<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
-----------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-12188
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DEB SHOPS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1913593
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9401 Blue Grass Road, Philadelphia, Pennsylvania 19114
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 676-6000
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(Registrant's telephone number, including area code)
Not Applicable
- - -------------------------------------------------------------------------------
(Former name and 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 l934 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, Par Value $.01 12,844,680
- - ---------------------------- -------------------------------------
(Class) (Outstanding at July 31, 1996)
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
I N D E X
Page
PART I. Financial Information:
Consolidated Balance Sheets - 1
July 31, 1996 and January 31, 1996
Consolidated Statements of Operations Six Months and 2
Three Months Ended July 31, 1996 and July 31, 1995
Consolidated Statements of Cash Flows - 3
Six Months Ended July 31, 1996 and July 31, 1995
Notes to Consolidated Financial Statements - 4
July 31, 1996
Management's Discussion and Analysis of Results of
Operations and Financial Condition - July 31, 1996 5-9
PART II. Other Information 9
<PAGE>
DEB SHOPS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1996 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46,567,468 $ 51,569,038
Merchandise inventories 29,534,219 16,655,946
Income taxes receivable 2,471,828 2,171,828
Prepaid expenses and other 3,372,862 1,718,882
Current deferred income taxes 949,128 949,128
------------ ------------
Total Current Assets 82,895,505 73,064,822
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 150,000 --
Building and improvements 3,910,817 1,982,000
Leasehold improvements 30,009,147 29,611,550
Furniture and equipment 15,655,841 16,135,884
------------ ------------
49,725,805 47,729,434
Less accumulated depreciation
and amortization 31,850,071 30,573,512
------------ ------------
17,875,734 17,155,922
------------ ------------
OTHER ASSETS
Goodwill, net of accumulated amortization
of $178,530 and $71,412, respectively 3,039,875 3,146,993
Long term deferred income taxes 1,062,212 1,062,212
Other 1,167,514 1,167,514
------------ ------------
Total Other Assets 5,269,601 5,376,719
------------ ------------
$106,040,840 $ 95,597,463
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 23,738,680 $ 8,585,210
Accrued expenses 4,805,495 4,532,801
------------ ------------
Total Current Liabilities 28,544,175 13,118,011
------------ ------------
Capital Lease Obligation 1,906,527 1,986,267
------------ ------------
COMMITMENTS
SHAREHOLDERS' EQUITY
Series A Preferred Stock, par value $1.00 a share:
Authorized - 5,000,000 shares
Issued and outstanding - 460 shares,
liquidation value $460,000 460 460
Common Stock, par value $.01 a share:
Authorized - 25,000,000 shares
Issued Shares - July 31, 1996: 15,688,290;
January 31, 1996: 15,688,290 156,883 156,883
Additional paid in capital 5,541,944 5,541,944
Retained earnings 87,467,274 92,370,321
------------ ------------
93,166,561 98,069,608
Less common treasury shares, at cost -
July 31, 1996: 2,843,610;
January 31, 1996: 2,843,610 17,576,423 17,576,423
------------ ------------
75,590,138 80,493,185
------------ ------------
$106,040,840 $ 95,597,463
============ ============
</TABLE>
The notes to consolidated financial statements are an
integral part of these financial statements.
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<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended July 31, Three Months Ended July 31,
------------------------------------ ---------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Net sales $ 86,498,960 $ 81,418,237 $48,459,959 $42,316,779
Other income, principally
interest 1,226,653 1,270,146 611,131 681,280
-------------- -------------- ------------ ------------
87,725,613 82,688,383 49,071,090 42,998,059
-------------- -------------- ------------ ------------
Costs and Expenses
Cost of sales, including
buying and occupancy costs 72,072,423 67,382,607 40,599,623 34,612,112
Selling and administrative 19,230,703 19,253,879 9,986,565 9,857,527
Depreciation and amortization 1,743,466 1,995,432 931,861 1,013,628
-------------- -------------- ------------ ------------
93,046,592 88,631,918 51,518,049 45,483,267
------------- ------------- ------------ ------------
(Loss) Before income taxes ( 5,320,979) ( 5,943,535) ( 2,446,959) ( 2,485,208)
Income taxes (benefit) ( 1,730,000) ( 1,992,000) ( 795,000) ( 833,000)
-------------- -------------- ------------- -------------
Net (Loss) ($ 3,590,979) ($ 3,951,535) ($ 1,651,959) ($ 1,652,208)
============== ============== ============= =============
Net (Loss) Per Common Share ($ 0.28) ($ 0.31) ($ 0.13) ($ 0.13)
============== ============== ============= =============
Cash Dividend Declared
Per Common Share $ 0.10 $ 0.10 $ 0.05 $ 0.05
=============== =============== ============ ============
Weighted Average Number of
Common Shares Outstanding 12,844,680 12,845,861 12,844,680 12,844,680
=============== =============== ============ ============
</TABLE>
The notes to consolidated financial statements are an integral
part of these financial statements.
