-----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, HwjKwV09MqoFCiTgH13O/pVhmg89Cu8V1SJJJAJ337Q1hazSkQrnsuRbi65/8nVV EBzXksqfkiUj64NZaOzewA== 0000051734-94-000009.txt : 19940910 0000051734-94-000009.hdr.sgml : 19940910 ACCESSION NUMBER: 0000051734-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940730 FILED AS OF DATE: 19940908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOYS R US INC CENTRAL INDEX KEY: 0000051734 STANDARD INDUSTRIAL CLASSIFICATION: 5945 IRS NUMBER: 135159250 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01117 FILM NUMBER: 94548404 BUSINESS ADDRESS: STREET 1: 461 FROM RD CITY: PARAMUS STATE: NJ ZIP: 07652 BUSINESS PHONE: 2012627800 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE STORES INC DATE OF NAME CHANGE: 19780525 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE DEPARTMENT STORES INC DATE OF NAME CHANGE: 19700702 10-Q 1 SECOND QUARTER 10-Q FILING UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 30, 1994 OR [ ] 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 1-1117 TOYS "R" US, INC. (Exact name of registrant as specified in its charter) Delaware 13-5159250 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 461 From Road, Paramus, New Jersey 07652 (Address of principal executive offices) (Zip Code) (201) 262-7800 (Registrant's telephone number, including area code) (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 Sections 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 requirement 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 August 22, 1994, 284,725,462 shares of common stock were outstanding. INDEX PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Earnings 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion - Results of Operations and Financial Condition 7 PART II - OTHER INFORMATION 8 SIGNATURES 9 Page 3 TOYS "R" US, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
July 30, July 31, January 29, 1994 1993 1994 ASSETS Current assets: Cash and cash equivalents $ 109,578 $ 146,818 $ 791,893 Accounts and other receivables 96,187 62,798 98,534 Merchandise inventories 2,411,919 2,142,103 1,777,569 Prepaid expenses and other 65,457 56,485 40,400 Total current assets 2,683,141 2,408,204 2,708,396 Property, equipment and other assets 3,746,293 3,087,022 3,441,213 $ 6,429,434 $ 5,495,226 $ 6,149,609 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 641,816 $ 287,712 $ 239,862 Accounts payable 1,323,177 1,208,186 1,156,411 Accrued expenses and other 363,732 303,845 471,782 Income taxes payable 14,009 2,471 206,996 Total current liabilities 2,342,734 1,802,214 2,075,051 Deferred income taxes 238,231 200,479 202,663 Long-term debt 755,136 687,893 723,613 Stockholders' equity: Common stock 29,794 29,794 29,794 Additional paid-in capital 448,089 473,408 454,061 Retained earnings 3,088,400 2,600,794 3,012,806 Foreign currency translation adjustments (20,290) (65,218) (56,021) Treasury shares, at cost (452,660) (234,138) (292,358) 3,093,333 2,804,640 3,148,282 $ 6,429,434 $ 5,495,226 $ 6,149,609 See notes to consolidated financial statements.
Page 4 TOYS "R" US, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands except per share information)
13 Weeks Ended 26 Weeks Ended July 30, July 31, July 30, July 31, 1994 1993 1994 1993 Net Sales $1,452,117 $1,317,012 $2,914,050 $2,603,491 Costs and expenses: Cost of sales 982,892 902,414 1,984,095 1,785,290 Selling, advertising, general & administrative 355,868 317,629 706,100 626,042 Depreciation and amortization 36,984 30,757 73,429 61,329 Interest expense - net 16,034 10,736 30,436 19,985 1,391,778 1,261,536 2,794,060 2,492,646 Earnings before taxes on income 60,339 55,476 119,990 110,845 Taxes on income 22,325 19,971 44,396 39,904 Net earnings $ 38,014 $ 35,505 $ 75,594 $ 70,941 Earnings per share $.13 $.12 $.26 $.24 Common and common equivalent shares 290,614 296,685 291,673 297,593 See notes to consolidated financial statements.
Page 5 TOYS "R" US, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
26 Weeks Ended July 30, July 31, 1994 1993 Cash Flows from operating activities: Net earnings $ 75,594 $ 70,941 Adjustments to reconcile net earnings to net cash used by operating activities: Depreciation and amortization 73,429 61,329 Deferred income taxes 9,851 9,953 Changes in operating assets and liabilities: Accounts and other receivables 2,347 6,587 Merchandise inventories (634,350) (643,432) Prepaid expenses and other operating assets (42,664) (19,031) Accounts payable, accrued expenses and taxes (134,271) 47,625 Total adjustments (725,658) (536,969) Net cash used by operating activities (650,064) (466,028) Cash flows from investing activities: Capital expenditures-net (259,004) (194,732) Other assets (18,675) (19,456) Net cash used by investing activities (277,679) (214,188) Cash flows from financing activities: Short-term borrowings, net 401,954 166,940 Long-term borrowings 11,218 900 Long-term debt repayments (553) (600) Exercise of stock options 5,688 8,238 Share repurchase program (171,962) (84,025) Net cash provided by financing activities 246,345 91,453 Effect of exchange rate changes on cash and cash equivalents (917) (28,140) Cash and cash equivalents: Decrease during period (682,315) (616,903) Beginning of period 791,893 763,721 End of period $ 109,578 $ 146,818 Supplemental disclosures of cash flow information: The Company considers all highly liquid investments purchased as part of its daily cash management activities to be cash equivalents. During the twenty-six weeks ended July 30, 1994 and July 31, 1993, the Company made income tax payments of $227,254 and $186,604 and interest payments (net of amounts capitalized) of $56,177 and $47,144, respectively. See notes to consolidated financial statements.
