UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 29, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-11736
The Dress Barn, Inc.
Exact name of registrant as specified in its charter)
Connecticut 06-0812960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
88 Hamilton Avenue, Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)
(203) 327-4242
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by 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
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
.05 par value 22,185,607 shares on March 9, 1994
Page 1 of 9
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THE DRESS BARN, INC. AND SUBSIDIARIES
INDEX
Page
Number
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
January 29, 1994 (unaudited)
and July 31, 1993 I-3
Consolidated Statements of Earnings
(unaudited) for the Thirteen and
Twenty-six weeks ended
January 29, 1994 and January 23, 1993 I-4 and I-5
Consolidated Statements of Cash Flows
(unaudited) for the Twenty-six weeks
ended January 29, 1994 and January
23, 1993 I-6
Notes to Consolidated Financial
Statements (unaudited) I-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations I-8 and I-9
Part II. OTHER INFORMATION:
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote
of Security Holders I-10
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K I-10
* Not applicable in this filing.
I - 2
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The Dress Barn, Inc. and Subsidiaries
Consolidated Balance Sheets
January 29, July 31,
ASSETS 1994 1993
Current Assets: (unaudited)
Cash & cash equivalents $7,046,095 $10,054,792
Marketable securities 51,192,654 51,023,754
Merchandise inventories 59,234,485 73,403,238
Prepaid expenses and other 5,193,761 8,100,021
Total Current Assets 122,666,995 142,581,805
Property and Equipment:
Leasehold improvements 37,897,306 35,013,977
Fixtures and equipment 62,254,520 56,058,888
Computer software 4,574,699 4,135,985
Automotive equipment 291,415 316,408
105,017,940 95,525,258
Less accumulated depreciation
and amortization 42,060,857 36,578,447
62,957,083 58,946,811
Other Assets 778,852 857,041
$186,402,930 $202,385,657
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade $19,573,438 $39,990,472
Accrued expenses 12,510,045 15,698,909
Customer credits 2,118,934 1,406,987
Income taxes payable 36,648 2,009,266
Total Current Liabilities 34,239,065 59,105,634
Deferred Income Taxes 1,181,351 1,277,351
Commitments
Shareholders' Equity:
Preferred stock, par value $.05 per share:
Authorized- 100,000 shares
Issued and outstanding- none -- --
Common stock, par value $.05 per share:
Authorized- 30,000,000 shares
Issued- 23,180,107 and 23,134,662
shares, respectively
Outstanding- 22,175,107 and 22,129,662
shares, respectively 1,159,005 1,156,733
Additional paid-in capital 13,231,402 12,789,169
Retained earnings 142,297,719 133,762,382
Treasury stock, at cost (5,705,612) (5,705,612)
150,982,514 142,002,672
$186,402,930 $202,385,657
See notes to consolidated financial statements (unaudited)
I-3
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The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Earnings-
Second Quarter
Thirteen Weeks Ended
January 29, January 24,
1994 1993
Net sales $106,576,759 $98,582,738
Costs and expenses:
Cost of sales, including
occupancy and buying costs 70,109,713 63,126,723
Selling, general and administrative 33,662,851 30,765,902
Interest (income) - net (575,188) (488,070)
103,197,376 93,404,555
Earnings before income taxes 3,379,383 5,178,183
Income taxes 1,250,000 1,864,000
Net Earnings $2,129,383 $3,314,183
Earnings per share $0.10 $0.15
Weighted average shares outstanding 22,163,335 21,961,578
See notes to consolidated financial statements (unaudited)
I-4
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The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Earnings-
Six Months
Twenty-Six Weeks Ended
January 29, January 24,
1994 1993
Net sales $226,276,886 $203,531,164
Costs and expenses:
Cost of sales, including
occupancy and buying costs 144,788,160 128,970,164
Selling, general and administrative 69,145,092 61,689,383
Interest (income) - net (1,203,703) (972,606)
212,729,549 189,686,941
Earnings before income taxes 13,547,337 13,844,223
Income taxes 5,012,000 4,984,000
Net Earnings $8,535,337 $8,860,223
Earnings per share $0.39 $0.40
Weighted average shares outstanding 22,155,185 21,925,647
See notes to consolidated financial statements (unaudited)
I-5
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The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended
January 29, January 24,
1994 1993
Operating Activities:
Net earnings $8,535,337 $8,860,223
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment 4,965,000 4,204,600
(Decrease) increase in
deferred income taxes (96,000) (77,000)
Deferred compensation 157,500 130,400
Changes in assets and liabilities:
Decrease in merchandise inventories 14,168,753 3,501,528
Decrease in prepaid expenses 2,906,260 1,094,864
Decrease in other assets 78,189 322,089
(Decrease)-accounts payable- trade (20,417,034) (6,122,037)
(Decrease) in accrued expenses (3,188,864) (1,682,148)
Increase in customer credits 711,946 592,750
(Decrease) in income taxes payable (1,972,618) (2,494,388)
Total adjustments (2,686,868) (529,342)
Net cash provided by operating
activities 5,848,469 8,330,881
Investing Activities
Purchases of property and equipment (8,975,272) (7,632,813)
Sales and maturities of marketable
securities (13,983,578) (13,066,640)
Purchases of marketable securities 13,814,678 9,458,164
Net cash used in investing activities (9,144,172) (11,241,289)
Financing Activities
Proceeds from Employee Stock
Purchase Plan 203,843 161,029
Proceeds from stock options exercised 83,163 598,205
Net cash provided by financing activities 287,006 759,234
Net increase (decrease) in cash
and cash equivalents (3,008,697) (2,151,174)
Cash and cash equivalents-
beginning of period 10,054,792 4,631,246
Cash and cash equivalents-
end of period $7,046,095 $2,480,072
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $7,580,618 $6,291,297
See notes to consolidated financial statements (unaudited)
I-6
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THE DRESS BARN, INC. AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all 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 for interim periods have been included. These
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's July 31, 1993
Annual Report to Shareholders.
