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 July 29, 1995
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 August 21, 1995, 273,147,295 shares of common stock were outstanding.
<PAGE>
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
<PAGE>
<TABLE>
Page 3
TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
July 29, July 30, January 28,
1995 1994 1995
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 222,593 $ 109,578 $ 369,833
Accounts and other receivables 113,310 96,187 115,914
Merchandise inventories 2,808,077 2,411,919 1,999,148
Prepaid expenses and other 67,703 65,457 45,818
Total current assets 3,211,683 2,683,141 2,530,713
Property, equipment and other assets 4,318,295 3,746,293 4,040,480
$7,529,978 $6,429,434 $6,571,193
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $1,221,676 $ 641,816 $ 122,661
Accounts payable 1,495,247 1,323,177 1,339,081
Accrued expenses and other 374,317 363,732 472,653
Income taxes payable 43,992 14,009 202,548
Total current liabilities 3,135,232 2,342,734 2,136,943
Deferred income taxes 230,304 238,231 219,927
Long-term debt 815,140 755,136 785,448
Stockholders' equity:
Common stock 29,795 29,794 29,795
Additional paid-in capital 510,751 448,089 521,295
Retained earnings 3,578,855 3,088,400 3,544,573
Foreign currency translation adjustments 45,249 (20,290) (25,121)
Treasury shares, at cost (815,348) (452,660) (641,667)
3,349,302 3,093,333 3,428,875
$7,529,978 $6,429,434 $6,571,193
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Page 4
TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands except per share information)
<CAPTION>
13 Weeks Ended 26 Weeks Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $ 1,614,210 $ 1,452,117 $ 3,107,175 $ 2,914,050
Costs and expenses:
Cost of sales 1,104,506 982,892 2,121,807 1,984,095
Selling, advertising, general & administrative 415,098 355,868 801,043 706,100
Depreciation and amortization 45,177 36,984 89,688 73,429
Interest expense - net 24,283 16,034 40,221 30,436
1,589,064 1,391,778 3,052,759 2,794,060
Earnings before taxes on income 25,146 60,339 54,416 119,990
Taxes on income 9,304 22,325 20,134 44,396
Net earnings $ 15,842 $ 38,014 $ 34,282 $ 75,594
Earnings per share $.06 $.13 $.12 $.26
Common and common equivalent shares 277,431 290,614 279,138 291,673
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Page 5
TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
26 Weeks Ended
July 29, July 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 34,282 $ 75,594
Adjustments to reconcile net earnings to net cash used by
operating activities:
Depreciation and amortization 89,688 73,429
Deferred income taxes (4,373) 9,851
Changes in operating assets and liabilities:
Accounts and other receivables 4,808 2,347
Merchandise inventories (800,639) (634,350)
Prepaid expenses and other operating assets (26,567) (42,664)
Accounts payable, accrued expenses and taxes (111,012) (134,271)
Total adjustments (848,095) (725,658)
Net cash used in operating activities (813,813) (650,064)
Cash flows from investing activities:
Capital expenditures-net (205,558) (259,004)
Other assets (33,893) (18,675)
Net cash used in investing activities (239,451) (277,679)
Cash flows from financing activities:
Short-term borrowings, net 1,099,015 401,954
Long-term borrowings - 11,218
Long-term debt repayments (1,784) (553)
Exercise of stock options 5,276 5,688
Share repurchase program (189,501) (171,962)
Net cash provided by financing activities 913,006 246,345
Effect of exchange rate changes on cash and cash
equivalents (6,982) (917)
Cash and cash equivalents:
Decrease during period (147,240) (682,315)
Beginning of period 369,833 791,893
End of period $ 222,593 $ 109,578
<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 twenty-six weeks ended July 29, 1995 and July 30, 1994, the Company made income
tax payments of $181,497 and $227,254 and interest payments (net of amounts capitalized) of
$54,226 and $56,177, respectively.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
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 and twenty-six weeks ended July 29,
1995 and July 30, 1994 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.
