FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 27, 1995
Commission File Number 0-1500
EVANS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-1050870
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
36 South State Street, Chicago, Illinois 60603
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-855-2000
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 latest practicable date: as of
July 7, 1995 4,918,301 shares of common stock, $.20 par value, were
outstanding.
<PAGE>
EVANS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheets - May 27, 1995
May 28, 1994 and February 25, 1995 2
Condensed Consolidated Statements of Operations -
Thirteen weeks ended May 27, 1995 and May 28, 1994 3
Condensed Consolidated Statements of Cash Flows -
Thirteen weeks ended May 27, 1995 and May 28, 1994 4
Notes to Condensed Consolidated Financial Statements 5 - 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 9
Part II. Other Information 10
Signatures 11
Index to Exhibits 12
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Evans, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
February 25,
May 27, 1995 May 28, 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 273,000 $ 4,296,000 $ 1,134,000
Accounts receivable (net) 14,807,000 17,055,000 17,105,000
Merchandise inventories 14,081,000 14,601,000 16,401,000
Prepaid expenses and
other assets 268,000 528,000 512,000
Deferred income taxes 682,000
------------- ------------- -------------
Total current assets 29,429,000 37,162,000 35,152,000
------------- ------------- -------------
Property and equipment 22,697,000 27,554,000 26,489,000
Accumulated depreciation
and amortization (12,243,000) (15,606,000) (15,885,000)
------------- ------------- -------------
Other assets 2,710,000 1,770,000 3,060,000
Deferred income taxes 1,300,000
------------- ------------- -------------
$42,593,000 $52,180,000 $48,816,000
============= ============= =============
LIABILITIES AND SHAREHOLDERS'EQUITY
- -----------------------------------
Current liabilities:
Notes payable - bank $ 1,400,000 $ 1,400,000
Current portion of
long-term debt 362,000 362,000
Accounts payable 4,604,000 $ 4,668,000 8,911,000
Accrued liabilities 6,766,000 6,246,000 6,930,000
------------- ------------- -------------
Total current liabilities 13,132,000 10,914,000 17,603,000
------------- ------------- -------------
Long-term debt 9,653,000 8,565,000 9,653,000
------------- ------------- -------------
Other liabilities 11,000 35,000 16,000
------------- ------------- -------------
Shareholders'equity:
Preferred stock,
3,000,000 shares
authorized, none issued
Common stock, 6,333,433
shares issued 1,267,000 1,267,000 1,267,000
Capital in excess of
par value 15,660,000 15,660,000 15,660,000
Retained earnings 7,468,000 20,337,000 9,215,000
------------- ------------- -------------
24,395,000 37,264,000 26,142,000
Treasury stock (1,415,134
shares at cost) (4,598,000) (4,598,000) (4,598,000)
------------- ------------- -------------
Total shareholders'equity 19,797,000 32,666,000 21,544,000
------------- ------------- -------------
$42,593,000 $52,180,000 $48,816,000
============= ============= =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
- 2 -
</TABLE>
<PAGE>
<TABLE>
Evans, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Thirteen weeks ended
------------------------------
May 27, 1995 May 28, 1994
------------- -------------
<S> <C> <C>
Net sales $12,300,000 $11,681,000
Service revenues 4,981,000 4,741,000
------------- -------------
17,281,000 16,422,000
Costs and expenses: ------------- -------------
Cost of goods and services sold,
buying and occupancy costs 11,978,000 11,071,000
Selling and general expenses 6,625,000 6,625,000
Provision for doubtful accounts 148,000 166,000
Interest expense 280,000 217,000
Other income, net (3,000) (33,000)
------------- -------------
19,028,000 18,046,000
------------- -------------
Loss before credit for income taxes (1,747,000) (1,624,000)
Credit for income taxes -- 682,000
------------- -------------
Net loss $(1,747,000) $ (942,000)
============= =============
Net loss per common share $(.36) $(.19)
============= =============
Cash dividends per common share -- --
Weighted average number of common
shares outstanding 4,918,301 4,918,301
============= =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
- 3 -
</TABLE>
<PAGE>
<TABLE>
Evans, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Thirteen weeks ended
------------------------------
May 27, 1995 May 28, 1994
