FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 2, 1998
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 number 333-10843
SRI RECEIVABLES PURCHASE CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-349276
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10201 MAIN STREET, HOUSTON, TEXAS 77025
(Address of principal executive offices) (Zip Code)
(713) 667-5601
Registrant's telephone number, including area code
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 [ ]
The number of shares of common stock outstanding as of June 2, 1998 was 1,000
shares which were held by Specialty Retailers, Inc., a wholly owned subsidiary
of Stage Stores, Inc.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
==============================================================================
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SRI RECEIVABLES PURCHASE CO., INC.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
CONDENSED BALANCE SHEET
(in thousands, except par value)
(unaudited)
May 2, January 31,
1998 1998
------- -------
ASSETS
Retained Certificates in Trust ..................... $68,202 $72,918
Restricted cash .................................... 7,738 7,808
Debt issue costs ................................... 1,713 1,874
Trust organization costs ........................... 3,762 3,883
------- -------
Total assets ................................. $81,415 $86,483
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued expenses and other accrued
liabilities .................................... 1,605 630
Payable to SRI ..................................... 7,650 14,324
Deferred income taxes .............................. 1,218 1,217
Long-term debt ..................................... 30,000 30,000
------- -------
Total liabilities ............................ 40,473 46,171
Common stock, par value $0.01, 1 share
authorized, issued and outstanding ............. -- --
Additional paid-in capital ......................... 35,563 34,556
Retained earnings .................................. 5,379 5,756
------- -------
Stockholder's equity ......................... 40,942 40,312
------- -------
Commitments and contingencies ...................... -- --
------- -------
Total liabilities and
stockholder's equity ..................... $81,415 $86,483
======= =======
The accompanying notes are an integral part of this statement.
1
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SRI RECEIVABLES PURCHASE CO., INC.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
CONDENSED STATEMENT OF INCOME
(in thousands)
(unaudited)
Three Months Ended
-------------------------
May 2, 1998 May 3, 1997
----------- -----------
Gain associated with Retained Certificates ....... $ 490 $ 1,752
Interest income on balances with SRI ............. 1,724 979
Interest income .................................. 57 53
Interest expense ................................. 935 935
Amortization of debt issue costs ................. 161 157
General and administrative expenses .............. 174 167
----------- -----------
Operating income ................................. 1,001 1,525
Income tax expense ............................... 371 567
----------- -----------
Net income ....................................... $ 630 $ 958
=========== ===========
The accompanying notes are an integral part of this statement.
2
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SRI RECEIVABLES PURCHASE CO., INC.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
------------------------
May 2, 1998 May 3, 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................ $ 630 $ 958
--------- ---------
Adjustments to reconcile net income to net cash
used in operating activities:
Amortization of trust organization and debt
issue costs ................................... 356 349
Deferred income taxes ........................... -- 516
Change in working capital ....................... (5,697) (17,205)
--------- ---------
Total adjustments ............................... (5,341) (16,340)
--------- ---------
Net cash used in operating activities ............. (4,711) (15,382)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in restricted cash .......... 70 (2,269)
Purchases of accounts receivable from SRI ....... (126,281) (85,809)
Transfer of accounts receivable to the Trust .... 131,929 103,483
--------- ---------
Net cash provided by investing activities ..... 5,718 15,405
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to debt issue costs ................... -- (23)
Dividends paid to SRI ........................... (1,007) --
--------- ---------
Net cash used in investing activities ......... (1,007) (23)
--------- ---------
Net change in cash and cash equivalents ....... -- --
Cash and cash equivalents:
Beginning of period ............................. -- --
--------- ---------
End of period ................................... $ -- $ --
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Contribution of ineligible accounts
receivable ................................... $ 933 $ 1,101
========= =========
Contribution of trust organization costs ........ $ 74 $ --
========= =========
The accompanying notes are an integral part of this statement.
3
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SRI RECEIVABLES PURCHASE CO., INC.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
CONDENSED STATEMENT OF STOCKHOLDER'S EQUITY
(in thousands)
(unaudited)
Common Stock
-------------------
Additional
Shares Paid-in Retained
Outstanding Amount Capital Earnings Total
----------- ------ -------- -------- --------
Balance, January 31, 1998 1 $ -- $ 34,556 $ 5,756 $ 40,312
Net income ............... -- -- -- 630 630
Dividends ................ -- -- -- (1,007) (1,007)
Contribution of ineligible
accounts receivable ...... -- -- 933 -- 933
Contribution of trust
organization costs ....... -- -- 74 -- 74
----------- ------ -------- -------- --------
Balance, May 2, 1998 ..... 1 $ -- $ 35,563 $ 5,379 $ 40,942
=========== ====== ======== ======== ========
The accompanying notes are an integral part of this statement.
