-----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, ETAegN0/j22oNnJZ7MlqlRv0iDdcaKK9p5VcYvD7OHh9PxVy8PZAqlxDAbY/h5VO KJS7H1ZyeG8suejKjuz6bA== 0000950169-97-000518.txt : 19970605 0000950169-97-000518.hdr.sgml : 19970605 ACCESSION NUMBER: 0000950169-97-000518 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970604 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK JOS A CLOTHIERS INC /DE/ CENTRAL INDEX KEY: 0000920033 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 363189198 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23874 FILM NUMBER: 97618921 BUSINESS ADDRESS: STREET 1: 500 HANOVER PIKE CITY: HAMPSTEAD STATE: MD ZIP: 21074 BUSINESS PHONE: 4102392700 10-Q 1 JOS A BANKS 10-Q United States Securities and Exchange Commission Washington, DC 20549 FORM 10 - Q [x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended May 3, 1997 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-23874 Jos. A. Bank Clothiers, Inc. Delaware 5611 36-3189198 - --------------------- ----------------- ---------------- (State incorporation) (Primary Standard (I.R.S. Employer Industrial Identification Classification Number) 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 May 30, 1997 ---------------------------- ------------------------------ Common stock. $.01 par value 6,791,152 Jos. A. Bank Clothiers, Inc. Index Part I. Financial Information Page No. Item 1. Financial Statements Condensed Consolidated Statements 3 of Income - Three Months ended May 3, 1997 and May 4, 1996 Condensed Consolidated Balance 4 Sheets - as of May 3, 1997 and February 1, 1997 Condensed Consolidated Statements 5 of Cash Flows -Three Months ended May 3, 1997 and May 4, 1996 Notes to Condensed Consolidated 6-7 Financial Statements Item 2. Management's Discussion and Analysis 8-11 of Results of Operations and Financial Condition Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 12 (a) Exhibits - Exhibit 27-Financial Data Schedule (EDGAR filing only) Signatures 13 2 PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (In thousands except per share data) (Unaudited) Three Months Ended ------------------------ May 3, May 4, 1997 1996 ------ ------ Net sales $38,655 $37,346 Costs and expenses: Cost of goods sold 19,793 19,665 General and administrative 4,213 4,036 Sales and marketing 13,427 12,557 ------- ------- 37,433 36,258 ------- ------- Operating income 1,222 1,088 Interest expense, net 590 715 ------- ------- Income before provision for income taxes 632 373 Provision for income taxes 250 145 ------- ------- Net income $ 382 $ 228 ======= ======= Per share information: Net income per share $ 0.06 $ 0.03 ======= ======= Weighted average number of shares outstanding 6,825 6,791 ======= ======= See accompanying notes. 3 JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets (In thousands) (Unaudited) May 3, February 1, 1997 1997 -------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 656 $ 719 Accounts receivable 3,573 3,300 Inventories: Raw materials 5,844 4,062 Work-in-process 5,823 4,717 Finished goods 36,500 32,104 -------- -------- Total inventories 48,167 40,883 -------- -------- Prepaid expenses and other current assets 4,549 4,874 Deferred and refundable income taxes 3,200 3,200 -------- -------- Total current assets 60,145 52,976 -------- -------- Property, plant and equipment, at cost 47,828 48,078 Accumulated depreciation and amortization (25,248) (25,238) -------- -------- Net property, plant and equipment 22,580 22,840 -------- -------- Deferred income taxes 3,843 4,083 Other assets 1,384 1,511 -------- -------- Total Assets $ 87,952 $ 81,410 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 15,012 $ 12,357 Accrued expenses 9,083 10,484 Current portion of long-term debt 1,423 1,504 -------- -------- Total current liabilities 25,518 24,345 Long-term liabilities 26,353 21,366 -------- -------- Total liabilities 51,871 45,711 -------- -------- Shareholders' equity: Common stock 70 70 Additional paid-in capital 56,336 56,336 Accumulated deficit (18,405) (18,787) -------- -------- 38,001 37,619 Less treasury stock (1,920) (1,920) -------- -------- Total shareholders' equity 36,081 35,699 -------- -------- Total liabilities and shareholders' equity $ 87,952 $ 81,410 ======== ======== See accompanying notes. 4 JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Three Months Ended ----------------------- May 3, May 4, 1997 1996 ------- ------ Cash flows from operating activities: Net income $ 382 $ 228 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Decrease in deferred taxes 240 3,876 Depreciation and amortization 916 992 Net increase in operating working capital (6,014) (1,994) Net cash provided by (used in) operating activities (4,476) 3,102 -------- ------- Cash flows from investing activities: Additions to property, plant and equipment (625) (159) Proceeds from disposal of assets - 97 -------- ------- Net cash provided by (used in) investing activities (625) (62) -------- ------- Cash flows from financing activities: Borrowings under long-term Credit Agreement 14,573 10,347 Repayment under long-term Credit Agreement (9,435) (13,026) Changes in other long-term debt, net (100) (216) Payments related to debt financing - (142) -------- ------- Net cash provided by (used in) financing activities 5,038 (3,037) -------- ------- Net increase (decrease) in cash and cash equivalents (63) 3 Cash and cash equivalents - beginning of period 719 644 -------- ------- Cash and cash equivalents - end of period $ 656 $ 647 ======= =======