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
- ------------------------------------------------
Net loss $(1,747,000) $ (942,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 342,000 342,000
Provision for doubtful accounts 148,000 166,000
Change in assets and liabilities:
Accounts receivable 2,150,000 1,077,000
Merchandise inventories 2,320,000 (439,000)
Prepaid expenses and other current assets 244,000 456,000
Deferred income taxes 0 (682,000)
Other assets 305,000 (2,000)
Accounts payable (4,307,000) (1,894,000)
Accrued liabilities (164,000) 1,107,000
Other liabilities (5,000) (34,000)
-------------- --------------
Net cash used in operating activities (714,000) (845,000)
Cash Flows from Investing Activities:
- ------------------------------------------------
Proceeds from the sale of property and equipment 10,000
Additions to property and equipment (157,000) (789,000)
-------------- --------------
Net cash used in investing activities (147,000) (789,000)
Cash Flows from Financing Activities:
- ------------------------------------------------
Net cash used in financing activities 0 0
-------------- --------------
Net decrease in cash and cash equivalents (861,000) (1,634,000)
Cash and cash equivalents at beginning of period 1,134,000 5,930,000
-------------- --------------
Cash and cash equivalents at end of period $ 273,000 $4,296,000
============== ==============
Supplemental Disclosures of Cash Flow Information:
- --------------------------------------------------
Cash paid during the period for:
Interest $211,000 $235,000
Income taxes 4,000 43,000
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
- 4 -
</TABLE>
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The financial information included herein was prepared in
conformity with generally accepted accounting principles and such
principles were applied on a basis consistent with those reflected
in the 1995 Form 10-K Annual Report filed with the Securities and
Exchange Commission. The accompanying financial data should be
read in conjunction with the notes to consolidated financial
statements contained in the 1995 Form 10-K Annual Report.
The information furnished herein, other than the Condensed
Consolidated Balance Sheet as of February 25, 1995, is unaudited
and includes all adjustments and accruals consisting only of normal
recurring adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The Condensed Consolidated Balance Sheet as of February 25, 1995
has been derived from, and does not include all the disclosures
contained in the audited financial statements as of and for the
year ended February 25, 1995.
2. Because of the seasonal nature of the Company's business,
operating results for the first thirteen weeks are not considered
to be indicative of the results that may be expected for the full
year. Historically, the Company realizes a major portion of its
annual revenues and most of its earnings in the fourth quarter of
its fiscal year.
3. Common share equivalents were not included in the computation
of earnings per share for the thirteen weeks ended May 27, 1995 and
May 28, 1994, because the periods resulted in net losses and the
effect would be antidilutive.
4. On May 31, 1995, the Company finalized an agreement with a new
lender to refinance the existing senior secured debt and provide
for the Company's working capital needs. The agreement provides
for a three year $23,500,000 credit facility which includes two
term loans totalling $2,000,000. The agreement provides for
interest at 1.5% and 2% over the base (prime) rate for the
revolving facility and the term loans, respectively. The agreement
includes provisions which require the maintenance of certain
financial covenants (the most restrictive of which is a minimum
debt service coverage ratio), prohibit the payment of cash
dividends and require a commitment fee of one-third of one percent
per annum on the unused portion of the revolving loan. Also, all
assets, rights, interest and properties of the Company are pledged
as collateral for the revolving and term loan obligations.
5. Approximately $140,000 of employee termination benefits were
charged against the restructuring liability during the first
quarter of fiscal 1996. As of May 27, 1995, approximately 75
employees had been terminated as part of the restructuring. In
- 5 -
<PAGE>
EVANS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
addition, approximately $402,000 of costs associated with store
closings were charged against the restructuring liability during
the first quarter of fiscal 1996.
