SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended July 29,1995
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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.)
30 Dunnigan Drive, Suffern, New York 10901
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (914) 369-4500
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Common stock - par value $.05 per share
Section 12(g) of the Act: ---------------------------------------
Section 12(g) of the Act: (Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K
Yes No X
Page 1 of Cover Page
<PAGE>
As of October 25, 1995, 22,380,430 shares of common stock were outstanding. The
aggregate market value of the shares of common stock (based upon the closing
price on October 24, 1995 on NASDAQ) of The Dress Barn, Inc. held by
non-affiliates was approximately $149,800,900. For the purposes of such
calculation, all outstanding shares of Common Stock have been considered held by
non-affiliates, other than the 7,016,235 shares beneficially owned by Directors
and Officers of the registrant. In making such calculation, the registrant does
not determine the affiliate or non-affiliate status of any shares for any other
purpose.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on December 11, 1995 are incorporated into Parts I and
III of this Form 10-K.
Page 2 of Cover Page
<PAGE>
PART I
ITEM 1. BUSINESS
General
As of July 29, 1995, The Dress Barn, Inc. (the "Company", which
includes, unless otherwise noted, its subsidiaries and predecessor) operated a
chain of 766 women's discount specialty apparel stores utilizing three
merchandising formats : Dress Barn ("DB"), Dress Barn Woman ("DBW") and DB/DBW
Combination stores ("Combos"). The Company discontinued the SBX format, which
primarily emphasized casual apparel, in fiscal 1995, integrating the SBX stores
into the Dress Barn format. Dress Barn stores operate primarily under the names
"Dress Barn" and "Westport Ltd.". DBW stores mostly operate as "Dress Barn
Woman" or "Westport Woman".
As of July 29, 1995, there were 578 Dress Barn stores, 106 DBW stores and 82
Combos.
All of the Company's stores offer in-season, moderate to better quality
fashion women's apparel emphasizing department store quality merchandise,
primarily with nationally recognized brand names bearing the manufacturer's
label, at a substantial discount from department store prices. The Company
merchandises for price conscious and fashion minded working women in middle to
upper income brackets and predominantly in the 18-40 year age range.
The Dress Barn stores carry Junior and Misses sizes, while the DBW
stores feature larger sizes of styles similar to those found in the DB stores.
The Combo locations, with an average size of 8,000 square feet, carry both DB
and DBW merchandise. The Company's Combo units have many cost and merchandising
efficiencies. The Company has accelerated the expansion of its Combo format by
opening new Combo locations and expanding existing DB locations and converting
them to the Combo format. Most of the Company's new locations planned for fiscal
1996 will be Combos.
Expansion and Store Openings
The Company has been in business since 1962. During the past five years
the Company increased its number of stores from 462 in July 1990 to 766 stores
open on July 29, 1995. During fiscal 1995, the Company opened 108 stores, closed
30 for a net increase of 78 locations for the fiscal year. The 1995 openings
included 8 new DBW freestanding locations as well as 36 Combos. Subsequent to
July 29, 1995, the Company has opened 17 Combos, 4 DBW stores and 1 Dress Barn
store. The Company since year end has closed 12 stores, with a total of 776
stores in operation as of October 25, 1995.
Merchandise and Marketing
All of the Company's stores sell only first-quality current merchandise,
with approximately 60% of the merchandise sold featuring nationally recognized
name brands through the offerings of domestic fashion vendors. Over half of the
Company's sales volume is sportswear, with the remainder consisting of dresses,
suits, blazers and accessories. DB and DBW are organized as separate divisions,
each with a separate merchandising staff to focus on its individual merchandise
styles.
<PAGE>
In addition to nationally recognized name brand labels, the Company's
stores offer private label merchandise. This merchandise, which is also first
quality, is typically imported or manufactured domestically under contract to
the Company and is concentrated in basic lines where quality, price and fashion
are more important than brand names. While such private label merchandise is
both less expensive for the customer and more profitable for the Company, the
Company believes that brand name apparel at discount prices continues to attract
its customers.
Virtually all merchandising decisions affecting the Company's stores are
made centrally. Pricing and markdowns are determined centrally but may be
adjusted locally in response to competitive situations. Generally, 80% of the
merchandise sold by the Company is uniformly carried by all stores with the
remaining 20% varied by management according to regional or consumer tastes or
the size of particular stores. To keep merchandise seasonal and in current
fashion, inventory is reviewed weekly and markdowns are taken to expedite
selling.
The Company's stores provide a high degree of customer service, including
personal sales assistance by Company employees and an attended dressing room
area with individual dressing rooms. The Company's stores are designed and
maintained to project an attractive, quality image. Exteriors carry a
distinctive logo for ease of identification. Interiors feature department store
type fixtures and carpeting and premium quality lighting. Merchandise is
attractively displayed and arranged by department such as sportswear, dresses
and suits. Well known designer and brand names are prominently displayed.
The Company uses mainly print advertising that emphasizes current fashion
apparel at discount prices. The Company experimented with television and radio
advertising in fiscal 1995 in selected Northeast markets. In fiscal 1994, the
Company introduced its own Dress Barn private label credit card program, which
as of October 1995 had over 500,000 cardholders.
Store Locations
As of July 29, 1995 the Company was operating 766 stores in 43 states and
the District of Columbia, primarily in suburban strip shopping centers and
outlet malls and strip centers. The Company`s outlet stores are more productive
and profitable than the average strip center store, and cost less to own and
operate. Nearly all of the Company's stores occupy between 3,500 and 5,000
square feet of selling space, except the Combos which occupy between 7,500 and
10,000 square feet.
