FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 1995
Commission file number 0-6319
JACOBSON STORES INC.
(Exact name of registrant as specified in its charter)
Michigan 38-0686330
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification Number)
3333 Sargent Road, Jackson, Michigan 49201
(Address of principal executive offices)
(517) 764-6400
(Registrant's telephone number, including area code)
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 latest practicable date.
Common Stock ($1 Par Value):
5,779,021 Shares Outstanding, excluding
187,200 shares held in treasury, as of April 29, 1995
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For Quarter Ended April 29, 1995
<TABLE>
<CAPTION>
INDEX
Page
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
. Consolidated Balance Sheets - April 29, 1995 and
January 28, 1995 1
. Consolidated Statements of Earnings - Thirteen Week Periods
Ended April 29, 1995 and April 30, 1994 2
. Consolidated Statements of Cash Flows - Thirteen Week
Periods Ended April 29, 1995 and April 30, 1994 3
. Notes to Consolidated Financial Statements 4
Review by Independent Public Accountants 12
Exhibit:
. Report of Independent Public Accountants 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
All items except those set forth above are inapplicable and have
been omitted.
SIGNATURES 19
INDEX OF EXHIBITS
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
April 29, January 28,
ASSETS 1995 1995
------------ -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,128 $ 3,558
Receivables from customers, net 38,350 43,984
Merchandise inventories 102,348 95,848
Prepaid expenses and other assets 2,531 3,639
Deferred taxes 2,190 2,190
--------- ---------
Total current assets 149,547 149,219
--------- ---------
PROPERTY AND EQUIPMENT, NET 98,992 100,258
--------- ---------
OTHER ASSETS 19,701 19,112
--------- ---------
$ 268,240 $ 268,589
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 4,468 $ 3,865
Accounts payable 29,038 30,606
Accrued expenses 13,333 15,112
--------- ---------
Total current liabilities 46,839 49,583
--------- ---------
LONG-TERM DEBT 123,151 120,424
--------- ---------
DEFERRED TAXES 8,405 8,405
--------- ---------
OTHER LIABILITIES 1,683 1,465
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 5,966 5,966
Paid-in surplus 7,109 7,109
Retained earnings 75,486 76,036
Treasury stock (399) (399)
--------- ---------
88,162 88,712
--------- ---------
$ 268,240 $ 268,589
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 1 -
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share and dividend data)
(unaudited)
Thirteen Weeks Ended
---------------------------
April 29, April 30,
1995 1994
---------- ---------
<S> <C> <C>
NET SALES $100,298 $ 97,494
-------- --------
COSTS AND EXPENSES:
Cost of merchandise sold, buying and occupancy
expenses 64,826 62,974
Selling, general and administrative expenses 33,000 31,448
Interest expense, net 2,208 1,858
Gain on sale of property - (504)
-------- --------
Total costs and expenses 100,034 95,776
-------- --------
EARNINGS BEFORE INCOME TAXES 264 1,718
PROVISION FOR INCOME TAXES 92 601
-------- --------
NET EARNINGS $ 172 $ 1,117
======== ========
EARNINGS PER COMMON SHARE:
Primary and fully diluted $ 0.03 $ 0.19
====== ======
CASH DIVIDENDS PER SHARE $ 0.12 1/2 $ 0.12 1/2
====== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Thirteen Weeks Ended
------------------------
April 29, April 30,
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 172 $ 1,117
Gain on sale of property, net of income tax - (333)
Adjustments to reconcile net earnings to
cash provided by operating activities:
Depreciation and amortization 2,549 2,473
Other liabilities 218 (3)
Change in:
Receivables from customers, net 5,634 5,169
Merchandise inventories (6,500) (2,960)
Prepaid expenses and other assets 1,108 129
Accounts payable and accrued expenses (3,347) 1,055
Accrued income taxes - (314)
------- -------
Net cash provided by (used in) operating activities (166) 6,333
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, net of income tax - 612
Additions to property and equipment (1,283) (3,040)
Other non-current assets (589) (2,482)
------- -------
Net cash used in investing activities (1,872) (4,910)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 4,200 1,700
Reduction of long-term debt (870) (802)
Cash dividends paid (722) (722)
------- -------
Net cash provided by financing activities 2,608 176
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 570 1,599
Cash and cash equivalents, beginning of period 3,558 5,899
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,128 $ 7,498
======= =======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
- 3 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
The condensed financial statements included herein have been prepared
by the Company without audit and reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of results for
the interim periods.