6. Consistent with the fourth quarter of the prior fiscal year,
the credit for income taxes for the current quarter of $734,000 was
offset by an increase in the Company's valuation allowance with
respect to the future tax benefits of the net operating loss as a
result of the uncertainty of their ultimate realization.
- 6 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Cash and cash equivalents at May 27, 1995 were $273,000 as compared
to $1,134,000 at February 25, 1995. The decrease was due to cash
used in operating activities of $714,000 and cash used in investing
activities of $147,000.
The cash used in operating activities was due primarily to the net
loss of $1,747,000 and a decrease in accounts payable of
$4,307,000, partially offset by a decrease in accounts receivable
of $2,150,000 and a decrease in merchandise inventories of
$2,320,000.
The cash used in investing activities was due primarily to
additions to property and equipment of $157,000, partially offset
by proceeds from the sale of property and equipment of $10,000.
Working capital at May 27, 1995 was $16,297,000 as compared to
$17,549,000 at February 25, 1995.
On May 31, 1995, the Company finalized an agreement with a new
lender to refinance the existing senior secured debt and provide
for the Company's working capital needs. The agreement provides
for a three year $23,500,000 credit facility which includes two
term loans totalling $2,000,000. The agreement provides for
interest at 1.5% and 2% over the base (prime) rate for the
revolving facility and the term loans, respectively. The agreement
includes provisions which require the maintenance of certain
financial covenants (the most restrictive of which is a minimum
debt service coverage ratio), prohibit the payment of cash
dividends and require a commitment fee of one-third of one percent
per annum on the unused portion of the revolving loan. Also, all
assets, rights, interest and properties of the Company are pledged
as collateral for the revolving and term loan obligations.
Results of Operations
Total revenues for the first quarter ended May 27, 1995 increased
$859,000 (5.2%) as compared to the same period last year. Fur
merchandise sales increased $847,000 (19.4%) due primarily to
$1,233,000 in sales associated with leased locations acquired
during the fourth quarter of the prior fiscal year, and an increase
of $260,000 in sales associated with store closing events at
Company-owned locations closed during the first quarter of the
current fiscal year. These increases were partially offset by a
decrease of $646,000 (15.7%) in sales at comparable locations.
Women's ready-to-wear sales decreased $228,000 (3.1%) due primarily
to a decrease of $111,000 in sales associated with the closing of
the Company's Southlake location in Merrilville, Indiana, during
the first quarter, and a decrease of 117,000 (1.7%) at comparable
locations. Service revenues increased $240,000 (5.1%) due
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations, continued
primarily to $1,237,000 in sales associated with leased locations
acquired during the fourth quarter of fiscal 1995, partially offset
by a decrease of $518,000 (12.4%) in sales at comparable locations
and a decrease of $480,000 in sales associated with three
Company-owned locations closed during the first quarter of the
current fiscal year.
Cost of goods and services sold, buying and occupancy costs as a
percentage of total revenues for the first quarter were 69.3% as
compared to 67.4% for the same period last year. Cost of goods and
services sold as a percentage of total revenues increased (54.4%
versus 52.5%) due primarily to lower gross margins on fur
merchandise sales resulting from higher markdowns and lower initial
markup. Buying costs as a percentage of total revenues decreased
(2.7% versus 3.5%) due primarily to the closing of the Company's
fur inspection office in New York during the first quarter.
Occupancy costs as a percentage of total revenues were comparable
with prior year levels.
Total selling and general expenses as a percentage of total
revenues decreased to 38.3% as compared to 40.3% for the same
period last year. Payroll and related fringe benefits as a
percentage of total revenues decreased (24.8% versus 25.7%) due
primarily to the reduction of staff in various corporate
departments as well as management wage reductions which were part
of the Company's planned restructuring. Advertising expenses as a
percentage of total revenues decreased (6.7% versus 7.1%) due
largely to management's efforts to control costs through efficient
and selective marketing strategies.