The table on the following page indicates the states in which the stores
operating on July 29, 1995 were located:
<PAGE>
Stores Open At July 29, 1995:
Location ................................ DB DBW Combo
- ----------------------------------------- --- --- ---
Alabama ................................. 6 -- 3
Arizona ................................. 12 1 1
Arkansas ................................ 1 -- 1
California .............................. 35 7 5
Colorado ................................ 6 1 1
Connecticut ............................. 25 5 4
District of Columbia .................... -- -- 1
Delaware ................................ 4 1 1
Florida ................................. 22 2 5
Georgia ................................. 22 4 2
Idaho ................................... 1 1 1
Illinois ................................ 27 3 5
Indiana ................................. 12 1 1
Kansas .................................. 4 1 --
Kentucky ................................ 4 2 1
Louisiana ............................... 2 -- 1
Maine ................................... 5 1 --
Maryland ................................ 17 2 4
Massachusetts ........................... 33 4 5
Michigan ................................ 29 5 3
Minnesota ............................... 4 -- 2
Mississippi ............................. 1 -- --
Missouri ................................ 8 2 2
Nebraska ................................ 2 -- --
Nevada .................................. 4 1 1
New Hampshire ........................... 6 1 1
New Jersey .............................. 43 13 3
New Mexico .............................. 1 -- 1
New York ................................ 56 7 4
North Carolina .......................... 26 8 3
Ohio .................................... 17 2 2
Oklahoma ................................ 2 -- --
Oregon .................................. 3 2 --
Pennsylvania ............................ 43 10 8
Rhode Island ............................ 1 -- --
South Carolina .......................... 15 2 --
Tennessee ............................... 12 3 4
Texas ................................... 21 3 4
Utah .................................... 4 2 --
Vermont ................................. 2 -- --
Virginia ................................ 30 6 --
Washington .............................. 3 1 --
West Virginia ........................... 1 -- 1
Wisconsin ............................... 6 2 1
Total ................................... 578 106 82
--- --- ---
<PAGE>
The following table indicates the type of shopping facility in which the stores
are located:
DB DBW Combo
Type of Facility Stores Stores Stores
Strip Shopping Centers ........................... 343 47 23
Outlet Malls and Strip Centers ................... 151 50 49
Free Standing, Downtown and Enclosed Malls ....... 84 9 10
Total ............................................ 578 106 82
--- --- ---
During the fiscal year ended July 29, 1995, no store accounted for as much
as 1% of the Company's total sales.
Purchasing and Distribution
The Company utilizes a buying organization that parallels those used by
most large specialty store chains. Purchasing is conducted on a departmental
basis for each of the DB and DBW divisions by the Company's staff of buyers and
assistant buyers supervised by the President and six Merchandise Managers. To
support its current and future expansion plans the Company has continued to
expand its buying staff. The Company also utilizes the services of independent
buying representatives in New York and overseas.
The Company has in the past always been able to purchase sufficient
quantities of first-quality brand name merchandise at attractive prices from
vendors who typically sell to department and specialty stores, and management
believes that there will continue to be an adequate supply of such merchandise
available. The Company obtains its brand name merchandise from approximately
350-450 vendors and its private label merchandise from approximately 20 vendors.
No vendor accounted for as much as 5% of the Company's purchases in the fiscal
year ended July 29, 1995.
All merchandise is received from vendors at the Company's central warehouse
and distribution facilities in Suffern, New York, where it is inspected,
ticketed and earmarked for particular stores. The Suffern facility, which began
operations in January 1994, has a total of 510,000 square feet, with 100,000
square feet of office space and the remainder for merchandise distribution.
The Company generally does not warehouse merchandise, but distributes it
promptly to stores, shipments being made at least twice a week to each store.
Turnaround time between receipt from the vendor and shipment to the stores is
usually three days or less. Because of such frequent shipments, the stores
themselves do not require significant storage space. The Company may on occasion
buy certain basic clothing that does not change in style from year to year at
attractive prices and warehouse such items until the following year.
<PAGE>
Store Operations and Management
Virtually all the Company's stores are open seven days a week. Stores
located in strip shopping centers and malls conform to the hours of other stores
in the shopping centers and are open most evenings, while downtown and free
standing stores are usually open two nights per week.
Approximately 45% of the Company's sales are for cash and checks. The
balance is credit card sales. The Company's stores accept Visa, MasterCard,
American Express and Discover credit cards. In February 1994, the Company
introduced its own Dress Barn private label credit card. As with the other
credit cards, the Company assumes no credit risk with respect to its Dress Barn
card but pays a percentage of sales as a service charge. The Company has a
chain-wide policy of cash refunds within 14 days of purchase and upon
presentation of a register receipt; additionally the customer still has the
option of receiving a credit redeemable at a later date.
None of the Company's stores or departments are franchised or operated by
others. Each store has a manager who reports to a District Sales Manager, who is
in charge of between 8 and 10 stores. District Sales Managers generally visit
each store at least once a week to review merchandise levels and presentation,
staff training and personnel performance, expense control, security, cleanliness
and adherence to Company operating procedures. In turn, to further maintain
centralized control, there are 10 Regional Sales Managers who are each
responsible for approximately 9 District Sales Managers.
Control Systems
The Company has developed and continues to improve a computerized
merchandise control system that can accommodate substantial growth in the number
of stores. This system tracks buyers' orders, warehouse receiving, price
marking, shipments to stores, inventories, markdowns, store sales and individual
merchandise item performance, and utilizes personal computers to input and
monitor the purchasing, receiving, shipping and distribution functions.
To monitor the performance of the various styles, management receives
bi-weekly computer reports reflecting sales and inventory levels. These reports
are organized by department, class, vendor, style, color and store. Thus, the
sales performance of every style and color of merchandise in every store is
monitored centrally twice a week.
The Company has a point of sale register system with price look up and
ticket scanning. The Company continues to enhance its systems to provide instant
access to sales information, increase productivity and improve customer service.
Each store has an attended dressing room area and generally one cash
register, which is constantly attended. These practices serve a security as well
as a service function. The Company utilizes article surveillance security tag
systems where they are cost justified. The Company's inventory shrinkage rate is
within industry norms.
<PAGE>
Trademarks
The Company has previously been issued U.S. Certificates of Registration of
Trademark for the operating names of its stores and its major private label
merchandise. The Company believes the following trademarks are materially
important to its business:
Trademark .... Registration Date
Dress Barn ... March 5, 1985
Westport, Ltd. August 20, 1985
Atrium ....... March 16, 1993
Princeton Club April 30, 1985
Employees
As of July 29, 1995, the Company had approximately 7,000 employees of whom
approximately 4,000 worked part time. A number of temporary employees are
usually added during the peak selling periods. None of the Company's employees
are covered by any collective bargaining agreement. The Company considers its
employee relations to be good.
Competition
The women's retail apparel business continues to be highly competitive. The
Company's stores compete with discount stores, off-price stores, women's apparel
specialty stores and department stores. Some of the stores with which the
Company competes are units of large national or regional chains that have
greater financial and other resources than the Company. The women's specialty
apparel business has become more difficult. Dress Barn accounts for a small
fraction of the total market for women's apparel.