Because of the nature of the specialty department store business, the
results for the thirteen week periods ended April 29, 1995 and April
30, 1994 (which do not include the Christmas holiday season) are not
indicative of the results for the year as a whole.
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or amended, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes to consolidated financial statements
included in the Company's latest annual report on Form 10-K.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF REPORTING
Jacobson Stores Inc. operates specialty department stores in 26 cities
in Michigan, Florida, Indiana, Kentucky and Ohio. The consolidated
financial statements include the accounts of the Company and two
wholly-owned subsidiaries, Jacobson Stores Realty Company and Jacobson
Credit Corp. All significant inter-company transactions and balances
have been eliminated.
FISCAL YEAR
The Company's fiscal year ends on the last Saturday in January.
SALES
Sales are net of returns. Restaurant and alteration revenues are
reflected as a reduction of cost of merchandise sold. Finance charge
revenues are recorded as income when earned and are reflected as a
reduction of selling, general and administrative expenses.
- 4 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
RECEIVABLES FROM CUSTOMERS
An account is reviewed for write-off if payment of 20% (one full
monthly payment) has not been received during the previous four-month
period or if it is otherwise determined that the account is
uncollectible.
MERCHANDISE INVENTORIES
All merchandise inventories are valued at cost, which is lower than
market, as determined by the retail last-in, first-out (LIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major replacements and
improvements are charged to the property and equipment accounts.
Maintenance, repairs and minor replacements are charged to expense as
incurred. When assets are sold, retired or fully depreciated, their
cost and related accumulated depreciation and amortization are removed
from the property and equipment accounts, and any gain or loss is
reflected in the statements of earnings.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided on the straight-line basis
over the estimated useful lives of the property and equipment, or over
the respective lease terms, if such periods are shorter.
CAPITALIZATION OF INTEREST
Interest expense incurred on properties under development is
capitalized to reflect properly the costs of properties up to the time
they produce revenues. The amounts capitalized are then amortized over
the respective lives of the depreciable assets.
PRE-OPENING EXPENSES
Expenditures of a non-capital nature associated with opening a new
store are charged to expense using the straight-line method in the 12
months immediately following the opening.
- 5 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
INCOME TAXES
Deferred income taxes result from temporary differences between the tax
basis of an asset or liability and its reported amount in the financial
statements and are adjusted for changes in tax laws and rates.
EARNINGS PER SHARE
Primary earnings per share are computed by dividing net earnings by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the periods.
Fully diluted earnings per share are computed based on the additional
assumption that the Company's 6-3/4% Convertible Subordinated
Debentures due 2011 were converted to common stock at the date of
issuance with a corresponding increase in net earnings to reflect a
reduction in related interest expense, net of income taxes.
(2) CUSTOMER CREDIT AND RECEIVABLES
Receivables from customers were as follows:
<TABLE>
<CAPTION>
April 29, January 28,
(in thousands) 1995 1995
-------------------------------------------------------------------
<S> <C> <C>
Receivables from customers $39,135 $44,777
Less reserve for doubtful accounts 785 793
------- -------
$38,350 $43,984
======= =======
</TABLE>
(3) MERCHANDISE INVENTORIES
Merchandise inventories were as follows:
<TABLE>
<CAPTION>
April 29, January 28,
(in thousands) 1995 1995
-------------------------------------------------------------------
<S> <C> <C>
Inventories at first-in, first-out
(FIFO) cost $118,327 $111,336
Less LIFO reserves 15,979 15,488
-------- --------
$102,348 $ 95,848
======== ========
</TABLE>
- 6 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
(4) PROPERTY AND EQUIPMENT
Property and equipment are set forth below:
<TABLE>
<CAPTION>
April 29, January 28,
(in thousands) 1995 1995
-------------------------------------------------------------------
<S> <C> <C>
Land and improvements $ 9,441 $ 9,472
Buildings and improvements 90,775 92,663
Furniture, fixtures & equipment 44,182 44,299
Leasehold improvements 10,835 10,824
Construction in progress 2,817 2,116
Capital leases 9,610 9,610
--------- --------
167,660 168,984
Less accumulated depreciation
and amortization 68,668 68,726
--------- --------
$ 98,992 $100,258
========= ========
</TABLE>
(5) LONG-TERM LEASES
The Company is obligated under non-cancelable long-term leases for
certain stores or portions of stores, and for certain fixtures and
equipment. Many of the leases contain renewal options. Most require
payment of taxes, insurance, and other costs applicable to the
property, and some require additional rentals based on percentages of
sales.
