-----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, ffOFlKJ0ADjh6vCujQw5aVtCdWlHVZ8qbS/FuB1QHxX0MQXwmwZ9siKeHvYTJiMh UduvOpXtKNI8ftsz8cbwdg== 0000916641-95-000278.txt : 19950907 0000916641-95-000278.hdr.sgml : 19950907 ACCESSION NUMBER: 0000916641-95-000278 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950729 FILED AS OF DATE: 19950906 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: S&K FAMOUS BRANDS INC CENTRAL INDEX KEY: 0000723924 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 540845694 STATE OF INCORPORATION: VA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11682 FILM NUMBER: 95570466 BUSINESS ADDRESS: STREET 1: 11100 W BROAD ST STREET 2: PO BOX 31800 CITY: RICHMOND STATE: VA ZIP: 23294-1800 BUSINESS PHONE: 8043462500 MAIL ADDRESS: STREET 1: P O BOX 31800 CITY: RICHMOND STATE: VA ZIP: 23294-1800 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 29, 1995 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 No. 0-11682 S & K FAMOUS BRANDS, INC. ........................................ (Exact name of registrant as specified in its charter) Virginia 54-0845694 .................... .................... (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11100 West Broad Street, P. O. Box 31800, Richmond, Virginia 23294-1800 ........................................................................... (Address of principal executive offices) Registrant's telephone number, including area code: (804) 346-2500 .................. 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 _____ Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of July 29, 1995. 5,058,434 shares of Common Stock, $0.50 par value PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS S & K FAMOUS BRANDS, INC. Statements of Income (unaudited)
Three Months Ended Six Months Ended July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994 As restated As restated Net income $27,267,166 $24,821,547 $56,013,245 $49,509,980 Cost of sales 15,121,826 14,153,702 30,976,448 28,139,764 Gross profit 12,145,340 10,667,845 25,036,797 21,370,216 Other costs and expenses: Selling, general and administrative 10,732,685 9,744,506 21,836,101 19,140,522 Interest 200,158 166,208 403,143 303,225 Depreciation and amortization 536,545 499,075 1,069,914 972,076 Other, net (27,227) (113,813) (96,806) (128,485) Income before income taxes 703,179 371,869 1,824,445 1,082,878 267,200 138,800 693,300 411,300 Provision for income taxes Net income $435,979 $233,069 $1,131,145 $671,578 Net income per common share $0.09 $0.05 $0.23 $0.14 Weighted average common shares 4,999,567 4,838,445 4,920,011 4,831,841
See notes to financial statements. S & K FAMOUS BRANDS, INC. Balance Sheets
As restated July 29, 1995 July 30, 1994 January 28, 1995 (unaudited) (unaudited) Assets Current assets: Cash . . . . . . . . . . . . . $ 189,795 $ 214,003 $ 584,887 Accounts receivable . . . . . . 395,718 461,897 320,199 Merchandise inventories . . . . 40,470,045 40,690,558 40,397,436 Other current assets . . . . . 2,196,701 2,226,107 2,263,805 Total current assets . . . . 43,252,259 43,592,565 43,566,327 Property and equipment, at cost: Land and corporate facility . . 5,125,041 5,121,909 5,130,826 Furniture, fixtures and equipment 10,547,041 9,976,654 10,415,365 Leasehold improvements . . . . 10,317,364 9,437,996 10,227,203 25,989,446 24,536,559 25,773,394 Less: Accumulated depreciation and amortization . . . . . . . 12,041,811 10,126,863 10,974,249 13,947,635 14,409,696 14,799,145 Other assets . . . . . . . . . . 2,170,714 1,759,453 1,975,313 $ 59,370,608 $ 59,761,714 $ 60,340,785 Liabilities and Shareholders' Equity Current liabilities: $ 180,000 $ 180,000 $ 180,000 Current maturities of long-term debt Accounts payable . . . . . . . 3,925,983 5,729,363 5,632,133 Accrued expenses: Compensation-related items . 853,276 786,515 980,365 Current and deferred income taxes 317,062 415,377 1,120,887 Other current liabilities . . 1,093,513 1,004,962 1,009,159 Total current liabilities . 6,369,834 8,116,217 8,922,544 Industrial Development Revenue Bond 2,430,000 2,610,000 2,520,000 Long-term debt . . . . . . . . . 10,707,887 12,154,658 10,263,498 Deferred income taxes . . . . . . 1,118,270 1,000,329 1,075,945 Commitments Shareholders' equity: Preferred stock, $1 par value; authorized shares, 500,000; issued and outstanding shares, none . . Common stock, $.50 par value, authorized shares, 10,000,000; issued and 2,529,217 2,419,223 2,419,223 outstanding shares, 5,058,434, 4,838,445 and 4,838,445, respectively Capital in excess of par value 7,795,215 6,365,287 6,365,287 Notes receivable--Stock Purchase Loan Plan (1,485,248) 0 0 Retained earnings . . . . . . . 29,905,433 27,096,000 28,774,288 38,744,617 35,880,510 37,558,798 $ 59,370,608 $ 59,761,714 $ 60,340,785
See notes to financial statements. S & K FAMOUS BRANDS, INC. Statements of Cash Flows Increase (Decrease) in Cash (unaudited)