Seasonality
Though the Company does not consider its business to be
seasonal, it has historically experienced substantially lower earnings in its
second fiscal quarter than during the other three fiscal quarters. This decline
reflects the intense promotional atmosphere that has accompanied the Christmas
shopping season in recent years. The Company does not expect this trend to
change in fiscal 1996 and anticipates earnings for its second quarter of fiscal
1996 to be significantly less than the other three quarters.
ITEM 2. PROPERTIES
The Company leases all its stores. Store leases generally have an
initial term ranging from 5 to 15 years with one or more 5-year options to
extend the lease. The table on the following page, covering all stores operated
by the Company on July 29, 1995, indicates the number of leases expiring during
the period indicated and the number of expiring leases with and without renewal
options:
<PAGE>
Total Expire Expire
Leases With Without
Fiscal Year Expiring Option Option
- --------------------------------- --- ---
1996 142 110 32
1997 145 127 18
1998 113 103 10
1999 116 90 26
2000-2002 ...... 181 53 128
2003 and thereafter .. 69 48 21
Total ....... 766 531 235
--- --- ---
New store leases generally provide for a base rent of between $12 and
$15 per square foot per annum. Most leases have formulas requiring the payment
of a percentage of sales as additional rent, generally when sales reach
specified levels. The Company's aggregate minimum rentals under operating leases
in effect at July 29, 1995 and excluding locations acquired after July 29, 1995,
for the fiscal year ending July 27, 1996, are approximately $47,000,000. In
addition, the Company is also responsible under its store leases for its pro
rata share of maintenance expenses and common charges in mall and strip
locations.
A substantial number of store leases give the Company the option to
terminate the lease if certain specified sales volumes are not achieved. In
addition, a number of these leases also provide for such termination at the
option of the landlord.
Usually these provisions are operative only during the first few years of the
lease.
The Company leases its executive offices and distribution facilities
at 30 Dunnigan Drive in Suffern, New York. This lease expires on April 30, 2007,
with three 5 year options to extend the lease. Management believes the Suffern
facility should be able to service in excess of 1,500 stores and provide
adequate office space for similar expansion in the Company's executive offices.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or any of
its subsidiaries is a party or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year.
<PAGE>
PART II
ITEM 5- MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
Market Prices of Common Stock
The Common Stock of the Dress Barn, Inc. is traded over-the-counter on the
NASDAQ National Market System under the symbol DBRN.
The table below sets forth the high and low bid prices as reported by
NASDAQ for the last eight fiscal quarters. These quotations represent prices
between dealers and do not include retail mark-ups, mark-downs or other fees or
commissions and may not represent actual transactions.
Fiscal 1995 Fiscal 1994
Bid Prices Bid Prices
High Low High Low
Fiscal Period
First Quarter $11.13 $8.63 $15.50 $10.50
Second Quarter 11.13 9.25 15.13 10.88
Third Quarter 10.50 9.25 14.00 10.88
Fourth Quarter 10.63 8.75 12.75 8.25
Number of Record Holders
The number of record holders of the Company's common stock as of October 10,
1995 was approximately 1,900.
Dividend Policy
The Company has never paid cash dividends on its common stock. Payment of
dividends is within the discretion of the Company's Board of Directors.
<PAGE>
ITEM 6- SELECTED FINANCIAL DATA
Year Ended
July 29, July 30, July 31, July 25, July 27,
1995 1994 1993(*) 1992 1991
Statement of earnings data:
Net sales ..... 500,836,364 457,324,621 419,585,581 363,089,914 325,412,935
Cost of sales,
including occupancy
and buying 327,165,606 301,153,755 274,433,316 238,061,208 209,896,316
-----------
Gross profit 173,670,758 156,170,866 145,152,265 125,028,706 115,516,619
Selling, general and
administrative
expenses 147,316,604 132,257,367 117,742,222 103,039,460 94,771,468
-----------
Operating income 26,354,154 23,913,499 27,410,043 21,989,246 20,745,151
Interest
income-net 2,670,331 1,726,717 2,338,217 3,002,872 2,918,882
-----------
Earnings before
income taxes .. 29,024,485 25,640,216 29,748,260 24,992,118 23,664,033
Income taxes .. 10,739,000 9,487,000 10,709,000 8,798,000 8,711,000
-----------
Net earnings .. $18,285,485 $16,153,216 $19,039,260 $16,194,118 $14,953,033
===========
Earnings per
share $ 0.82 $ 0.73 $ 0.86 $ 0.74 $ 0.68
Weighted average
shares
outstanding
shares 22,266,091 22,177,063 22,019,742 21,805,478 21,905,407
Balance sheet data:
Working capital $103,309,912 $89,050,887 $83,476,171 $73,477,379 $61,917,864
Total assets .. $243,521,055 $217,862,655 $202,385,657 $173,360,191 $137,634,744
Long-term debt $ 3,500,000 -- -- -- --
Shareholders'
equity $178,937,938 $159,197,953 $142,002,672 $120,339,195 $102,955,940
Percent of net sales:
Cost of sales, including
occupancy and buying 65.3% 65.9% 65.4% 65.6% 64.5%
Gross profit .. 34.7% 34.1% 34.6% 34.4% 35.5%
Selling, general and
administrative expense 29.4% 28.9% 28.1% 28.4% 29.1%
Operating income 5.3% 5.2% 6.5% 6.1% 6.4%
Net earnings .. 3.7% 3.5% 4.5% 4.5% 4.6%
Certain reclassifications have been made to fiscal 1994 and prior years' data to
conform with the curent year's presentation.
(*) Consists of 53 weeks. All other fiscal years presented consist of 52
weeks.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net Sales
Net sales increased 9.5% in fiscal 1995 as compared to fiscal
1994 and 9.0% in fiscal 1994 as compared to fiscal 1993. Fiscal 1993 was a 53
week year versus 52 weeks for fiscal 1995 and 1994. The sales increases in both
fiscal years resulted from the 78 (net) stores added during fiscal 1995 and the
47 (net) stores added during fiscal 1994. Comparable store sales decreased 1.4%
in fiscal 1995 and 1.2% in fiscal 1994 versus the prior year. Units sold per
store decreased in fiscal 1995 from fiscal 1994, but the sales price of the
average unit sold remained approximately the same as last year.