Capital leases provide the Company with the economic benefits and risks
of ownership. These leases are capitalized and treated as installment
purchases of depreciable property. Capital leases are included in the
balance sheets as property and equipment while the related lease
obligations are included in long-term debt. Interest based on these
obligations and amortization based on the lease terms are charged to
current operations in lieu of rental expense.
All other leases are considered operating leases. Operating leases are
accounted for by recording rental expense over the terms of the leases.
Additional rentals based on percentages of sales are recorded as rental
expense for both capital and operating leases.
- 7 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
(6) FINANCING
Jacobson Credit Corp. has available an unsecured line of credit of
$35,000,000 under a three year Revolving Credit Agreement with two
banks. The Agreement provides for either or both of two interest rate
alternatives, at the Company's option, which historically are below the
prime rate of interest of the lending banks. Borrowings under this
Agreement mature on June 30, 1997. On each June 30, this maturity date
extends one year unless terminated by written notice. The Agreement
requires a facility fee equal to 1/4 of 1% of the line per annum.
Compensating balances are not required. There was $7,700,000
outstanding under the Agreement at April 29, 1995.
The 6-3/4% Convertible Subordinated Debentures are convertible to
shares of the Company's common stock at any time prior to maturity,
unless previously redeemed, at $32.67 per share, subject to adjustment
in certain events. The debentures are redeemable, in whole or in part,
at the option of the Company at declining premiums to December 15,
1996, and thereafter at par. Mandatory annual sinking fund payments of
$1,725,000 are required beginning December 15, 1996. At April 29, 1995,
1,056,000 shares of authorized common stock were reserved for
conversion.
The Company has a 10-year Term Loan Agreement with two banks which
provides for borrowings of up to $40,000,000 on an unsecured basis at
market rates in effect at the time of such borrowings. The Term Loan
Agreement provides for payments of interest only through December 31,
1995, with quarterly principal repayments commencing March 31, 1996.
The Company has $20,000,000 outstanding under this facility at April
29, 1995, at a fixed rate of 7.73% and $10,000,000 outstanding at a
variable rate below prime.
Loan agreements include, among other things, covenants requiring
minimum working capital, minimum net worth and minimum cash flow and
restricting capital stock redemptions and dividend payments.
- 8 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
Long-term debt, less current maturities, consisted of the following:
<TABLE>
<CAPTION>
April 29, January 28,
(in thousands) 1995 1995
--------------------------------------------------------------------------------
<S> <C> <C>
6-3/4% Convertible Subordinated Debentures
due 2011 $ 34,500 $ 34,500
Mortgage notes and collateral trust bonds due
through 2013, at rates from 6.44% to 9.5% 39,670 41,124
Unsecured term loan due 2002, at a fixed rate
of 7.73% 20,000 20,000
Unsecured term loan due 2002, at a variable
rate below prime 10,000 10,000
Industrial development revenue bond obligations,
due through 2015, at variable rates below prime 9,621 9,628
Notes under revolving credit agreement due
1997, at a variable rate below prime 7,700 3,500
-------- --------
121,491 118,752
Capital lease obligations 1,660 1,672
-------- --------
$123,151 $120,424
======== ========
</TABLE>
(7) ACCRUED EXPENSES
Accrued expenses were as follows:
<TABLE>
<CAPTION>
April 29, January 28,
(in thousands) 1995 1995
-------------------------------------------------------------------
<S> <C> <C>
Wages and vacation pay $ 6,151 $ 6,720
Pension 395 1,293
Taxes, other than income taxes 1,825 2,247
Interest 1,541 927
Other 3,421 3,925
-------- --------
$ 13,333 $ 15,112
======== ========
</TABLE>
- 9 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
(8) STOCK OPTIONS
At April 29, 1995, 103,100 shares of Jacobson Stores Inc. common stock
were reserved for issuance under a stock option plan adopted in 1983.
No more options may be granted under this plan. At April 29, 1995,
137,250 shares of Jacobson Stores Inc. common stock were reserved for
issuance under a plan adopted in 1994 and options for an additional
262,750 shares were available for grant to directors and employees.
(9) PREFERRED STOCK PURCHASE RIGHTS
The Company has a Preferred Stock Purchase Rights Plan, under which a
Right is attached to each share of the Company's Common Stock. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock at an exercise
price of $100, subject to adjustment. The Company has reserved 100,000
shares of Series A Preferred Stock for issuance on exercise of the
Rights. The Rights trade with the Company's Common Stock and will
become exercisable 10 days after any person or group acquires 25% or
more of the Company's Common Stock or commences or announces an offer
for 30% or more of the Company's Common Stock. After the Rights become
exercisable, if the Company is acquired in a merger or other business
combination or if 50% or more of its assets or earning power are sold,
each Right will entitle the holder to purchase, at the then current
exercise price of the Right, shares of common stock of the acquiring
company having a market value of twice the exercise price of the Right.