See accompanying notes. 5 Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/3/97 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. 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 1, 1997 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, 5/3/97 3. WORKING CAPITAL The net change in operating working capital is composed of the following:
Three Months Ended ------------------ May 3, May 4, 1997 1996 ------- ------- (in thousands) (Increase) in accounts receivable $ (273) $(2,120) (Increase) decrease in inventories (7,284) 2,553 Decrease in prepaids and other assets 395 532 Increase (decrease) in accounts payable 2,655 (2,263) (Decrease) in accrued expenses and other liabilities (1,507) (696) ------- ------- Net (increase) in operating working capital $(6,014) $(1,994) ======= =======
4. NEW ACCOUNTING STANDARDS During early 1997, the Financial Accounting Standards Board issued SFAS No. 128, Earnings Per Share," which becomes effective December 15, 1997, and as to which early adoption is not permitted. Under SFAS No. 128, a company will be required to disclose basic earnings per share (with the principal difference from current disclosure being that common stock equivalents will not be considered in the compilation of basic earnings per share) and diluted earnings per share. The adoption of this pronouncement will require restatement of all prior period earnings per share data presented; however, the Company does not expect this change to be material to the historical earnings per share. 7 Jos. A. Bank Clothiers, Inc. S.E.C. Form 10-Q, 5/3/97 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 1, 1997. Overview - The Company's net income for the first quarter of fiscal 1997 increased to $.4 million or $.06 per share compared to net income of $.2 million or $.03 per share for the same period in the prior year. The Company's strategy of expanding its store base by clustering stores in existing markets is performing well, generating increased sales and profit. The four new full-line stores that were opened in the fourth quarter of 1996 have generated strong contributions. The Company has finalized leases for six additional stores to be opened between May and September 1997 and is actively pursuing up to four additional sites to be opened in 1997. These stores would add to our base of 80 stores that were open at the beginning of fiscal 1997. Comparable store sales decreased slightly by 1.5 percent primarily because of the new stores opened in existing markets. Catalog operations have generated higher sales due primarily to the increased catalog circulation and better response rates. During the first quarter of 1997, the Company spent $.9 million more on advertising primarily for a national image advertising campaign which is to be run throughout the year and increased catalog circulation in reaction to favorable response rates over the past year. Gross profit improved compared to 1996 as all product categories performed better than last year, particularly suits and ties. The Company's availability under the Credit Agreement has increased to $13.1 million at May 30, 1997 compared to $11.6 million at the same time last year. Total debt outstanding decreased $3.9 million from $23.5 million at May 3, 1997 compared to $27.4 million at May 4, 1996. Results of Operations - The following table is derived from the Company's condensed consolidated statements of income and sets forth, for the periods indicated, the items included in the condensed consolidated statements of income, expressed as a percentage of net sales. 8 Jos. A. Bank Clothiers, Inc. S.E.C.Form 10-Q 5/3/97 Percentage of Net Sales Quarter Ended -------------------------- May 3, May 4, 1997 1996 ------ ------ Net Sales.................................... 100.0% 100.0% Cost of goods sold........................... 51.2 52.7 ----- ----- Gross profit................................. 48.8 47.3 General and administrative expenses.......... 10.9 10.8 Sales and marketing expenses................. 34.7 33.6 ----- ----- Operating income............................. 3.0 2.9 Interest expense, net........................ 1.5 1.9 ----- ----- Income before income taxes................... 1.6 1.0 Provision for income taxes and related items.......................... .6 0.4 ----- ----- Net income................................... 1.0% 0.6% ===== ===== Net Sales - Total retail and catalog sales increased 6.2 percent to $38.7 million in the first quarter of 1997 from $36.4 million in the same period last year. (The sales for 1996 exclude $.9 million of sales for contract manufacturing work which the Company discontinued in the third quarter of 1996.) The increase in sales reflects a 15 percent increase in existing markets where three new stores were opened. In addition, catalog sales increased by 40 percent during the quarter on an increase of approximately 20 percent in catalog circulation. Comparable store sales (those opened over one year) decreased slightly by 1.5 percent due to the impact of new stores opened in existing markets and an aggressive promotional campaign during April 1996. As expected, the new stores are drawing customers from our existing stores which reduces our comparable store sales results. Cost of Goods Sold - Gross profit improved by 1.5 percentage points for the first quarter of 1997 compared to the same period in the prior year. This improvement was consistent in all categories, particularly in the higher margin suits and ties. General and Administrative Expenses - General and