables, net of allowances of $12,012 at April 29, 1995, $10,581 at April 30, 1994, and $11,664 at January 28, 1995 91,159 103,507 98,079 Inventories (net of adjustment to last-in, first-out cost of $37,566 at April 29, 1995, $44,335 at April 30, 1994, and $37,286 at January 28, 1995) 336,746 292,930 322,029 Net Current Assets of Discontinued Operations 94,689 Other Current Assets 54,753 66,878 39,930 --------- --------- --------- Total Current Assets 503,115 579,268 478,960 Property and Equipment 208,783 189,580 203,227 Less allowances for depreciation and amortization (114,436) (101,286) (110,323) --------- --------- --------- 94,347 88,294 92,904 Net Noncurrent Assets of Discontinued Operations 15,474 Other Assets 62,895 56,018 64,651 --------- --------- --------- $ 660,357 $ 739,054 $ 636,515 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes Payable $ 75,231 $ 145,166 $ 41,085 Accounts Payable 105,925 83,940 85,045 Accrued Expenses 87,051 102,825 92,231 Income Taxes 9,262 1,386 (642) Current Maturities of Long-Term Debt 52,799 3,112 2,063 --------- --------- --------- Total Current Liabilities 330,268 336,429 219,782 Long-Term Debt and Capitalized Lease Obligations 57,465 135,289 133,213 Other Liabilities 33,169 30,852 33,793 Shareholders' Equity Common Stock 67,261 66,426 67,388 Additional Capital 46,634 38,085 46,957 Cumulative Translation Adjustment (4,507) (4,402) (5,556) Unamortized Value of Restricted Stock (9,483) (6,409) (10,878) Retained Earnings 139,550 142,784 151,816 239,455 236,484 249,727 --------- --------- --------- $ 660,357 $ 739,054 $ 636,515 ========= ========= =========
See Notes to Condensed Consolidated Financial Statements. 3 BROWN GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Thousands, except per share)
Three Months Ended -------------------- April 29, April 30, 1995 1994 --------- --------- Net Sales $ 357,442 $ 369,488 Cost of Goods Sold 237,247 242,028 --------- --------- Gross Profit 120,195 127,460 --------- --------- Selling and Administrative Expenses 123,916 112,044 Interest Expense 3,916 4,279 Other (Income) Expense (608) (463) --------- --------- Earnings (Loss) from Continuing Operations Before Income Taxes (7,029) 11,600 Income Taxes (2,618) 4,266 --------- --------- Earnings (Loss) from Continuing Operations (4,411) 7,334 Earnings from Discontinued Operations, Net of Taxes -- 597 --------- --------- NET EARNINGS (LOSS) $ (4,411) $ 7,931 ========= ========= NET EARNINGS (LOSS) PER COMMON SHARE: Continuing Operations $ (.25) $ .42 Discontinued Operations -- .03 --------- --------- NET EARNINGS (LOSS) PER COMMON SHARE $ (.25) $ .45 ========= ========= Weighted Average Number of Outstanding Shares of Common Stock 17,608 17,451 DIVIDENDS PER COMMON SHARE $ .40 $ .40 ========= =========
See Notes to Condensed Consolidated Financial Statements. 4 BROWN GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Thousands)
Three Months Ended --------------------- April 29, April 30, 1995 1994 --------- --------- Net Cash Provided (Used) by Operating Activities of: Continuing operations $ 6,505 $ 13,477 Discontinued operations -- (1,495) --------- -------- Net Cash Provided (Used) by Operating Activities 6,505 11,982 Investing Activities: Capital expenditures (7,537) (7,606) Proceeds from sales of assets of discontinued operations -- 9,978 Other 1,120 383 --------- --------- Net Cash Provided (Used) by Investing Activities (6,417) 2,755 Financing Activities: Increase/(decrease) in short-term notes payable 9,146 (924) Principal payments of long-term debt (13) (4,635) Dividends paid (7,181) (7,070) Payments for purchase of treasury stock (824) Proceeds from issuance of common stock 319 2,264 --------- -------- Net Cash Provided (Used) by Financing Activities 1,447 (10,365) --------- -------- Increase (Decrease) in Cash and Cash Equivalents 1,535 4,372 Cash and Cash Equivalents at Beginning of Period 18,922 16,892 --------- -------- Cash and Cash Equivalents at End of Period $ 20,457 $ 21,264 ========= ========
See Notes to Condensed Consolidated Financial Statements. 5 BROWN GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation ------------------------------ The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and reflect all adjustments which management believes necessary (which include only normal recurring accruals and the effect on LIFO inventory valuation of estimated annual inflationary cost increases and year-end inventory levels) to present fairly the results of operations. These statements, however, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flow in conformity with generally accepted accounting principles. The Corporation's business is subject to seasonal influences, and interim results may not necessarily be indicative of results which may be expected for any other interim period or for the year as a whole. For further information refer to the consolidated financial statements and footnotes included in the Corporation's Annual Report and Form 10-K for the period ended January 28, 1995. Note B - Earnings Per Share --------------------------- Net earnings per share of Common Stock is computed by dividing net earnings by the weighted average number of shares outstanding. The dilutive effect of stock options is not significant and is therefore excluded from the calculation. Note C - Inventories -------------------- The components of inventory are as follows ($000):
