UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 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 1-1117
TOYS "R" US, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-5159250
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
461 From Road, Paramus, New Jersey 07652
(Address of principal executive offices) (Zip Code)
(201) 262-7800
(Registrant's telephone number, including area code)
(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 Sections 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 May 23, 1994, 287,553,496 shares of common stock were outstanding.
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INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets....................... 3
Consolidated Statements of Earnings............... 4
Consolidated Statements of Cash Flows............. 5
Notes to Consolidated Financial Statements........ 6
Item 2. Management's Discussion - Results of Operations
and Financial Condition...................... 7
PART II - OTHER INFORMATION............................ 8
SIGNATURES............................................. 9
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Page 3
TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
April 30, May 1, January 29,
1994 1993 1994
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 238,189 $ 261,907 $ 791,893
Accounts and other receivables 92,912 70,690 98,534
Merchandise inventories 2,025,726 1,745,312 1,777,569
Prepaid expenses and other 57,472 46,341 40,400
Total current assets 2,414,299 2,124,250 2,708,396
Property, equipment and other assets 3,557,299 3,008,563 3,441,213
$ 5,971,598 $ 5,132,813 $ 6,149,609
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 410,456 $ 146,402 $ 239,862
Accounts payable 1,055,931 909,440 1,156,411
Accrued expenses and other 348,822 289,453 471,782
Income taxes payable 67,437 29,067 206,996
Total current liabilities 1,882,646 1,374,362 2,075,051
Deferred income taxes 221,906 188,178 202,663
Long-term debt 738,725 694,057 723,613
Stockholders' equity:
Common stock 29,794 29,794 29,794
Additional paid-in capital 449,325 471,558 454,061
Retained earnings 3,050,386 2,565,288 3,012,806
Foreign currency translation
adjustments (45,754) 12,912 (56,021)
Treasury shares, at cost (355,430) (203,336) (292,358)
3,128,321 2,876,216 3,148,282
$ 5,971,598 $ 5,132,813 $ 6,149,609
<FN>
See notes to consolidated financial statements.
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TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands except per share information)
<CAPTION>
13 Weeks Ended
April 30, May 1,
1994 1993
<S> <C> <C>
Net sales $ 1,461,933 $ 1,286,479
Costs and expenses:
Cost of sales 1,001,203 882,876
Selling, advertising, general &
administrative 350,232 308,413
Depreciation and amortization 36,445 30,572
Interest expense - net 14,402 9,249
1,402,282 1,231,110
Earnings before taxes on income 59,651 55,369
Taxes on income 22,071 19,933
Net earnings $ 37,580 $ 35,436
Earnings per share $.13 $.12
Common and common equivalent shares 292,741 298,511
<FN>
See notes to consolidated financial statements.
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TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
13 Weeks Ended
April 30, May 1,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 37,580 $ 35,436
Adjustments to reconcile net earnings to net
cash used by operating activities:
Depreciation and amortization 36,445 30,572
Deferred income taxes 4,926 4,987
Changes in operating assets and liabilities:
Accounts and other receivables 5,622 (1,305)
Merchandise inventories (248,157) (246,641)
Prepaid expenses and other operating assets (20,622) 7,724
Accounts payable, accrued expenses and taxes (362,999) (238,917)
Total adjustments (584,785) (443,580)
Net cash used by operating activities (547,205) (408,144)
Cash flows from investing activities:
Capital expenditures-net (100,437) (64,891)
Other assets (5,869) (9,675)
Net cash used by investing activities (106,306) (74,566)
Cash flows from financing activities:
Short-term borrowings, net 170,594 25,630
Long-term borrowings 1,218 900
Long-term debt repayments (221) (236)
Exercise of stock options 3,194 6,273
Share repurchase program (71,002) (53,109)
Net cash provided (used) by financing
activities 103,783 (20,542)
Effect of exchange rate changes on cash and
cash equivalents (3,976) 1,438
Cash and cash equivalents:
Decrease during period (553,704) (501,814)
Beginning of period 791,893 763,721
End of period $ 238,189 $ 261,907
P
<FN>
Supplemental disclosures of cash flow information:
The Company considers all highly liquid investments purchased as part of
its daily cash management activities to be cash equivalents.
During the thirteen weeks ended April 30, 1994 and May 1, 1993, the Company
made income tax payments of $154,727 and $144,995 and interest payments
(net of amounts capitalized) of $18,896 and $16,185, respectively.
See notes to consolidated financial statements.
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Page 6
TOYS "R" US, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Interim Reporting
The interim financial statements are unaudited and are subject to
year-end adjustments. However, in the opinion of management, all known
adjustments (which consist only of normal recurring accruals) have been
made to present fairly the consolidated operating results for the
unaudited periods. Because of the seasonal nature of the Company's
business, results for interim periods are not indicative of results to
be expected for the fiscal year.
2. Earnings Per Share
Earnings per share for the thirteen weeks ended April 30, 1994 and
May 1, 1993 are computed by dividing net earnings by the weighted
average number of common shares outstanding, after reduction for
treasury shares and assuming exercise of dilutive stock options
computed by the treasury stock method using the average market price
during the period.
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Page 7
MANAGEMENT'S DISCUSSION - RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Sales increased by $175,454,000 or 13.6% in the first quarter over the prior
year's comparable quarter due primarily to sales from 109 new toy stores and
10 children's clothing stores opened in 1993 and 1994, offset by the closing
of 18 children's clothing stores over the same period. Comparable USA toy
store sales increased by 6.6% for the quarter. International toy store
comparable sales decreased due to adverse local economic conditions.
Cost of sales as a percentage of sales decreased from 68.6% in the first
quarter of 1993 to 68.5% in the first quarter of 1994 due to a more favorable
product mix and reduced markdowns associated with strong inventory controls.
Selling, advertising, general and administrative expenses remained constant
at 24% of sales in the first quarter of 1994 and 1993.
Net interest expense increased in the quarter compared to the prior years
quarter, as a result of a decrease in interest income ($4,651,000 in 1994
and $6,823,000 in 1993) and higher average short term borrowings.
Our effective tax rate increased from 36% in the first quarter of 1993 to
37% in the first quarter of 1994 due to a 1% increase in the U.S. federal
corporate income tax rate.
Financial Condition
Plans are underway for approximately 40 U.S.A. and 65 international toy
stores including our first stores in Denmark and Sweden, and 10 Kids "R" Us
children's clothing stores. The Company has closed 14 of the 20 Kids "R" Us
stores that were anticipated to be closed this year, with no significant
impact on the Company's financial condition. Seasonal cash requirements will
continue to be met through operations, the issuance of short-term commercial
paper, bank borrowings for certain foreign subsidiaries and the issuance of
long-term debt, if advantageous.
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Page 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Not applicable.
(b) The Company was not required to file any reports on Form 8-K
during the 13 weeks ended April 30, 1994.
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Page 9
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.
Date: June 6, 1994 Toys "R" Us, Inc.
(Registrant)
s/Louis Lipschitz
(Signature)
Louis Lipschitz
Senior Vice President - Finance and
Chief Financial Officer
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