Cost of Sales (Cost of Goods Sold, Including Buying and Occupancy Costs ("CGS"))
CGS increased 8.6% in fiscal 1995 and 9.7% in fiscal 1994 as
compared to the prior fiscal years, primarily as a result of the increases in
sales. As a percentage of net sales, CGS was 65.3% in fiscal 1995, 65.9% in
fiscal 1994 and 65.4% in fiscal 1993. The percentage decrease from fiscal 1994
to fiscal 1995 was due to improved initial margins which offset higher occupancy
costs from both new stores and expanded existing stores. The percentage increase
from fiscal 1993 to fiscal 1994 was due to the shortfall in sales versus planned
levels, which did not offset higher occupancy costs from larger new stores,
expanded existing stores and the Company's new headquarters facility.
Selling, General and Administrative Expenses ("SG&A")
SG&A increased 11.4% in fiscal 1995 following an increase of
12.3% in fiscal 1994. As a percentage of net sales, SGA was 29.4% in fiscal
1995, 28.9% in fiscal 1994 and 28.1% in fiscal 1993. Continued expense controls
were not sufficient to cover the shortfall in sales from planned levels in both
fiscal 1995 and fiscal 1994. In addition, the Company incurred $1.2 million in
non-recurring and duplicate expenses from its relocation to Suffern in fiscal
1994.
<PAGE>
Interest Income
Interest income increased by $943,614, or 54.6%, in fiscal
1995 as compared to fiscal 1994 and decreased by $611,500, or 26.2%, in fiscal
1994 as compared to fiscal 1993. The increase in fiscal 1995 was due to the
increase in the market value of the Company's managed municipal bond portfolio
(see also Notes 1 and 3 to the Consolidated Financial Statements). This was in
contrast to the market value decline in fiscal 1994 that caused the decrease in
fiscal 1994's interest income versus fiscal 1993. Also contributing to the
decrease in fiscal 1994 and fiscal 1993 was an accounting adjustment to amortize
premiums on investment purchases.
Provision for Income Taxes
The effective tax rates were 37.0%, 37.0% and 36.0% for fiscal
1995, 1994, and 1993, respectively. The increase in the tax rate in fiscal 1994
reflected the increase in the corporate federal tax rate as specified in the
Omnibus Budget Reconciliation Act of 1993 which became effective July 1,1993.
Net Earnings
In any period the Company's net earnings depend primarily on
the level of sales, the gross profit on those sales and controls over SG&A
expenses. The factors that affect the Company's sales and margins include
occupancy costs included in CGS, the general retail climate for apparel and
competitive factors in general. The Company's fiscal 1995 net earnings were
positively impacted by several factors, including the increase in gross margins
and interest income, which more than offset the comparable store sales decrease
and its effect on SG&A expenses as a percentage of sales. The Company's fiscal
1995 net earnings were negatively impacted by several factors, including a
decline in apparel prices, unseasonable weather and increased department store
promotions. As a result of all of these factors, net earnings increased by 13.2%
to $18,285,000 during fiscal 1995 as compared to fiscal 1994, and decreased
15.2% to $16,153,000 during fiscal 1994 as compared to fiscal 1993. Net earnings
as a percentage of net sales were 3.7%, 3.5% and 4.5% in fiscal 1995, 1994 and
1993. The Company's fiscal 1994 net earnings were negatively impacted by several
factors, including the comparable store sales decrease and the non-recurring
expenses from the relocation to Suffern.
<PAGE>
Liquidity and Capital Resources
The Company has generally funded, through internally generated
cash flow, all of its operating and capital needs. These include the opening of
358 new stores, the remodeling of existing stores, the continued expansion of
its successful Dress Barn Woman and Combo formats and the relocation of its
headquarters. Total capital expenditures were $22,027,000, $23,380,000 and
$20,071,000 in fiscal 1995, 1994 and 1993, respectively. A total of
approximately $15 million of capital expenditures during fiscal 1994 and fiscal
1995 were for the new Suffern facility. In conjunction with the new facility,
the Company, in fiscal 1995, accepted a $3.5 million low interest industrial
revenue loan from New York State Urban Development Corporation.
The Company's cash and cash equivalents and marketable
securities increased almost $10 million in fiscal 1995 from fiscal 1994. The
increase in earnings and the proceeds from the $3.5 million loan accounted for
the increase. The Company funds inventory expenditures through cash flows from
operations and the favorable payment terms the Company has established with its
vendors. This has allowed the Company's quick ratio (i.e., the ratio of current
assets less inventory to current liabilities) to improve slightly over the past
three years (1.25, 1.17 and 1.17 in the 1995, 1994 and 1993 fiscal years,
respectively). In fiscal 1995, merchandise inventories increased a modest
$8,444,000 as the Company has continued to keep its inventory levels in line
with sales. The Company's net cash provided by operations in fiscal 1995
increased to $27,628,000, as compared to $23,704,000 in fiscal 1994 and
$29,047,000 in fiscal 1993. The increase in fiscal 1995 was due to the increase
in earnings and favorable income tax cash planning. During this three-year
period, the Company has increased its cash and investments by $21,100,000 and
financed its expansion and corporate relocation while incurring only $3.5
million in long-term debt.
In fiscal 1996 the Company plans to spend approximately
$17,500,000 to open approximately 70 additional stores and continue its store
remodeling program. The Company expects to finance this expansion and its
foreseeable operating and capital needs through internally generated funds.
At July 29, 1995, the Company had $64,413,000 in marketable
securities. The portfolio primarily consists of municipal bonds that can readily
be converted to cash. The Company holds no options or other derivative
instruments. Working capital was $103,310,000 at July 29, 1995. In addition, the
Company has available $90,000,000 in unsecured lines of credit bearing interest
at below the prime rate. The Company had no debt outstanding under any of these
lines at July 29, 1995. However, borrowings were limited by approximately $36
million of outstanding letters of credit.
<PAGE>
Inflation
General inflation has historically had only a minor effect on
the Company' results of operations as the Company has generally been able to
maintain its sales prices of merchandise sold. The Company expects this trend to
continue in fiscal 1996, with no significant increase in its selling prices
planned.
In the last several years, there has been deflation in the
cost of apparel. The Company believes that this deflation has had a modest
effect on the Company's net sales.