April 29, April 30, January 28, 1995 1994 1995 --------- -------- ----------- Finished Goods $318,369 $269,953 $298,235 Work in Process 2,215 5,462 4,193 Raw Materials and Supplies 16,162 17,515 19,601 -------- -------- -------- $336,746 $292,930 $322,029 ======== ======== ========
6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ Results of Operations --------------------- Quarter ended April 29, 1995 compared to the Quarter ended April 30, 1994 ------------------------------------------------------------------------- Consolidated net sales for the first quarter ended April 29, 1995, were $357.4 million, a decrease of 3% from last year's first quarter. A loss from continuing operations of $4.4 million for the first quarter of 1995 compares to earnings of $7.3 million last year. The net loss of $4.4 million for the first quarter of 1995 compares to net earnings of $7.9 million last year. Included in net earnings in 1994 is aftertax income from discontinued operations of $.6 million. These results reflect poor spring retail conditions, including very slow sales in February and March, which severely affected the Corporation's retail operations and wholesale customers. There is evidence that cautious consumer spending patterns are likely to continue, margins will be under pressure, and the seasonally slow second quarter will be challenging. Sales from the footwear retailing operations increased 10% from the first quarter of 1994, but were down on a store-for-store basis. Famous Footwear's total sales increased 21% reflecting a same-store decrease of 3% and 161 more units in operation. Famous Footwear now operates 754 stores. The Canadian retailing operation's sales decreased slightly, posting a 1% decrease with a same-store decrease of 3% and six more units than the prior year. Naturalizer stores' sales decreased 14% from last year's first quarter, reflecting a same-store decrease of 10% and 42 fewer units in operation. Naturalizer now operates 324 stores. In the first quarter of fiscal 1994, the Connie and Regal stores had sales of $6.2 million; all were closed by the end of fiscal 1994. Sales from footwear wholesaling activities decreased 17% from the same period last year. Pagoda's sales decreased 4% and Brown Shoe's decreased 32% as weak spring retail conditions led to wholesale order cancellations and pushbacks. Gross profit as a percent of sales decreased to 33.6% from 34.5% for the same period last year. Decreasing margins at Brown Shoe, due to higher markdowns in 1995, were offset by increasing margins at Pagoda. A slight decrease in retail margins was due primarily to increased promotions by Famous Footwear to stimulate sales. Selling and administrative expenses as a percent of sales increased to 34.7% from 30.3% for the same period last year, reflecting lower than planned sales throughout the Corporation and higher fixed costs at Famous Footwear associated with investment in systems and distribution infrastructure to support store expansion. Other income increased to $.6 million compared to income of $.5 million in 1994 and consists primarily of royalty income. Restructuring ------------- The restructuring initiatives announced in January 1994, for which the Corporation established a $45.4 million reserve, are proceeding as planned. To date, charges of $30.5 million have been charged against the restructuring reserve. These charges consisted of $12.1 million of non-cash charges for asset write-offs and $18.4 million of cash charges related to lease buyouts, inventory liquidation costs, and severance and benefit costs. The amounts to be paid out during the remainder of 1995 relate to lease buyouts and severance and benefit costs. 7 Financial Condition ------------------- A summary of key financial data and ratios at the dates indicated is as follows: April 29, April 30, January 28, 1995 1994 1995 --------- --------- ----------- Working Capital (millions) $172.8 $242.8 $259.2 Current Ratio 1.5 1.7 2.2 Total Debt as a Percentage of Total Capitalization 43.7% 54.5% 41.4% Net Debt (Total Debt less Cash and Cash Equivalents) as a Percentage of Total Capitalization 40.8% 52.6% 38.7% Cash flow from operating activities of continuing operations for the first three months of fiscal 1995 was approximately $7.0 million less than in the first three months of 1994. The decrease was primarily the result of lower earnings, which were partially offset by lower inventories and accounts receivable at Brown Shoe and Pagoda. Financing activities in the first quarter of fiscal 1995 reflect an increase in notes payable which is due primarily to lower earnings and growth at Famous Footwear. In the first quarter of 1994, the Corporation was able to reduce total debt with proceeds from the sale of assets from the discontinued leased department business. The decrease in the ratio of total debt as a percentage of total capitalization at April 29, 1995, compared to the end of the first quarter in 1994, is due primarily to the Corporation paying down short-term debt in the third quarter of fiscal 1994 with additional cash flow generated from discontinued operations. The decrease in the current ratio is due primarily to approximately $75 million of long-term debt becoming current in the first quarter of 1995. The Corporation's financial condition and debt to capitalization ratios provide additional borrowing capacity, if needed. 