TO: SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED April 29, 1995
COMMISSION FILE NUMBER 0-1391
ZIONS COOPERATIVE MERCANTILE INSTITUTION
A UTAH CORPORATION
SALT LAKE CITY, UTAH 84137
TELEPHONE NUMBER 801:579-6404
IRS EMPLOYEE IDENTIFICATION NUMBER 87-0196220
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
of such charter 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
Number of Shares outstanding: Common Stock 2,168,942 shares
Other shares, none
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
INDEX
TITLE PAGE NO.
Condensed Balance Sheet 1
Condensed Income Statement 3
Three Months Ended April 29, 1995 & 1994
Condensed Statement of Cash Flows 4
April 29, 1995 & 1994
Notes to Condensed Financial Statements 5
Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
Other Information 8
Signatures 9
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
CONDENSED BALANCE SHEET - APRIL 29, 1995 & JANUARY 28, 1995
In Thousands (000 omitted)
<TABLE>
ASSETS AND OTHER DEBITS
<S> <C> <C>
Current Assets: APRIL JANUARY
1995 1995
Cash and cash items $ 608 $ 2,699
Accounts and Notes Receivable 48,327 56,602
Less allowance for doubtful accounts 2,133 1,923
Net Accounts Receivable and Notes Receivable 46,194 54,679
Inventories:
Finished goods - LIFO cost, retail method 47,159 44,767
Supplies - FIFO cost 2,063 1,645
Prepaid Expenses 1,057 761
Total Current Assets $97,081 104,551
Property:
Property, plant and equipment $33,760 $34,429
Less accumulated depreciation, depletion
and amortization of property, plant and
equipment 12,208 11,595
Capital Leases, Net Accumulated Amortization
(Note 1) 14,828 15,358
Total Property $36,380 $38,192
Other Assets and Deferred Charges:
Other Assets 294 294
Investment in Subsidiary 304 304
TOTAL ASSETS AND OTHER DEBITS $134,059 $143,341
</TABLE>
See notes to condensed financial statements
Form 10-Q
<TABLE>
ZIONS COOPERATIVE MERCANTILE INSTITUTION
CONDENSED BALANCE SHEET - APRIL 29, 1995 & JANUARY 28, 1995
In Thousands (000 omitted)
LIABILITIES, RESERVES AND STOCKHOLDERS EQUITY
<S> <C> <C>
APRIL JANUARY
1995 1995
Current Liabilities:
Accounts payable - trade $ 3,292 $ 6,648
Short term borrowings - banks 17,936 11,500
Current portion of long-term debt 448 146
Current portion of obligations under capital
leases 1,934 1,790
Accrued liabilities
Outstanding gift certificates 1,510 1,566
Reserve for store closings 759 768
Other accrued liabilities 5,419 12,008
Total Current Liabilities $ 31,298 $ 34,426
Long-Term Debt:
Bonds, mortgages and similar debt 26,883 30,222
Capital Lease - Long Term Portion (Note 1) 20,194 20,752
Other Liabilities and Deferred Credits:
Deferred Fed Income Taxes 12 12
Deferred Gross Profit 4,051 4,358
Stockholders Equity:
Capital shares $ 14,602 $ 14,621
Other stockholders equity 37,019 38,950
Total Stockholders Equity $ 51,621 $ 53,571
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $134,059 $143,341
</TABLE>
See notes to condensed financial statements
Form 10-Q
<TABLE>
ZIONS COOPERATIVE MERCANTILE INSTITUTION
CONDENSED INCOME STATEMENT THREE MONTHS ENDED APRIL 29, 1995 & 1994
In Thousands (000 omitted)
<S> <C> <C>
1995 1994
Net Sales $50,447 $50,107
Cost of goods sold, direct merchandising and
buying costs 34,553 34,464
Other revenues 1,524 1,489
Other costs and expenses applicable to other revenue 0 0
Selling, general and administrative expenses 17,298 16,402
Provision for doubtful accounts and notes 156 229
Other Income:
Miscellaneous other income 164 121
Income Deductions:
Interest and amortization of debt discount and
expenses 693 375
Interest Expense on Capital Leases (Note 1) 651 638
Miscellaneous income deductions 398 278
Net loss before income tax expense and
extraordinary items $ (1,614) $ (669)
Income tax expense 0 0
Net loss before extraordinary items $ (1,614) $ (669)
Extraordinary items less applicable tax 0 0
Net Loss $ (1,614) $ (669)
Weighted average number of common shares outstanding 2,168,942 2,168,942
Earnings per common share $ (0.74) $ (0.31)
Cash dividends per common share $ 0.15 $ 0.15
</TABLE>
See notes to condensed financial statements
Form 10-Q
<TABLE>
ZIONS COOPERATIVE MERCANTILE INSTITUTION
CONDENSED STATEMENT OF CASH FLOWS APRIL 29, 1995 & APRIL 30, 1994
In Thousands (000 omitted)
<S> <C> <C>