Seasonality
Though the Company does not consider its business to be
seasonal, it has historically experienced substantially lower earnings in its
second fiscal quarter than during the other three fiscal quarters. This decline
reflects the intense promotional atmosphere that has accompanied the Christmas
shopping season in recent years. The Company does not expect this trend to
change in fiscal 1996 and anticipates earnings for its second quarter of fiscal
1996 to be significantly less than the other three quarters.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of The Dress Barn, Inc. and
subsidiaries are filed together with this report: See Index to Financial
Statements, Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
The information called for by Items 10, 11, 12 and 13 is incorporated
herein by reference from the definitive proxy statement to be filed by the
Company in connection with its 1995 Annual Meeting of Shareholders.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ITEM 14. (a)(1) FINANCIAL STATEMENTS PAGE NUMBER
Independent Auditors' Report .................. F-1
Consolidated Balance Sheets ................... F-2
Consolidated Statements of Earnings ........... F-3
Consolidated Statements of Shareholders' Equity F-4
Consolidated Statements of Cash Flows ......... F-5
Notes to Consolidated Financial Statements .... F-6 to F-11
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
ITEM 14.(a)(3) LIST OF EXHIBITS
The following exhibits are filed as part of this Report and except
Exhibits 22 and 24 are all incorporated by reference (utilizing the same
exhibit numbers) from the sources shown.
Incorporated By
Reference From
3(c) Amended and Restated Certificate of Incorporation (1)
3(e) Amended and Restated By-Laws (1)
3(f) Amendments to Amended and Restated Certificate of Incorporation (5)
3(g) Amendments to Amended and Restated By-Laws (5)
3(h) Amendments to Amended and Restated By-Laws (6)
<PAGE>
Incorporated By
Reference From
4. Specimen Common Stock Certificate .......................... (1)
10(a) 1993 Incentive Stock Option Plan ........................... (10)
10(b) Employment Agreement With Burt Steinberg ................... (1)
10(e) Agreement for Issuance of Stock to Arthur Ziluck ........... (1)
10(f) Agreement terminating Agreement for Purchase of Certain Stock
from Elliot S. Jaffe upon death ............................ (6)
10(g) Agreement terminating Agreement for Purchase of Certain Stock
from Roslyn S. Jaffe upon death ............................ (6)
Leases of Company premises of which the lessor is Elliot S. Jaffe or members of
his family or related trusts:
10(k) Wilton, CT store (1)
10(l) Danbury, CT store (1)
10(m) Branford, CT store (1)
10(o) Mt. Kisco, NY store (1)
10(hh) Norwalk, CT Dress Barn Woman store (8)
10(ii) Branford, CT Dress Barn Woman store (8)
10(r) Amendments to Employment Agreement with Burt Steinberg ..... (2)
10(v) Employment Agreement with Eric Hawn ........................ (4)
10(w) Agreement for Advances with Eric Hawn ...................... (4)
10(z) Extension of Employment Agreement with Burt Steinberg ...... (5)
10(aa)The Dress Barn, Inc. 1987 Non-Qualified Stock Option Plan .. (5)
<PAGE>
Incorporated By
Reference From
10(cc)Employment Agreement with Armand Correia ................... (7)
10(dd)Nonqualified Stock Option Agreement with Armand Correia .... (7)
10(ff)Nonqualified Stock Option Agreement with Elliot Jaffe ...... (7)
10(gg)Nonqualified Stock Option Agreement with Burt Steinberg .... (7)
10(jj)Employment Agreement with David Montieth ................... (8)
10(kk)Employment Agreement with David Jaffe ...................... (8)
10(mm)Lease between Dress Barn and AT&T for ...................... (9)
Office and Distribution Space in Suffern, New York
Subsidiaries of the Registrant 22
Independent Auditors' Consent 24
(1) The Company's Registration Statement on Form S-1 under the Securities Act
of 1933 (Registration No. 2-82916) declared effective May 4, 1983.
(2) The Company's Annual Report on Form 10-K for the
fiscal year ended July 28, 1984.
(3) The Company's Annual Report on Form 10-K for the
fiscal year ended July 27, 1985.
(4) The Company's Annual Report on Form 10-K for the
fiscal year ended July 26, 1986.
(5) The Company's Annual Report on Form 10-K for the
fiscal year ended July 30, 1988.
(6) The Company's Annual Report on Form 10-K for the
fiscal year ended July 28, 1990.
(7) The Company's Annual Report on Form 10-K for the
fiscal year ended July 27, 1991.
(8) The Company's Annual Report on Form 10-K for the
fiscal year ended July 25, 1992.
(9) The Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1993.
(10) The Company's Registration Statement on Form S-8 under the Securities Act
of 1933 (Registration No. 33-60196) filed on March 29, 1993.
ITEM 14. (b) REPORT ON FORM 8-K
The Company has not filed any reports on Form 8-K during the last quarter of
the fiscal year ended July 29, 1995.
<PAGE>
ITEM 14. (c) EXHIBITS
All exhibits are incorporated by reference as shown in Item 14(a)3,
except Exhibits 22 and 24 which are filed as part of this
Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
The Dress Barn, Inc.
by /s/ ELLIOT S. JAFFE
Elliot S. Jaffe
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ ELLIOT S. JAFFE
Elliot S. Jaffe Chairman of the Board and 10/26/95
Chief Executive Officer
Principal Executive Officer)
/s/ ROSLYN S. JAFFE
Roslyn S. Jaffe Director and Secretary and Treasurer 10/26/95
/s/ BURT STEINBERG
Burt Steinberg Director and President 10/26/95
and Chief Operating Officer
/s/ KLAUS EPPLER
Klaus Eppler Director 10/26/95
/s/ DONALD JONAS
Donald Jonas Director 10/26/95
/s/ EDWARD D. SOLOMON
Edward D. Solomon Director 10/26/95
/s/ ARMAND CORREIA
Armand Correia Chief Financial Officer (Principal 10/26/95
Financial and Accounting Officer)
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The Dress Barn, Inc.
Suffern, New York
We have audited the accompanying consolidated balance sheets of The Dress
Barn, Inc. and subsidiaries as of July 29, 1995 and July 30, 1994, and the
related statements of earnings, shareholders' equity, and cash flows for each of
the three years in the period ended July 29, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Dress
Barn, Inc. and subsidiaries as of July 29, 1995 and July 30, 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended July 29, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for certain investments in debt
securities in fiscal 1995.
