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 October 29, 1994
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 1-1394
Edison Brothers Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43-0254900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 N. Broadway, St. Louis, Missouri 63102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 331-6000
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by
this report:
Common Stock, $1 par value - 22,021,261
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheets as of
October 29, 1994; January 29, 1994; and
October 30, 1993
Condensed Consolidated Statements of Income for
the 13 and 39 weeks ended October 29, 1994 and
for the 13 and 39 weeks ended October 30, 1993
Condensed Consolidated Statements of Cash Flows
for the 39 weeks ended October 29, 1994 and for the
39 weeks ended October 30, 1993
Notes to Condensed Consolidated
Financial Statements
Management's Discussion and Analysis
Part II. Other Information
Signatures
<TABLE>
PART I FINANCIAL INFORMATION
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
Oct. 29, January 29, Oct. 30,
1994 1994 1993
(In Millions)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and short-term investments $ 30.1 $ 32.6 $ 100.5
Merchandise inventories 383.8 295.0 385.2
Prepaid expenses 11.0 9.4 10.4
Deferred income taxes 24.4 17.4 17.3
Other current assets 15.8 12.5 19.6
Total Current Assets 465.1 366.9 533.0
Property and Equipment, net 355.1 353.8 350.0
Intangible Assets, net 111.1 102.4 101.6
Prepaid Pension Expense 38.1 36.2 35.7
Other Assets 17.1 13.8 11.0
Total Assets $986.5 $873.1 $1,031.3
<CAPTION>
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current Liabilities:
Notes payable and commercial paper $182.1 $ 44.8 $ 134.4
Current portion of long-term debt 15.1 35.1 95.1
Accounts payable, trade 79.4 72.2 69.2
Other current liabilities 71.7 69.3 70.1
Total Current Liabilities 348.3 221.4 368.8
Long-Term Debt 158.6 159.2 174.2
Postretirement Benefits 39.7 38.8 38.7
Other Liabilities 36.1 31.9 33.7
Deferred Income Taxes 8.5 10.0 8.6
Common Stockholders' Equity:
Common stock, par value $1 22.0 22.0 21.9
Capital in excess of par value 76.5 75.6 74.1
Retained earnings 298.1 314.5 311.5
Foreign currency translation
adjustment and other (1.3) (.3) (.2)
Total Common Stockholders' Equity 395.3 411.8 407.3
Total Liabilities and Equity $986.5 $873.1 $1,031.3
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Oct. 29, Oct. 30, Oct. 29, Oct. 30,
1994 1993 1994 1993
(In millions, except per share data)
<S> <C> <C> <C> <C>
Net Sales $353.6 $343.9 $1,031.3 $1,011.1
Cost of goods sold, occupancy
and buying expenses 242.1 231.2 696.6 672.0
Store operating and
administrative expenses 88.0 87.0 261.9 254.9
Depreciation and amortization 17.3 17.0 52.5 49.8
Interest expense, net 5.0 5.2 14.0 14.8
Total Costs and Expenses 352.4 340.4 1,025.0 991.5
Income before income taxes 1.2 3.5 6.3 19.6
Provision for income taxes .4 1.3 2.3 7.3
Net Income $ .8 $ 2.2 $ 4.0 $ 12.3
Per Common Share:
Net Income $ .04 $ .10 $ .18 $ .56
Cash dividends declared $ .31 $ .31 $ .93 $ .93
Weighted average common shares
outstanding (in thousands) 22,021 21,956 22,002 22,010
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
39 Weeks Ended
Oct. 29, Oct. 30,
1994 1993
(In Millions)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 4.0 $ 12.3
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization 52.5 49.8
Deferred income taxes (.9) 3.6
Change in assets and liabilities
net of effects from acquisitions:
Merchandise inventories (90.8) (37.6)
Other assets (13.9) (16.9)
Accounts payable, accrued
expenses and other liabilities 12.9 (9.3)
Other 5.2 4.0
Total Operating Activities (31.0) 5.9
Cash Flows from Investing Activities:
Net payments for businesses and assets
net of cash acquired (10.4) (34.7)
Capital expenditures (49.9) (59.7)
Other (7.3) (2.7)
Total Investing Activities (67.6) (97.1)
Cash Flows from Financing Activities:
Principal payments of long-term debt (20.6) (.1)
Short-term borrowings 137.3 41.6
Common stock dividends (20.5) (20.5)
Common stock purchased (.1) (5.5)
Proceeds from long-term debt issuance 150.0
Other 2.8
Total Financing Activities 96.1 168.3
Cash Provided (Used) (2.5) 77.1
Beginning cash and short-term investments 32.6 23.4
Ending cash and short-term investments $ 30.1 $ 100.5
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited financial statements and notes have been
condensed and, therefore, do not contain all disclosures required by
generally accepted accounting principles. Reference should be made to
the annual financial statements, including the notes thereto, included
in the company's Annual Report to Stockholders for the year ended
January 29, 1994. In the opinion of the company, all adjustments have
been made to present fairly the financial position and the results of
operations for the unaudited interim periods. Unless otherwise
indicated, all such adjustments are of a normal recurring nature.