Alternatively, if a 25% shareholder acquires the Company by means of a
reverse merger in which the Company and its stock survive, or if such
shareholder engages in self-dealing transactions with the Company or
acquires beneficial ownership of 40% or more of the Company's Common
Stock other than by means of a fair offer to buy all shares, each Right
(except those of the acquiring person or group) will entitle its holder
to purchase, on exercise, shares of the Company's Common Stock having a
market value of twice the current exercise price of each Right. The
Rights may be redeemed by the Company for one cent per Right until 30
days after a person or group acquires 25% or more of the Company's
Common Stock, and will expire on October 25, 1998.
- 10 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended April 29, 1995
(10) RETIREMENT PLAN
The Company has a trusteed non-contributory defined benefit pension
plan covering substantially all of its employees. Benefits under the
plan are based on a career average pay formula. Service cost and the
projected benefit obligation under the projected unit credit actuarial
method reflect the impact of estimated increases in compensation on
future pension benefits. Unrecognized pension costs and credits,
including actuarial gains and losses, are amortized over the average
remaining service period of those employees expected to receive pension
benefits. The Company's funding policy satisfies the minimum funding
requirements of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code of 1986. Pension plan assets are managed by
independent investment managers.
(11) SUPPLEMENTARY CASH FLOW INFORMATION
The Company considers all short-term investments with a maturity at
date of purchase of three months or less to be cash equivalents.
Investing and financing activities not reported in the Consolidated
Statements of Cash Flows, because they do not involve cash, include
equipment acquired through capital lease obligations. There were no new
capital lease obligations in the thirteen weeks this year or in 1994.
Interest paid (net of interest capitalized) totalled $1,665,000 and
$1,246,000 for the thirteen week periods ended April 29, 1995 and April
30, 1994, respectively. Income tax payments totalled $2,000 and
$918,000 for the thirteen week periods ended April 29, 1995 and April
30, 1994, respectively.
- 11 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended April 29, 1995
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have performed a
limited review of the condensed consolidated financial statements for
the thirteen week period ended April 29, 1995. Since they did not
perform an audit, they express no opinion on the financial statements
referred to above.
- 12 -
<PAGE>
EXHIBIT
EXHIBIT
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To Jacobson Stores Inc.:
We have reviewed the accompanying condensed consolidated balance sheet
of JACOBSON STORES INC. (a Michigan corporation) and subsidiaries as of
April 29, 1995 and the related condensed consolidated statements of
earnings and cash flows for the thirteen week period then ended. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements referred
to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Jacobson Stores
Inc. and subsidiaries as of January 28, 1995, and the related
consolidated statements of earnings, shareholders' equity and cash
flows for the year then ended (not presented herein), and, in our
report dated March 3, 1995, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of January
28, 1995, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan
May 11, 1995
- 13 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended April 29, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The registrant, Jacobson Stores Inc., a Michigan corporation, operates
specialty department stores catering to discerning customers with preferences
for fine merchandise. The Company emphasizes quality merchandise, fully
staffed stores, personalized customer service and attractive, comfortable
shopping surroundings. Each store features a full line of fashion apparel and
accessories for women, men and children, and most offer accessories for the
home.
The Company owns a substantial portion of the real property used in its
business, primarily through its consolidated, wholly-owned real estate
subsidiary, Jacobson Stores Realty Company ("Jacobson Realty"). The Company
finances customer receivables through Jacobson Credit Corp. ("Jacobson
Credit"), its consolidated, wholly-owned finance subsidiary. As used in this
report, the terms "registrant", "Company" and "Jacobson's" refer to Jacobson
Stores Inc. and its subsidiaries unless the context indicates otherwise.
Jacobson's operates in two regions, with stores in twenty-six cities in
Michigan, Indiana, Kentucky, Ohio and Florida. The Company maintains separate
staffs of buyers for each region in order to better respond to customers'
lifestyles and merchandise preferences. The principal merchandising and
distribution functions are performed through regional distribution facilities.
