FORM 10-Q
UNITED STATES
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 July 31, 1999
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 (IRS Employer Identification Number)
incorporation or organization)
3333 Sargent Road, Jackson, Michigan 49201
(Address of principal executive offices, including zip code)
(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):
5,788,209-2/3 Shares outstanding as of July 31, 1999
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For Quarter Ended July 31, 1999
INDEX
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
. Consolidated Balance Sheets -July 31, 1999 and
January 30, 1999 1
. Consolidated Statements of Earnings - Thirteen and
Twenty-Six Week Periods Ended July 31, 1999 and
August 1, 1998 2
. Consolidated Statements of Cash Flows - Twenty- Six
Week Periods Ended July 31, 1999 and August 1, 1998 3
. Notes to Consolidated Financial Statements 4
Review by Independent Public Accountants 6
Exhibit:
. Report of Independent Public Accountants 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 14
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
All items except those set forth above are
inapplicable and have been omitted.
SIGNATURES 17
INDEX OF EXHIBITS
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 31, January 30,
ASSETS 1999 1999
--------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 5,770 $ 2,929
Receivables from customers, net 25,683 32,151
Merchandise inventories 78,842 90,454
Prepaid expenses and other assets 1,224 1,370
Deferred taxes 4,894 4,894
--------- ---------
Total current assets 116,413 131,798
--------- ---------
PROPERTY AND EQUIPMENT, NET 80,628 84,989
--------- ---------
OTHER ASSETS 20,115 20,088
--------- ---------
$ 217,156 $ 236,875
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,497 $ 3,719
Accounts payable 25,918 34,769
Accrued expenses 15,404 16,774
Accrued income taxes -- 442
--------- ---------
Total current liabilities 43,819 55,704
--------- ---------
LONG-TERM DEBT 95,458 99,803
--------- ---------
DEFERRED TAXES 4,866 6,386
--------- ---------
OTHER LIABILITIES 3,855 4,045
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 5,975 5,975
Paid-in surplus 7,201 7,201
Retained earnings 56,381 58,160
Treasury stock (399) (399)
--------- ---------
69,158 70,937
--------- ---------
$ 217,156 $ 236,875
========= =========
The accompanying notes are an integral part of these statements.
- 1 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share data)
(unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------- -----------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 94,186 $ 95,256 $ 208,145 $ 210,081
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of merchandise sold, buying and
occupancy expenses 68,609 70,184 142,306 142,946
Selling, general and administrative
expenses 31,132 31,390 65,523 67,594
Interest expense, net 1,773 1,978 3,577 3,926
Gain on sale of property (523) -- (523) --
--------- --------- --------- ---------
Total costs and expenses 100,991 103,552 210,883 214,466
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE INCOME
TAXES (6,805) (8,296) (2,738) (4,385)
PROVISION (CREDIT) FOR INCOME
TAXES (2,382) (2,904) (959) (1,535)
--------- --------- --------- ---------
NET EARNINGS (LOSS) $ (4,423) $ (5,392) $ (1,779) $ (2,850)
========= ========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE:
Basic and diluted $ (0.76) $ (0.93) $ (0.31) $ (0.49)
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
- 2 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twenty-Six Weeks Ended
----------------------
July 31, August 1,
1999 1998
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,779) $ (2,850)
Gain on sale of property (523) --
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization 4,208 4,228
Deferred taxes (1,520) (1,724)
Other liabilities (190) (199)
Change in:
Receivables from customers, net 6,468 6,580
Merchandise inventories 11,612 7,461
Prepaid expenses and other assets 146 (7)
Accounts payable and accrued expenses (10,221) (2,343)
Current income taxes (442) (360)
-------- --------
Net cash provided by
operating activities 7,759 10,786
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 2,315 --
Additions to property and equipment (1,639) (5,302)
Other non-current assets (27) (202)
-------- --------
Net cash provided by (used in)
investing activities 649 (5,504)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt (5,567) (6,241)
Proceeds of exercise of stock options -- 81
-------- --------
Net cash used in financing
activities (5,567) (6,160)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,841 (878)
Cash and cash equivalents, beginning of period 2,929 3,883
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,770 $ 3,005
======== ========
The accompanying notes are an integral part of these statements.
- 3 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 31, 1999
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 achieve a
fair statement of results for the interim periods. All adjustments
are of a normal and recurring nature.
