-----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, WUQDK0iDcwbscFMl4Q50VVbLrHSkDizmHwamWI1cUVWAEsypPdrO3ut3wm/UDgWd HersLtZ/IO8t6icJY2MTuQ== 0000950169-96-000171.txt : 19960705 0000950169-96-000171.hdr.sgml : 19960705 ACCESSION NUMBER: 0000950169-96-000171 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960611 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK JOS A CLOTHIERS INC /DE/ CENTRAL INDEX KEY: 0000920033 STANDARD INDUSTRIAL CLASSIFICATION: 5600 IRS NUMBER: 363189198 STATE OF INCORPORATION: DE FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23874 FILM NUMBER: 96579614 BUSINESS ADDRESS: STREET 1: 500 HANOVER PIKE CITY: HAMPSTEAD STATE: MD ZIP: 21074 BUSINESS PHONE: 4102392700 10-Q 1 JOSEPH A. BANK CLOTHIERS United States Securities and Exchange Commission Washington, DC 20549 FORM 10 - Q x Quarterly report pursuant to Section 13 or 14(d) of the Securities Exchange Act of 1934 For the quarterly period ended May 4, 1996 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 33-76282 Jos. A. Bank Clothiers, Inc. Delaware 5611 36-3189198 (State of other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification incorporation or Classification Number) organization) Code Number) 500 Hanover Pike, Hampstead, MD 21074-2095 none (Former name or former address, 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 of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding as of June 11, 1996 Common stock. $.01 par value 6,790,152 Jos. A. Bank Clothiers, Inc. Index Part I. Financial Information Page No. Item 1. Financial Statements Condensed Consolidated Statements 3 of Income (Loss) --Three months ended May 4, 1996 and April 29, 1995 Condensed Consolidated Balance 4 Sheets--as of May 4, 1996 and February 3, 1996 Condensed Consolidated Statements 5 of Cash Flows--Three months ended May 4, 1996 and April 29, 1995 Notes to Condensed Consolidated 6-7 Financial Statements Item 2. Management's Discussion and Analysis 8-10 of Results of Operations and Financial Condition Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 10 Signature 11 -2- PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY Condensed consolidated statements of income (loss) (In thousands except per share data) (Unaudited) Three Months Ended May 4 April 29 1996 1995 Net sales (Note 1) $ 37,346 $ 44,423 Costs and expenses: Cost of goods sold 19,665 27,973 General and administrative 4,036 5,324 Sales and marketing 12,557 17,294 36,258 50,591 Operating income (loss) 1,088 (6,168) Interest expense, net 715 722 Income (loss) before provision (benefit) for income taxes 373 (6,890) Provision (benefit) for income taxes 145 (2,687) Net income (loss) $228 ($4,203) Per share information: Net income (loss) per share $0.03 ($0.62) Weighted average number of shares outstanding 6,791 6,790 See accompanying notes. -3- JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY Condensed consolidated balance sheets (In thousands) (Unaudited) May 4, February 3, 1996 1996 ASSETS Current Assets: Cash and cash equivalents $ 647 $ 644 Accounts receivable 5,986 3,866 Inventories: Raw materials 2,344 5,292 Work-in-process 2,488 2,331 Finished goods 35,888 35,650 Total inventories 40,720 43,273 Prepaid expenses and other current assets 3,801 4,333 Deferred and refundable income taxes 2,200 5,200 Total current assets 53,354 57,316 Property, plant and equipment, at cost 48,871 48,871 Accumulated depreciation and amortization (24,218) (23,200) Net property, plant and equipment 24,653 25,671 Deferred income taxes 5,091 5,967 Other assets 1,790 1,717 Total Assets $ 84,888 $ 90,671 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,666 $ 8,929 Accrued expenses 10,127 10,896 Current portion of long-term debt and other 1,727 1,769 Total current liabilities 18,520 21,594 Long-term liabilities 30,695 33,632 Total liabilities 49,215 55,226 Shareholders' equity: Common stock 70 70 Additional paid-in capital 56,333 56,333 Accumulated deficit (18,810) (19,038) 37,593 37,365 Less treasury stock (1,920) (1,920) Total shareholders' equity 35,673 35,445 Total liabilities and shareholders' equity $ 84,888 $ 90,671 See accompanying notes. -4- JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY Condensed consolidated statements of cash flows (In thousands) (Unaudited)
Three Months Ended May 4, April 29, 1996 1995 Cash flows from operating activities: Net income (loss) $ 228 $ (4,203) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Deferred taxes 3,876 -- Depreciation and amortization 992 1,156 Net (increase) decrease in operating working capital (1,910) 162 Net cash provided by (used in) operating activities 3,186 (2,885) Cash flows from investing activities: Additions to property, plant and equipment (159) (562) Proceeds from disposal of assets 97 -- Net cash flows (used in) investing activities (62) (562) Cash flows from financing activities: Borrowings (repayments) under long-term revolving loan agreement, net (2,679) 3,090 Changes in long-term debt (300) (265) Payments related to debt financing (142) (75) Net cash (used in) provided by financing activities (3,121) 2,750 Net increase (decrease) in cash and cash equivalents 3 (697) Cash and cash equivalents - beginning of period 644 737 Cash and cash equivalents - end of period $ 647 $ 40 ======== =========
