<PAGE>
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 No. 1-5967
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THREE D DEPARTMENTS, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-0733200
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
3200 Bristol Street, Costa Mesa, California 92626
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (714) 662-0818
-----------------------------
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 .
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At April 29, 1995 there were 1,151,494 shares of Class A common stock and
1,276,717 shares of Class B common stock, par value $.25, outstanding.
The total number of pages in this report is 8 .
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THREE D DEPARTMENTS, INC.
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INDEX
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Quarter Ended April 29, 1995
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<TABLE>
<CAPTION>
Page
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Part I. Financial Information:
Item 1. Financial Statements:
Balance sheet at April 29, 1995
and July 30, 1994 3
Statement of income and retained earnings
for the thirteen week periods ended
April 29, 1995 and April 30, 1994 and
for the thirty-nine week periods ended
April 29, 1995 and April 30, 1994 4
Statement of cash flows for the thirty-nine
week periods ended April 29, 1995
and April 30, 1994 5
Notes to financial statements 6
Item 2. Management's discussion and analysis of results
of operations and financial position 7
Part II. Other Information 8
Signatures 8
</TABLE>
2
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THREE D DEPARTMENTS, INC.
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Balance Sheet
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(Unaudited)
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<TABLE>
<CAPTION>
April 29, July 30,
1995 1994
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<S> <C> <C>
ASSETS
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CURRENT ASSETS:
- - - ---------------
Cash $ 605,751 $ 3,311,144
Receivables:
Tax refund 364,395 364,395
Other 278,545 659,044
Inventories 17,983,057 14,118,720
Prepaid expenses 424,806 293,153
Prepaid income taxes 74,311 107,555
Deferred income taxes 353,333 322,733
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Total current assets 20,084,198 19,176,744
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PROPERTY, FIXTURES AND IMPROVEMENTS, at cost:
- - - ---------------------------------------------
Property, fixtures and equipment 11,055,456 8,569,658
Leasehold improvements 3,106,716 2,466,222
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14,162,172 11,035,880
Less - acccumulated depreciation and amortization 6,894,337 6,325,295
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7,267,835 4,710,585
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OTHER ASSETS:
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Deferred costs of leases, net 1,297,281 492,599
Deferred income taxes 24,347 160,398
Other 1,076,309 906,642
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2,397,937 1,559,639
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29,749,970 25,446,968
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LIABILITIES and STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
- - - --------------------
Long-term debt - current portion 287,269 $ 62,097
Accounts payable 4,458,214 4,377,271
Accrued liabilities 2,083,747 1,869,520
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Total current liabilities 6,829,230 6,308,888
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LONG-TERM DEBT, LESS CURRENT PORTION 9,866,213 6,015,911
- - - ------------------------------------ ----------- -----------
DEFERRED COMPENSATION 200,000 200,000
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OTHER LIABILITIES 450,000
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STOCKHOLDERS' EQUITY:
- - - ---------------------
Preferred stock; $1.00 par value;
authorized 300,000 shares; none issued
Common stock; $.25 par value
Class A - authorized 6,000,000 shares;
issued 1,656,969 shares 414,242 414,242
Class B - authorized 6,000,000 shares;
issued 1,576,113 shares 394,028 394,028
Additional paid-in capital 1,246,557 1,246,557
Retained earnings 12,154,433 12,123,208
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14,209,260 14,178,035
Less - 804,871 shares of common stock in treasury, at cost
(July 30, 1994 - 382,278) 1,804,733 1,255,866
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12,404,527 12,922,169
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$29,749,970 $25,446,968
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</TABLE>
See accompanying notes to financial statements.
3
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THREE D DEPARTMENTS, INC.