8 PART II - OTHER INFORMATION Item 1 - Legal Proceedings -------------------------- There have been no material developments during the quarter ended April 29, 1995, in the legal proceedings described in the Corporation's Form 10-K for the period ended January 28, 1995. Item 4 - Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ At the Annual Meeting of Shareholders held on May 25, 1995, four proposals described in the Notice of Annual Meeting of Shareholders dated April 19, 1995, were voted upon. 1. The shareholders elected four directors, Mr. B. A. Bridgewater, Jr., Mrs. Julie C. Esrey, Mr. Richard A. Liddy, and Mr. William E. Maritz, for terms of three years each, and General Edward C. Meyer, Retired, for a term of one year. The voting for each director is as follows: Directors For Withheld --------- ---------- -------- B. A. Bridgewater, Jr. 15,834,333 262,705 Julie C. Esrey 15,888,739 208,299 Richard A. Liddy 15,872,023 225,015 William E. Maritz 15,882,589 214,449 General Edward C. Meyer, Retired 15,845,845 251,193 2. The proposal to ratify the appointment of Ernst & Young as the Corporation's independent auditors was approved by a vote of 16,001,959 in favor to 39,145 against, with 55,934 abstaining. 3. The proposal to declassify the Board of Directors for the purpose of director elections was rejected, and therefore failed, by a vote of 5,010,955 in favor to 9,135,361 against, with 161,553 abstaining and 1,789,169 broker non-votes. 4. The proposal to adopt and implement a policy of confidential voting at all meetings of the Corporation's shareholders was rejected, and therefore failed, by a vote of 6,694,976 in favor to 7,452,462 against, with 160,431 abstaining and 1,789,169 broker non-votes. Item 6 - Exhibits and Reports on Form 8-K ----------------------------------------- (a) Listing of Exhibits (3) (i) (a) Certificate of Incorporation of the Corporation as amended through February 16, 1984, incorporated herein by reference to Exhibit 3 to the Corporation's Report on Form 10-K for the fiscal year ended November 1, 1986. (i) (b) Amendment of Certificate of Incorporation of the Corporation filed February 20, 1987, incorporated herein by reference to Exhibit 3 to the Corporation's Report on Form 10-K for the fiscal year ended January 30, 1988. 9 (ii) Bylaws of the Corporation as amended through March 2, 1995, incorporated herein by reference to Exhibit 3(ii) to the Corporation's Report on Form 10-K for the fiscal year ended January 28, 1995. (11) Computation of Earnings Per Share (Page 10) (27) Financial Data Schedule (Page 11) (b) Reports on Form 8-K: There were no reports on Form 8-K for the quarter ended April 29, 1995. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN GROUP, INC. Date: June 12, 1995 /s/ Harry E. Rich ------------------------------- Executive Vice President and Chief Financial Officer and On Behalf of the Corporation as the Principal Financial Officer 10 EXHIBIT 11 PART II - OTHER INFORMATION COMPUTATION OF EARNINGS PER SHARE BROWN GROUP, INC. (Thousands, except per share)
Three Months Ended --------------------- April 29, April 30, 1995 1994 --------- --------- PRIMARY Weighted average shares outstanding 17,608 17,451 Net effect of dilutive stock options based on the treasury stock method using average market price 25 110 --------- --------- TOTAL 17,633 17,561 ========= ======== Earnings (loss) from continuing operations $ (4,411) $ 7,334 Discontinued operations -- 597 --------- -------- Net earnings (loss) $ (4,411) $ 7,931 ========= ======== Earnings (loss) per share from continuing operations $ (.25) $ .42 Discontinued operations -- .03 --------- -------- Net earnings (loss) per share (1) $ (.25) $ .45 ========= ======== FULLY DILUTED Weighted average shares outstanding 17,608 17,451 Net effect of dilutive stock options based on the treasury stock method using the period-end market price, if higher than the average market price 52 130 --------- -------- TOTAL 17,660 17,581 ========= ======== Earnings (loss) from continuing operations $ (4,411) $ 7,334 Discontinued operations -- 597 --------- -------- Net earnings (loss) $ (4,411) $ 7,931 ========= ======== Earnings (loss) per share from continuing operations $ (.25) $ .42 Discontinued operations -- .03 --------- -------- Net earnings (loss) per share (1) $ (.25) $ .45 ========= ========
(1) The dilutive effect of stock options was not included in weighted average shares outstanding for purposes of calculating earnings per share because dilution was less than 3% and not material. EX-27 2
5 3-MOS FEB-3-1996 APR-29-1995 20,457 0 103,171 (12,012) 336,746 503,115 208,783 (114,436) 660,357 330,268 57,465 67,261 0 0 172,194 660,357 357,442 357,442 237,247 361,163 (608) 1,423 3,916 (7,029) (2,618) (4,411) 0 0 0 (4,411) (.25) (.25)
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