See accompanying notes. -5- Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/4/96 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION Jos. A. Bank Clothiers, Inc. (the Company) is a manufacturer and nationwide retailer of classic men's clothing through conventional retail stores and catalog direct marketing. In 1995, the Company discontinued its women's product line to concentrate solely on its men's business. Sales from the women's product line were $8.2 million in the first quarter of 1995. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. These adjustments are of a normal recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company's February 3, 1996 Annual Report on Form 10-K. 2. SIGNIFICANT ACCOUNTING POLICIES Inventories are stated at the lower of first-in, first-out, cost or market. The company capitalizes into inventories certain warehousing and delivery costs associated with getting its manufactured and purchased inventory to the point of sale. Costs related to mail order catalogs and promotional materials are included in prepaid expenses and other current assets. These costs are amortized over the expected periods of benefit, not to exceed six months. The company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (SFAS 109). This standard requires, among other things, recognition of future tax benefits, measured by enacted tax rates attributable to deductible temporary differences between financial statement and income tax basis of assets and liabilities and to tax net operating loss carryforwards, to the extent that realization of such benefits is more likely than not. -6- Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/4/96 3. WORKING CAPITAL The net change in operating working capital is composed of the following: Three Months Ended May 4, April 29, 1996 1995 (in thousands) (Increase) in accounts receivable $ (2,120) $ (563) (Increase) decrease in inventories 2,553 (5,039) (Increase) decrease in prepaids and other assets 532 (527) Increase (decrease) in accounts payable (2,263) 6,404 (Decrease) in accrued expenses (612) (113) Net (increase) decrease in operating working capital $ (1,910) $ 162 4. FINANCING In April 1996, the Company extended its credit agreement (the "Credit Agreement") to April 1999 which changed the maximum borrowing under the revolver facility to $38,000,000 and provides a term loan facility of $2,000,000 payable in monthly installments over a five year period. The Credit Agreement also includes financial covenants concerning net worth and working capital, among others, and limitations on capital expenditures and additional indebtedness and a restriction on the payment of dividends. Interest rates under the amended agreement range from prime plus 1.5% to prime plus 2.0% or LIBOR plus 3.5%. The amended agreement also includes an early termination fee and provisions for a seasonal over-advance. Substantially all assets of the Company are collateralized under the Credit Agreement. -7- Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/4/96 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The following discussion should be read in conjunction with the attached condensed consolidated financial statements and notes thereto and with the Company's audited financial statements and notes thereto for the fiscal year ended February 3, 1996. Overview - During the three months ended May 4, 1996, the Company dramatically improved its operating income to $1.1 million from an operating loss of $6.2 million in the first quarter of 1995 (which included a $3.9 million operating loss from the recurring men's business). The first quarter of 1996 is the first period in which the Company's operations were not encumbered by the women's business which was discontinued in 1995. The Company was able to concentrate entirely on its core men's business resulting in significantly improved margins, lower operating expenses and higher tailored clothing sales. Results of Operations - The following table is derived from the Company's Condensed consolidated statements of operations and sets forth, for the periods indicated, the items included in the Condensed consolidated statements of income (loss), expressed as a percentage of net sales. Percentage of Net Sales Quarter Ended May 4, April 29, 1996 1995 Net Sales 100.0% 100.0% Costs of goods sold 52.7 63.0 Gross profit 47.3 37.0 General and administrative expenses 10.8 12.0 Sales and marketing expenses 33.6 38.9 Operating income (loss) 2.9 (13.9) Interest expense 1.9 1.6 Income (loss) before income taxes 1.0 (15.5) Income taxes and related items 0.4 (6.0) Net income (loss) 0.6% (9.5%) Net Sales - For the second quarter in a row, the Company achieved significant increases in men's sales. Men's comparable store sales for the first quarter of 1996 increased 8.6% over the same period in the prior year and total men's sales excluding catalog sales increased $3.2 million, or 10.6%, from - 8 - $30.4 in 1995 to $33.6 million in 1996. Net sales decreased 15.9% to $37.3 million in the first quarter of 1996 