Stamford, Connecticut
September 20, 1995
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Balance Sheets
July 29, July 30,
ASSETS 1995 1994
Current Assets:
Cash & cash equivalents ........... $ 7,378,747 $ 6,668,006
Marketable securities (Note 3) .... 64,412,660 55,321,978
Merchandise inventories ........... 88,044,774 79,601,016
Prepaid expenses and other ........ 3,439,685 4,237,426
Total Current Assets .............. 163,275,866 145,828,426
Property and Equipment:
Leasehold improvements ............ 48,908,048 43,173,926
Fixtures and equipment ............ 80,617,805 66,026,065
Computer software ................. 6,915,150 6,360,151
Automotive equipment .............. 255,237 251,571
-----------
136,696,240 115,811,713
Less accumulated depreciation
and amortization .................. 57,072,264 44,459,195
-----------
79,623,976 71,352,518
-----------
Other Assets ...................... 621,213 681,711
-----------
$243,521,055 $217,862,655
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade ........... $38,424,376 $41,700,608
Accrued expenses .................. 16,652,543 13,041,013
Customer credits .................. 1,487,579 1,141,523
Income taxes payable .............. 3,401,456 894,395
-----------
Total Current Liabilities ......... 59,965,954 56,777,539
-----------
Deferred Income Taxes ............. 1,117,163 1,887,163
-----------
Long-Term Debt (Note 4) ........... 3,500,000
-----------
Commitments (Note 7)
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- 23,320,108 and 23,226,768
shares, respectively
Outstanding- 22,315,108 and 22,221,768
shares, respectively .............. 1,166,005 1,161,338
Additional paid-in capital ........ 15,055,061 13,826,629
Retained earnings ................. 168,201,083 149,915,598
Treasury stock, at cost ........... (5,705,612) (5,705,612)
Unrealized holding gains on investments (Not 221,401 --
-----------
178,937,938 159,197,953
$243,521,055 $217,862,655
See notes to consolidated financial statements
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Earnings
Year Ended
July 29, July 30, July 31,
1995 1994 1993
Net sales $500,836,364 $457,324,621 $419,585,581
Costs and expenses:
Cost of sales, including
occupancy and buying costs 327,165,606 301,153,755 274,433,316
Selling, general and
administrative 147,316,604 132,257,367 117,742,222
Interest (income) - net (2,670,331) (1,726,717) (2,338,217)
471,811,879 431,684,405 389,837,321
Earnings before income taxes 29,024,485 25,640,216 29,748,260
Income taxes 10,739,000 9,487,000 10,709,000
Net Earnings $ 18,285,485 $ 16,153,216 $ 19,039,260
Earnings per share $ 0.82 $ 0.73 $ 0.86
Weighted average shares
outstanding 22,266,091 22,177,063 22,019,742
See notes to consolidated financial statements
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of
Shareholders' Equity Unrealized
Additional Holding Gains Total
Common Stock Paid-In Retained Treasury on Shareholders'
Shares Amount Capital Earnings Stock Investments Equity
Balance,July 25, 1992
21,847,453 1,142,623 10,179,062 114,723,122 (5,705,612) -- 120,339,195
Tax effect of deferred compensation
882,151 882,151
Employee Stock Purchase Plan activity
36,366 1,818 367,372 369,190
Shares issued pursuant to exercise of stock options
217,255 10,863 1,028,679 1,039,542
Shares issued in connection with purchase of JRL Consulting Corp.
28,588 1,429 331,905 333,334
Net earnings 19,039,260 19,039,260
Balance,July 31, 1993
22,129,662 1,156,733 12,789,169 133,762,382 (5,705,612) -- 142,002,672
Deferred compensation
15,000 750 453,730 454,480
Employee Stock Purchase Plan activity
35,244 1,762 390,047 391,809
Shares issued pursuant to exercise of stock options
41,862 2,093 193,683 195,776
Net earnings 16,153,216 16,153,216
Balance,July 30, 1994
22,221,768 1,161,338 13,826,629 149,915,598 (5,705,612) -- 159,197,953
Deferred compensation
25,000 1,250 644,053 645,303
Employee Stock Purchase Plan activity
43,490 2,175 389,586 391,761
Shares issued pursuant to exercise of stock options
15,461 773 85,786 86,559
Shares issued in connection with purchase Of JRL Consulting Corp.
9,389 469 109,007 109,476
Unealized holding gains on marketable ssecurities
221,401 221,401
Net earnings 18,285,485 18,285,485
Balance,July 29,1995
22,315,108 1,166,005 15,055,061 168,201,083 (5,705,612) 221,401 178,937,938
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended
July 29, July 30, July 31,
1995 1994 1993
Operating Activities:
Net earnings $18,285,485 $16,153,216 $19,039,260
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property and equipment
13,755,120 10,974,527 9,177,014
(Decrease) increase in deferred taxes
(770,000) 609,812 (711,159)
Deferred compensation 754,779 251,480 331,151
Changes in assets and liabilities:
(Increase) in merchandise inventories
(8,443,758) (6,197,778) (7,071,023)
Decrease (increase) in prepaid expenses
797,741 3,862,595 (616,772)
Decrease in other assets 60,498 175,330 274,274
(Decrease) increase - accounts payable- trade
(3,276,232) 1,710,136 6,243,082
Increase (decrease) in accrued expenses
3,611,530 (2,657,896) 2,019,572
Increase (decrease) in customer credits
346,056 (265,464) 298,906
Increase (decrease) in income taxes payable
2,507,061 (911,871) 62,588
----------------------------------------------------------------
Total adjustments 9,342,795 7,550,871 10,007,633
----------------------------------------------------------------
Net cash provided by operating activities
27,628,280 23,704,087 29,046,893
Investing Activities
Purchases of property and equipment - net
(22,026,578) (23,380,234) (20,071,480)
Sales and maturities of marketable securities
24,548,148 9,516,454 21,030,349
Purchases of marketable securities
(33,417,429) (13,814,678) (25,990,948)
Net cash used in investing activities
(30,895,859) (27,678,458) (25,032,079)
Financing Activities
Proceeds from long term debt 3,500,000 - -
Proceeds from Employee Stock Purchase Plan
391,761 391,809 369,190
Proceeds from stock options exercised
86,559 195,776 1,039,542
Net cash provided by financing activities
3,978,320 587,585 1,408,732
Net increase (decrease) in cash and cash equivalents
710,741 (3,386,786) 5,423,546
Cash and cash equivalents- beginning of period
6,668,006 10,054,792 4,631,246
Cash and cash equivalents- end of period
$7,378,747 $6,668,006 $10,054,792
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $9,001,939 $9,285,361 $11,357,571
See notes to consolidated financial statements
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Years Ended July 29, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Dress Barn, Inc. (including The Dress Barn, Inc. and its wholly-owned
subsidiaries (the "Company")) operates a chain of discount women's apparel
specialty stores. The stores, operating principally under the name "Dress Barn",
offer in-season, moderate to better quality fashion apparel. The Company
operates in one business segment.