Because of the nature of the specialty department store business,
the results for the twenty-six week periods ended July 31, 1999
and August 1, 1998 (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) EARNINGS (LOSS) PER SHARE
Basic earnings per share are computed by dividing reported
earnings available to common shareholders by weighted average
common shares outstanding. Diluted earnings per share give effect
to potential common shares represented by stock options and the
Company's 6-3/4% Convertible Subordinated Debentures due 2011,
except if anti-dilutive. Earnings (loss) per common share are
calculated as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Twenty-Six Weeks
------------------ ------------------
(dollars and shares in thousands) 1999 1998 1999 1998
----------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net loss $(4,423) $(5,392) $(1,779) $(2,850)
======= ======= ======= =======
Weighted average common shares
outstanding 5,788 5,782 5,788 5,781
Dilutive stock options 9 225 2 213
------- ------- ------- -------
Shares used to calculate
diluted loss per common share 5,797 6,007 5,790 5,994
======= ======= ======= =======
Loss per common share:
Basic and Diluted $ (.76) $ (.93) $ (.31) $ (.49)
======= ======= ======= =======
</TABLE>
- 4 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 31, 1999
(2) CUSTOMER CREDIT AND RECEIVABLES
Receivables from customers were as follows:
July 31, January 30,
(in thousands) 1999 1999
---------------------------------- -------- ----------
Receivables from customers $26,127 $32,749
Less reserve for doubtful accounts 444 598
------- -------
$25,683 $32,151
======= =======
(3) MERCHANDISE INVENTORIES
Merchandise inventories were as follows:
July 31, January 30,
(in thousands) 1999 1999
----------------------------------- ------- -----------
Inventories at first-in, first out
(FIFO) cost $ 97,261 $108,263
Less LIFO reserves 18,419 17,809
-------- --------
$ 78,842 $ 90,454
======== ========
(4) PROPERTY AND EQUIPMENT
Property and equipment are set forth below:
July 31, January 30,
(in thousands) 1999 1999
------------------------------ -------- -----------
Property and equipment $175,327 $177,864
Less accumulated depreciation
and amortization 94,699 92,875
-------- --------
$ 80,628 $ 84,989
======== ========
- 5 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 31, 1999
(5) 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.
Interest paid (net of interest capitalized) totaled $3,606,000 and
$3,959,000 in the twenty-six week periods ended July 31, 1999 and
August 1, 1998, respectively. The Company paid income taxes
totalling $1,007,000 and $548,000 in the twenty-six week periods
ended July 31, 1999 and August 1, 1998, respectively.
(6) FINANCING
In May 1999, the Company and the lenders under its
Revolving Credit Agreement extended the maturity date by
one year to March 24, 2002.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have
performed a limited review of the condensed consolidated financial
statements for the twenty-six week period ended July 31, 1999.
Since they did not perform an audit, they express no opinion on
the financial statements referred to above.
- 6 -
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 July 31,
1999, and the related condensed consolidated statements of earnings and cash
flows for the twenty-six 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 condensed 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 30, 1999, 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 5, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of January 30, 1999, 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
August 13, 1999
- 7 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The registrant, Jacobson Stores Inc., a Michigan corporation
and successor to a business founded in 1868, offers
customers distinctive apparel and accessories for women, men
and children, as well as decorative accents for the home.
The Company operates 24 specialty stores in Michigan,
Indiana, Kansas, Kentucky, Ohio and Florida, catering to
discerning customers with preferences for high quality
merchandise and individualized service provided by
knowledgeable sales associates.
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 also has a
consolidated wholly-owned finance subsidiary, Jacobson
Credit Corp. ("Jacobson Credit"). 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.
The principal distribution functions are performed at
service centers in Jackson, Michigan and Winter Park,
Florida. Functions common to all stores, such as management
coordination, merchandising, sales promotion, data
processing and accounting, are centralized at the corporate
headquarters in Jackson, Michigan.
a. OPERATING RESULTS: THIRTEEN WEEKS ENDED JULY 31, 1999
COMPARED TO THIRTEEN WEEKS ENDED AUGUST 1, 1998
Sales for the quarter ended July 31, 1999, totaled
$94,186,000, a decrease of 1.1% from 1998. The Company
operated the same number of stores in 1999 and 1998. The
sales decrease in the quarter this year is primarily due to
a phase-out of the Company's bridal salons, beginning in the
second quarter of 1998.
The Company's gross profit percentage increased to 27.2% for
the thirteen weeks this year from 26.3% in 1998, reflecting
principally higher markup and lower markdowns.