Six Months Ended July 29, 1995 July 30, 1994 As restated Cash flows from operating activities: Net income . . . . . . . . . . . $ 1,131,145 $ 671,578 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization . . 1,266,269 1,128,418 Loss on property dispositions, (net) 45,548 52,762 Other . . . . . . . . . . . . . . 61,389 56,841 Changes in assets and liabilities: Accounts receivable . . . . . (75,519) (17,597) Inventories . . . . . . . . . (72,609) (2,095,747) Other current assets . . . . . 67,104 (558,474) Other assets . . . . . . . . . (195,401) (219,973) Accounts payable and accrued expenses (1,694,211) 1,668,866 Income taxes and deferred income taxes (761,500) (757,881) Net cash used for operating activities (227,785) (71,207) Cash flows from investing activities: Capital expenditures . . . . . . (464,357) (1,762,155) Proceeds from property dispositions 4,050 2,000 Net cash used for investing activities (460,307) (1,760,155) Cash flows from financing activities: 383,000 1,635,001 Net borrowings under revolving bank lines of credit 0 95,438 Proceeds from exercise of stock options Reduction of long-term debt . . . (90,000) (90,000) Net cash provided by financing activities 293,000 1,640,439 Net decrease in cash . . . . . . . . (395,092) (190,923) Cash at beginning of period . . . . . 584,887 404,926 Cash at end of period . . . . . . . . $ 189,795 $ 214,003 Supplemental cash flow information: Cash paid during the period for: Interest . . . . . . . . . . . . $ 401,700 $ 285,300 Income taxes . . . . . . . . . . 1,458,100 1,171,600
See notes to financial statements. S & K FAMOUS BRANDS, INC. Notes to Financial Statements A. Accounting Policies The accompanying unaudited interim financial statements have been prepared by the Company in accordance with the regulations of the Securities and Exchange Commission in regard to quarterly reporting. In the opinion of the Company, the statements include all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair representation of the financial position and results of operations for interim periods. B. Interim Results of Operations The Company's business is highly seasonal, with peak sales periods occurring during its fourth fiscal quarter which includes the Christmas season. The net earnings of any interim quarter are seasonally disproportionate to net sales since administrative and certain operating expenses remain relatively constant during the year. Consequently, interim results should not be considered necessarily indicative of the results for the entire fiscal year. C. Accounting Change During the first quarter of fiscal 1996, the Company changed its method of determining the cost of the majority of its inventories to the average cost method. The Company had previously determined the cost of the majority of its inventories using the last-in, first-out (LIFO) retail inventory method. Under the retail LIFO inventory method, the Company had experienced no significant inflation in retail prices in recent years. At the same time, the Company had experienced cost reductions for certain goods as a result of volume and inventory sourcing efficiencies. Using the average cost method, the Company will track inventory costs for approximately 130 inventory categories which are used to classify the Company's inventory. Management believes that reporting inventories using the average cost method will result in better matching of revenues and costs and reporting on a basis more consistent with other companies in its industry. The change in the method of valuing inventories has been applied retroactively and the effect on net income per share as previously reported is as follows: Decrease In Fiscal 1995 Quarter Ended (unaudited) April July October January Net income . . . $43,530 $43,709 $47,865 $63,036 Net income per share $.01 $.01 $.01 $.01 Decrease In Years Ended January 1995 1994 Net income . . . $198,140 $404,301 Net income per share $.04 $.09 The balances of retained earnings for fiscal 1995 and 1994 have been adjusted for the effect (net of income taxes) of applying retroactively the new method of accounting. D. Expansion During the second quarter, the Company opened one new 17,700 square foot Menswear Mega Center in the Washington, D.C., market (New Carrollton, Maryland) on June 22, 1995. The Company closed a 3,880 square foot store in Moline, Illinois, and a 3,715 square foot store in Davenport, Iowa, in late July since both stores had not met the Company's sales and earnings expectations. E. Stock Purchase Loan Plan On May 25, 1995, the shareholders approved the Company's Stock Purchase Loan Plan. Under this Plan, the Company issued 214,275 shares of stock to seventeen Company officers and has loans with these officers approximating $1.5 million. Item 2. MANAGEMENT'S DISCUSSION AND FINANCIAL REVIEW Three Months and Six Months Ended July 29, 1995, Compared to Three Months and Six Months Ended July 30, 1994 RESULTS OF OPERATIONS The following table sets forth certain items in the Statements of Income as a percentage of net sales for the three months and six months ended July 29, 1995 and July 30, 1994. Percentage of Net Sales Three Months Ended Six Months Ended 7/29/95 7/30/94 7/29/95 7/30/94 Net sales . . . . . . . . . . 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales . . . . . . . 55.4 57.0 55.3 56.8 Gross profit . . . . . . . . 44.6 43.0 44.7 43.2 Other costs and expenses: Selling, general and administrative . . . . . 39.4 39.3 39.0 38.7 Interest . . . . . . . . .7 .7 .7 .6 Depreciation and amortization 2.0 2.0 1.9 2.0 Other, net . . . . . . . (.1) (.5) (.1) (.3) Income before incomes taxes 2.6 1.5 3.2 2.2 Provision for income taxes 1.0 .6 1.2 .8 Net income . . . . . . . . 