-2-
<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended July 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows used in operating activities:
Net (Loss) ($ 3,590,979) ($ 3,951,535)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Depreciation and amortization 1,743,466 1,995,432
Issuance of restricted incentive stock, net --- ( 41,325)
Loss on retirement of property, plant and equipment 180,137 151,697
Change in assets and liabilities:
(Increase) in merchandise inventories ( 12,878,273) ( 3,088,038)
(Increase) in income taxes receivable ( 300,000) ( 2,171,828)
(Increase) decrease in prepaid expenses and other ( 1,653,980) 737,047
Increase in trade accounts payable 15,153,470 3,783,259
Increase (decrease) in accrued expenses 272,694 ( 209,339)
------------- -------------
Net cash used in operating activities ( 1,073,465) ( 2,794,630)
------------- -------------
Cash flows used in investing activities:
Purchase of property, plant and equipment, net ( 2,536,297) ( 716,687)
------------- -------------
Net cash used in investing activities ( 2,536,297) ( 716,687)
------------- -------------
Cash flows used in financing activities:
Preferred stock cash dividends paid ( 27,600) ( 27,600)
Common stock cash dividends paid ( 1,284,468) ( 1,284,468)
Principal payment under capital lease obligations ( 79,740) ---
------------- -------------
Net cash used in financing activities ( 1,391,808) ( 1,312,068)
------------- -------------
(Decrease) in cash and cash equivalents ( 5,001,570) ( 4,823,385)
Cash and cash equivalents at beginning of period 51,569,038 50,610,195
------------- ------------
Cash and cash equivalents at end of period $46,567,468 $45,786,810
============= ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on capital lease obligation $ 195,000 $ 212,000
Income taxes, net 121,302 86,617
</TABLE>
The notes to consolidated financial statements are an integral part of these
financial statements.
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<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six months ended July 31, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1996. The Balance
Sheet at January 31, 1996 has been derived from the audited financial statements
at that date.
NOTE B - INCOME TAXES
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using enacted tax rates and laws that are expected to be in effect when
the differences reverse. Deferred income taxes result principally from
differences in the time of recognition of overhead in inventory, deductibility
of certain liabilities and depreciation expense.
NOTE C - STOCK OPTION PLAN
Effective October 1995, the Company adopted a new Incentive Stock
Option Plan (the Plan), which was approved by the shareholders at the annual
meeting held on May 22, 1996. The Plan is administered by a Stock Option
Committee (the Committee) designated by the Board of Directors. Under the Plan
the Company may grant both "incentive stock options" as defined in Section 422
of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options. Options under the Plan may be awarded to certain key employees of the
Company. The maximum aggregate number of shares of Company stock that may be
delivered for all purposes under the Plan is 2,000,000, subject to standard
anti-dilution provisions. The price payable for the shares of Common Stock under
each stock option will be fixed by the Committee at the time of grant, but will
be no less than 100% of the fair market value of the Company's Common Stock at
the time the stock option is granted. Options are exercisable commencing one
year after date of grant, subject to such vesting requirements as the Committee
may specify. Changes in outstanding common stock options during the six month
period ended July 31, 1996 are summarized below.
Outstanding, beginning of year................................ 355,000
Granted during period (at $3.25 per share)........... 35,000
Canceled during period............................... --
Exercised during period.............................. --
-------
Outstanding, end of period
(at $3.25 and $3.50 per share)....................... 390,000
=======
The granted options expire through January, 2001.