Selling, general and administrative expenses totaled 33.1%
of sales for the quarter, essentially unchanged from 33.0%
one year ago. Expense dollars decreased $258,000 in the
quarter this year, reflecting savings from integration of
the Company's Florida and Midwest buying offices and lower
direct selling payroll.
- 8 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
Interest expense, expressed as a percentage of sales,
decreased to 1.9% for the quarter from 2.1% one year ago,
primarily due to lower revolving credit interest rates and
borrowings and lower 6 3/4% Convertible Subordinated
Debenture borrowings.
1999 net loss for the thirteen weeks totaled $4,423,000, or
76 cents per common share, compared to $5,392,000, or 93
cents per common share, last year. As a percent of sales,
net loss totaled 4.7% in 1999 compared to 5.7% in 1998. 1999
results included an after-tax gain on sale of property
totaling $340,000, or 6 cents per share.
b. OPERATING RESULTS: TWENTY-SIX WEEKS ENDED JULY 31, 1999
COMPARED TO TWENTY-SIX WEEKS ENDED AUGUST 1, 1998
Sales for the twenty-six weeks ended July 31, 1999, totaled
$208,145,000, a decrease of 0.9% from 1998. The Company
operated the same number of stores in 1999 and 1998. The
sales decrease in the twenty-six weeks this year is
primarily due to a phase-out of the Company's bridal salons,
beginning in the second quarter of 1998.
The Company's gross profit percentage decreased to 31.6% for
the twenty-six weeks this year from 32.0% in 1998,
reflecting principally higher markdowns, partially offset by
higher markup.
Selling, general and administrative expenses, expressed as a
percentage of sales, decreased to 31.5% for the twenty-six
weeks from 32.2% one year ago. The decrease is due primarily
to reduced sales promotion expense in the first quarter this
year.
Interest expense, expressed as a percentage of sales,
decreased to 1.7% from 1.9% in 1998, primarily due to lower
revolving credit interest rates and borrowings and lower 6
3/4% Convertible Subordinated Debenture borrowings.
1999 net loss for the twenty-six weeks totaled $1,779,000,
or 31 cents per common share, compared to $2,850,000, or 49
cents per common share, last year. As a percent of sales,
net loss was 0.9% in 1999 compared to 1.4% in 1998. 1999
results included an after-tax gain on sale of property
totaling $340,000, or 6 cents per share.
c. LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1999, the Company's current ratio was 2.66 to 1
and working capital totaled $72,594,000, including
$5,770,000 of cash and cash equivalents. At January 30,
1999, the current ratio was 2.37 to 1 and working capital
totaled $76,094,000, including $2,929,000 of cash and cash
equivalents.
- 9 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
The Company utilizes cash flows from operations and revolving credit
line borrowings to fund its seasonal working capital needs, debt
service and expenditures to modernize and refixture existing stores.
To support its present and planned working capital requirements, the
Company has a $100,000,000 revolving credit facility under a Revolving
Credit Agreement with a commercial lender. The revolving credit
facility currently provides for borrowings of up to $80,000,000,
subject to a borrowing base limitation and lender reserves. The
Company may, at its option, increase the maximum available borrowings
under the revolving credit facility to up to $100,000,000 in the
aggregate, subject to the borrowing base limitation and lender
reserves. As of July 31, 1999, the Company had borrowed $31,529,000
under this facility and had $48,471,000 of borrowing availability. For
the twenty-six weeks ended July 31, 1999, the daily weighted average
interest rate on borrowings under the Revolving Credit Agreement was
7.5%.
The Company's debt obligations that are sensitive to changes in
interest rates, scheduled principal maturities, weighted average
interest rates associated with those maturities and market value of
debt have not changed materially from fiscal year-end, except that in
May 1999 the Company received a one-year extension of the revolving
credit facility maturity date to March 24, 2002. In the Form 10-K for
the year ended January 30, 1999, revolving credit borrowings of
$34,875,000 were included in 2001 principal maturities.
d. CASH FLOWS
Cash and cash equivalents increased $2,841,000 in the twenty-six weeks
ended July 31, 1999, compared to a decrease of $878,000 in the
twenty-six weeks ended August 1, 1998. Cash flows are impacted by
operating, investing and financing activities. In the twenty-six weeks
this year, cash provided by operating activities totaled $7,759,000,
compared to $10,786,000 in 1998.