Certain prior year items have been reclassified to conform to the
current year presentation.
2. Interim operating results are not necessarily indicative of those for
a full fiscal year because of the seasonal nature of the business.
3. Net income per common share is based on the weighted average common
shares outstanding during the period. Shares issuable under the stock
option plans would have no material dilutive effect on earnings per
common share.
4. Common stock shares authorized total 100,000,000; 27,554,196 shares
are issued of which 5,532,935 shares are being held in the company's
treasury and 22,021,261 shares are outstanding.
<TABLE>
5. Property and equipment, net is composed of the following:
<CAPTION>
Oct. 29, January 29, Oct. 30,
1994 1994 1993
(In millions)
<S> <C> <C> <C>
Cost $639.5 $612.5 $600.3
Accumulated depreciation and
amortization (284.4) (258.7) (250.3)
Net book value $355.1 $353.8 $350.0
</TABLE>
<TABLE>
6. Intangible assets, net is composed of the following:
<CAPTION>
Oct. 29, January 29, Oct. 30,
1994 1994 1993
(In millions)
<S> <C> <C> <C>
Cost $157.5 $145.2 $142.9
Accumulated amortization (46.4) (42.8) (41.3)
Net book value $111.1 $102.4 $101.6
</TABLE>
7. The company's financing agreements contain certain restrictions
including limitations on dividend payments and the company's
acquisition of its capital stock. At October 29, 1994 retained
earnings of $89.2 million were free of the most restrictive of these
limitations.
8. In accordance with Financial Accounting Standards Board Technical
Bulletin 85-3, the company accrues noncash rent expense for leases
with scheduled increases in minimum lease payments such that minimum
rent expense is recognized on a straight-line basis over the lease
term. Minimum rent expense accrued in excess of cash rent payments
was $.4 million and $1.3 million for the 13 and 39 weeks ended
October 29, 1994 and $.9 million and $2.7 million for the 13 and 39
weeks ended October 30, 1993.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Condition
Cash and short-term investments decreased $67.9 million between third
quarter and year-end 1993 as proceeds from a March 1993 sale of senior
notes were applied to other maturing debt during the last quarter of 1993.
The company reduced its merchandise inventories over the same period, as it
responded to an anticipated weak retail environment during the fall 1993
season. The increase in inventory between year-end 1993 and third quarter
1994 was a normal build-up of stock in anticipation of the year-end selling
season and, to a lesser extent, the acquisition of several small big-and-
tall men's apparel operations. The company also continued to limit
discretionary capital expenditures in the third quarter of 1994. Third
quarter 1994 expenditures were 6.5% less than expenditures during third
quarter 1993. Intangible assets increased due to 1994 acquisitions and
accrual of a contingent purchase obligation in connection with a prior
acquisition.
The fluctuations in current debt (notes payable and commercial paper) and
long-term debt (current and noncurrent portions) were caused by normal
seasonal variances and balance sheet reclassifications to recognize pending
maturities of long-term debt and the payment of such maturities. The sell-
down of inventory in the fall of 1993 provided the funds necessary to
reduce short-term borrowings during the period. Short-term debt increased
between year-end 1993 and October 1994, in large part because of the
seasonal build-up of fall 1994 inventories, a $20.0 million senior debt
payment in June 1994, and capital expenditures.
Fluctuations in the capital structure have remained reasonably consistent
over the past few years, including at year-end, when the company benefits
from the larger positive cash flow from Christmas sales. At the end of
third quarter 1994 the ratio of total-debt-to-total-debt-plus-equity was
47.4% and at the end of third quarter 1993 was 49.8%. With the application
of the then-available investment funds to existing debt, the 1993 measure
would have dropped to 44.6%. The company has used, and if needed will use,
short-term financing to provide additional working capital when
appropriate. At the end of third quarter 1994, the company had available
committed and uncommitted credit facilities aggregating $103.0 million.
Management believes that funds from operations and the available credit
facilities provide adequate funds to meet working capital and operating
needs.
Operating Results
On October 29, 1994, the company had 2,832 stores in operation, a net
decrease of 34 stores from January 29, 1994. Eighteen stores were added
via business acquisitions during the period.
Sales for the third quarter and 39 weeks ended October 1994 increased by
2.8% and 2.0%, respectively, from the comparable periods of 1993. Third
quarter sales in comparable stores were about even with last year's.