At July 31, 1996, there were 1,610,000 shares reserved for future
grant.
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<PAGE>
DEB SHOPS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
JULY 31, 1996
Deb Shops, Inc. (the "Company") operates 289 women's specialty apparel
stores offering moderately priced, fashionable, coordinated sportswear, dresses,
coats, lingerie, accessories and shoes. Junior sizes are offered in 279 of these
stores, with 85 also offering plus sizes and 18 also offering Tops `N Bottoms
merchandise. Ten stores offer only plus sizes. The Company also operates 10
Tops `N Bottoms stores which sell moderately priced men's and women's apparel.
In October, 1995, the Company acquired substantially all of the net
assets of the Atlantic Book chain for a purchase price of approximately
$4,500,000. Atlantic operates 13 locations, including 10 "Atlantic Book Shops,
which are small limited selection book stores, generally open seasonally in New
Jersey and Delaware shore resort towns. Atlantic Books also operates 3 much
larger "Atlantic Book Warehouses" which are full-service book stores emphasizing
bargain books. The Atlantic Book Warehouse stores are located in
Montgomeryville, PA, Cherry Hill, NJ and Dover DE.
Results of operations for the Company for the three and six months
ended July 31, 1996, are presented on a consolidated basis and are segmented to
provide relevant information concerning the Company's retail apparel store
business which is the Company's principal line of business. In the opinion of
management, at the present time, the results of operations of the Company's book
store business are not material to the Company's consolidated results of
operations either (i) when compared to the Company as a whole or (ii) when
compared to the Company's apparel store business, and therefore, the Company has
not separately reported results of operations of the book store business.
Results of Operations - Consolidated
Net sales for the six and three month periods ended July 31, 1996
increased $5,080,723 (6.2%) and $6,143,180 (14.5%), respectively, over the
comparable six and three month periods of 1995. While the Company does not
consider the results of operations of the book store business to be material to
the consolidated results of operations at the present time, the increase in net
sales was principally attributable to the acquisition of Atlantic Books. For
further information see Results of Operations - Apparel Business.
The Company had a net loss of ($3,590,979) and ($1,651,959) for the six
and three months ended July 31, 1996 as compared to a net loss of ($3,951,535)
and ($1,652,208) for the six and three months ended July 31, 1995. The loss was
primarily attributable to the decrease in margins in the apparel business as a
result of the start-up of the "Plus Size" segment. The net loss for the six
months ended July 31, 1996 also includes a $560,000 charge for the termination
of our private label credit card program. The Company continues to accept third
party credit cards at all of its stores. Sales and margins at these levels are
insufficient to cover fixed overhead. Comparable store sales, for the apparel
stores, increased by 9.2% and 18% for the six and three months ended July 31,
1996, as compared to a decrease of (6.5%) and (7.0%) for the six and three
months ended July 31, 1995. This increase is due primarily to the start-up of
our "Plus Size" business, along with a decrease in competition, the changes in
fashion trends, along with changes in, in-store merchandising. Net loss as a
percentage of sales was (4.2%) and (3.4%) for the six and three months ended
July 31, 1996 as compared to (4.9%) and (3.9%) for the six and three months
ended July 31, 1995.
Cost of sales, including buying and occupancy costs increased
$4,689,816, (7.0%) and $5,987,511, (17.3%), respectively, over the comparable
six and three month periods of 1995. The increase in cost of sales, buying and
occupancy costs was principally due to the decrease in margins as a result of
the start-up of our "Plus Size" business. As a percentage of net sales, these
costs were 83.3% and 83.8% respectively, for the six and
-5-
<PAGE>
three periods ended July 31, 1996 as compared to 82.8% and 81.8%, respectively
for the six and three month periods ended July 31, 1995. Buying and occupancy
costs for the six and three month periods ended July 31, 1996 were 20.9% and
18.8% of sales and for the comparable six and three month periods in 1995 were
23.6% and 22.6% of sales. This percentage decrease was the result of a decrease
in the number of apparel stores along with an increase in the sales per store
during the period. Additionally the decrease resulted from a higher level of
occupancy costs associated with apparel stores that had been closed during the
prior year.