Net operating cash inflows in the 1999 twenty-six weeks resulted
primarily from earnings before non-cash charges, collection of
receivables from customers and seasonal inventory decreases, partially
offset by paydown of accounts payable. Net cash inflows in the 1998
twenty-six weeks resulted primarily from earnings before non-cash
charges, collection of receivables from customers and seasonal
inventory decreases, partially offset by paydown of accounts payable.
Investing activities provided cash of $649,000 in the twenty-six weeks
this year compared to $5,504,000 used in 1998. Capital expenditures
totaled $1,639,000 in the first twenty-six weeks of 1999 compared to
$5,302,000 in the comparable 1998 period. Proceeds from the sale of
property in 1999 totaled $2,315,000.
- 10 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
Financing activities used cash of $5,567,000 in the twenty-six weeks
this year compared to $6,160,000 used last year. In the twenty-six
weeks in 1999, the Company paid down $3,347,000 under its revolving
credit facility, used $1,260,000 to purchase 6 3/4% Convertible
Subordinated Debentures, satisfying the December 1999 sinking fund
requirement, and used $960,000 to service current maturities of
long-term debt. In 1998, the Company paid down $4,978,000 under the
Revolving Credit Agreement, purchased $324,000 in principal amount of
6 3/4% Convertible Subordinated Debentures toward satisfaction of the
$1,725,000 annual sinking fund requirement and used $939,000 to
service current maturities of long-term debt.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets are adequate to
fund its operations and debt maturities.
e. CORPORATE DEVELOPMENT
The Company has no commitments for any new store locations at the
present time. The Company reviews the performance of its less
profitable stores from time to time to determine whether it would be
in the Company's best interest to close any of these stores. Store
closings could have a significant impact on the Company's sales,
expenses and capital requirements and would likely entail additional
significant one-time charges to effect the closing and to recognize
any impairment of assets resulting from the closing decision. In 1998,
the Company sold closed facilities in Jackson and Kalamazoo, Michigan.
In the second quarter of 1999, the Company sold a closed facility in
Dearborn, Michigan.
In 1999, the Company is constructing a 17,000 square foot expansion of
its leased store in Naples, Florida and is remodeling its Sarasota,
Florida store. Both projects are scheduled for completion in time for
the 1999 Holiday season.
The Company is actively addressing the issues related to the year
2000. In 1997, the Company assessed its critical information systems,
communications networks, equipment and facilities, and established a
plan of action to remediate or replace all non-compliant software and
hardware that could pose a significant risk to the Company's
operations. The Company expects to complete remediation or
replacement, testing and implementation of all key systems by the end
of September 1999.
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JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
In addition, the Company has contacted third-party providers of
computer hardware and software to secure appropriate representations
that such hardware or software is or will be year 2000 compliant. The
Company has received year 2000 compliant versions of most third-party
software and expects to complete testing and implementation of those
third-party software programs that have been identified as critical to
the Company's operation by the end of September 1999.
The Company believes its information systems will be ready for the
year 2000. Under the most reasonably likely worst case scenario, it
may experience isolated incidents of non-compliance. The Company
expects that its technically trained personnel, working in cooperation
with key vendors and service providers, should be able to address any
year 2000 issues that may arise. As part of its contingency planning
effort, the Company has made inquiries as to the year 2000 readiness
of select key merchandise vendors. The Company continues to evaluate
the responses to identify any significant exposure that may exist and
to establish alternate sources or strategies where necessary. The
Company believes it generally will have alternative sources of
comparable products and services and does not expect to experience any
material business interruption.
Many risks, however, such as the failure to perform by public
utilities, telecommunications providers and financial institutions,
and the impact of the year 2000 issue on the economy as a whole, are
outside the Company's control and could adversely affect the Company
and its ability to conduct business. While the Company believes its
remediation and contingency planning efforts adequately identify and
address the year 2000 issues that are within the Company's reasonable
control, there can be no assurance that the year 2000 issue will not
have a material adverse impact on the Company's financial condition,
operating results or business.
The substantial majority of the costs to replace non-compliant
software and hardware would have been incurred regardless of the year
2000 issue to meet current business needs and to take advantage of new
lower cost technology platforms. In addition, the Company expects to
spend approximately $800,000 in internal development costs related to
year 2000 readiness, principally for payroll costs of its internal
information systems staff in 1998 and 1999, of which approximately
$675,000 had been spent through July 31, 1999. These system
replacement and internal costs are expected to be funded primarily
through cash flows from operations.
