-----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, Jbu8PMVF272DCIVHVdwtinBaJzdYLVkzOh2hNkeET+Y6oInVgQIiOQAxh24HZwix bEzQdVC2nvf+hxLcSvpH2g== /in/edgar/work/20000911/0000895447-00-000008/0000895447-00-000008.txt : 20000922 0000895447-00-000008.hdr.sgml : 20000922 ACCESSION NUMBER: 0000895447-00-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000729 FILED AS OF DATE: 20000911 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: 720044 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 2ND 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 July 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 of 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, 11,941,066 shares outstanding as of September 1, 2000. 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................... 8-11 Part II Other Information Item 4. Submission of Matters to Vote of Security Holders........ 12 Item 6. Exhibits and Reports on Form 8-K......................... 12 Signature........................................................ 13 2
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited July 29, January 29, July 31, 2000 2000 1999 ---------- ---------- ---------- (In thousands) ASSETS ------ Current Assets: Cash and cash equivalents............... $ 3,358 $ 1,675 $ 2,724 Accounts receivable..................... 631 694 706 Merchandise inventories................. 123,791 104,730 92,637 Deferred income tax benefit............. 701 876 821 Other................................... 1,794 1,168 1,965 --------- --------- --------- Total Current Assets...................... 130,275 109,143 98,853 Property and equipment-net................ 56,796 53,710 49,759 --------- --------- --------- Total Assets.............................. $ 187,071 $ 162,853 $ 148,612 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable........................ $ 32,549 $ 33,817 $ 28,770 Accrued and other liabilities........... 7,038 6,266 5,901 Current portion of long-term debt....... 786 714 733 --------- --------- --------- Total Current Liabilities................. 40,373 40,797 35,404 Long-term debt............................ 45,749 22,338 17,074 Deferred lease incentives................. 3,079 3,077 2,980 Deferred income taxes..................... 3,693 3,296 2,163 --------- --------- --------- Total Liabilities......................... 92,894 69,508 57,621 --------- --------- --------- Shareholders' Equity: Common stock, $.01 par value, 50,000 shares authorized, 13,363, 13,345, 13,326 shares issued at July 29, 2000, January 29, 2000 and July 31, 1999... 134 133 133 Additional paid-in capital.............. 64,283 63,683 63,558 Retained earnings....................... 37,130 31,953 27,300 Treasury stock, at cost, 1,015 and 292 shares at July 29, 2000 and January 29, 2000................................. (7,370) (2,424) --------- --------- --------- Total Shareholders' Equity................ 94,177 93,345 90,991 --------- --------- --------- Total Liabilities and Shareholders' Equity $ 187,071 $ 162,853 $ 148,612 ========= ========= =========
See Notes to Condensed Consolidated Financial Statements 3
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 29, July 31, July 29, July 31, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- (In thousands, except per share data) Net sales................ $ 95,611 $ 83,206 $ 191,016 $ 161,317 Cost of sales (including buying, distribution and occupancy costs)... 68,220 58,112 135,432 111,365 ---------- ---------- ---------- ---------- Gross profit............. 27,391 25,094 55,584 49,952 Selling, general and administrative expenses 23,736 19,464 45,679 37,432 ---------- ---------- ---------- ---------- Operating income......... 3,655 5,630 9,905 12,520 Interest expense, net.... 769 190 1,348 340 ---------- ---------- ---------- ---------- Income before income taxes 2,886 5,440 8,557 12,180 Income taxes............. 1,140 2,176 3,380 4,872 ---------- ---------- ---------- ---------- Net income............... $ 1,746 $ 3,264 $ 5,177 $ 7,308 ========== ========== ========== ========== Net income per share: Basic................ $ .14 $ .25 $ .41 $ .55 ========== ========== ========== ========== Diluted.............. $ .14 $ .24 $ .40 $ .54 ========== ========== ========== ========== Average shares outstanding: Basic................ 12,543 13,293 12,758 13,249 ========== ========== ========== ========== Diluted.............. 12,583 13,734 12,880 13,639 ========== ========== ========== ==========
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 9 1 600 48 649 Employee stock purchase plan purchases.. 12 73 73 Common stock repurchased..... (744) (5,067) (5,067) Net income ....... 5,177 5,177 ------ ----- ----- -------- ------- -------- -------- Balance at July 29, 2000 13,363 (1,015) $ 134 $ 64,283 $37,130 $ (7,370) $ 94,177 ====== ===== ===== ======== ======= ======== ========
See Notes to Condensed Consolidated Financial Statements 5
SHOE CARNIVAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Twenty-six Twenty-six Weeks Ended Weeks Ended July 29, July 31, 2000 1999 ----------- ----------- (In thousands) Cash flows from operating activities: Net income.................................... $ 5,177 $ 7,308 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization............... 4,952 3,866 Loss on retirement of assets................ 26 6 Deferred income taxes....................... 572 53 Other ..................................... (174) (164) Changes in operating assets and liabilities: Merchandise inventories.................. (19,061) (17,247) Accounts receivable...................... 63 (140) Accounts payable and accrued liabilities. (509) 3,216 Other.................................... (626) (743) ---------- ---------- Net cash used in operating activities........... (9,580) (3,845) ---------- ---------- Cash flows from investing activities: Purchases of property and equipment........... (7,686) (12,129) Lease incentives.............................. 