-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NtXMf7kARja0ZbcRXb4SMgBDLKMiujKGcDKklUV5NDfPVWE2zw8sQnz1UuxvAMOY PHpw//2RQSki9Sz4wWs33A== 0000033780-96-000012.txt : 19961016 0000033780-96-000012.hdr.sgml : 19961016 ACCESSION NUMBER: 0000033780-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVANS INC CENTRAL INDEX KEY: 0000033780 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 361050870 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01500 FILM NUMBER: 96643270 BUSINESS ADDRESS: STREET 1: 36 S STATE ST CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3128552000 10-Q 1 EVANS, INC. 10-Q REPORT FOR QUARTER ENDED 08/31/96 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended August 31, 1996 Commission File Number 0-1500 EVANS, INC. (Exact name of registrant as specified in its charter) DELAWARE 36-1050870 (State or other jurisdiction of (IRS Employer Incorporation or organization) Identification Number) 36 South State Street, Chicago, Illinois 60603 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312-855-2000 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: as of October 11, 1996 4,918,301 shares of common stock, $.20 par value, were outstanding. EVANS, INC. AND SUBSIDIARIES INDEX Page No. Part I. Financial Information -------- Condensed Consolidated Balance Sheets - August 31, 1996, August 26, 1995 and March 2, 1996 2 Condensed Consolidated Statements of Operations - Thirteen and Twenty-six weeks ended August 31, 1996 and August 26, 1995 3 Condensed Consolidated Statements of Cash Flows - Twenty-six weeks ended August 31, 1996 and August 26, 1995 4 Notes to Condensed Consolidated Financial Statements 5 - 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 Part II. Other Information 10 Signatures 11 Index to Exhibits 12 PART I. FINANCIAL INFORMATION Evans, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
August 31, August 26, March 2, 1996 1995 1996 ------------ ------------ ------------ ASSETS - ------ Current assets: Cash and cash equivalents $764,000 $931,000 $1,378,000 Accounts receivable (net) 12,577,000 13,547,000 15,984,000 Merchandise inventories 17,445,000 16,946,000 14,761,000 Prepaid expenses and other assets 1,244,000 765,000 1,154,000 Deferred income taxes 1,583,000 ------------ ------------ ------------ Total current assets 33,613,000 32,189,000 33,277,000 ------------ ------------ ------------ Property and equipment 20,931,000 22,893,000 20,716,000 Accumulated depreciation and amortization (10,831,000) (12,416,000) (10,293,000) ------------ ------------ ------------ Net property and equipment 10,100,000 10,477,000 10,423,000 Other assets 3,353,000 2,870,000 3,469,000 ------------ ------------ ------------ $47,066,000 $45,536,000 $47,169,000 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Notes payable $11,707,000 $9,724,000 $9,219,000 Current portion of long-term debt 1,043,000 692,000 1,043,000 Accounts payable 7,361,000 8,050,000 7,769,000 Accrued liabilities 5,784,000 7,123,000 5,461,000 ------------ ------------ ------------ Total current liabilities 25,895,000 25,589,000 23,492,000 ------------ ------------ ------------ Long-term debt 1,569,000 2,612,000 1,888,000 ------------ ------------ ------------ Other liabilities 11,000 11,000 11,000 ------------ ------------ ------------ Shareholders' equity: Preferred stock, 3,000,000 shares authorized, none issued Common stock, 6,333,433 shares issued 1,267,000 1,267,000 1,267,000 Capital in excess of par value 15,660,000 15,660,000 15,660,000 Retained earnings 7,262,000 4,995,000 9,449,000 ------------ ------------ ------------ 24,189,000 21,922,000 26,376,000 ------------ ------------ ------------ Treasury stock (1,415,134 shares at cost) (4,598,000) (4,598,000) (4,598,000) ------------ ------------ ------------ Total shareholders' equity 19,591,000 17,324,000 21,778,000 ------------ ------------ ------------ $47,066,000 $45,536,000 $47,169,000 ============ ============ ============ See accompanying notes to condensed consolidated financial statements.