administrative expenses increased $.2 million to $4.2 million in the quarter compared to 1996. The increase was primarily related to higher professional fees as the Company negotiated the extension of the contract with its manufacturing and distribution union. Sales and Marketing Expenses - Sales and marketing expenses increased $.8 million in the first quarter of 1997 compared to 1996 primarily as a result of higher catalog circulation and a national image advertising campaign. The Company mailed approximately 20 percent more catalogs in the first quarter of 1997 compared to the same period in 1996 in reaction to favorable trends in the catalog operations over the last year. The Company expects to continue to increase catalog circulation in 1997. The national image campaign is to be run throughout the year on CNN Headline News and is designed to increase the awareness of the Jos. A. Bank name. 9 Jos. A. Bank Clothiers, Inc. S.E.C.Form 10-Q 5/3/97 Interest Expense - Interest expense was $.1 million lower in the first quarter ended May 3, 1997 compared to the same period in 1996 due primarily to a $3.9 million decrease in total debt outstanding at May 3, 1997 compared to May 4, 1996. Income Taxes - The Company has net tax operating loss carryforwards (NOLs) of approximately $20 million which expire through 2011. The NOLs were generated during periods in which the Company operated its women's business along with the men's business, primarily in fiscal 1995. In 1995, the Company discontinued its women's business to focus its efforts on its men's business. Realization of the future tax benefits of the NOLs 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 earnings, its recent operating results and growth plans, that future earnings of the Company will more likely than not be sufficient to utilize at least $16 million of the NOLs prior to their expiration. Accordingly, the Company has recorded a deferred tax asset of $6.1 million relating to the NOLs. The average minimum taxable income that the Company would need to generate prior to the expiration of the NOLs would be less than the average taxable income that the Company earned during fiscal years 1992 through 1994, as adjusted for unusual charges. Management believes that although the recent earnings and estimated future earnings might justify a higher amount, the $6.1 million represents a reasonable estimate of the future utilization of the NOLs and will continue to evaluate the likelihood of future profit and the necessity of future adjustments to the deferred tax asset valuation allowance. No assurance can be given that sufficient taxable income will be generated for full utilization of the NOLs. Liquidity and Capital Resources - At May 3, 1997 the Company had outstanding borrowings of $23.1 million with $13.8 million of availability under its Credit Agreement compared to borrowings of $26.2 million and availability of $9.7 million at the same time last year. The Company's availability at May 3, 1997 has increased by $4.1 million compared to the same time in 1996. The increase in availability was generated principally by better terms with vendors and the timing of inventory purchases. The following table summarizes the Company's sources and uses of funds as reflected in the condensed consolidated statements of cash flows: Three Months Ended ----------------------- May 3, May 4, 1997 1996 -------- -------- Cash provided by (used in): Operating activities $(4,476) $ 3,102 Investing activities (625) (62) Financing activities 5,038 (3,037) ------- ------- Net increase (decrease) in cash and cash equivalents $ (63) $ 3 ======= ======= 10 Jos. A. Bank Clothiers, Inc. S.E.C.Form 10-Q 5/3/97 Cash used by operating activities was due primarily to higher inventory levels to support new stores and to add product categories. Cash used in investing activities relates primarily to improvements to two new stores that will open in the second quarter of 1997 and for display fixtures to improve merchandise presentations in our stores. Cash provided by financing activities represents primarily borrowings on the revolving loan under the Credit Agreement. The Company expects to spend between $4.0 and $5.0 million in capital expenditures to open up to ten new stores and renovate existing stores in 1997. The Company believes that its current liquidity and Credit Agreement will be adequate to maintain its currently anticipated working capital and investment needs. The store expansion program is being financed through operations and the Company's Credit Agreement. Further expansion beyond 1998 may necessitate revised financing arrangements for the Company. The Company's plans and beliefs concerning 1997 contained herein are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forecast due to a variety of factors that can adversely affect the Company's operating results, liquidity and financial condition. 11 PART 2. OTHER INFORMATION Item 6. Exhibit (a) Exhibit 27 - Financial Data Schedule 12 Jos. A. Bank Clothiers, Inc. S.E.C.Form 10-Q 5/3/97 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 3, 1997 Jos. A. Bank Clothiers, Inc. (Registrant) ----------------------------------------- David E. Ullman Executive Vice President, Chief Financial Officer 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-31-1998 APR-03-1997 656 0 3,573 0 48,167 60,145 47,828 25,248 87,952 25,518 0 0 0 70 36,011 87,952 38,655 38,655 19,793 17,640 0 0 590 632 250 382 0 0 0 382 0.06 0.06
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