-----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, GBvlUh7xuTESRmtnVCIaLaa/zgjKO31jWx/pyEBgrRmSFp25X7Yl526S4Ig5TosF dncdCw7aX+KpGj82oys0bw== 0000950142-97-000448.txt : 19970610 0000950142-97-000448.hdr.sgml : 19970610 ACCESSION NUMBER: 0000950142-97-000448 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970609 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOEHMANNS INC CENTRAL INDEX KEY: 0000060064 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 222341356 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28410 FILM NUMBER: 97620806 BUSINESS ADDRESS: STREET 1: 2500 HALSEY STREET CITY: BRONX STATE: NY ZIP: 10461 BUSINESS PHONE: 0000000000 MAIL ADDRESS: STREET 1: 2500 HALSEY STREET STREET 2: 2500 HALSEY STREET CITY: BRONX STATE: NY ZIP: 10401 10-Q 1 FORM 10-Q 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 Quarter Ended May 3, 1997 Commission File Number: 0-28410 LOEHMANN'S, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-2341356 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2500 Halsey Street Bronx, New York 10461 - ------------------------------- ------------------- Registrant's telephone number, including area code (718) 409-2000 ------------------- Indicate by a 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 as 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 ------- ------- Number of shares outstanding of Registrant's Common Stock and Class B Convertible Common Stock, as of May 27, 1997; 8,853,608 and 48,431, respectively. Loehmann's, Inc. Quarter ended May 3, 1997 CONTENTS PART I--FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets--May 3, 1997 and February 1, 1997............... 1 Consolidated Statements of Operations--Quarter ended May 3, 1997 and May 4, 1996.............................................. 2 Consolidated Statements of Cash Flows--Quarter ended May 3, 1997 and May 4, 1996.............................................. 3 Notes to Consolidated Financial Statements.................................. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 6 PART II--OTHER INFORMATION Item 5. Other Information................................................... 8 Item 6. Exhibits and Reports on Form 8-K.................................... 8 Signatures.................................................................. 9 Loehmann's, Inc. Consolidated Balance Sheets (Unaudited)
MAY 3, FEBRUARY 1, 1997 1997 --------- --------- (IN THOUSANDS, EXCEPT SHARE AMOUNTS) ASSETS Current assets: Cash and cash equivalents $ 2,498 $ 2,292 Accounts receivable and other assets 6,150 4,400 Merchandise inventory 72,545 58,304 --------- --------- Total current assets 81,193 64,996 Property, equipment and leaseholds, net 66,473 66,515 Deferred debt issuance costs and other assets, net 3,623 3,870 Purchase price in excess of assets acquired, net 40,495 40,819 ========= ========= Total assets $ 191,784 $ 176,200 ========= ========= LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 30,425 $ 19,634 Accrued expenses 18,139 20,484 Accrued interest 5,332 2,530 Current portion of long-term debt 70 70 --------- --------- Total current liabilities 53,966 42,718 Long-term debt: Revolving Line of Credit 14,143 10,188 11-7/8% senior secured notes 95,000 95,000 Revenue bonds and notes, less current portion 2,646 2,662 --------- --------- Total long-term debt 111,789 107,850 Other noncurrent liabilities 389 389 Common stockholders' equity: Common stock, 25,000,000 shares authorized; 8,779,322 and 8,756,739 shares issued and outstanding at May 3, 1997 and February 1, 1997, respectively 87 87 Class B convertible common stock, 469,237 shares authorized; 122,726 and 142,277 shares issued and outstanding at May 3, 1997 and February 1, 1997, respectively 615 713 Additional paid-in capital 81,110 80,995 Accumulated deficit (56,172) (56,552) --------- --------- Total common stockholders' equity 25,640 25,243 ========= ========= Total liabilities and common stockholders' equity $ 191,784 $ 176,200 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 1 Loehmann's, Inc. Consolidated Statements of Operations (Unaudited) QUARTER ENDED MAY 3, MAY 4, 1997 1996 -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net sales $112,595 $104,120 Cost of sales 77,489 70,386 -------- -------- Gross profit 35,106 33,734 Sales, general and administrative expenses 28,868 23,885 Depreciation and amortization 2,864 3,147 -------- -------- Operating income 3,374 6,702 Interest expense, net 2,972 4,231 -------- -------- Income before income taxes 402 2,471 Provision for income taxes 22 50 -------- -------- Net income 380 2,421 Stock dividends on and accretion of preferred stock -- 586 -------- -------- Net income applicable to common stock $ 380 $ 1,835 ======== ======== Net income per share applicable to common stock $ 0.04 $ 0.31 ======== ======== Weighted average number of common shares outstanding 9,418 5,914 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 2 Loehmann's, Inc. Consolidated Statements of Cash Flows (Unaudited)