- 2 - Evans, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Thirteen weeks ended Twenty-six weeks ended -------------------------- -------------------------- Aug. 31, Aug. 26, Aug. 31, Aug. 26, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Net sales $6,754,000 $7,999,000 $15,593,000 $20,299,000 Service revenues 4,220,000 4,328,000 8,884,000 9,309,000 ------------ ------------ ------------ ------------ 10,974,000 12,327,000 24,477,000 29,608,000 ------------ ------------ ------------ ------------ Costs and expenses: Cost of goods and services sold, buying and occupancy costs 7,706,000 8,978,000 16,197,000 20,956,000 Selling and general expenses 5,239,000 5,396,000 11,169,000 12,021,000 Provision for doubtful accounts 86,000 102,000 199,000 250,000 Interest expense 354,000 324,000 687,000 604,000 Other income, net (5,000) -- (5,000) (3,000) ------------ ------------ ------------ ------------ 13,380,000 14,800,000 28,247,000 33,828,000 ------------ ------------ ------------ ------------ Loss before credit for income taxes (2,406,000) (2,473,000) (3,770,000) (4,220,000) Credit for income taxes 1,010,000 -- 1,583,000 -- ------------ ------------ ------------ ------------ Net loss ($1,396,000) ($2,473,000) ($2,187,000) ($4,220,000) ============ ============ ============ ============ Net loss per common share ($0.28) ($0.50) ($0.44) ($0.86) ------------ ------------ ------------ ------------ Cash dividends per common share -- -- -- -- Weighted average number of common shares outstanding 4,918,301 4,918,301 4,918,301 4,918,301 ============ ============ ============ ============ See accompanying notes to condensed consolidated financial statements.
- 3 - Evans, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Twenty-six weeks ended ------------------------------- Aug. 31, 1996 Aug. 26, 1995 ------------- ------------- Cash Flows from Operating Activities: Net loss ($2,187,000) ($4,220,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 681,000 691,000 Provision for doubtful accounts 199,000 250,000 Change in assets and liabilities: Accounts receivable 3,208,000 3,308,000 Merchandise inventories (2,684,000) (545,000) Prepaid expenses and other current assets (90,000) (253,000) Deferred income taxes (1,583,000) 0 Other assets 13,000 100,000 Accounts payable (408,000) (2,627,000) Accrued liabilities 323,000 193,000 Other liabilities 0 (5,000) ------------ ------------ Net cash used in operating activities (2,528,000) (3,108,000) Cash Flows from Investing Activities: Proceeds from the sale of property and equipment 5,000 10,000 Additions to property and equipment (260,000) (484,000) ------------ ------------ Net cash used in investing activities (255,000) (474,000) Cash Flows from Financing Activities: Proceeds from short-term borrowing 2,488,000 1,654,000 Principal payments on long-term debt (319,000) (41,000) ------------ ------------ Net cash provided by financing activities 2,169,000 1,613,000 ------------ ------------ Net decrease in cash and cash equivalents (614,000) (1,969,000) Cash and cash equivalents at beginning of period 1,378,000 2,900,000 ------------ ------------ Cash and cash equivalents at end of period $764,000 $931,000 ============ ============ Supplemental Disclosures of Cash Flow Information: - -------------------------------------------------- Cash paid during the period for: Interest $583,000 $532,000 Income taxes 75,000 15,000 See accompanying notes to condensed consolidated financial statements.