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JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
Each of the above statements regarding future revenues, expenses or
business plans (including statements regarding the sufficiency of the
Company's capital resources to fund future operations) may be a
"forward looking statement" within the meaning of the Securities
Exchange Act of 1934. Such statements are subject to important factors
and uncertainties that could cause actual results to differ materially
from those in the forward-looking statement, including the continued
support of the Company's trade creditors and factors, the risks
inherent in the level of the Company's long-term debt compared to its
equity, the risks inherent in the Year 2000 computer issue, the risk
of unanticipated operating expenses, general trends in retail clothing
apparel purchasing, especially during the Christmas season, and the
factors set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations.
- 13 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 31, 1999
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's debt obligations that are sensitive to changes
in interest rates, scheduled principal maturities, weighted
average interest rates associated with those maturities and
market value of debt have not changed materially from fiscal
year-end, except that in May 1999 the Company received a
one-year extension of the revolving credit facility maturity
date to March 24, 2002. In the Form 10-K for the year ended
January 30, 1999, revolving credit borrowings of $34,875,000
were included in 2001 principal maturities.
- 14 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 31, 1999
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held
on May 27, 1999. At the Annual Meeting, Herbert S. Amster,
Herman S. Kohlmeyer, Jr., P. Gerald Mills and M. Marnette
Perry were elected as Directors to serve until the 2002
Annual Meeting of Shareholders and until their successors
are elected and qualified. Also at the Annual Meeting,
Leslie E. Dietzman was elected as a Director to serve until
the 2000 Annual Meeting of Shareholders and until his
successor is elected and qualified. The following votes were
cast for or were withheld from voting with respect to the
election of each of the following persons:
Votes
------------------------
Authority
Name For Withheld
---- --- --------
Herbert S. Amster 5,391,886 24,773
Herman S. Kohlmeyer, Jr. 5,390,742 25,917
P. Gerald Mills 5,049,603 367,056
M. Marnette Perry 5,052,543 364,116
Leslie E. Dietzman 5,042,320 374,339
There were no abstentions or broker non-votes in connection
with the election of the directors at the Annual Meeting.
In addition, at the Annual Meeting, the shareholders voted
to appoint Arthur Andersen LLP, independent certified public
accountants, as auditors for the fiscal year ending January
29, 2000. The following table shows the number of votes for
and against the proposal and the number of votes abstaining
with respect to the proposal:
For Against Abstain
--- ------- -------
5,368,238 44,752 3,669
There were no broker non-votes in connection with the
appointment of the Company's auditors at the Annual Meeting.
- 15 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 31, 1999
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
15 Letter from Independent Public Accountants
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during its
fiscal quarter ended July 31, 1999.
All exhibits except as set forth above have been omitted as not applicable or
not required.
-16-
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
For Quarter Ended July 31, 1999
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: September 10 , 1999 BY: /s/ P. Gerald Mills
--------------- ----------------------------------
P. GERALD MILLS
Chairman of the Board, President
and Chief Executive Officer
Date: September 10 , 1999 BY: /s/ Paul W. Gilbert
--------------- ----------------------------------
PAUL W. GILBERT
Vice Chairman of the Board
(Principal Financial Officer)
- 17 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
INDEX OF EXHIBITS
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 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 File Nos. 033-53469, 333-31989 and 333-59031
and Form S-2 File No. 33-10532 its Form 10-Q for the quarter ended July 31,
1999, which includes our report dated August 13, 1999, 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
--------------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan
September 10, 1999
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES AS
OF, AND FOR THE TWENTY-SIX WEEK PERIOD ENDED, JULY 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> JUL-31-1999
<PERIOD-TYPE> 6-MOS
<CASH> 5,770
<SECURITIES> 0
<RECEIVABLES> 26,127
<ALLOWANCES> 444
<INVENTORY> 78,842
<CURRENT-ASSETS> 116,413
<PP&E> 175,327
<DEPRECIATION> 94,699
<TOTAL-ASSETS> 217,156
<CURRENT-LIABILITIES> 43,819
<BONDS> 95,458
<COMMON> 5,975
0
0
<OTHER-SE> 63,183
<TOTAL-LIABILITY-AND-EQUITY> 217,156
<SALES> 208,145
<TOTAL-REVENUES> 208,145
<CGS> 142,306
<TOTAL-COSTS> 142,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,577
<INCOME-PRETAX> (2,738)
<INCOME-TAX> (959)
<INCOME-CONTINUING> (1,779)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (1,779)
<EPS-BASIC> (0.31)
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