Principles of consolidation
The consolidated financial statements include the accounts of
the Company. All material intercompany balances and transactions have been
eliminated.
Merchandise inventories
Merchandise inventories are valued at the lower of cost, on a
first-in, first-out basis, or market as determined by the retail method.
Property and equipment
Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets which range from 3 to 10 years. For income
tax purposes, accelerated methods are generally used.
Income taxes
Deferred income taxes are provided using the asset and
liability method, whereby deferred income taxes result from temporary
differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements.
Fiscal year
The Company reports on a 52-53 week fiscal year ending on the
last Saturday in July. The fiscal year ended July 31, 1993 consisted of 53 weeks
while all other years presented consisted of 52 weeks.
Store preopening costs
Expenses associated with the opening of new stores are charged
to expense as incurred.
<PAGE>
Marketable securities
The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), effective July 31, 1994. SFAS 115 requires securities
that are available for sale be carried at fair value, with changes in net
unrealized gains and losses recorded directly to shareholders' equity. There was
no material impact on the Company's financial statements as a result of the
adoption of SFAS 115.
At July 29, 1995, marketable securities are categorized as
available for sale and are stated at market value. The unrealized holding gains
and losses are included in shareholders' equity until realized. At July 30,
1994, marketable securities were carried at the lower of amortized cost or fair
value.
Earnings per share
Earnings per share is based on the weighted average number of
common shares and common share equivalents outstanding for the years presented.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company
considers its highly liquid overnight investments to be cash equivalents. The
carrying amount of cash and equivalents approximate fair value due to their
short term maturities. The majority of the Company's money market funds are
maintained with one financial institution.
Reclassifications
Certain amounts in prior years' financial statements have been
reclassified for comparative purposes.
2. ACQUISITION OF JRL CONSULTING CORP.
In April 1990, the Company purchased all of the assets of JRL
Consulting Corp. ("JRL"). The purchase price and contingent payments based on
performance were paid from 1990 through 1995. These payments were made both in
cash and through the issuance of shares of the Company's common stock. The final
issuance was made as of August 1995.
<PAGE>
3. MARKETABLE SECURITIES
Marketable securities included the following:
July 29, 1995
-------------
Fair Amortized
Value Cost
Money Market Funds $18,313,000 $18,313,000
Tax Free Municipal Bonds 44,409,000 44,000,000
US Govt. Securities Fund 1,691,000 1,878,000
---------- ---------
$64,413,000 $64,191,000
July 30, 1994
-------------
Fair Amortized
Value Cost
Money Market Funds $ 7,240,000 $ 7,240,000
Tax Free Municipal Bonds 46,407,000 46,429,000
US Govt. Securities Fund 1,675,000 1,878,000
---------- ----------
$55,322,000 $55,547,000
=========== ===========
The scheduled maturities of marketable securities at July 29, 1995 is
as follows:
Due In Fair Value Amortized Cost
- ----------------------
One year or less $37,715,000 $37,733,000
One year through five years 21,982,000 21,710,000
Six years through ten years 3,581,000 3,564,000
After ten years 1,135,000 1,184,000
$64,413,000 $64,191,000
Gross unrealized holding gains and losses at July 29, 1995 were
$221,000. Proceeds and gross realized gains from the sale of securities
classified as available for sale in fiscal 1995 were $24,548,000 and $66,000,
respectively. For the purposes of determining gross realized gains and losses,
the cost of securities is based upon specific identification.
4. LONG-TERM DEBT
The Company incurred long term debt for the first time during fiscal
1995 when it borrowed $3.5 million from New York State Urban Development
Corporation. The $3.5 million unsecured loan, due October 1, 2004, provides for
the payment of interest at rates ranging from 0% to 3% over the term of the
loan. Interest payments commences November 1, 1996 and are paid monthly
thereafter. The loan agreement has no restrictive covenants, but requires a $3.5
million irrevocable letter of credit in favor of the lender to guarantee its
repayment. The Company had no other long-term debt outstanding at any time
during the three years ended July 29, 1995.
At July 29, 1995 the Company had unsecured lines of credit with three
banks totaling $90,000,000, with interest payable at rates below prime. None of
the Company's lines of credit contain any significant covenants or commitment
fees. The Company had no debt outstanding under any of the lines at July 29,
1995. However, borrowings were limited by approximately $36 million of
outstanding letters of credit.
<PAGE>
5. EMPLOYEE BENEFIT PLANS
The Company maintains a discretionary profit-sharing plan for eligible
employees. Amounts charged to operations for the plan were $555,000, $575,000,
and $685,000 for the years ended July 29, 1995, July 30, 1994 and July 31, 1993,
respectively.
The Company does not provide any additional postretirement benefits.
6. INCOME TAXES
The components of the provision for income taxes were as
follows:
July 29, July 30, July 31,
1995 1994 1993
Federal:
Current ...................... $ 8,815,000 $ 7,280,000 $ 9,027,000
Deferred ..................... (608,000) 228,000 (757,000)
Subtotal ..................... 8,207,000 7,508,000 8,270,000
State:
Current ...................... 2,694,000 1,919,000 2,604,000
Deferred ..................... (162,000) 60,000 (165,000)
Subtotal ..................... 2,532,000 1,979,000 2,439,000
Total ........................ $10,739,000 $ 9,487,000 $10,709,000
Significant components of the Company's deferred tax liabilities and
assets were as follows:
July 29, July 30, July 31,
1995 1994 1993
Deferred tax liabilities:
Depreciation ................. $ 6,482,842 $ 4,646,641 $ 5,118,111
Other items .................. 953,237 3,027,557 1,413,629
Total deferred tax liabilities 7,436,079 7,674,198 6,531,740
Deferred tax assets:
Inventory capitalization for tax 2,302,648 2,067,669 2,049,434
Other items .................. 4,016,268 3,719,366 3,204,955
Total deferred tax assets .... 6,318,916 5,787,035 5,254,389
Net deferred tax liabilities . $ 1,117,163 $ 1,887,163 $ 1,277,351
<PAGE>
The net deferred tax liabilities were comprised of approximately
$190,000 in state deferred taxes and $927,000 in federal deferred taxes.