- 4 - EVANS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The financial information included herein was prepared in conformity with generally accepted accounting principles and such principles were applied on a basis consistent with those reflected in the 1996 Form 10-K Annual Report filed with the Securities and Exchange Commission. The accompanying financial data should be read in conjunction with the notes to consolidated financial statements contained in the 1996 Form 10-K Annual Report. The information furnished herein, other than the Condensed Consolidated Balance Sheet as of March 2, 1996, is unaudited and includes all adjustments and accruals consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The Condensed Consolidated Balance Sheet as of March 2, 1996 has been derived from, and does not include all the disclosures contained in the audited financial statements as of and for the year ended March 2, 1996. 2. Because of the seasonal nature of the Company's business, operating results for the first twenty-six weeks are not considered to be indicative of the results that may be expected for the full year. Historically, the Company realizes a major portion of its annual revenues and most of its earnings in the fourth quarter of its fiscal year. 3. Common share equivalents were not included in the computation of earnings per share for the thirteen and twenty-six weeks ended August 31, 1996 and August 26, 1995, because the periods resulted in net losses and the effect would be antidilutive. 4. Certain reclassifications have been made to the Condensed Consolidated Balance Sheets for August 26, 1995 and March 2, 1996 and the Condensed Consolidated Statement of Cash Flows for the twenty-six weeks ended August 26, 1995 to conform to the presentation for August 31, 1996. Such reclassifications did not effect the previously reported operating results. 5. On October 11, 1996, the Company amended its revolving credit agreement to reflect its current operating condition. - 5 - EVANS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued (Unaudited) 6. On September 27, 1996, the Company entered into a contract, subject to due diligence on behalf of the purchaser, to sell its property in Fort Worth, Texas for $350,000. The purchase agreement, as contemplated, is expected to close no later than December 13, 1996. Proceeds will be used to pay down long-term debt as required by the loan agreement. 7. Subsequent to the second quarter of fiscal 1997, the Company, pursuant to the Evans, Inc. 1994 Stock Option Program, granted 41,500 options to 62 key employees at the price of $2.25 being 100% of market value on the date of grant. - 6 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Cash and cash equivalents at August 31, 1996 were $764,000 as compared to $1,378,000 at March 2, 1996. The decrease was due to cash used in operating activities of $2,528,000 and cash used in investing activities of $255,000, partially offset by cash provided by financing activities of $2,169,000. The cash used in operating activities was due primarily to the net loss of $2,187,000, an increase in merchandise inventories of $2,684,000 due to the seasonal nature of the Company's business and a decrease in accounts payable of $408,000, partially offset by a decrease in accounts receivable of $3,208,000. The cash used in investing activities was largely the result of additions to property and equipment of $260,000. The cash provided by financing activities was due primarily to an increase in notes payable of $2,488,000, partially offset by principal payments on long-term debt of $319,000. Working capital at August 31, 1996 was $7,718,000 as compared to $9,785,000 at March 2, 1996. The revolving line of credit which expires May 31, 1998 is considered adequate to finance seasonal inventory requirements as well as commitments for capital expenditures during fiscal 1997. Results of Operations Total revenues for the second quarter ended August 31, 1996 decreased $1,353,000 (11.0%) as compared to the same period last year. Overall, fur merchandise sales were comparable with the prior year. Included in the second quarter were $335,000 in sales associated with a successful store closing event related to the termination of the Company's license agreement with Strawbridge & Clothier partially offset by a $261,000 (8.8%) decrease at comparable locations and an $81,000 decrease associated with locations closed subsequent to the second quarter of the prior year. Women's ready-to-wear sales decreased $1,238,000 (25.0%) due primarily to a decrease of $1,088,000 (22.6%) in sales at comparable locations and a decrease of $150,000 in sales associated with a Company owned location closed subsequent to the second quarter of the prior year. Service revenues decreased $108,000 (2.5%) due primarily to a decrease of $210,000 in sales associated with locations closed subsequent to the second quarter of the prior year partially offset by an increase of $102,000 (2.6%) in sales at comparable locations. - 7 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, continued Total revenues for the first six months decreased $5,131,000 (17.3%) as compared to the same period last year. Fur merchandise sales decreased $1,573,000 (19.1%) due primarily to a $1,150,000 (15.6%) decrease in sales at comparable locations and a $758,000 decrease in sales associated with locations closed during and subsequent to the first quarter of the prior year. These decreases were partially offset by $335,000 in sales associated with a successful store closing event as a result of the termination of the Company's license agreement with Strawbridge & Clothier. Women's ready-to-wear sales decreased $3,133,000 (26.0%) due primarily to a $2,467,000 (21.7%) decrease in sales at comparable locations and a $666,000 decrease in sales associated with two Company owned locations closed during and subsequent to the first quarter of the prior year. The decrease in women's ready-to-wear sales at comparable locations is indicative of the fiercely competitive retail atmosphere in women's apparel. Service revenues decreased $425,000 (4.6%) due primarily to a $688,000 decrease in sales associated with locations closed during and subsequent to the first quarter of the prior year, partially offset by an increase of $263,000 (3.1%) in sales at comparable locations. Cost of goods and services sold, buying and occupancy costs as a percentage of total revenues for the second quarter and first six months decreased (70.2% versus 72.8% and 66.2% versus 70.8%, respectively) in comparison with the prior year periods. Cost of goods and services sold as a percentage of total revenues for the second quarter and first six months decreased (49.4% versus 52.2% and 47.1% versus 53.5%, respectively) due primarily to the Company's continuing to achieve higher gross margins on merchandise sales. Buying costs as a percentage of total revenues for the second quarter and first six months were comparable with prior year levels. Occupancy costs as a percentage of total revenues for the second quarter were comparable with the same period last year. Occupancy costs as a percentage of total revenues for the first six months increased (15.4% versus 14.3%) due primarily to the impact of fixed rental costs as measured against the overall decrease in sales. Total selling and general expenses decreased $157,000 (2.9%) and $852,000 (7.1%) for the second quarter and first six months, respectively, as compared to the prior year periods. Payroll and related fringe benefits decreased $161,000 (4.1%) and $618,000 (7.4%) for the second quarter and first six months, respectively, due primarily to costs associated with locations closed during and subsequent to the first quarter of the prior year and staff reductions initiated subsequent to the second quarter of the prior year. Advertising expense decreased $58,000 (16.9%) and $292,000 (19.5%) for the second quarter and first six months, respectively. - 8 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations, continued Interest expense for the second quarter and first six months increased $30,000 (9.3%) and $83,000 (13.7%) respectively, due primarily to higher average short-term borrowings as compared to the prior year periods. The lower pre-tax losses for the second quarter and first six months ($2,406,000 versus $2,473,000 and $3,770,000 versus $4,220,000, respectively) were due largely to the increase in gross margin percentages and the decrease in selling and general expenses in comparison with the same periods last year. The income tax credits for the second quarter and first six months of the prior year were offset by increases in the Company's valuation allowance with respect to the future tax benefits of the net operating losses as a result of the uncertainty of their ultimate realization. - 9 - PART II - OTHER INFORMATION. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Part I. Exhibit 4.53 Amendment No. 6 to Loan and Security Agreement between Registrant and Transamerica Business Credit Corporation. Exhibit 11 Computation of earnings per share. (b) Reports on Form 8-K -- There were no reports on Form 8-K filed during the thirteen weeks ended August 31, 1996. Items other than those listed are omitted because they are not required. - 10 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized. EVANS, INC. DATE: October 11, 1996 PATRICK J. REGAN PATRICK J. REGAN President and Chief Executive Officer DATE: October 11, 1996 WILLIAM E. KOZIEL WILLIAM E. KOZIEL Vice President and Chief Financial Officer - 11 - EVANS, INC. AND SUBSIDIARIES Exhibit Page Nos. 4.53 13 - 14 11 15 - 12 - AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT AMENDMENT NO. 6, dated as of October 11, 1996, between TRANSAMERICA BUSINESS CREDIT CORPORATION ("Lender"), and EVANS, INC. ("Borrower"), and Borrower's wholly-owned Subsidiaries, KOSLOW'S, INC. ("Koslow") and EVANS - ROSENDORF OF MARYLAND, INC. ("Rosendorf") (Koslow and Rosendorf individually, a "Borrowing Subsidiary", and collectively, "Borrowing Subsidiaries"). Lender and Borrower and Borrowing Subsidiaries are parties to a Loan and Security Agreement dated as of May 31, 1995, as amended by Amendment No. 1 to Loan and Security Agreement dated as of October 3, 1995, by Amendment No. 2 to Loan and Security Agreement dated as of November 20, 1995, by Amendment No. 3 to Loan and Security Agreement dated as of January 5, 1996, by Amendment No. 4 to Loan and Security Agreement dated as of May 30, 1996, and by Amendment No. 5 to Loan and Security Agreement dated as of July 5, 1996 (the "Loan and Security Agreement"). Lender, Borrower and Borrowing Subsidiaries desire to amend the Loan and Security Agreement in certain respects and, accordingly, the parties hereto agree as follows: 1. Definitions. Except as otherwise provided herein, the terms defined in the Loan and Security Agreement are used herein as defined therein. 