April April
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $(1,614) $ (669)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,168 884
Deferred gross profit (307) (299)
Deferred income taxes 0 0
Provision for losses on accounts receivable 156 229
Decrease (increase) in assets:
Accounts receivable 8,329 6,879
Inventories (2,810) (1,424)
Prepaid expenses (297) (252)
Other Assets 0 11
Increase (decrease) in liabilities
Accounts payable -- trade (419) (539)
Accrued liabilities (6,655) (4,176)
Net cash provided by operating activities (2,448) 783
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,162) (1,632)
Proceeds from sale of property, plant and equipment 1,805 414
Net cash used in investing activities 643 (1,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 3,500 (9,500)
Additions to long-term debt (3,339) 5,927
Principal payments on long-term debt obligations (111) (418)
under capital leases
Stock options exercised and sales of capital stock 0 0
Purchase (Sale) of treasury stock (13) 60
Cash dividends (322) (321)
Net cash provided by (used in) financing activities (286) (4,252)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,090) (4,687)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,699 5,315
CASH AND CASH EQUIVALENTS AT END OF PERIOD 608 629
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
Notes to Condensed Financial Statements
1. The Company has non-cancellable leases covering store space
which expire on various dates through 2053. Some of the
leases contain provisions for additional annual lease payments
based on a percentage of sales at the leased store. The leases
have renewal options for additional periods ranging up to 67
years.
2. In the opinion of the Company, the accompanying unaudited
condensed financial statements contain all adjustments (con-
sisting of only normal recurring accruals) necessary to
present fairly the financial position as of April 29, 1995 and
the results of operations for three months ended April 29,
1995, and 1994 and changes in financial position for three
months ended April 29, 1995 & 1994.
3. The results of operations for the three months period ended
April 29, 1995 are not necessarily indicative of the results
to be expected for the full year.
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Prospective Information:
During the year ended January 29, 1995, ZCMI closed the Superstition
Springs store in Mesa, Arizona. This store had been converted to an
outlet store format during fiscal 1992, as were stores in the now closed
Village Fair Mall in Phoenix, Arizona, the Tri City Mall in Mesa,
Arizona and the East Bay Mall in Provo, Utah. ZCMI did not open any
stores during the fiscal year ended January 28, 1995. No new stores are
planned during the current fiscal year.
The Company is also in the final phases of converting from a mainframe
computer to a more efficient computer system. This conversion from the
present IBM 4381 mainframe to an IBM AS/400 computer system is estimated
to cost approximately $1,500,000 from inception to completion of the
project.
It is anticipated that these capital expenditures will be financed by
internally generated funds, the leasing of fixtures, and by short-term
and long-term debt.
ZCMI has completed the remodeling projects at the Cottonwood Mall,
Valley Fair Mall, and Layton Hills Mall stores. There are no further
renovation projects scheduled for 1995. The Ogden store was sold during
October 1994. The Ogden store is now located in Ogden City Mall, across
the street from its previous location. Fixed asset expenditures for the
current year are intended for the purchase of new assets and the
maintenance of currently owned assets and should be approximately
$1,000,000.
2. Liquidity and Capital Resources:
The quick and current ratios (1.5 and 3.1, respectively) indicate that
the company's liquidity is more than adequate. These ratios will
fluctuate from quarter to quarter due to the seasonality of inventory
requirements. The liquidity is considered adequate to finance current
operations, pay dividends, and provide for capital expenditures. The
lines of credit that the company has ($49,000,000) are more than
adequate to handle the borrowing requirements for the above mentioned
items.