186 720 Other......................................... 2 ---------- ---------- Net cash used in investing activities........... (7,498) (11,409) ---------- ---------- Cash flows from financing activities: Borrowings under line of credit............... 198,600 82,150 Payments on line of credit.................... (175,100) (66,650) Payments on capital lease obligations......... (393) (481) Proceeds from issuance of stock............... 721 1,015 Purchase of treasury stock.................... (5,067) ---------- ---------- Net cash provided by financing activities....... 18,761 16,034 ---------- ---------- Net increase in cash and cash equivalents....... 1,683 780 Cash and cash equivalents at beginning of period 1,675 1,944 ---------- ---------- Cash and cash equivalents at end of period...... $ 3,358 $ 2,724 ========== ========== Supplemental disclosures of cash flow information: Cash paid during period for interest.......... $ 1,341 $ 336 Cash paid during period for income taxes...... $ 2,076 $ 5,133 Supplemental disclosure of noncash investing activities: Capital lease obligations incurred............ $ 377 $ 644
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 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 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 2000, the Company had an unsecured $45 million credit agreement (the "Credit Agreement") with a bank group. 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. 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 1.5%, 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. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations Number of Stores Store Square Footage --------------------------------- ----------------- Comparable Beginning End of Net End Store 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% July 29, 2000 144 10 0 154 120,000 1,788,000 (2.1%) Year-to-date 138 16 0 154 198,000 1,788,000 (.4%) May 1, 1999 111 3 0 114 40,000 1,314,000 3.4% July 31, 1999 114 12 0 126 142,000 1,456,000 .6% Year-to-date 111 15 0 126 182,000 1,456,000 2.0%
The following table sets forth the Company's results of operations expressed as a percentage of net sales for the periods indicated:
Thirteen Thirteen Twenty-six Twenty-six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 29, July 31, July 29, July 31, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales................. 100.0% 100.0% 100.0% 100.0% Cost of sales (including buying, distribution and occupancy costs)... 71.4 69.8 70.9 69.0 ----------- ----------- ----------- ----------- Gross profit.............. 28.6 30.2 29.1 31.0 Selling, general and administrative expenses 24.8 23.4 23.9 23.2 ----------- ----------- ----------- ----------- Operating income.......... 3.8 6.8 5.2 7.8 Interest expense.......... .8 .3 .7 .2 ----------- ----------- ----------- ----------- Income before income taxes 3.0 6.5 4.5 7.6 Income taxes.............. 1.2 2.6 1.8 3.1 ----------- ----------- ----------- ----------- Net income................ 1.8% 3.9% 2.7% 4.5% =========== =========== =========== ===========
Net Sales Net sales increased $12.4 million to $95.6 million in the second quarter of 2000, a 14.9% increase over net sales of $83.2 million in the comparable prior year period. The increase was attributable to the sales generated by the 41 new stores opened since April 1999 (net of one store closed) partially offset by a 2.1% decrease in comparable store sales. The decline in comparable sales for the quarter was due primarily to a decline in sales of men's, women's and children's sandals. Average footwear unit sales in comparable stores increased 3.8% while footwear unit prices decreased 6.2%. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Net sales increased $29.7 million to $191 million in the first half of 2000, an 18.4% increase over net sales of $161.3 million in the comparable prior year period. The increase was attributable to the sales generated by the 43 new stores opened in 1999 and 2000 (net of one store closed) partially offset by a 0.4% decrease in comparable store sales. Average footwear unit sales in comparable stores increased 3.5% and average footwear unit prices decreased 4.1%. Gross Profit Gross profit increased $2.3 million to $27.4 million in the second quarter of 2000, a 9.2% increase over gross profit of $25.1 million in the comparable prior year period. The Company's gross profit margin decreased to 28.6% from 30.2%. As a percentage of sales, the merchandise gross profit margin decreased 0.8% and buying, distribution and occupancy costs increased 0.8%. The decrease in the merchandise gross profit margin was due to a decline in the sales and gross margin obtained on the sale of sandals for the quarter. Gross profit increased $5.6 million to $55.6 million in the first half of 2000, an 11.3% increase over gross profit of $50.0 million in the comparable prior year period. The Company's gross profit margin decreased to 29.1% from 31.0%. As a percentage of sales, the merchandise gross profit margin decreased 1.1% and buying, distribution and occupancy costs increased 0.8%. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $4.3 million to $23.7 million in the second quarter of 2000 from $19.5 million in the comparable prior year period. As a percentage of sales, these expenses increased 1.4% primarily due to higher advertising costs. Included in second quarter expenses is a $220,000 charge for expected costs to close one store in September 2000. Total pre-opening costs in the second quarter of 2000 were $785,000 or 0.8% of sales, as compared to $727,000 or 0.9% of sales, for the second quarter of 1999. Pre-opening expenses incurred were primarily for the stores opened in that quarter. Ten stores were opened in the second quarter of 2000 and twelve stores were opened in the second quarter of 1999. Selling, general and administrative expenses increased $8.2 million to $45.7 million in the first half of 2000 from $37.4 million in the comparable prior year period. As a percentage of sales, these expenses increased 0.7%. Total pre-opening costs in the first half of 2000 were $1.2 million or 0.6% of sales, as compared to $994,000 or 0.6% of sales, in the first half of 1999. Sixteen stores were opened in the first half of 2000 and fifteen stores were opened in the first half of 1999. Interest Expense The increase in net interest expense in the second quarter and the first six months of 2000 as compared with the second quarter and the first six months of 1999 resulted from increased borrowings and a higher effective interest rate. Income Taxes The effective income tax rate of 39.5% and 40% in the second quarter and the first six months 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. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 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 $9.6 million during the first half of 2000. The decrease resulted primarily from seasonal increases in inventories and the additional inventories for the 16 stores opened in the first half of 2000. Excluding changes in operating assets and liabilities, cash provided by operating activities was $10.6 million in the first half of 2000. Working capital increased to $89.9 million at July 29, 2000 from $68.3 million at January 29, 2000 and the current ratio was 3.2 to 1 at July 29, 2000 as compared with 2.7 to 1 at January 29, 2000. Long-term debt as a percentage of total capital was 32.7% at July 29, 2000, compared to 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 and the store expansion program. Capital expenditures net of lease incentives were $7.9 million in the first half of 2000 (including $377,000 of capital lease assets). Of these expenditures, approximately $5.4 million was incurred for new stores and $1.3 was incurred for the remodeling of certain stores. The remaining capital expenditures in the first half of 2000 were primarily for various store improvements, merchandise display and signage enhancements and technology. The Company intends to open approximately 32 stores in 2000, including the 16 stores opened in the first half. Six stores were opened in the first quarter and ten in the second quarter of 2000. Of the remaining 16 stores for 2000, 8 are expected to open in the third quarter with the remaining 8 opening in November. Fifteen stores were opened in the first half 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 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 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 allowed the Company to purchase up to $10 million of the outstanding common stock. In January 2000, the Company purchased 291,900 shares at a cost of $2.4 million. 123,100 shares were purchased during the first quarter at a cost of $1.1 million and 620,600 shares were purchased during the second quarter for $4.0 million. The share repurchase program was completed in August with the purchase of 409,750 shares at a cost of $2.5 million. Total shares acquired under the program were 1,445,350 at a cost of $10.0 million. The treasury shares may be reissued in connection with possible future stock offerings, dividends, stock based compensation programs and other general corporate uses. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 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 July 29, 2000 were $44.5 million and $7.7 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. Factors That May Effect Future Results This report contains certain forward looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions in the areas of the United States in which the Company's stores are located; changes in the overall retail environment and more specifically in the apparel and footwear retail sectors; the impact of competition, weather patterns, consumer buying trends and the ability of the Company to identify and respond to emerging fashion trends; the availability of desirable store locations and management's ability to negotiate acceptable lease terms and open new stores in a timely manner; and changes in the political and economic environments in the People's Republic of China, where most of the Company's private label products are manufactured, and the continued favorable trade relationships between China and the United States. 11 SHOE CARNIVAL, INC. PART II - OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders The annual meeting of the common shareholders of the Company was held June 8, 2000. Election of Directors William E. Bindley was elected at the annual meeting to serve as a Director of the Company for a three year term. Mr. Bindley received 12,049,497 votes in favor of his election. No votes were cast against the election of Mr. Bindley. Other Matters Voted Upon at the Meeting Deloitte & Touche LLP was appointed as auditor for the Company for 2000. 12,068,778 votes were cast in favor, 3,339 votes were cast against and 2,730 abstentions were recorded with respect to such appointment. The Company's 2000 Stock Option and Incentive Plan was approved. 9,458,043 votes were cast in favor and 851,218 votes were cast against. 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 July 29, 2000. 12 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: September 11, 2000 SHOE CARNIVAL, INC. (Registrant) By: /s/ W. Kerry Jackson ---------------------- W. Kerry Jackson Vice President and Chief Financial Officer 13 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED JULY 29, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-03-2001 JAN-30-2000 JUL-29-2000 3,358 0 631 0 123,791 130,275 97,631 40,835 187,071 40,373 45,749 0 0 134 94,043 187,071 191,016 191,016 135,432 135,432 0 0 1,348 8,557 3,380 5,177 0 0 0 5,177 0.41 0.40
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