QUARTER ENDED MAY 3, 1997 MAY 4, 1996 ------------ ------------ (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 380 $ 2,421 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,864 3,147 Accretion of 10-1/2% senior secured notes -- 392 Changes in current assets and liabilities: Accounts receivable, net (1,707) (1,062) Merchandise inventory (14,241) (12,684) Prepaid expenses and other (43) (137) Accounts payable 10,791 13,831 Accrued expenses (2,345) 634 Accrued interest 2,802 (4,047) ------------ ------------ Net changes in current assets and liabilities: (4,743) (3,465) Net change in other assets and liabilities 93 (34) ------------ ------------ Net adjustments (1,786) 40 ------------ ------------ Net cash (used in) provided by operating activities (1,406) 2,461 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (2,338) (1,336) ------------ ------------ Net cash used in investing activities (2,338) (1,336) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under credit facility, net 3,955 -- Purchase of 10-1/2% senior secured notes -- (1,568) Sale of common stock 17 33 Other financing activities, net (22) (16) ------------ ------------ Net cash provided by (used in) financing activities 3,950 (1,551) ------------ ------------ Net increase (decrease) in cash and cash equivalents 206 (426) Cash and cash equivalents at beginning of period 2,292 12,512 ------------ ------------ Cash and cash equivalents at end of period $ 2,498 $ 12,086 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash interest paid during period $ 292 $ 8,158 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3 Loehmann's, Inc. Notes to Consolidated Financial Statements (Unaudited) May 3, 1997 1. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Loehmann's, Inc. and its wholly-owned subsidiaries, collectively referred to hereafter as the Company. All significant intercompany items have been eliminated in consolidation. The balance sheet at May 3, 1997 and the statements of operations and cash flows for the quarters ended May 3, 1997 and May 4, 1996 include, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Certain information and footnote disclosures normally included in financial statements required by generally accepted accounting principles have been omitted. Operating results for the quarter ended May 3, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ended January 31, 1998. It is suggested that these unaudited consolidated financial statements be read in conjunction with the financial statements and notes for the fiscal year ended February 1, 1997 included in the Company's Annual Report on Form 10-K for such year. Net income per share amounts were determined by dividing net income (after deducting dividends on and accretion of preferred stock) by the weighted average number of common shares and common share equivalents outstanding during each period. 2. INCOME TAXES The provision for income taxes primarily represents alternative minimum tax and state and local taxes for states that do not allow net operating loss carryforwards. 3. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles for interim financial information requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual amounts could differ. 4 Loehmann's, Inc. Notes to Consolidated Financial Statements (Unaudited) May 3, 1997 4. EARNINGS PER SHARE Effective December 31, 1997, the Company will adopt Statement of Financial Accounting Standard No. 128, EARNINGS PER SHARE, ("FAS 128") which will simplify the calculation and presentation of earnings per share data and require the restatement of earnings per share data for all periods presented. Earlier adoption is not permitted. Upon the adoption of FAS 128 at the end of 1997, reported primary earnings per share of $0.04 and $0.31 for the quarters ended May 3, 1997 and May 4 1996, respectively, will be restated to reflect basic earnings per common share of $0.04 and $0.35 and diluted income per common share $0.04 and $0.31 per common share and common share equivalents. 5. EQUITY AND DEBT OFFERING On May 10, 1996, the Company sold 3,572,000 shares of Common Stock and $100.0 million principal amount of 11-7/8% Senior Notes due 2003 (the "Senior Notes"). The net proceeds received from such offerings (the "Offerings") were used (i) to redeem in full $52.5 million face amount of the Company's 10-1/2% Senior Secured Notes due 1997, at a redemption price of 103.5% of the face amount of such notes, plus accrued and unpaid interest, (ii) to redeem in full $77.6 million face amount of the Company's 13-3/4% Senior Subordinated Notes due 1999 at a redemption price of 101.0% of the face amount of such notes, plus accrued and unpaid interest and (iii) to redeem all issued and outstanding shares of the Company's Series A Preferred Stock at its liquidation price of $0.56 per share for a total of $20.9 million (collectively, the "Existing Obligations"). As a result of these transactions, the Company incurred approximately $4.7 million in extraordinary losses on the early extinguishment of debt and $2.0 million in losses from the write-off of related deferred financing costs associated with such indebtedness, and a $5.1 million charge to accumulated deficit from the accelerated accretion of the Series A Preferred Stock to its liquidation price of $0.56 per share. 