-----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, QELjm/691QbCZBEg6O1esJdDgGlwv9eCKrvqdGTcJWCPmzixs2v6/cWlBu1pT24z RUJndzeWPiGByWPYs9+RnA== /in/edgar/work/20000613/0000895447-00-000006/0000895447-00-000006.txt : 20000919 0000895447-00-000006.hdr.sgml : 20000919 ACCESSION NUMBER: 0000895447-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000429 FILED AS OF DATE: 20000613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOE CARNIVAL INC CENTRAL INDEX KEY: 0000895447 STANDARD INDUSTRIAL CLASSIFICATION: [5661 ] IRS NUMBER: 351736614 STATE OF INCORPORATION: IN FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21360 FILM NUMBER: 654250 BUSINESS ADDRESS: STREET 1: 8233 BAUMGART ROAD CITY: EVANSVILLE STATE: IN ZIP: 47725 BUSINESS PHONE: 8128674039 MAIL ADDRESS: STREET 1: 8233 BAUMGART RD CITY: EVANSVILLE STATE: IN ZIP: 47725 10-Q 1 0001.txt 1ST QUARTER 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 29,2000 [ ] 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: 0-21360 Shoe Carnival, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Indiana 35-1736614 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 8233 Baumgart Road, Evansville, Indiana 47725 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (812) 867-6471 - -------------------------------------------------------------------------------- (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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value, 12,627,718 shares outstanding as of June 1, 2000. - -------------------------------------------------------------------------------- 1 SHOE CARNIVAL, INC. INDEX TO FINANCIAL STATEMENTS Page Part I Financial Information Item 1 - Financial Statements (Unaudited) Condensed Consolidated Balance Sheets.......................... 3 Condensed Consolidated Statements of Income.................... 4 Condensed Consolidated Statement of Shareholders' Equity....... 5 Condensed Consolidated Statements of Cash Flows................ 6 Notes to Condensed Consolidated Financial Statements........... 7 Item 2 - Management's Discussion and Analysis.................... 8-10 Part II Other Information Item 6. Exhibits and Reports on Form 8-K........................ 11 Signature........................................................ 12 2
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited April 29, January 29, May 1, 2000 2000 1999 --------- --------- --------- (In thousands) ASSETS Current Assets: Cash and cash equivalents......... $ 2,767 $ 1,675 $ 2,598 Accounts receivable............... 624 694 688 Merchandise inventories........... 111,980 104,730 79,722 Deferred income tax benefit....... 795 876 798 Other............................. 1,476 1,168 845 --------- --------- --------- Total Current Assets................. 117,642 109,143 84,651 Property and equipment-net........... 55,503 53,710 45,367 --------- --------- --------- Total Assets......................... $ 173,145 $ 162,853 $ 130,018 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable.................. $ 28,781 $ 33,817 $ 19,119 Accrued and other liabilities..... 9,255 6,266 9,337 Current portion of long-term debt. 776 714 671 --------- --------- --------- Total Current Liabilities............ 38,812 40,797 29,127 Long-term debt....................... 31,331 22,338 9,202 Deferred lease incentives............ 3,187 3,077 2,348 Deferred income taxes................ 3,487 3,296 2,106 --------- --------- --------- Total Liabilities.................... 76,817 69,508 42,783 --------- --------- --------- Shareholders' Equity: Common stock, $.01 par value, 50,000 shares authorized, 13,363, 13,345, 13,253 shares issued at April 29, 2000, January 29, 2000 and May 1, 1999.................... 133 133 133 Additional paid-in capital........ 64,279 63,683 63,066 Retained earnings................. 35,384 31,953 24,036 Treasury stock, at cost, 410 and 292 shares at April 29, 2000 and January 29, 2000............... (3,468) (2,424) --------- --------- --------- Total Shareholders' Equity........... 96,328 93,345 87,235 --------- --------- --------- Total Liabilities and Shareholders' Equity.................... $ 173,145 $ 162,853 $ 130,018 ========= ========= =========
See Notes to Condensed Consolidated Financial Statements 3