Functions common to all stores, such as management coordination, sales
promotion, data processing and accounting, are centralized at the corporate
headquarters in Jackson, Michigan.
a. OPERATING RESULTS: THIRTEEN WEEKS ENDED APRIL 29, 1995 TO THIRTEEN
WEEKS ENDED APRIL 30, 1994
Sales for the quarter ended April 29, 1995, totalled $100,298,000, an
increase of 2.9% from 1994. Comparable store sales decreased 1.1%.
The cost of merchandise sold, buying and occupancy expenses, expressed as
a percentage of sales, totalled 64.6% for the quarter in both years, as a
higher markup and lower LIFO provision were offset by increased markdowns
in the 1995 period.
Selling, general and administrative expenses, expressed as a percentage
of sales, increased to 32.9% in the quarter from 32.3% in 1994. The
increase is due primarily to first-year costs associated with a new store
opened in Louisville, Kentucky, in fall 1994.
- 14 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended April 29, 1995
Interest expense, expressed as a percentage of sales, increased to 2.2%
for the quarter from 1.9% one year ago, reflecting primarily increased
borrowings on the term loan and revolving credit facilities.
The estimated effective annual income tax rate was 35% in both years and
includes estimated provisions for Federal, State and local income taxes.
1995 net earnings for the thirteen weeks totalled $172,000 or 3 cents per
common share compared to $1,117,000 or 19 cents per share in the same
period last year. As a percentage of sales, net earnings were 0.2% in
1995 as compared to 1.1% in 1994.
Net earnings for the thirteen weeks in 1994 included an after-tax gain on
sale of property of $333,000 or 5 cents per share.
b. LIQUIDITY AND CAPITAL RESOURCES
At April 29, 1995, the Company's current ratio was 3.19 to 1 and working
capital totalled $102,708,000, including $4,128,000 of cash and cash
equivalents. At January 28, 1995, the current ratio was 3.01 to 1 and
working capital totalled $99,636,000, including $3,558,000 of cash and
cash equivalents.
The Company utilizes cash flows from operations and short-term borrowings
to fund its seasonal working capital needs. To support its seasonal
requirements, the Company maintains a $35,000,000 unsecured revolving
credit line through Jacobson Credit Corp. This facility provides for
either or both of two interest rate alternatives. At April 29, 1995,
borrowings under this facility totalled $7,700,000. The Company also
maintains a 10-year term loan facility which provides for borrowings of
up to $40,000,000 on an unsecured basis at market rates in effect at the
time of such borrowings. At April 29, 1995, the Company had borrowed
$30,000,000 under this facility. These facilities provide sufficient
capacity to fund present and anticipated working capital requirements.
A part of the Company's financial strategy is to own, or obtain long-term
leases of its properties. Capital expenditures to modernize and refixture
existing stores and support facilities generally are financed with
internally generated funds. New stores and major expansion projects
generally are financed by first mortgages or comparable financing through
Jacobson Stores Realty Company, or through long-term leases. Future
expansion is expected to be financed in a similar manner.
- 15 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended April 29, 1995
c. CASH FLOWS
Cash and cash equivalents increased $570,000 in the thirteen weeks ended
April 29, 1995 compared to an increase of $1,599,000 in the thirteen
weeks ended April 30, 1994. Cash flows are impacted by operating,
investing and financing activities. In the thirteen weeks this year,
operating activities used $166,000 of cash, compared to $6,333,000 of
cash provided in 1994. The decrease in 1995 versus 1994 reflects primarily
increases in inventory levels.
Investing activities used cash of $1,872,000 in the thirteen weeks this
year compared to $4,910,000 in 1994. Investing activities included
capital expenditures for the acquisition and fixturing of new stores, and
expansion, modernization and refixturing of existing stores and support
facilities totalling $1,283,000 in the quarter in 1995 compared to
$3,040,000 last year. In addition, the Company incurs capital lease
obligations (not included in cash investing activities above) primarily
for computer hardware and related software. There were no new capital
lease obligations to-date this year or last year.
Financing activities provided cash of $2,608,000 in the thirteen weeks
this year compared to $176,000 last year. In the quarter this year, the
Company borrowed an additional $4,200,000 under its revolving credit line
and used $870,000 of cash to service current maturities of long-term
debt. In the same period last year, the Company obtained $1,700,000 in
first mortgage financing and used $802,000 of cash to service current
maturities of long-term debt. The Company paid common stock dividends of
$722,000 in each thirteen week period in 1995 and 1994.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets are adequate to fund
its operations, debt maturities and strategies for future growth.
d. CORPORATE DEVELOPMENT
The Company's strategy is to achieve consistent long-term growth both by
maintaining and improving market share in its existing communities and by
entering new markets.