2. Amendment. Effective as of August 31, 1996, Section 7.3(E) of the Loan and Security Agreement is amended and restated as follows: "(E) Average Inventory Days (i) at the end of the second Fiscal Quarter of the 1997 Fiscal Year, of not more than 420, (ii) at the end of the third Fiscal Quarter of the 1997 Fiscal Year, of not more than 208, and (iii) at the end of each Fiscal Quarter, commencing with the fourth Fiscal Quarter of the 1997 Fiscal Year, not more than the number set opposite such Fiscal Quarter in the following schedule: Fiscal Quarter Average Inventory Days First 300 Second 375 Third 200 Fourth 125" 3. Term Note B. The maturity date of Term Note B is extended to the earlier of (a) the date on which Borrower sells its owned Real Property commonly described as 405 West Seventh Street, Fort Worth, Texas, or (b) December 31, 1996. 4. Representation and Warranty. Borrower and each Borrowing Subsidiary represents and warrants to Lender that the execution and delivery by Borrower and each Borrowing Subsidiary of this Amendment No. 6 are within Borrower's and each Borrowing Subsidiary's corporate power, have been duly authorized by all necessary or proper corporate action, - 13 - are not in contravention of any provision of Borrower's or either Borrowing Subsidiary's Articles or Certificate of Incorporation or By-Laws, will not violate any law or regulation, or any order or decree of any court or governmental instrumentality, will not conflict with or result in the breach or termination of, constitute a default under, or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower or either Borrowing Subsidiary is a party or by which Borrower or either Borrowing Subsidiary or any of its property is bound and do not require the consent or approval of any governmental body, agency, authority or any other person. 4. Miscellaneous. Except as herein provided, the Loan and Security Agreement shall remain unchanged and in full force and effect. This Amendment No. 6 may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. This Amendment No. 6 and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. IN WITNESS WHEREOF, this Amendment No. 6 has been duly executed as of the day and year specified at the beginning hereof. TRANSAMERICA BUSINESS CREDIT EVANS, INC. CORPORATION By: MATTHEW N. MCALPINE By: WILLIAM E. KOZIEL Name: MATTHEW N. MCALPINE Name: WILLIAM E. KOZIEL Title: Senior Account Executive Title: Vice President and Chief Financial Officer KOSLOW'S, INC. By: WILLIAM E. KOZIEL Name: WILLIAM E. KOZIEL Title: Vice President and Chief Financial Officer EVANS - ROSENDORF OF MARYLAND, INC. By: WILLIAM E. KOZIEL Name: WILLIAM E. KOZIEL Title: Vice President and Chief Financial Officer - 14 - EXHIBIT 11 EVANS, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
Thirteen weeks ended Twenty-six weeks ended -------------------------- -------------------------- Aug. 31, Aug. 26, Aug. 31, Aug. 26, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Primary: -------- Weighted average shares outstanding 4,918,301 4,918,301 4,918,301 4,918,301 Incremental shares for exercise of stock options 99,165 -- 42,487 -- ------------ ------------ ------------ ------------ Adjusted number of common shares outstanding 5,017,466 4,918,301 4,960,788 4,918,301 ============ ============ ============ ============ Net loss ($1,396,000) ($2,473,000) ($2,187,000) ($4,220,000) ============ ============ ============ ============ Net loss per share ($0.28) ($0.50) ($0.44) ($0.86) ======= ======= ======= ======= Fully diluted: -------------- Weighted average shares outstanding 4,918,301 4,918,301 4,918,301 4,918,301 Incremental shares for exercise of stock options 160,900 -- 160,900 -- ------------ ------------ ------------ ------------ Adjusted number of common shares outstanding 5,079,201 4,918,301 5,079,201 4,918,301 ============ ============ ============ ============ Net loss ($1,396,000) ($2,473,000) ($2,187,000) ($4,220,000) ============ ============ ============ ============ Net loss per share ($0.27) ($0.50) ($0.43) ($0.86) ======= ======= ======= ======= - 15 -
EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-Q
5 1 6-MOS Mar-01-1997 Mar-03-1996 Aug-31-1996 764,000 0 12,577,000 0 17,445,000 33,613,000 20,931,000 10,831,000 47,066,000 25,895,000 0 0 0 1,267,000 18,324,000 47,066,000 15,593,000 24,477,000 11,536,000 16,197,000 (5,000) 0 687,000 (3,770,000) 1,583,000 (2,187,000) 0 0 0 (2,187,000) .44 .44
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