Selling and administrative expenses for the six months ended July 31,
1996 decreased ($23,176) (0.1%) and for the three months ended July 31, 1996
increased $129,038, (1.3%) over the comparable periods in 1995. The change in
selling and administrative expenses for the six months ended July 31, 1996
includes a $560,000 cost for the termination of our private label credit card
program. The balance of the change in these expenses was principally due to a
decrease in the number of stores and continuing control over expenses. As a
percentage of net sales, these expenses were 22.2% and 20.6% respectively, for
the six and three months ended July 31, 1996 as compared to 23.6% and 23.3%,
respectively, for the six and three months ended July 31, 1995.
The decrease in depreciation and amortization expenses ($251,966) and
($81,767), respectively for the six and three months ended July 31, 1996 over
the comparable periods of 1995 was principally attributed to the write-off of
leasehold improvements of closed stores net of the remodeling of certain of
Company's apparel stores.
Results of Operations - Apparel Business
<TABLE>
<CAPTION>
Per Store Data(1) July 31
Six Months Three Months
- - --------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
---- ----- ---- ----
<S> <C> <C> <C> <C>
Stores open at end of period 299 334 299 334
Average number of stores in operation during the period 301 336 301 336
Average net sales per store (in thousands) $ 272 $242 $151 $126
Average net (loss) per store (in thousands) ($ 13) ($ 12) ($ 6) ($ 5)
Comparable store sales - Percent Change2 9.2% ( 6.5%) 18.3% ( 7.0%)
</TABLE>
Net sales for the six months and three months ended July 31, 1996
increased $501,273, (0.6%) and $3,274,991, (7.7%), respectively, over the
comparable six and three month periods of 1995. The increase in net sales was
principally attributable to the start-up of our "Plus Size" business. Until this
quarter, on an annual quarterly basis, the Company has trended toward lower
sales since fiscal 1993. On an annual basis the Company has trended toward lower
earnings since fiscal 1991. Sales had been lower due to lower demand as a result
of increased customer resistance to product and pricing. Management has tried
and continues to try to adjust the product mix and pricing philosophy in an
attempt to stimulate sales. In March, 1995 the Company introduced shoes into 200
of its locations in an attempt to generate new business and multiple sales.
During the current quarter "Plus Sizes" were introduced into approximately
one-third of the chain. The goal of this operation is to offer a larger
assortment of merchandise to an expanded customer base to help increase sales
per store. The Company's "Plus Size" began on or about May 1, 1996 and generated
sales of approximately $4,800,000 during this quarter.
- - --------
1 Includes Tops `N Bottoms
2 Comparable store sales includes stores opened for both periods in the current
format and location. A store is added to the comparable store base in its
13th month of operation.
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<PAGE>
In spite of the increase in net sales the apparel business suffered a
net loss of ($3,894,402) for the six months ended July 31, 1996 and ($1,846,742)
for the three months ended July 31, 1996 as compared to a net loss of
($3,951,535) for the six months ended July 31, 1995 and a net loss of
($1,652,208) for the three months ended July 31, 1995. The loss was primarily
attributable to lower margins as a result of the start-up of the "Plus Size"
business. As a result of the introduction of "Plus Sizes" in May, 1996 and the
necessity to sell through that first season's inventory in three months margins
were only maintained at minimal levels. These lower margins on the "Plus Size"
business were sufficient to adversely affect the overall margins for the entire
apparel business. The net loss for the six months ended July 31, 1996 includes a
one time $560,000 charge for the termination of the private label credit card
program. Sales and margins at these levels are insufficient to cover fixed
overhead. Comparable store sales increased by 9.2% and 18.3% for the six and
three month periods ended July 31, 1996, as compared to decreases of (6.5%) and
(7.0%) for the six and three month periods ended July 31, 1995. The increases in
comparable store sales resulted principally from a renewed interest, by the
Company's target customer, in the current fashion trends, the new visual
merchandising being employed in our stores, the introduction of the "Plus Size"
business and the reduction in competition. The net loss as a percentage of sales
was (4.8%) and (4.2%) for the six and three month periods ended July 31, 1996 as
compared to (4.9%) and (3.9%) for the six and three month periods ended July 31,
1995.