4
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SRI RECEIVABLES PURCHASE CO., INC.
(An indirect, wholly owned subsidiary of Stage Stores, Inc.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed financial statements of SRI
Receivables Purchase Co., Inc. (the "Company" or "SRPC") have been prepared in
accordance with Rule 10-01 of Regulation S-X and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Those adjustments, which include only normal
recurring adjustments, that are in the opinion of management, necessary for a
fair presentation of the results of the interim periods, have been made. The
results of operations for such interim periods are not necessarily indicative of
results of operations for a full year. The unaudited financial statements should
be read in conjunction with the audited financial statements and notes thereto
for the year ended January 31, 1998 filed with SRPC's Annual Report on Form
10-K. Certain reclassifications have been made to prior year amounts to conform
with the current year presentation. The fiscal years discussed herein end on the
Saturday nearest to January 31 in the following calendar year. For example,
references to "1998" mean the fiscal year ended January 30, 1999.
2. SRPC is a wholly owned, special-purpose subsidiary of Specialty
Retailers, Inc. ("SRI"). The Company's ultimate parent is Stage Stores, Inc.
("Stage Stores"). The Company was incorporated in 1993 and established to
acquire substantially all of the trade accounts receivable generated by holders
of SRI's private label credit card accounts and transfer such accounts
receivable to SRI Receivables Master Trust under the terms of a pooling and
servicing agreement. The Company is a separate and distinct entity from Stage
Stores and it's other affiliates. The Company was established with the intent
that in the event of a liquidation, it's creditors would be entitled to satisfy
their claims from the Company's assets prior to any distribution to Stage Stores
or any of it's subsidiaries.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995.
Certain items discussed or incorporated by reference herein contain
forward-looking statements that involve risks and uncertainties including, but
not limited to, the seasonality of demand for apparel which can be affected by
weather patterns, levels of competition, competitors' marketing strategies,
changes in fashion trends and availability of product, the failure of SRI to
achieve the expected results of merchandising and marketing plans or store
opening or closing plans. The occurrence of any of the above could have a
material adverse impact on the amount or quality of accounts receivable
transferred to SRPC, which in turn could affect the operating results of SRPC.
Additionally, changes in economic conditions (including interest rates and
payment patterns of the holders of SRI private label credit card accounts) could
negatively impact SRPC's results of operations. Certain information herein
contains estimates, which represent management's best judgment as of the date
hereof based on information currently available; however, SRPC does not intend
to update this information to reflect developments or information obtained after
the date hereof and disclaims any legal obligation to the contrary.
FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997
Management's Discussion and Analysis of Financial Condition and Results of
Operations is limited to an analysis of results of operations between first
quarter 1998 and first quarter 1997, pursuant to General Instruction H of Form
10-Q
The gain associated with the Retained Certificates for the first quarter
of 1998 decreased 72.2% to $0.5 million from $1.8 million in the same period in
1997 due to an increase in premium payments to SRI for the purchase of accounts
receivable partially offset by an increase in the amount of service charge
income and decrease in bad debt expense. Interest income on balances with SRI
increased 70.0% to $1.7 million in the first quarter of 1998 from $1.0 million
in the first quarter of 1997 primarily due to an increase in the net cash
advances to SRI. Interest expense remained the same at $.9 million in the first
quarters of 1998 and 1997.
5
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item omitted pursuant to General Instruction H of Form 10-Q.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
This item is omitted pursuant to General Instruction H of Form 10-Q.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
This item is omitted pursuant to General Instruction H of Form 10-Q.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This item is omitted pursuant to General Instruction H of Form 10-Q.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27.1 Financial Data Schedule.
6
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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.
SRI RECEIVABLES PURCHASE CO., INC.
JUNE 10, 1998 /S/ CARL E. TOOKER
(Date) Carl E. Tooker
Chairman, Chief Executive Officer
and President
(principal executive officer)
JUNE 10, 1998 /S/ JAMES A. MARCUM
(Date) James A. Marcum
Vice Chairman and
Chief Financial Officer
(principal financial and accounting
officer)
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SRI RECEIVABLES PURCHASE CO., INC. FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-2-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 75,940
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,415
<CURRENT-LIABILITIES> 2,823
<BONDS> 30,000
<COMMON> 0
0
0
<OTHER-SE> 40,942
<TOTAL-LIABILITY-AND-EQUITY> 81,415
<SALES> 0
<TOTAL-REVENUES> 2,271
<CGS> 0
<TOTAL-COSTS> 335
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 935
<INCOME-PRETAX> 1,001
<INCOME-TAX> 371
<INCOME-CONTINUING> 630
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 630
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