In March 1994, the Company signed a lease for a 161,000 square foot
building and related parking in the Oxmoor Center, Louisville, Kentucky.
The Company renovated the building and opened the store in November 1994.
- 16 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended April 29, 1995
In April 1994, the Company purchased the store building in the Grande
Boulevard Mall in Jacksonville, Florida, which it had leased since
opening in 1983. The Company obtained first mortgage financing to fund
the purchase.
In May 1994, the Company acquired ownership of its styling salon
operations, which previously were operated as a leased department. The
Company and the former salon operator terminated their License Agreement
and the Company purchased the salon assets for cash.
In October 1994, the Company signed a lease for a 120,000 square foot
store in a shopping center to be constructed in Leawood, Kansas, a suburb
of Kansas City. The store is targeted to open in the Spring 1996.
Subsequent to the close of the quarter covered by this report, in May
1995, the Company signed a lease for an 80,000 square foot store to be
constructed in Mizner Park, a mixed-use retail, residential and office
development in Boca Raton, Florida. The store is targeted to open in the
Fall 1996.
- 17 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended April 29, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
All exhibits except as set forth above have been omitted as not applicable or
not required.
- 18 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
For Quarter 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.
JACOBSON STORES INC.
---------------------
(Registrant)
Date: June 9, 1995 BY: /s/ Mark K. Rosenfeld
-------------------------
MARK K. ROSENFELD
Chairman of the Board and Chief
Executive Officer
Date: June 9, 1995 BY: /s/ Paul W. Gilbert
----------------------
PAUL W. GILBERT
Vice Chairman of the Board
(Principal Financial Officer)
- 19 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
INDEX OF EXHIBITS
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
All exhibits except as set forth above have been omitted as not applicable or
not required.
EXHIBIT 11
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands)
(unaudited)
Primary earnings per common share, as set forth in the consolidated statements
of earnings, are computed by dividing net earnings by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. Fully diluted earnings per share are computed based on the
additional assumption that the Company's 6-3/4% Convertible Subordinated
Debentures due 2011 were converted to common stock at the date of issuance
with a corresponding increase in net earnings to reflect reduction in related
interest expense, net of income taxes, except if anti-dilutive.
These computations are set forth below (in thousands except per share data):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------
April 29, April 30,
1995 1994
--------- ---------
<S> <C> <C>
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE:
Weighted average number of shares of common
stock and common stock equivalents outstanding -
Primary 5,782 5,779
Fully diluted 6,835 6,840
====== =======
NET EARNINGS $ 172 $ 1,117
====== =======
NET EARNINGS, adjusted to reflect reduction
in interest expense attributable to convertible
debentures, net of income tax $ 556 $ 1,501
====== =======
NET EARNINGS PER SHARE:
Primary and Fully diluted $ 0.03 $ 0.19
====== =======
</TABLE>
EXHIBIT 15
ARTHUR ANDERSEN LLP
To Jacobson Stores Inc.:
We are aware that Jacobson Stores Inc. has incorporated by reference in its
Form S-8 Registration Statements No. 2-88295 and No. 033-53469 and Form S-2
Registration Statement No. 33-10532 its Form 10-Q for the quarter ended
April 29, 1995, which includes our report dated May 11, 1995, covering the
unaudited interim condensed consolidated financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933, that report
is not considered a part of the registration statement prepared or certified
by our firm or a report prepared or certified by our firm within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
------------------------
Detroit, Michigan
June 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED
SUBSIDIARIES FOR THE THIRTEEN WEEK PERIOD ENDED APRIL 29, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-END> APR-29-1995
<PERIOD-TYPE> 3-MOS
<CASH> 4,128
<SECURITIES> 0
<RECEIVABLES> 39,135
<ALLOWANCES> 785
<INVENTORY> 102,348
<CURRENT-ASSETS> 149,547
<PP&E> 168,453
<DEPRECIATION> 69,461
<TOTAL-ASSETS> 268,240
<CURRENT-LIABILITIES> 46,839
<BONDS> 123,151
<COMMON> 5,966
0
0
<OTHER-SE> 82,196
<TOTAL-LIABILITY-AND-EQUITY> 268,240
<SALES> 100,298
<TOTAL-REVENUES> 100,298
<CGS> 64,826
<TOTAL-COSTS> 64,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 212
<INTEREST-EXPENSE> 2,208
<INCOME-PRETAX> 264
<INCOME-TAX> 92
<INCOME-CONTINUING> 172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 172
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