The results of operations for the period ended January 29, 1994, are not
necessarily indicative of the operating results for the full year.
2. Reclassification
Certain reclassification have been made to prior year's financial
statements to conform with the current year's presentation.
I - 7
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THE DRESS BARN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's net sales reflect the results of 657 stores in operation at
January 29, 1994 as compared with 595 at January 23, 1993. During the twenty-
six weeks ended January 29, 1994, the Company opened 40 stores and closed 24
for a net addition of 16 stores during the six months.
The following summarizes the financial results for the thirteen and twenty-
six week periods ended January 29, 1994 versus the comparable periods last year:
Second Quarter Six Months
% Change % of Sales % Change % of Sales
from L/Y T/Y L/Y from L/Y T/Y L/Y
Net Sales 8.1% 11.2%
Gross Profit, less
Occupancy & Buying 2.9% 34.2% 36.0% 9.3% 36.0% 36.6%
Selling, General and
Admin. Expenses 9.4% 31.6% 31.2% 12.1% 30.6% 30.3%
Operating Income -40.2% 2.6% 4.8% -4.1% 5.5% 6.3%
Interest Income 17.8% 0.5% 0.5% 23.8% 0.5% 0.5%
Income Taxes -32.9% 1.2% 1.9% -2.1% 2.2% 2.4%
Net Income -35.7% 2.0% 3.4% -3.7% 3.8% 4.4%
Net sales increased due to the increased number of stores open during both
fiscal periods this year versus last. The increases were reduced by declines in
comparable store sales of 4% and 2% for the three and six month periods,
respectively.
Gross profit less occupancy and buying costs for both the quarter and the
six months decreased as a percentage of sales due to increased markdowns,
especially in the second quarter, and increased occupancy costs from new stores.
The increase in selling, general and administrative expenses as a
percentage of net sales resulted from the decrease in comparable store sales.
Tight expense controls over variable expenses did not provide savings to cover
the shortfall in sales.
Interest income increased in both periods as the increase in funds
available for short term investments combined with a modest increase in the
prevailing investment rates this year versus last to generate additional
interest income.
The effective tax rate for the twenty-six weeks ended January 29, 1994 was
37.0% as compared to the 36.0% effective tax rate in effect for the fiscal year
ended July 31, 1993. This reflects the increase in the corporate federal tax
rate specified in the Omnibus Budget Reconciliation Act of 1993.
I - 8
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THE DRESS BARN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Liquidity and Capital Resources
During the six months ended January 29, 1994 there was no material change
in the Company's liquidity or capital resources. Capital expenditures during
the six months utilized internally generated funds.
At January 29, 1994, the Company had working capital of $88,428,000 and
three bank credit lines totalling $65,000,000 without any outstanding
borrowings.
I - 9
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Part II - OTHER INFORMATION
Item 4 -- Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the Company's shareholders was held on December
13, 1993.
(b) Edward D. Solomon, a member of the Board of Directors previously
reported to the Commission, was reelected and Klaus Eppler, a new Director,
was elected, each for three year terms. The Board of Directors continues
to be comprised of seven members as previously reported.
Item 6 -- Exhibits and Reports on Form 8-K
(a) No exhibits are required to be filed herewith.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURE
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.
BY: /s/ ARMAND CORREIA
Armand Correia
Senior Vice President
(Principal Financial
and Accounting Officer)
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