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Statement of Income and Retained Earnings
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(Unaudited)
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<TABLE>
<CAPTION>
Thirteen Week Periods Ended Thirty-Nine Week Period Ended
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Apr. 29, 1995 Apr. 30, 1994 Apr. 29, 1995 Apr. 30, 1994
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<S> <C> <C> <C> <C>
Revenues:
Sales $11,522,075 $ 8,554,691 $38,020,624 $31,258,455
Costs and Expenses:
Cost of sales, including
warehousing and
buying expenses 6,200,348 5,234,270 21,299,572 17,901,226
Store operating,
administrative and
general expenses 5,176,698 4,371,618 15,755,606 14,089,065
Interest expense 298,937 110,260 717,393 309,817
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11,675,983 9,716,148 37,772,571 32,300,108
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Income (loss) before income taxes
and cumulative effect
of accounting change (153,908) (1,161,457) 248,053 (1,041,653)
----------- ----------- ----------- -----------
Provision (benefit) for
income taxes
Federal (30,987) (298,275) 105,430 (299,800)
State (18,777) (31,355) 35,070 (7,400)
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(49,764) (329,630) 140,500 (307,200)
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Net income (loss) before
cumulative effect
of accounting change (104,144) (831,827) 107,553 (734,453)
Cumulative effect of
accounting change for
income taxes (Note 3) 96,223
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Net income (loss) (104,144) (831,827) 107,553 (638,230)
Retained earnings at
beginning of period 12,282,534 13,049,223 12,123,208 12,912,472
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12,178,390 12,217,396 12,230,761 12,274,242
Cash dividends (23,957) (28,428) (76,328) (85,274)
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Retained earnings at
end of period $12,154,433 $12,188,968 $12,154,433 $12,188,968
=========== =========== =========== ===========
Average number of
shares outstanding 2,428,211 2,850,804 2,561,278 2,850,804
=========== =========== =========== ===========
Net income (loss) per share $ (.04) $ (.29) $ .04 $ (.22)
=========== =========== =========== ===========
Cash dividends per share
Class A common $ .0125 $ .0125 $ .0375 $ .0375
=========== =========== =========== ===========
Class B common $ .0075 $ .0075 $ .0225 $ .0225
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
THREE D DEPARTMENTS, INC.
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Statement of Cash Flows
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Increase (Decrease) in Cash and Cash Equivalents
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(Unaudited)
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<TABLE>
<CAPTION>
Thirty-Nine Week Periods Ended
--------------------------------
Apr. 29, 1995 Apr. 30, 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 107,553 $ (638,230)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,143,745 992,133
Benefit (provision) for deferred taxes 136,051 (1,899)
Increase in cash value of life insurance (243,922) (217,111)
Loss on sale, and abandonments of fixtures
and leaseholds 16,974 91,906
Changes in assets and liabilities:
Decrease (increase) in receivables 380,499 (821,647)
Increase in inventories (3,864,337) (485,332)
(Increase) decrease in prepaid expenses (131,653) 79,838
Decrease in prepaid income taxes 33,244 31,637
Decrease in deposits 55,195 6,529
Increase in deferred income taxes (30,600) (100,075)
Increase in accounts payable 80,943 1,684,564
Increase in other liabilities 450,000
Increase in accrued liabilities 214,227 375,383
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Net cash (used by) provided by operating
activities (1,652,081) 997,696
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Cash flows from investing activities:
Purchase of building (1,193,834)
Purchase of property, fixtures and improvements (2,376,846) (619,336)
Purchase of software (58,877) (2,940)
Purchase of lease (880,000)
Sale of fixtures 5,966 1,500
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Net cash used by investing activities: (4,503,591) (620,776)
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Cash flows from financing activities:
Purchase of common stock (548,867)
Repayment of debt (3,074,526) (2,031,346)
Dividends paid (76,328) (85,274)
Proceeds from borrowings 7,150,000 2,043,180
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Net cash provided by (used by) financing
activities 3,450,279 (73,440)
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Net (decrease) increase in cash and cash equivalents (2,705,393) 303,480
Cash and cash equivalents at beginning of period 3,311,144 2,064,681
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Cash and cash equivalents at end of period $ 605,751 $ 2,368,161
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</TABLE>
See accompanying notes to financial statements.
5
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THREE D DEPARTMENTS, INC.
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Notes to Financial Statements
-----------------------------
1. The accounting policies followed by the Company for the unaudited interim
periods are substantially the same as outlined in the Company's 1994 annual
report, which should be read in conjunction with this quarterly report.
2. The financial statements at April 29, 1995 and for the thirteen and thirty-
nine weeks ended April 29, 1995 and April 30, 1994 are unaudited but, in
the opinion of the Company, include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim periods.
3. In October 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109). The adoption of SFAS 109 changed the
Company's method of accounting for income taxes from the deferred method to
an asset and liability approach. The cumulative adjustment of adopting
SFAS 109 was a $96,223 increase to income and deferred tax assets.
4. In October 1994, the Company expended $547,777 in the purchase of 256,794
Class A shares and 165,007 Class B shares from a major shareholder at a
negotiated price. In addition, the Company expended $990 for the purchase
of 792 Class A shares from an unrelated shareholder at the prevailing
market price.