1.6 % .9 % 2.0 % 1.4 % Net sales in the second quarter increased by 9.9%, or $2.4 million, over the same period last year, and reflects the net addition of 11 new stores since July 30, 1994. Comparable store sales were up 3%. For the six-month period, net sales increased by 13.1% or $6.5 million over the same period last year with comparable stores sales up 6%. These sales increases were attributable to strong performance in suits and to an aggressive marketing campaign. During the quarter ended July 29, 1995, the Company opened one new Menswear Mega Center in late June and closed two S&K stores in late July. There were 171 stores in operation as of July 29, 1995, compared to 160 stores at July 30, 1994. Cost of sales in the second quarter of fiscal 1996 was 55.4% of net sales compared to 57.0% of net sales for the same period last year. For the six-month period, cost of sales was 55.3% of net sales compared to 56.8% last year. These cost reductions were the result of reduced markdowns associated with the clearance of seasonal merchandise and improved initial markup on new inventory purchases. Selling, general and administrative expenses in the second quarter of fiscal 1996 were 39.4% of net sales compared to 39.3% of net sales for the second quarter of fiscal 1995. For the six-month period, selling, general and administrative expenses were 39.0% of net sales compared to 38.7% of net sales last year. These increases were primarily attributable to higher planned advertising costs initiated to increase market share, offset by, to a lesser degree, the leveraging of fixed overhead on higher sales. Interest expense was .7% of net sales in the second quarter of both fiscal 1996 and 1995. For the six-month period, interest expense was .7% of net sales compared to .6% of net sales last year. Although average borrowing levels for the periods decreased 8% from the same periods last year, increases in interest rates offset the improvement. Other, net in the second quarter of fiscal 1996 consisted of other income of .1% of net sales compared to .5% of net sales for the same period last year. On a year to date basis, other income was .1% of sales compared to .3% last year. These decreases are primarily attributable to an insured loss last year in which claim proceeds exceeded the net book value of the Company's assets. LIQUIDITY AND CAPITAL RESOURCES The Company has funded its operating activities, including capital expenditures for the opening of new stores, from internally generated funds and from bank borrowings. Through the first six months of fiscal 1996 the Company opened two new stores and remodeled two others. By Thanksgiving 1995, the Company plans to open a number of new stores and remodel several others. The Company believes that its sources of liquidity and capital resources will continue to be sufficient to fund its operations. Operating activities used net cash of approximately $.2 million and $.1 million during the first six months of fiscal 1996 and 1995, respectively. Excluding the effects of changes in working capital, net cash provided by operating activities in the first six months was $2.5 million this year compared to $1.9 million last year. Net cash used in investing activities in fiscal 1996 and fiscal 1995 was for the purpose of store expansion and remodelings; additionally fiscal 1995 included enhancements to the Distribution Center. Capital expenditures for the first six months of fiscal 1996 and 1995 approximated $.5 million and $1.8 million, respectively, of which in fiscal 1995 approximately $.4 million related to the Distribution Center. In the first six months of fiscal 1996, the Company opened two new stores (including one Menswear Mega Center) and remodeled two other stores. For the same period last year the Company opened seven new stores, relocated one, and remodeled one. Financing activities provided net cash of approximately $.3 million in the first six months of fiscal 1996 compared with $1.6 million in the same period in fiscal 1995. This decrease is primarily due to a $1.3 million reduction in the increases in year over year borrowing levels under the Company's revolving credit agreements. The Company's revolving credit agreements with two banks aggregate $23.0 million. As of July 29, 1995, the Company had net unused commitments of approximately $13.1 million under the agreements. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) There were no reports filed on Form 8-K during the three months ended July 29, 1995. 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. S & K FAMOUS BRANDS, INC. (Registrant) Date: September 5, 1995 /s/ Robert E. Knowles Robert E. Knowles Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer) Date: September 5, 1995 /s/ Janet L. Jorgensen Janet L. Jorgensen Vice President and Controller (Principal Accounting Officer) EX-27 2
5 1 6-MOS JAN-28-1995 JAN-29-1995 JUL-29-1995 189,795 0 395,718 0 40,470,045 43,252,259 25,989,446 12,041,811 59,370,608 6,369,834 0 2,529,217 0 0 36,215,400 59,370,608 56,013,245 56,013,245 30,976,448 30,976,448 22,809,209 0 403,143 1,824,445 693,300 1,131,145 0 0 0 1,131,145 0.23 0.23
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