<PAGE>
Page 7
MANAGEMENT'S DISCUSSION - RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Sales increased by $162 million or 11.2% in the second quarter and $193
million or 6.6% for the twenty-six weeks over the prior year's comparable
periods due primarily to sales from new toy and children's clothing stores,
offset by the closing of 19 children's clothing stores since the beginning
of 1994. Comparable USA toy store sales decreased by .7% for the second
quarter and 5.2% for the twenty-six weeks, and excluding consumables, video
game products and hanging clothing, have increased 1.7% for the quarter and
decreased 1% for the twenty-six weeks. International toy stores also
experienced a decline in comparable sales for both the quarter and twenty-six
weeks due primarily to the continued poor retail environment in much of Europe.
Kids "R" Us had comparable store sales decreases for both the quarter and
twenty-six weeks due to the weak apparel sales environment in the U.S.
Cost of sales, as a percentage of sales, increased .7% in the second quarter
and .2% for the twenty-six weeks versus the prior year's comparable periods
due to the Company's aggressive pricing strategy and changes in the sales mix,
predominately higher sales of low margin video game hardware.
Selling, advertising, general and administrative expenses as a percentage of
sales increased by 1.2% in the second quarter and 1.6% in the twenty-six weeks
versus the prior year's comparable periods as a result of overall comparable
store sales declines and the Company's initiatives to promote customer
service and strategically position the business for the future.
Net interest expense increased in the second quarter and in the twenty-six weeks
compared to the prior years comparable periods, principally as a result of
higher average short-term borrowings due primarily to higher inventories and the
share repurchase program.
The effective tax rate remained constant at 37% for all periods presented.
Since January 28, 1995, foreign currency exchange rates have experienced
fluctuations, however, the impact on net earnings was not significant.
Financial Condition
Plans are underway to open approximately 35 USA and 50 international toy
stores, and 10 Kids "R" Us children's clothing stores during 1995.
Annual capital expenditures for new and existing facilities are estimated
to be approximately $575 million. Cash requirements for operations, capital
expenditures, lease commitments and the share repurchase program will be met
primarily through operating activities, borrowings under the $1 billion
revolving credit facility, issuance of short-term commercial paper and bank
borrowings for foreign subsidiaries.
<PAGE>
Page 8
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of the Company's stockholders on June 7,
1995, all of management's nominees for director were elected.
No additional matters were voted on.
Management's nominees for director received the following votes:
<TABLE>
<CAPTION>
Number of Shares Withheld Votes
<S> <C> <C>
Robert A. Bernhard 233,211,693 1,696,776
Michael Goldstein 233,243,390 1,665,079
Milton S. Gould 233,178,152 1,730,317
Shirley Strum Kenny 233,245,463 1,663,006
Charles Lazarus 233,232,279 1,676,190
Reuben Mark 233,241,062 1,667,407
Howard W. Moore 233,248,251 1,660,218
Robert C. Nakasone 233,204,244 1,704,225
Norman M. Schneider 233,192,504 1,715,965
Harold M. Wit 233,231,925 1,676,544
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule.
(b) The Company was not required to file any reports on Form 8-K
during the 13 weeks ended July 29, 1995.
<PAGE>
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: September 6, 1995 Toys "R" Us, Inc.
(Registrant)
s/Louis Lipschitz
(Signature)
Louis Lipschitz
Senior Vice President - Finance and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
The following is a list of all exhibits filed as part of this document:
<TABLE>
<CAPTION>
Exhibit Page
No. No. Document
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Conslidated Balance Sheets and Consolidated Statements of Earnings as reported
in the Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000051734
<NAME> TOYS "R" US, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> JUL-29-1995
<CASH> 222,593
<SECURITIES> 0
<RECEIVABLES> 113,310
<ALLOWANCES> 0
<INVENTORY> 2,808,077
<CURRENT-ASSETS> 3,211,683
<PP&E> 4,769,000
<DEPRECIATION> 894,366
<TOTAL-ASSETS> 7,529,978
<CURRENT-LIABILITIES> 3,135,232
<BONDS> 815,140
<COMMON> 29,795
0
0
<OTHER-SE> 3,319,507
<TOTAL-LIABILITY-AND-EQUITY> 7,529,978
<SALES> 3,107,175
<TOTAL-REVENUES> 3,107,175
<CGS> 2,121,807
<TOTAL-COSTS> 801,043
<OTHER-EXPENSES> 89,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,221
<INCOME-PRETAX> 54,416
<INCOME-TAX> 20,134
<INCOME-CONTINUING> 34,282
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,282
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