Following is a reconciliation of the statutory Federal income tax rate and the
effective income tax rate applicable to earnings before income taxes:
July 29, July 30, July 31,
1995 1994 1993
Statutory tax rate ........... 35.0% 35.0% 34.0%
State taxes - net of federal
benefit ...................... 6.1 5.5 5.9
Other - net .................. (4.1) (3.5) (3.9)
Effective tax rate ........... 37.0% 37.0% 36.0%
7. COMMITMENTS
Lease commitments
The Company leases all its stores and warehouses. Certain
leases provide for additional rents based on percentages of net sales, charges
for real estate taxes, insurance and other occupancy costs. Store leases
generally have an initial term ranging from 5 to 15 years with one or more 5
year options to extend the lease. Some of these leases have provisions for rent
escalations during the initial term. In July 1993, the Company entered into a
lease for 510,000 square feet of office and distribution space in Suffern, New
York. The lease has an initial term of 14 years with three 5 year options to
extend the lease.
A summary of rental expense is as follows:
Year Ended
July 29, July 30, July 31,
1995 1994 1993
Base rentals ................. $47,942,000 $42,641,000 $36,804,000
Percentage rentals ........... 167,000 149,000 338,000
Other occupancy costs ........ 18,299,000 13,796,000 11,237,000
----------- ----------- -----------
Total ........................ $66,408,000 $56,586,000 $48,429,000
<PAGE>
The following is a schedule of future minimum rentals under
noncancellable operating leases as of July 29, 1995:
Fiscal Year Amount
- ------------- ------------
1996 $ 47,087,000
1997 39,296,000
1998 32,109,000
1999 24,802,000
2000 17,496,000
Subsequent years 45,854,000
Total future minimum rentals $206,644,000
Although the Company has the ability to cancel certain leases if
specified sales levels are not achieved, future minimum rentals under such
leases have been included in the above table.
Leases with related parties
The Company leases six stores from its Chief Executive Officer or
related trusts. Future minimum rentals under leases with such related parties
which extend beyond July 29, 1995, included in the above schedule, are
approximately $109,000 annually and aggregate $1,202,000. The leases also
contain provisions for cost escalations and additional rent based on net sales
in excess of stipulated amounts. Rent expense for fiscal years 1995, 1994, and
1993 under these leases amounted to approximately $429,000, $430,000 and
$413,000, respectively.
8. STOCK OPTION PLANS
The Company's 1983 Incentive Stock Option Plan expired on April 4,1993,
and accordingly, the Company can no longer grant options under such plan. The
Company's shareholders approved the 1993 Incentive Stock Option Plan, which
contains provisions similar to the expired plan. The 1993 Plan provides for the
grant of options to purchase up to 1,250,000 shares of the Company's Common
Stock. The exercise price of the options granted under both plans may not be
less than the market price of the Common Stock at the date of grant. In
addition, the Company's 1987 Non-Qualified Stock Option Plan provides for the
granting of options to purchase up to 1,000,000 shares of Common Stock to key
employees. Compensation expense resulting from the issuance of non-qualified
options is recognized on a straight-line basis over the vesting term of the
option agreement. All options granted under both plans vest over a five year
period. As of July 29, 1995, 532,224 of the options issued to date were
exercisable.
<PAGE>
The following summarizes the activities in all Stock Option Plans:
Number of Option Price Range
Shares (Per share)
Outstanding - July 31,1993 ............. 823,102 $ 3.00 - 12.50
Granted ................................ 528,950 10.53-11.25
Exercised .............................. (41,862) 5.36-8.25
Canceled ............................... (52,848) 5.36-8.38
---------- -----------------
Outstanding - July 30,1994 ............. 1,257,342 $ 3.00 - 12.50
Granted ................................ 406,079 8.25 - 8.87
Exercised .............................. (15,461) 5.36 - 6.41
Canceled ............................... (255,327) 3.34-10.53
---------- -----------------
Outstanding - July 29,1995 ............. 1,392,633 $ 3.00 - 12.50
9. QUARTERLY RESULTS OF OPERATIONS (unaudited)
($000 omitted except per share amounts)
Fourth Third Second First
Quarter Quarter Quarter Quarter
Year ended July 29, 1995
Net Sales ........ $130,559 $123,541 $116,660 $130,076
Gross Profit,
less occupancy
and buying costs 44,603 43,798 38,578 46,692
Income Taxes ..... 2,623 2,941 1,421 3,754
Net Earnings ..... 4,468 5,002 2,423 6,392
Earnings Per Share $ .20 $ .22 $ .11 $ .29
Year ended July 30, 1994
Net Sales ........ $118,186 $112,862 $106,577 $119,700
Gross Profit,
less occupancy
and buying costs 39,129 39,861 34,223 42,958
Income Taxes ..... 1,945 2,530 1,250 3,762
Net Earnings ..... 3,311 4,307 2,129 6,406
Earnings Per Share $ .15 $ .19 $ .10 $ .29
<PAGE>
EXHIBIT 22
THE DRESS BARN, INC.
SUBSIDIARIES OF THE REGISTRANT
(All 100% Owned)
State of
Subsidiary Incorporation
D.B.R., Inc. Delaware
The Dress Barn, Inc. of
New Hampshire, Inc. (**) New Hampshire
Raxton Corp. (**) Massachusetts
JRL Consulting Corp. New Jersey
D.B.X. Inc. New York
(**) Inactive Subsidiary
F-17
EXHIBIT 24
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in registration statement Nos.
33-16857 and 33-17488 (on Form S-8) and 33-16856 (on Form S-3) of our report,
dated September 15, 1992 on the consolidated financial statements of The Dress
Barn, Inc. and subsidiaries appearing on pages F-1 to F-10 in the Annual Report
on Form 10-K for the year ended July 29, 1995.
Stamford, Connecticut
September 20, 1995
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