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 April 27, 1996
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.)
30 Dunnigan Drive, Suffern New York 10901
(Address of principal executive offices) (Zip Code)
(914) 369-4500
(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 No X
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 22,535,607 shares on June 5,1996
Page 1 of 10
THE DRESS BARN, INC. AND SUBSIDIARIES
INDEX
Page
Number
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
April 27, 1996 (unaudited)
and July 29, 1995 I-3
Consolidated Statements of Earnings
(unaudited) for the Thirteen and
Thirty-nine weeks ended
April 27, 1996 and April 29, 1995 I-4 and I-5
Consolidated Statements of Cash Flows (unaudited) for the
Thirty-nine weeks ended April 27, 1996 and April
29, 1995 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 *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K I-10
* Not applicable in this filing.
<PAGE>
The Dress Barn, Inc. and
Subsidiaries
Consolidated Balance Sheets
April 27, July 29,
ASSETS 1996 1995
------------- -------------
Current Assets: (unaudited)
Cash & cash equivalents $6,646,017 $7,378,747
Marketable securities 78,026,898 64,412,660
Merchandise inventories 99,056,510 88,044,774
Prepaid expenses and other 3,029,716 3,439,685
------------- -------------
Total Current Assets 186,759,141 163,275,866
------------- -------------
Property and Equipment:
Leasehold improvements 53,516,811 48,908,048
Fixtures and equipment 88,834,092 80,617,805
Computer software 7,147,759 6,915,150
Automotive equipment 365,531 255,237
------------- -------------
149,864,193 136,696,240
Less accumulated depreciation
and amortization 71,388,485 57,072,264
------------- -------------
78,475,708 79,623,976
------------- -------------
Other Assets 790,253 621,213
------------- -------------
$266,025,102 $243,521,055
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade $49,190,716 $38,424,376
Accrued expenses 15,128,113 16,652,543
Customer credits 1,790,698 1,487,579
Income taxes payable 2,290,388 3,401,456
------------- -------------
Total Current 68,399,915 59,965,954
Liabilities
------------- -------------
Deferred Income Taxes 1,190,163 1,117,163
------------- -------------
Long Term Debt 3,500,000 3,500,000
------------- -------------
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- 23,529,843 and 23,281,640 shares,respectively
Outstanding- 22,524,843 and 22,276,640
shares, respectively 1,176,492 1,166,005
Additional paid-in capital 16,216,658 15,055,061
Retained earnings 181,094,499 168,201,083
Treasury stock, at cost (5,705,612) (5,705,612)
Unrealized holding gains on investments 152,987 221,401
------------- -------------
192,935,024 178,937,938
============= =============
$266,025,102 $243,521,055
============= =============
See notes to consolidated financial
statements (unaudited)
<PAGE>
The Dress Barn, Inc. and
Subsidiaries
Consolidated Statements of Earnings- Third Quarter
Unaudited
Thirteen Weeks Ended
---------------------------------
April 27, April 29,
1996 1995
------------- -------------
Net sales $125,174,377 $123,540,622
------------- -------------
Costs and expenses:
Cost of sales, including
occupancy and buying costs 81,390,921 79,743,073
Selling, general and administrative 31,613,939 32,581,761
Depreciation and amortization 4,813,098 3,574,409
Interest (income) - net (798,893) (301,722)
------------- -------------
117,019,065 115,597,521
------------- -------------
Earnings before income taxes 8,155,312 7,943,101
Income taxes 3,018,000 2,941,000
------------- -------------
Net Earnings $5,137,312 $5,002,101
============= =============
Earnings per share $0.23 $0.22
============= =============
Weighted average shares outstanding 22,438,458 22,274,692
============= =============
------------- -------------
See notes to consolidated financial
statements (unaudited)
<PAGE>
The Dress Barn, Inc. and
Subsidiaries
Consolidated Statements of Earnings- Nine Months
Unaudited
Thirty Nine Weeks Ended
---------------------------------
April 27, April 29,
1996 1995
------------- -------------
Net sales $381,651,631 $370,277,044
------------- -------------
Costs and expenses:
Cost of sales, including
occupancy and buying costs 250,731,721 241,209,110
Selling, general and administrative 98,806,728 98,060,760
Depreciation and amortization 14,100,000 10,353,311
Interest (income) - net (2,453,234) (1,279,752)
------------- -------------
361,185,215 348,343,429
------------- -------------
Earnings before income taxes 20,466,416 21,933,615
Income taxes 7,573,000 8,116,000
------------- -------------
Net Earnings $12,893,416 $13,817,615
============= =============
Earnings per share $0.58 $0.62
============= =============
Weighted average shares outstanding 22,367,126 22,254,281
============= =============
------------- -------------
See notes to consolidated financial
statements (unaudited)
<PAGE>
The Dress Barn, Inc. and
Subsidiaries
Consolidated Statements of Cash Flows
Unaudited
Thirty-Nine Weeks Ended
---------------------------------
April 27, April 29,
1996 1995
------------- -------------
Operating Activities:
Net earnings $12,893,416 $13,817,615
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of
property and equipment 11,300,000 9,088,200
Loss on disposal of property and
equipment 2,800,000 633,600
Increase (decrease) in deferred
income taxes 73,000 170,000
Deferred compensation 241,699 151,200
Changes in assets and liabilities:
Increase in merchandise inventories (11,011,736) (27,098,952)
Decrease (increase) in prepaid expenses 409,969 (1,178,286)
(Increase) decrease in other assets (169,040) 34,260
Increase in accounts payable- trade 10,766,340 20,532,275
Increase (decrease) in accrued expenses (1,524,430) (963,800)
Increase in customer credits 303,119 388,070
(Decrease)increase in income taxes pay (1,111,068) 1,601,710
------------- -------------
Total adjustments 12,077,853 3,358,277
------------- -------------
Net cash provided by operating activities 24,971,269 17,175,892
------------- -------------
Investing Activities
Purchases of property and equipment (12,951,732) (18,010,508)
Purchases of marketable securities (56,035,227) (18,544,398)
Sales and maturities of marketable sec 42,268,002 16,251,154
------------- -------------
Net cash used in investing activities (26,718,957) (20,303,752)
------------- -------------
Financing Activities
Proceeds from long term debt -- 3,500,000
Proceeds from Employee Stock Purchase Plan 179,139 297,345
Proceeds from stock options exercised 835,818 53,693
------------- -------------
Net cash provided by financing activities 1,014,957 3,851,038
------------- -------------
Net (decrease) increase in cash and cash equiv (732,730) 723,178
Cash and cash equivalents- beginning of period 7,378,747 6,668,006
------------- -------------
Cash and cash equivalents- end of period $6,646,017 $7,391,184
============= =============
Supplemental Disclosure of Cash Flow
Information:
Cash paid for income taxes $8,611,068 $6,291,605
============= =============
See notes to consolidated financial
statements (unaudited)
<PAGE>
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 29, 1995 Annual Report to
Shareholders.
The results of operations for the period ended April 27, 1996, are not
necessarily indicative of the operating results for the full year.
2. Reclassification
Certain amounts in prior years' financial statements have been
reclassified for comparative purposes.
<PAGE>
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 749 stores in operation at
April 27, 1996 as compared with 764 at April 29, 1995. During the thirty-nine
weeks ended April 27, 1996, the Company opened 41 stores and closed 58 for a net
reduction of 17 stores during the nine months. The Company converted 15 Dress
Barn locations to DB/DBW combination units during the quarter and 25 during the
nine month period. As of April 27, 1996, the Company had in operation 136 DB/DBW
combination units, compared to 78 at April 29, 1995.
The following summarizes the financial results for the thirteen and
thirty-nine week periods ended April 27, 1996 versus the comparable periods last
year:
Third Quarter Nine Months
% Change % of Sales % Change % of Sales
from L/Y T/Y L/Y from L/Y T/Y L/Y
Net Sales 1.3% 3.1%
Gross Profit, less
Occupancy & Buying 0.0% 35.0% 35.5% 3.9% 34.3% 34.9%
Selling, General and
Admin. Expenses -3.0% 25.3% 26.4% 0.8% 25.9% 26.5%
Depreciation &
Amortization 34.7% 3.8% 2.9% 36.2% 3.7% 2.8%
Operating Income -3.7% 5.9% 6.2% -12.8% 4.7% 5.6%
Interest Income 165.8% 0.6% 0.2% 91.7% 0.7% 0.3%
Income Taxes 2.6% 2.4% 2.4% -6.7% 2.0% 2.2%
Net Income 2.7% 4.1% 4.0% -6.7% 3.4% 3.7%
Net sales increased due to the increased number of operating units open
during both fiscal periods this year versus last. The increases were reduced by
declines in comparable store sales of 3% for the third quarter and 4% for the
nine month period.
Gross profit less occupancy and buying costs for both the quarter and the
nine months decreased as a percentage of net sales. Merchandise margins as a
percentage of net sales increased in both periods. However, this was offset by
occupancy costs which increased as a percent of net sales due to the comparable
sales decline.
The decrease in selling, general and administrative expenses as a
percentage of net sales for both periods resulted from the Company's continued
focus on cost controls throughout all areas of the Company. Reductions in supply
costs, repairs and maintenance and Home Office payroll offset increased
expenditures for store payroll and advertising.
Depreciation expense includes $2.8 million of costs relating to the 58
stores already closed and 15 additional stores expected to be closed by the end
of the fiscal year ending July 27, 1996.
Interest income increased in both periods as tight inventory and expense
controls and the relatively small number of store openings resulted in an
increase in funds available for short term investment, which was accompanied by
an increase in short term interest rates.
The effective tax rate for the thirty-nine weeks ended April 27, 1996 was
37.0%, the same as the effective rate for the fiscal year ended July 29, 1995.
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Liquidity and Capital Resources
During the nine months ended April 27, 1996 there was no material change
in the Company's liquidity or capital resources. Capital expenditures during the
quarter utilized internally generated funds.
At April 27, 1996, the Company had working capital of $118,359,000 and
four bank credit lines totaling $100,000,000 without any outstanding borrowings.
<PAGE>
Part II - OTHER INFORMATION
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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<CGS> 250731721
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<OTHER-EXPENSES> 14100000
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