6
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THREE D DEPARTMENTS, INC.
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Management's Discussion and Analysis of
---------------------------------------
Results of Operations and Financial Position
--------------------------------------------
Sales for the thirteen week period ended April 29, 1995 were $11,522,075
compared to $8,554,691 for the thirteen week period ended April 30, 1994, an
increase of $2,967,384 or 34.7%. Sales for the thirty-nine week period ended
April 29, 1995 were $38,020,624, compared to $31,258,455 for the thirty-nine
week period ended April 30, 1994, an increase of $6,762,169 or 21.6%. The
increase in sales for the thirteen and thirty-nine week periods ended April 29,
1995 was attributable to the opening of four new and three expanded stores with
our housewares format. Sales of stores open in both the thirteen and thirty-
nine week periods increased by 20.9% and 16.7%, respectively.
Cost of sales, including warehouse and buying expenses, for the thirteen and
thirty-nine week periods ended April 29, 1995 were 53.8% and 56.0% of sales,
respectively, as compared to 61.2% and 57.3% for the thirteen and thirty-nine
week periods ended April 30, 1994, respectively. The decrease was primarily due
to lower markdowns in the thirteen week period ended April 29, 1995 than for the
same period April 30, 1994. In the quarter ended April 1994, the Company
incurred higher markdowns than normal due to the early termination of a lease
and a store closing sale.
Store operating, administrative and general expenses for the thirteen and
thirty-nine week periods ended April 29, 1995 were 44.9% and 41.4% of sales,
respectively, as compared to 51.1% and 45.1% of sales for the thirteen and
thirty-nine week periods ended April 30, 1994, respectively. The decrease in
the thirteen and thirty-nine week periods were principally due to lower store
closing costs and writeoffs associated with closing three unproductive stores in
Fiscal 1995, as compared to seven stores in Fiscal 1994.
Interest expense increased to $298,937 for the thirteen week period ended April
29, 1995, compared to $110,260 for the thirteen week period ended April 30,
1994. For the thirty-nine week period ended April 29, 1995, interest expense
was $717,393 compared to $309,817 for the thirty-nine week period ended April
30, 1994. The increase was principally due to additional borrowings for
inventory and capital expenditures and higher interest rates.
Total working capital at April 29, 1995 was $13,254,968 compared to $12,867,856
at July 30, 1994. The increase was due to additional inventory for our new and
expanded stores. The current ratio decreased from 3.0 to 1 at July 30, 1994 to
2.9 to 1 at April 29, 1995.
The Company had capital expenditures during the thirty-nine week period ended
April 29, 1995 of approximately $4,510,000 for a building, leases, fixtures and
improvements for new and expanded stores with our housewares format. In the
fourth quarter 1995, the Company projects additional capital expenditures of
approximately $200,000 for new and remodeled stores. Such expenditures will be
funded from operations and outside financing.
7
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THREE D DEPARTMENTS, INC.
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Part II - Other Information
Item 6. Exhibits and Reports of Form 8-K.
(a) Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company was not required to file a report on Form 8-K for any
event during the thirty-nine week period ended April 29, 1995.
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.
THREE D DEPARTMENTS, INC.
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(Registrant)
Date: June 12, 1995
---------------
By /s/ Frank Kane
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Frank Kane
Vice President
Administration and Finance
and /s/ Kim Hutchinson
--------------------------
Kim Hutchinson
Controller
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
APRIL 29, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-30-1994
<PERIOD-START> JUL-31-1994
<PERIOD-END> APR-29-1995
<CASH> 605,751
<SECURITIES> 0
<RECEIVABLES> 642,940
<ALLOWANCES> 0
<INVENTORY> 17,983,057
<CURRENT-ASSETS> 20,084,198
<PP&E> 14,162,172
<DEPRECIATION> 6,894,337
<TOTAL-ASSETS> 29,749,970
<CURRENT-LIABILITIES> 6,829,230
<BONDS> 0
<COMMON> 808,270
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 29,749,970
<SALES> 38,020,624
<TOTAL-REVENUES> 38,020,624
<CGS> 21,299,572
<TOTAL-COSTS> 15,755,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 717,393
<INCOME-PRETAX> 248,053
<INCOME-TAX> 140,500
<INCOME-CONTINUING> 107,553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,553
<EPS-PRIMARY> $.04
<EPS-DILUTED> $.04
</TABLE>