3. Material Changes:
Accounts Receivable balances normally decline from prior year end
balances due to customer payments on Christmas merchandise as well as
the customer using a third party charge card instead of a ZCMI charge
card.
(Continued on page 7)
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued from page 6)
Long-term debt amortization has decreased the long-term debt while
property and equipment also decreased due to the sale and lease back of
previously owned assets. Inventories increased as a result of the
seasonal trend in inventory levels.
4. Interim Period Reporting:
Comparisons between the first quarter of our fiscal year and the fourth
quarter of the prior year in the department store industry are not only
meaningless, but if made, could be misleading. The Company and the
industry typically records about 33% of its annual sales in the fourth
quarter versus about 20% in the first quarter, due to the variation in
seasonal buying patterns of consumers. Variations in net income is even
greater due to the relatively fixed expenses that accrue rather evenly
throughout the year. As a result many retailers have net losses in the
first quarter.
Sales increased by .7% in the first quarter of 1995 over the first
quarter of 1994.
Costs of goods sold have remained steady at 68.5% for the three month
period ended April 29, 1995 as compared to 68.7% for the same period for
1994. Markdowns have remained close to the same at 17.9% of sales as of
April 29, 1995 as compared to 18.0% of sales on April 30, 1994.
Selling, general, and administrative expenses have increased slightly as
a percent of sales. As of April 29, 1995, they were 34.3% of sales
while they were 32.7% of sales as of April 30, 1994.
Operating expenses increased in the first quarter as a result of
increased depreciation, leases, and rental of furniture, fixture and
equipment due to remodeling and expansion. Also, pension and health
insurance expense have continued to increase as the cost of providing
fringe benefits to associates have increased. Interest expense has
continued to rise as the interest rates have increased over this time
last year.
5. Store Closing Expenditures
ZCMI decided to close several unprofitable stores in prior years
beginning in the year ended January 31, 1992. Stores that have been
closed include Charleston Commons, Pavilions Mall and Village Fair. The
Superstition Springs location was also closed this past fiscal year
ending January 28, 1995. As part of the effort to close unprofitable
stores, $7,150,000 from profits in prior fiscal years was reserved for
store closing costs. These reserves were accumulated against closing
costs from store closings. As of April 29, 1995, approximately $759,300
remained in the reserve for future store closing costs.
Form 10-Q
ZIONS COOPERATIVE MERCANTILE INSTITUTION
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a party to routine legal proceedings
incident to its business none of which, in the opinion
of management, will have a material adverse effect on
The Company's business or financial condition.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
1. The Company was not required to report material or
unusual charges or credits to income pursuant to item
10 (a) or a change in independent accountants pursuant
to item 12 of Form 8-K for any of the three months
ended April 28, 1995.
2. There were no securities of the Company sold by the
Company during the three months ended April 28, 1995
which were not registered under the Securities Act of
1933 in reliance upon an exemption from registration
provided by section 4 (2) of the Act.
Item 6. Exhibits and Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto authorized.
ZIONS CO-OPERATIVE MERCANTILE INSTITUTION
Date June 14, 1995 ____Keith C. Saunders________________
Keith C. Saunders, Secretary
Executive Vice President
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> APR-29-1995
<CASH> 608,446
<SECURITIES> 0
<RECEIVABLES> 48,327,342
<ALLOWANCES> 2,133,438
<INVENTORY> 49,221,660
<CURRENT-ASSETS> 97,081,492
<PP&E> 65,124,627
<DEPRECIATION> 16,536,546
<TOTAL-ASSETS> 134,059,891
<CURRENT-LIABILITIES> 31,298,823
<BONDS> 0
<COMMON> 14,602,359
0
0
<OTHER-SE> 37,018,671
<TOTAL-LIABILITY-AND-EQUITY> 134,059,891
<SALES> 50,446,500
<TOTAL-REVENUES> 52,134,214
<CGS> 34,552,500
<TOTAL-COSTS> 52,248,428
<OTHER-EXPENSES> 398,028
<LOSS-PROVISION> 156,053
<INTEREST-EXPENSE> 1,343,759
<INCOME-PRETAX> (1,614,026)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,614,026)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,614,026)
<EPS-PRIMARY> (0.74)
<EPS-DILUTED> (0.74)
</TABLE>