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited Thirteen Thirteen Weeks Ended Weeks Ended April 29, 2000 May 1, 1999 -------------- ----------- (In thousands, except per share data) Net sales............................... $ 95,405 $ 78,111 Cost of sales (including buying, distribution and occupancy costs)... 67,212 53,253 ----------- ----------- Gross profit............................ 28,193 24,858 Selling, general and administrative expenses............................ 21,943 17,968 ----------- ----------- Operating income........................ 6,250 6,890 Interest expense, net................... 579 150 ----------- ----------- Income before income taxes.............. 5,671 6,740 Income taxes............................ 2,240 2,696 ----------- ----------- Net income.............................. $ 3,431 $ 4,044 =========== =========== Net income per share: Basic................................ $ .26 $ .31 =========== =========== Diluted.............................. $ .26 $ .30 =========== =========== Average shares outstanding: Basic................................ 12,974 13,206 =========== =========== Diluted.............................. 13,149 13,532 =========== ===========
See Notes to Condensed Consolidated Financial Statements 4
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Unaudited Common Stock Additional ---------------------- Paid-In Retained Treasury Issued Treasury Amount Capital Earnings Stock Total ------ -------- ------ --------- -------- -------- ------- (In thousands) Balance at January 29, 2000 13,345 (292) $ 133 $ 63,683 $ 31,953 $ (2,424) $ 93,345 Exercise of stock options... 18 596 596 Employee stock purchase plan purchases.. 5 35 35 Common stock repurchased..... (123) (1,079) (1,079) Net income ....... 3,431 3,431 ------ ----- ----- -------- -------- --------- --------- Balance at April 29, 2000 13,363 (410) $ 133 $ 64,279 $ 35,384 $ (3,468) $ 96,328 ====== ===== ===== ======== ======== ========= =========
See Notes to Condensed Consolidated Financial Statements 5
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Thirteen Thirteen Weeks Ended Weeks Ended April 29, 2000 May 1, 1999 -------------- ----------- (In thousands) Cash flows from operating activities: Net income.................................. $ 3,431 $ 4,044 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............. 2,400 1,877 Loss on retirement of assets.............. 6 Deferred income taxes..................... 272 19 Other ................................... (78) (76) Changes in operating assets and liabilities: Merchandise inventories................ (7,251) (4,333) Accounts receivable..................... 70 (121) Accounts payable and accrued liabilities (2,027) (2,999) Other................................... (326) 378 ---------- ---------- Net cash used in operating activities.......... (3,509) (1,205) ---------- ---------- Cash flows from investing activities: Purchases of property and equipment......... (3,959) (6,394) Lease incentives............................ 186 ---------- ---------- Net cash used in investing activities.......... (3,773) (6,394) ---------- ---------- Cash flows from financing activities: Borrowings under line of credit............. 99,925 39,650 Payments on line of credit.................. (90,925) (31,675) Payments on capital lease obligations....... (178) (246) Proceeds from issuance of stock............. 596 524 Purchase of treasury stock.................. (1,044) ---------- ---------- Net cash provided by financing activities...... 8,374 8,253 ---------- ---------- Net increase in cash and cash equivalents...... 1,092 654 Cash and cash equivalents at beginning of period 1,675 1,944 ---------- ---------- Cash and cash equivalents at end of period..... $ 2,767 $ 2,598 ========== ========== Supplemental disclosures of cash flow information: Cash paid during period for interest........ $ 576 $ 118 Cash paid during period for income taxes.... $ 59 $ 74 Capital lease obligations incurred.......... $ 232
See Notes to Condensed Consolidated Financial Statements 6 SHOE CARNIVAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Note 1 - Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company and the results of its operations and its cash flows for the periods presented. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted according to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and financial notes thereto included in the Company's 1999 Annual Report. Note 2 - Long-Term Debt At the beginning of 1999, the Company had an unsecured $35 million credit agreement (the "Credit Agreement") with a bank group. On April 16, 1999, the Credit Agreement was amended to increase the total credit facility to $45 million. Borrowings are based on eligible inventory and bear interest, at the Company's option, at the agent bank's prime rate minus 0.5% or the applicable London Inter-Bank Offered Rate (LIBOR) plus from 0.75% to 2%, depending on the Company's achievement of certain performance criteria. A commitment fee is charged, at the Company's option, at 0.3% per annum on the unused portion of the bank group's commitment or 0.15% per annum of the total commitment. The Credit Agreement contains various restrictive and financial covenants, including the maintenance of specific financial ratios and a limitation on the payment of dividends. On March 24, 2000, the Credit Agreement was amended to increase the total credit facility to $55 million and to extend the maturity date to March 31, 2002. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Number of Stores Store Square Footage Comparable --------------------- -------------------- Store Beginning End of Net End Sales Quarter Ended Of Period Opened Closed Period Change of Period Increase - ------------- --------- ------ ------ ------ ------ --------- ---------- April 29, 2000 138 6 0 144 78,000 1,668,000 1.4% May 1, 1999 111 3 0 114 40,000 1,314,000 3.4% The following table sets forth the Company's results of operations expressed as a percentage of net sales for the periods indicated: Thirteen Thirteen Weeks Ended Weeks Ended April 29, 2000 May 1, 1999 -------------- ----------- Net sales........................... 100.0% 100.0% Cost of sales (including buying, distribution and occupancy costs) 70.4 68.2 -------------- ----------- Gross profit........................ 29.6 31.8 Selling, general and administrative expenses........................ 23.0 23.0 -------------- ----------- Operating income.................... 6.6 8.8 Interest expense.................... .6 .2 -------------- ----------- Income before income taxes.......... 6.0 8.6 Income taxes........................ 2.4 3.4 -------------- ----------- Net income.......................... 3.6% 5.2% ============== =========== Net Sales Net sales increased $17.3 million to $95.4 million in the first quarter of 2000, a 22.1% increase over net sales of $78.1 million in the comparable prior year period. The increase was attributable to a 1.4% comparable store sales increase and the sales generated by the 33 new stores opened in 1999 and 2000 (net of one store closed). Footwear unit sales in comparable stores increased 3.3% while average footwear unit prices decreased 2.1% for the quarter. Gross Profit Gross profit increased $3.3 million to $28.2 million in the first quarter of 2000, a 13.4% increase over gross profit of $24.9 million in the comparable prior year period. The Company's gross profit margin decreased to 29.6% from 31.8%. As a percentage of sales, the merchandise gross profit margin decreased 1.5% and buying, distribution and occupancy costs increased .7%. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sales of high-margin seasonal product, primarily sandals and opened-up dress shoes, were below expectations for the quarter. This weakness in sales resulted in a decrease in the merchandise gross profit margin due to a more promotional environment as markdowns of the seasonal product were accelerated in order to manage inventory levels. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $3.9 million to $21.9 million in the first quarter of 2000 from $18.0 million in the comparable prior year period. As a percentage of sales, these expenses were unchanged from the prior year at 23.0%. Total pre-opening costs for the six stores opened in the first quarter of 2000 were $451,000 or 0.5% of sales, as compared to $267,000 or 0.3% of sales, for the three stores opened in the first quarter of 1999. Interest Expense The increase in net interest expense to $579,000 in the first quarter of 2000 from $150,000 in the first quarter of 1999 resulted from increased borrowings. Income Taxes The effective income tax rate of 39.5% and 40% in the first quarter of 2000 and 1999, respectively, differed from the statutory federal rates due primarily to state and local income taxes, net of the federal tax benefit. Liquidity and Capital Resources The Company's primary sources of funds are cash flows from operations and borrowings under its revolving credit facility. Net cash used in operating activities was $3.5 million during the first quarter of 2000. The decrease resulted primarily from an increase in inventories and a decrease in accounts payable and accrued liabilities. Excluding changes in operating assets and liabilities, cash provided by operating activities was $6.0 million in the first quarter of 2000. The increase in merchandise inventories was primarily due to seasonal fluctuations and the addition of six stores in the first quarter of 2000. Working capital increased to $78.8 million at April 29, 2000 from $68.3 million at January 29, 2000 and the current ratio was 3.0 to 1 as compared with 2.7 to 1 at January 29, 2000. Long-term debt as a percentage of total capital was 24.5% at April 29, 2000 and 19.3% at January 29, 2000. The increase in working capital and long-term debt as a percent of total capital was primarily due to seasonal