Cost of sales, including buying and occupancy costs increased
$1,605,796, (2.4%) and $4,018,708, (11.6%), respectively, over the comparable
six month and three month periods of 1995. The increase in cost of sales, buying
and occupancy costs was principally due to the decrease in margins related to
the start-up of the "Plus Size" business as discussed above. As a percentage of
net sales, these costs were 84.2% and 84.7%, respectively, for the six and three
month periods ended July 31, 1996 as compared to 82.8% and 81.8%, respectively,
for the six and three month periods ended July 31, 1995. The increased cost of
sales percentage resulted principally from lower margins as previously
discussed. Buying and occupancy costs for the six months and three months ended
July 31, 1996 were 21.3% and 19.0% of sales and for the comparable periods in
1995 were 23.6% and 22.6% of sales. This percentage decrease was the result of a
decrease in the number of stores along with an increase in the sales per store
during the period. Additionally the decrease resulted from a higher level of
occupancy costs associated with stores that had been closed during the period.
The inventory turn-over rate was approximately 1.6 times during the six
months ended July 31, 1996 and July 31, 1995. Due to the comparability of these
turns, the impact on profit margins is not material.
Selling and administrative expenses for the six months and three months
ended July 31, 1996 decreased ($920,827) (4.8%) and ($355,698) (3.6%),
respectively, over the comparable periods in 1995. The decrease in selling and
administrative expenses was principally due to a decrease in the number of
stores and continued control over expenses. As a percentage of net sales,
these expenses were 22.4% and 20.8% respectively for the six month and three
month periods ended July 31, 1996 as compared to 23.6% and 23.3%, respectively,
for the six month and three month periods ended July 31, 1995.
The decrease in depreciation and amortization expenses, ($404,962) and
($212,341), respectively for the six month and three month periods ended July
31, 1996 over the comparable periods of 1995 was principally attributed to the
write-off of leasehold improvements of closed stores, net of the remodeling of
certain of the Company's stores.
-7-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the three and six months ended July 31, 1996 and 1995, the
Company funded internally all of its operating needs and the remodeling of
existing stores in fiscal 1996 and 1995 including capital expenditures for the
opening of new stores in fiscal 1995. For the six months ended July 31, 1996,
the Company used net cash of $1,073,465 in operating activities as a result,
principally, of the net loss for the period, increased prepaid expenses and
merchandise inventories, partially offset by an increase in trade accounts
payable, and depreciation and amortization. The increase in merchandise
inventories for the six months ended July 31, 1996 was higher than for the
comparable six months ended July 31, 1995 principally due to the rebuilding of
total inventory per store and the introduction of plus sizes. For the six months
ended July 31, 1995, the Company used net cash of $2,794,630 in operating
activities as a result, principally, of the net loss for the period, increased
income tax receivable and merchandise inventories, partially offset by increased
trade accounts payable, and depreciation and amortization. The Company realized
a loss for the fiscal year ended January 31, 1996 and the six months ended July
31, 1996. A tax benefit and corresponding receivable were recorded for each
period based on estimates of the amounts recoverable.
Net cash used in investing activities was $2,536,297 and $716,687 for
the six months ended July 31, 1996 and 1995 respectively. In October, 1995, the
Company acquired substantially all of the net assets of the Atlantic Books chain
for a purchase price of $4,468,016, which purchase price was funded from the
Company's internal funds.
Net cash used in financing activities was $1,391,808 for the six months
ended July 31, 1996 and $1,312,068 for the six months ended July 31, 1995. For
the six months ended July 31, 1996 and 1995 these funds were primarily used for
the payments of dividends on preferred and common stock.
As of July 31, 1996, the Company had cash and cash equivalents of
$46,567,468 compared with $45,786,810 at July 31, 1995. The Company terminated
its private label credit card program as of June 30, 1996. With the payment of a
termination fee of $560,000, the bank will assume all future obligations
associated with the portfolio. The Company continues to accept third party
credit cards at all of its stores.
The Company's present intention is to expand the book store business by
opening additional warehouse stores. Opening a warehouse bookstore is capital
intensive, between leasehold improvements and initial inventory. It is
anticipated that the funds to finance this expansion will come from the cash and
cash equivalents on hand. As of the balance sheet date, there was a commitment
for the opening of two additional warehouse stores. One of those locations is
leased, and is currently under construction. The Company purchased the other
location for a warehouse bookstore for approximately $2,100,000 on May 29, 1996.