Page 6 TOYS "R" US, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Interim Reporting The interim financial statements are unaudited and are subject to year-end adjustments. However, in the opinion of management, all known adjustments (which consist only of normal recurring accruals) have been made to present fairly the consolidated operating results for the unaudited periods. Because of the seasonal nature of the Company's business, results for interim periods are not indicative of results to be expected for the fiscal year. 2. Earnings Per Share Earnings per share for the thirteen and twenty-six weeks ended July, 30, 1994 and July 31, 1993 are computed by dividing net earnings by the weighted average number of common shares outstanding, after reduction for treasury shares and assuming exercise of dilutive stock options computed by the treasury stock method using the average market price during the period. Page 7 MANAGEMENT'S DISCUSSION - RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Sales increased by $135,105,000 or 10.3% in the second quarter and $310,559,000 or 11.9% for the twenty-six weeks over the prior year's comparable periods due primarily to sales from 112 new toy stores and 11 children's clothing stores, offset by the closing of 20 children's clothing stores since the beginning of fiscal 1993. Comparable USA toy store sales increased by 2.2% for the second quarter and 4.3% for the twenty-six weeks. International toy store comparable sales decreased due to adverse local economic conditions. Kids "R" Us had comparable store sales increases. Cost of sales as a percentage of sales decreased .8% in the second quarter and decreased .5% for the twenty-six weeks versus the prior year's comparable periods due to a more favorable product mix and reduced markdowns associated with strong inventory controls. Selling, advertising, general and administrative expenses as a percentage of sales increased .4% in the second quarter and .2% in the twenty-six weeks versus the prior year's comparable periods as a result of continued international expansion and lower comparable international toy store sales. Net interest expense increased in the second quarter and in the twenty-six weeks compared to the prior years comparable periods, principally as a result of higher average short term borrowings and a decrease in interest income ($2,257,000 in 1994 as compared to $3,292,000 in 1993 for the quarter, and $6,908,000 in 1994 as compared to $10,115,000 in 1993 for the first half). Our effective tax rate increased from 36% in the first half of 1993 to 37% in the first half of 1994 due to a 1% increase in the U.S. federal corporate income tax rate. Since January 29, 1994, foreign currency exchange rates have experienced fluctuations, however, the impact on net earnings was not significant. Financial Condition Plans are underway for approximately 40 U.S.A. and 60 international toy stores including our first stores in Denmark, Sweden and Luxembourg and 6 Kids "R" Us children's clothing stores. The Company has closed 16 of the 20 Kids "R" Us stores that were anticipated to be closed this year, with no significant impact on the Company's financial condition. Seasonal cash requirements will continue to be met through operations, the issuance of short-term commercial paper, bank borrowings for certain foreign subsidiaries and the issuance of long-term debt, if advantageous. Page 8 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of the Company's Stockholders on June 8, 1994, all of management's nominees for director were elected. Also approved by the following votes was: (i) A proposal to amend the Company's Restated Certificate of Incorporation to authorize additional shares of Common Stock (230,685,480 shares in favor, 13 against, 832,021 shares abstaining and 4,304,000 broker non-votes); (ii) a proposal to approve the Toys "R" Us, Inc. 1994 Stock Option and Performance Incentive Plan (179,045,484 shares in favor, 29,038,100 shares against shares abstaining and 40,290,562 broker non-votes); and (iii) a proposal to approve the Toys "R" Us, Inc. Management Incentive Compensation Plan (240,552,430 shares in favor, 7,736,258 shares against such proposal, 1,215,443 shares abstaining and 0 broker non-votes). Management's nominees for director received the following votes:
Number of Shares Withheld Votes Robert A. Bernhard 248,599,446 905,385 Michael Goldstein 248,612,583 892,248 Milton S. Gould 248,524,632 980,199 Shirley Strum Kenny 248,604,856 899,975 Charles Lazarus 248,535,216 969,615 Reuben Mark 248,610,728 894,103 Howard W. Moore 248,612,624 892,207 Robert C. Nakasone 248,610,511 894,320 Norman M. Schneider 248,523,682 981,149 Harold M. Wit 248,609,605 895,226
Item 6. Exhibits and Reports on Form 8-K (a) Not applicable. (b) The Company was not required to file any reports on Form 8-K during the 13 weeks ended July 30, 1994. Page 9 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 by the undersigned thereunto duly authorized. Date: September 6, 1994 Toys "R" Us, Inc. (Registrant) s/Louis Lipschitz (Signature) Louis Lipschitz Senior Vice President - Finance and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----