Interest expense increased $63,000 (29.0%) due primarily to higher
average long-term borrowings associated with the acquisition of the
assets and the assumption of certain liabilities of Gilson,
Incorporated during the fourth quarter of the prior fiscal year and
short-term borrowings which were outstanding during the first
quarter of the current fiscal year.
Other income decreased $30,000 due primarily to a decline in
interest income associated with temporary cash investments.
The pre-tax loss for the first quarter of $1,747,000 as compared to
$1,624,000 for the same period last year was due largely to the
increase in interest expense and the decrease in other income.
Consistent with the fourth quarter of the prior fiscal year, the
credit for income taxes for the current quarter of $734,000 was
offset by an increase in the Company's valuation allowance with
respect to the future tax benefits of the net operating loss as a
result of the uncertainty of their ultimate realization. The net
loss for the first quarter of the prior year of $942,000 was the
- 8 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations, continued
result of an income tax credit of $682,000.
- 9 -
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibit and Report on Form 8-K
(a) Exhibits
Exhibit 11. Computation of earnings per share.
Exhibit 27. Financial Data Schedule
(b) Report on Form 8-K -- A report on form 8-K dated March 3,
1995, was filed by the Company stating that the Company had
finalized an agreement with its principal lenders for amendments to
its existing revolving credit facility and its senior secured
long-term note payable obligations. The amendments established,
among other things, for a May 31, 1995 maturity on the revolving
credit facility, direct borrowings of $1,400,000 through May 31,
1995 and an agreement by the lenders not to exercise any remedies
under the loan agreements with respect to certain potential and
unmatured events of default through May 31, 1995.
Items other than those listed are omitted because they
are not required.
- 10 -
<PAGE>
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 of the undersigned thereunto duly authorized.
EVANS, INC.
DATE: July 7, 1995 PATRICK J. REGAN
PATRICK J. REGAN
President and
Chief Executive Officer
DATE: July 7, 1995 WILLIAM E. KOZIEL
WILLIAM E. KOZIEL
Vice President and
Controller
- 11 -
<PAGE>
EVANS, INC. AND SUBSIDIARIES
Exhibit Page Nos.
11 13
27 14
- 12 -
<PAGE>
<TABLE>
EXHIBIT 11
EVANS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Thirteen weeks ended
--------------------------------
May 27, 1995 May 28, 1994
-------------- --------------
<S> <C> <C>
Primary:
- --------
Weighted average shares outstanding 4,918,301 4,918,301
Incremental shares for
exercise of stock options -- 127,431
-------------- --------------
Adjusted number of common
shares outstanding 4,918,301 5,045,732
============== ==============
Net loss $(1,747,000) $(942,000)
============== ==============
Net loss per share $(.36) $(.19)
============== ==============
Fully diluted:
- --------------
Weighted average shares outstanding 4,918,301 4,918,301
Incremental shares for
exercise of stock options -- 127,431
-------------- --------------
Adjusted number of common
shares outstanding 4,918,301 5,045,732
============== ==============
Net loss $(1,747,000) $(942,000)
============== ==============
Net loss per share $(.36) $(.19)
============== ==============
- 13 -
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Mar-02-1996
<PERIOD-START> Feb-26-1995
<PERIOD-END> May-27-1995
<CASH> 273,000
<SECURITIES> 0
<RECEIVABLES> 14,807,000
<ALLOWANCES> 0
<INVENTORY> 14,081,000
<CURRENT-ASSETS> 29,429,000
<PP&E> 22,697,000
<DEPRECIATION> 12,243,000
<TOTAL-ASSETS> 42,593,000
<CURRENT-LIABILITIES> 13,132,000
<BONDS> 0
<COMMON> 1,267,000
0
0
<OTHER-SE> 18,530,000
<TOTAL-LIABILITY-AND-EQUITY> 42,593,000
<SALES> 12,300,000
<TOTAL-REVENUES> 17,281,000
<CGS> 9,405,000
<TOTAL-COSTS> 11,978,000
<OTHER-EXPENSES> (3,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 280,000
<INCOME-PRETAX> (1,747,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,747,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,747,000)
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