It is generally not the Company's intention to purchase store locations.
However, when the location and the economics are suitable, such transactions
will be evaluated. There are no known other trends or commitments, events or
other uncertainties that are reasonably likely to result in the Company's
liquidity increasing or decreasing in any material way.
-8-
<PAGE>
SEASONAL NATURE OF OPERATIONS
The following table shows the Company's net sales and net earnings per quarter
for the fiscal year ended January 31, 1996 on an unaudited basis.
Net Sales Net Income
--------------------- ----------------------
Amount % Amount %
------ - ------ -
(Dollars in Thousands)
1st Quarter $ 39,101 22.1% ($2,299) ( 54.5%)
2nd Quarter 42,317 23.9 ( 1,652) ( 39.1 )
3rd Quarter 41,672 23.6 ( 2,793) ( 66.1 )
4th Quarter 53,643 30.4 2,520 59.7
--------- ------ --------- ------
TOTAL $176,733 100.0% ($4,224) 100.0%
========= ====== ======== =======
Approximately 54% and (6%) of the Company's net sales and net (loss) income,
respectively, for fiscal 1996 occurred during the last six months, which
includes the Back-to-School and Christmas selling seasons.
PART II. OTHER INFORMATION
Items 1 - 3. NOT APPLICABLE
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of the company was held on Wednesday, May 22, 1996.
Total votes present either in person or by proxy was 12,361,196. The votes were
cast as follows for the election of directors:
FOR WITHHELD
--- --------
Marvin Rounick 11,895,564 471,652
Warren Weiner 11,889,544 471,652
Jack A. Rounick 11,889,244 471,952
Paul S. Bachow 11,888,764 472,432
Barry H. Feinberg 11,888,764 472,432
Barry H. Frank 11,889,544 471,652
The votes were cast as follows for the adoption of the 1995 Incentive
Stock Option Plan:
FOR AGAINST WITHHELD
-------- --------- ----------
10,532,200 822,025 329,920
There were no other matters voted on at the meeting.
Item 5. NOT APPLICABLE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description of Document
11 Computation of Earnings Per Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended July 31, 1996.
-9-
<PAGE>
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.
DEB SHOPS, INC.
DATE: September 16, 1996 By /s/ Marvin Rounick
-------------------------
Marvin Rounick
President
DATE: September 16, 1996 By /s/ Lewis Lyons
----------------------
Lewis Lyons
Vice President, Finance
Chief Financial Officer
<PAGE>
EXHIBIT 11
DEB SHOPS, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Six Months Ended July 31 Three Months Ended July 31
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 12,844,680 12,845,861 12,844,680 12,844,680
Net effect of dilutive stock
options and restricted incentive
stock based on the treasury stock
method using average market price 0 0 0 0
------------ ------------ ------------ ------------
12,844,680 12,845,861 12,844,680 12,844,680
============ ============ ============ ============
Net (Loss) ($ 3,590,979) ($ 3,951,535) ($ 1,651,959) ($ 1,652,208)
Preferred dividend paid 27,600 27,600 13,800 13,800
------------ ------------ ------------ ------------
($ 3,618,579) ($ 3,979,135) ($ 1,665,759) ($ 1,666,008)
============ ============ ============ ============
Per common share amount ($ .28) ($ .31) ($ .13) ($ .13)
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JUL-31-1996
<CASH> 46,567,468
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 29,534,219
<CURRENT-ASSETS> 82,895,505
<PP&E> 49,725,805
<DEPRECIATION> 31,850,071
<TOTAL-ASSETS> 106,040,840
<CURRENT-LIABILITIES> 28,544,175
<BONDS> 0
460
0
<COMMON> 156,883
<OTHER-SE> 75,432,795
<TOTAL-LIABILITY-AND-EQUITY> 106,040,840
<SALES> 86,498,960
<TOTAL-REVENUES> 87,725,613
<CGS> 53,997,987
<TOTAL-COSTS> 93,046,592
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,320,979)
<INCOME-TAX> (1,730,000)
<INCOME-CONTINUING> (3,590,979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,590,979)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