Despite strong performances in the footwear, JW and Repp Ltd. chains, sales
were held down by heavy promotional activity in the other apparel chains,
which has continued into the fourth quarter. During the 39 weeks, the apparel
segment accounted for a majority of sales with 64.7% of the total.
Footwear and entertainment reported 28.0% and 7.3%, respectively, of the
total.
Cost of goods sold, including occupancy and buying expenses, as a
percentage of sales was 68.5% and 67.5% for the third quarter and 39 weeks
of 1994, respectively, as compared with 67.2% and 66.5% for the 1993
periods. Over one-half of the third quarter increased cost percentage
resulted from the heightened markdown activity discussed earlier. The
balance of the increase was caused primarily by higher occupancy and buying
costs. For the 39-week period, the increase was spread more evenly over
all component costs. The footwear segment was more successful than the
apparel segment at achieving regular-price sales, avoiding promotional
markdowns and maintaining or lowering occupancy and buying costs.
Store operating and administrative expenses, expressed as a percentage of
sales, were 24.9% and 25.4% for the third quarter and 39 weeks of 1994 as
compared with 25.3% and 25.2% for the comparable 1993 periods. Store
expenses were well controlled during the third quarter with only a slight
increase as a percentage of sales as compared with the same period last
year. The small increase in store expenses was more than offset by a
decrease in administrative costs caused primarily by a $1.7 million net
benefit from a litigation settlement. Although store expenses during the
39-week period of 1994 were higher as a percentage of sales than in 1993,
the rate of increase declined from that reported in the spring of 1994,
reflecting positive sales leverage. The opening of a new Dave & Buster's
unit during first quarter 1994 also increased the store expense rate.
These restaurant\entertainment centers are more labor intensive than the
Company's other retail units and this larger unit accounted for over one-
half of the total Company increase as a percentage of sales for the 39-week
period. Excluding the litigation settlement, administrative expenses for
the 39 weeks, as a percentage of sales, continued at a rate slightly below
1993 levels.
The reductions in interest expense in the 1994 periods are attributable to
the discontinuance and partial reversal of an accrual along with greater
interest income earnings, all partially offset by somewhat higher expense
on borrowings.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Items 1 through 5 of Part II are not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11, computation of per share earnings, is on page 9 of this
Form 10-Q.
(b) Exhibit 27, Financial Data Schedule, is on page 10 of this Form 10-Q.
(c) There were no reports on Form 8-K filed during the quarter ended
October 29, 1994.
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.
EDISON BROTHERS STORES, INC.
Date: December 12, 1994 By/s/David B. Cooper, Jr.
David B. Cooper, Jr.
Executive Vice President and
Chief Financial Officer
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Oct. 29, Oct. 30, Oct. 29, Oct. 30,
1994 1993 1994 1993
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Income from continuing operations $ 824 $ 2,130 $ 4,028 $12,259
Preferred stock dividends (1) (7) (9) (20)
Net Income applicable to common stock $ 823 $ 2,123 $ 4,019 $12,239
SIMPLE AND PRIMARY
Weighted average shares outstanding 22,021 21,956 22,002 22,010
Net effect of dilutive stock
options - based on the treasury
method (56) 132 35 211
TOTAL 21,965 22,088 22,037 22,221
Per common share amounts: Simple
Net Income applicable to common
stock $ .04 $ .10 $ .18 $ .56
Per common share amounts: Primary
Net income applicable to common
stock $ .04 $ .10 $ .18 $ .55
FULLY DILUTED
Weighted average shares outstanding 22,021 21,956 22,002 22,010
Net effect of dilutive stock
options - based on the treasury
method (56) 180 41 242
TOTAL 21,965 22,136 22,043 22,252
Per common share amounts: Fully
diluted
Net Income applicable to common
stock $ .04 $ .10 $ .18 $ .55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF OCTOBER 29, 1994, AND THE
CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE 39 WEEKS ENDED
OCTOBER 29, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000031575
<NAME> EDISON BROTHERS STORES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-29-1995
<CASH> 30,100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 383,300
<CURRENT-ASSETS> 465,100
<PP&E> 639,500
<DEPRECIATION> (284,400)
<TOTAL-ASSETS> 986,500
<CURRENT-LIABILITIES> 348,300
<BONDS> 158,600
<COMMON> 22,000
0
0
<OTHER-SE> 373,300
<TOTAL-LIABILITY-AND-EQUITY> 986,500
<SALES> 1,031,300
<TOTAL-REVENUES> 1,031,300
<CGS> 696,600
<TOTAL-COSTS> 314,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,000
<INCOME-PRETAX> 6,300
<INCOME-TAX> 2,300
<INCOME-CONTINUING> 4,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