5 Loehmann's, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULT OF OPERATIONS--COMPARISON OF THE QUARTERS ENDED MAY 3, 1997 AND MAY 4, 1996 Net sales for the thirteen week period ended May 3, 1997, were $112.6 million as compared to $104.1 million for the comparable period in the prior year, an increase of approximately $8.5 million or 8.1%. Comparable store sales (sales at stores that were in operation for both periods) decreased by 6.2%. The increase in net sales was due to the sales contribution from eight new stores opened during the preceding 52 weeks, partially offset by the closure of four stores during the same period and the decrease in comparable stores results. Gross profit for the thirteen week period ended May 3, 1997, was $35.1 as compared to $33.7 million for the same period in the prior year, an increase of $1.4 million or 4.1%. Gross margin percent decreased to 31.2% from 32.4% in the prior year period. The decline in margin percent was a result of an increase in markdowns as a percentage of sales. Selling, general and administrative expenses for the thirteen week period ended May 3, 1997, were $28.9 million as compared to $23.9 million during the same period in the prior year, an increase of $5.0 million, or 20.9%. As a percentage of net sales, selling, general and administrative expenses were 25.6% versus 22.9% during the same period in the prior year. The increase in selling, general and administrative expenses was due to additional payroll, occupancy, advertising and other costs related to the opening of eight new stores since the first quarter of 1996. Depreciation and amortization expense for the thirteen week period ended May 3, 1997, was $2.9 million as compared to $3.1 million for the same period in the prior year, a decrease of approximately $0.2 million, or 9.0%. This decrease was primarily due to the reduction in amortization expense associated with the refinancing of debt pursuant to the Debt Offering. Net interest expense for the thirteen week period ended May 3, 1997 was $3.0 million as compared to $4.2 million for the same period in the prior year, a decrease of approximately $1.2 million or 29.8%. The reduction in net interest expense primarily resulted from the Company's reduction of approximately $35.0 million of senior notes and a reduction of the average interest rate paid on the long term debt by approximately 60 basis points, partially offset by interest expense incurred on borrowings under the revolving line of credit. In May 1996, the Company redeemed its 10-1/2% Senior Secured Notes and 13-3/4% Senior Subordinated Notes totaling $130.0 million face value and issued $100.0 million face value of 11-7/8% Senior Notes, of which, $5.0 million was repurchased during fiscal 1996. 6 Loehmann's, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES Net cash used as a result of operating activities totaled $1.4 million during the quarter ended May 3, 1997. Cash of $3.2 million was provided from operations after adding back non-cash charges, offset by the use of net working capital of approximately $4.7 million primarily related to seasonal needs, the three new stores opened during the quarter and two stores opened in May, 1997. Net cash used in investing activities totaled $2.3 million during the quarter ended May 3, 1997. These expenditures were principally related to capital expenditures for leasehold improvements and fixtures primarily associated with the opening of three new stores during the first quarter of 1997. Net cash provided by financing activities was approximately $4.0 million during the quarter ended May 3, 1997, and reflects the proceeds from borrowings under the Company's revolving line of credit. The Company believes that cash generated from operations and funds available under its revolving credit agreement will be sufficient to satisfy its cash requirements through fiscal 1997. 7 Loehmann's, Inc. PART II--OTHER INFORMATION ITEM 5. OTHER INFORMATION Certain statements in this quarterly report on Form 10-Q under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report and in future filings by the Company with the Securities and Exchange Commission, constitute "forward looking statements" with the meaning of the Reform Act. Such forward looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, the following: general economic and business conditions; competition; success of operating initiatives; development and operating costs; advertising and promotional efforts; brand awareness; the existence or adherence to development schedules; the existence or absence of adverse publicity; availability, locations and terms of sites for store development; changes in business strategy or development plans; quality of management; availability, terms and deployment of capital; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs; changes in, or the failure to comply with, government regulations; construction costs and other factors referenced in this quarterly report. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule (for SEC use only) (b) No reports on Form 8-K were filed during the quarter ended May 3, 1997. 8 Loehmann's, Inc. Signature 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. Dated: June 6, 1997 Loehmann's, Inc. By /S/ Philip Kaplan ----------------------------------------------- Philip Kaplan President, Chief Operating Officer and Director By /S/ Robert Glass ----------------------------------------------- Robert Glass Senior Vice President, Chief Financial Officer, and Assistant Secretary 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 3-MOS JAN-31-1998 FEB-2-1997 MAY-3-1997 2,498 0 6,150 0 72,545 81,193 134,158 (67,685) 191,784 53,966 95,000 0 0 87 25,553 191,784 112,595 112,595 77,489 0 0 28,868 2,972 402 22 402 0 0 0 380 0.04 0.04
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