fluctuations. Capital expenditures, net of lease incentives, were $4.0 million in the first quarter of 2000. Of these expenditures, $2.4 million was incurred for new stores and $800,000 was incurred for the remodeling of certain stores. The remaining capital expenditures in the first quarter of 2000 were primarily for merchandise display and signage enhancements and improvements to computer systems. The Company intends to open approximately 30 stores in 2000, including the six stores opened in the first quarter. Eight stores are expected to be opened in the second quarter. The remaining store openings will occur primarily in the third quarter with certain stores opening early in the fourth quarter. Three stores were opened in the first quarter of 1999. The actual amount of the Company's cash requirements for capital expenditures depends in part on the number of new stores opened, the amount of lease incentives, if any, received from landlords and the number of stores 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) remodeled. The opening of new stores will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending in areas the Company targets for expansion. The Company's current store prototype utilizes between 8,000 and 15,000 square feet depending upon, among other factors, the location of the store and the population base the store is expected to service. Capital expenditures for a new store are expected to average approximately $350,000, including point-of-sale equipment which is generally acquired through equipment leasing transactions. The average inventory investment in a new store is expected to range from $450,000 to $750,000, depending on the size and sales expectation of the store and the timing of the new store opening. Pre-opening expenses, such as advertising, salaries, supplies and utilities, are expected to average approximately $80,000 per store. On January 7, 2000, the Company's Board of Directors authorized a share repurchase program that will allow the Company to purchase up to $10 million of the outstanding common stock. As of January 29, 2000, the Company had purchased 291,900 shares at an approximate cost of $2.4 million. An additional 123,100 shares were purchased during the first quarter at a cost of $1.1 million. Share repurchases will continue as market conditions allow and will be funded by borrowings under the line of credit. The treasury shares may be reissued in connection with possible future stock offerings, dividends, stock based compensation programs and other general corporate uses. The Company's credit facility provides for a combination of cash advances on a revolving basis and the issuance of commercial letters of credit. Borrowings under the revolving credit line are based on eligible inventory. Borrowings and letters of credit outstanding under this facility at April 29, 2000 were $30.0 million and $4.1 million, respectively. On March 24, 2000, the credit agreement was amended to increase the facility by $10 million to allow for up to $55 million in cash advances and commercial letters of credit. The maturity date was also extended to March 31, 2002. The Company anticipates that its existing cash and cash flow from operations, supplemented by borrowings under the credit facility will be sufficient to fund its planned expansion and other operating cash requirements for at least the next 12 months. Seasonality The Company's quarterly results of operations have fluctuated, and are expected to continue to fluctuate in the future primarily as a result of seasonal variances and the timing of sales and costs associated with opening new stores. Non-capital expenditures, such as advertising and payroll, incurred prior to opening of a new store are charged to expense as incurred. Therefore, the Company's results of operations may be adversely affected in any quarter in which the Company incurs pre-opening expenses related to the opening of new stores. The Company has three distinct selling periods: Easter, back-to-school and Christmas. 10 SHOE CARNIVAL, INC. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended April 29, 2000 11 SHOE CARNIVAL, 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. Date: June 9, 2000 SHOE CARNIVAL, INC. (Registrant) By: /s/ W. Kerry Jackson ---------------------------- W. Kerry Jackson Vice President and Chief Financial Officer 12 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED APRIL 29, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS FEB-03-2001 JAN-30-2000 APR-29-2000 2,767 0 624 0 111,980 117,642 93,831 38,328 173,145 38,812 31,331 0 0 133 96,195 173,145 95,405 95,405 67,212 67,212 0 0 579 5,671 2,240 3,431 0 0 0 3,431 0.26 0.26
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