from $44.4 million in the prior year's quarter due primarily to the Company repositioning its merchandising to eliminate the women's product line and focus solely on its men's business. The Company reduced the number of catalogs mailed to prospects in the first quarter of 1996 compared to the prior year to maximize catalog earnings, which resulted in a $2.1 million decrease in men's catalog sales. The Company expects to increase mailings to prospects in the second half of 1996, when response rates are typically better. Cost of Goods Sold - Cost of goods sold decreased to 52.7% of sales for the quarter ended May 4, 1996 from 63.0% during the same period in the prior year due to the elimination of the women's product line and the improvement of margins in the continuing men's business, particularly in tailored clothing. General and Administrative Expenses - General and administrative expenses decreased to $4.0 million, or 10.8% of sales, in the first quarter of 1996 from $5.3 million, or 12.0% of sales, in the first quarter of 1995. Approximately $.7 million of the decrease was related to severance accrued in the first quarter of 1995 for terminated employees. The remainder of the improvement was due primarily to lower professional fees and payroll and related expenses which reflects the Company's continued focus on controlling overhead costs. Sales and Marketing Expenses - Sales and marketing expenses decreased $4.7 million to $12.6 million, or 33.6% of sales, in the first quarter of 1996 from $17.3 million, or 38.9% in the prior year's quarter. The decrease was due primarily to the elimination of the women's product line and its related costs, the reduction of the number of catalogs mailed to prospects and lower store operating expenses. Interest Expense - Interest expense was consistent in the first quarter of 1996 compared to the same period of 1995. Income Taxes - The Company has net tax operating loss carryforwards (NOLs) of approximately $16 million which expire through 2011. Realization of the future tax benefits is dependent on the Company's ability to generate taxable income within the carryforward period. Management has determined, based on the Company's history of prior operating earnings and its expectations for the future, that future operating income of the Company will more likely than not be sufficient to utilize fully the NOLs prior to their expiration. Accordingly, the Company has recorded a deferred tax asset of $6.3 million relating to the NOLs. No assurance can be given that sufficient taxable income will be generated for full utilization of the NOLs. Liquidity and Capital Resources - Net working capital was $34.8 million at May 4, 1996 compared to $35.7 million at February 3, 1996. At May 4, 1996, the Company had outstanding borrowings of $26.2 million under its revolving loan agreement as compared to $28.9 million at February 3, 1996. -9- Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/4/96 The following table summarizes the Company's sources and uses of funds as reflected in the condensed consolidated statement of cash flows: Three Months Ended May 4, April 29, 1996 1995 Cash provided by (used in): Operating activities $ 3,186 $ (2,885) Investing activities (62) (562) Financing activities (3,121) 2,750 Net increase (decrease) in cash and cash equivalents $ 3 $ (697) Cash provided by the Company's operating activities was due primarily to the $3.8 million income tax refund received from its pre-1986 parent in the first quarter of 1996. Cash used in investing activities relates primarily to continued consolidation of the Company's tailoring operations and improvements in stores, net of proceeds from the sale of fixed assets. Cash used in financing activities represented primarily repayments of the revolving loan. The Company expects to increase its rate of capital expenditures in 1996 as it continues its program to reposition its existing store base, which includes opening and relocating several stores, downsizing stores which have more space than is needed to support the continuing men's business and closing several unprofitable stores. In April, 1996 the Company extended its Credit Agreement to April 1999, which reduced the financial covenants and provides for a seasonal over-advance. At May 4, 1996, the Company had outstanding borrowings of $26.2 million with $9.9 million of availability compared to borrowings of $28.9 million and availability of $5.5 million at February 3, 1996. The Company believes that its current liquidity and revolving loan facility will be adequate to maintain its currently anticipated working capital needs. PART 2. OTHER INFORMATION Not applicable. - 10 - 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 11, 1996 Jos. A. Bank Clothiers, Inc. (Registrant) ------------------------------- David E. Ullman Executive Vice President and Chief Financial Officer -11- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS FEB-01-1997 MAY-01-1996 647 0 5,986 0 40,720 53,354 48,871 (24,218) 84,888 18,520 0 0 0 70 35,603 84,888 37,346 37,346 19,665 16,593 0 0 715 373 145 228 0 0 0 228 0.03 0.03
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