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 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 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 22,412,251 shares on March 1, 1996
Page 1 of 10
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
INDEX
Page
Number
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
January 27, 1996 (unaudited)
and July 29, 1995 I-3
Consolidated Statements of Earnings
(unaudited) for the Thirteen and
Twenty-Six weeks ended
January 27, 1996 and January 28, 1995 I-4 and I-5
Consolidated Statements of Cash Flows (unaudited)
for the Twenty-Six weeks ended January 27, 1996
and January 29, 1994 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.
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Balance Sheets
January 27, July 29,
ASSETS 1996 1995
----------------- --------------
Current Assets: (unaudited)
Cash & cash equivalents $6,351,627 $7,378,747
Marketable securities 72,041,507 64,412,660
Merchandise inventories 70,361,858 88,044,774
Prepaid expenses and other 1,799,494 3,439,685
----------------- --------------
Total Current Assets 150,554,486 163,275,866
----------------- --------------
Property and Equipment:
Leasehold improvements 51,299,626 48,908,048
Fixtures and equipment 86,221,307 80,617,805
Computer software 7,120,749 6,915,150
Automotive equipment 310,622 255,237
----------------- --------------
144,952,304 136,696,240
Less accumulated depreciation
and amortization 66,276,452 57,072,264
----------------- --------------
78,675,852 79,623,976
----------------- --------------
Other Assets 1,895,612 621,213
================= --------------
$231,125,950 $243,521,055
================= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade $21,735,755 $38,424,376
Accrued expenses 12,056,714 16,652,543
Customer credits 2,208,012 1,487,579
Income taxes payable 2,845,390 3,401,456
----------------- --------------
Total Current 38,845,871 59,965,954
Liabilities
----------------- --------------
Deferred Income Taxes 1,209,163 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- 23,347,020 and 23,320,108
shares,respectively
Outstanding- 22,342,020 and 22,315,108
shares, repectively 1,167,351 1,166,005
Additional paid-in capital 15,431,029 15,055,061
Retained earnings 175,957,188 168,201,083
Treasury stock, at cost (5,705,612) (5,705,612)
Unrealized holding gains on investments 720,960 221,401
----------------- --------------
187,570,916 178,937,938
================= ==============
$231,125,950 $243,521,055
================= ==============
See notes to consolidated financial statements (unaudited)
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Income Statements
Unaudited
Thirteen Weeks Ended
------------------------------------
January 27, January 28,
1996 1995
--------------- ---------------
Statement of earnings data:
Net sales $119,126,704 $116,660,499
Cost of sales, including
occupancy and buying costs 80,376,800 78,082,582
--------------- ---------------
Gross profit 38,749,904 38,577,917
Selling, general and
administrative expenses 32,362,422 31,868,913
Depreciation and amortization 4,550,828 3,342,193
--------------- ---------------
Operating income 1,836,654 3,366,811
Interest income- net 911,223 477,412
--------------- ---------------
Earnings before
income taxes 2,747,877 3,844,223
Income taxes 1,017,000 1,421,000
--------------- ---------------
Net earnings $1,730,877 $2,423,223
=============== ===============
Earnings per share $0.08 $0.11
=============== ===============
Weighted average
shares outstanding 22,338,635 22,253,110
--------------- ---------------
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Income Statements
Unaudited
Twenty-Six Weeks Ended
------------------------------------
January 27, January 28,
1996 1995
--------------- ---------------
Statement of earnings data:
Net sales $256,477,254 $246,736,422
Cost of sales, including
occupancy and buying costs 169,340,800 161,466,037
--------------- ---------------
Gross profit 87,136,454 85,270,385
Selling, general and
administrative expenses 67,192,789 65,478,999
Depreciation and amortization 9,286,902 6,778,902
--------------- ---------------
Operating income 10,656,763 13,012,484
Interest income- net 1,654,341 978,030
--------------- ---------------
Earnings before
income taxes 12,311,104 13,990,514
Income taxes 4,555,000 5,175,000
--------------- ---------------
Net earnings $7,756,104 $8,815,514
=============== ===============
Earnings per share $0.35 $0.40
=============== ===============
Weighted average
shares outstanding 22,331,460 22,244,076
--------------- ---------------
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited
Twenty-Six Weeks Ended
------------------------------------
January 27, January 28,
1996 1995
--------------- --------------
Operating Activities:
Net earnings $7,756,104 $8,815,514
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment 9,286,902 6,360,200
Increase in deferred income taxes 92,000 107,000
Deferred compensation 92,774 100,800
Changes in assets and liabilities:
Decrease in merchandise inventories 17,682,916 7,339,499
Decrease in prepaid expenses 1,640,191 988,555
(Increase) decrease in other assets (1,274,399) 8,713
(Decrease)-accounts payable- trade (16,688,621) (11,664,468)
(Decrease) in accrued expenses (4,595,829) (4,193,235)
Increase in customer credits 720,433 787,247
(Decrease) in income taxes payable (556,066) (727,239)
--------------- --------------
Total adjustments 6,400,302 (892,928)
--------------- --------------
Net cash provided by operating activities 14,156,406 7,922,586
--------------- --------------
Investing Activities
Purchases of property and equipment (8,338,778) (11,343,405)
Purchases of marketable securities (23,484,093) (15,758,835)
Sales and maturities of marketable 16,354,805 13,882,491
securities
--------------- --------------
Net cash used in investing activities (15,468,066) (13,219,749)
--------------- --------------
Financing Activities
Proceeds from long term debt 0 3,500,000
Proceeds from Employee Stock Purchase Plan 124,357 197,247
Proceeds from stock options exercised 160,183 38,350
--------------- --------------
Net cash provided by financing activities 284,540 3,735,597
--------------- --------------
Net (decrease) in cash and cash equivelants (1,027,120) (1,561,566)
Cash and cash equivalents- beginning of period 7,378,747 6,668,006
--------------- --------------
Cash and cash equivalents- end of period $6,351,627 $5,106,440
=============== ==============
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $4,519,067 $5,795,239
=============== ==============
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 January 27, 1996, are not
necessarily indicative of the operating results for the full year.
2. Reclassification
Certain reclassifications have been made to prior year's financial
statements to conform with the current year's presentation.
<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 759 stores in operation at
January 27, 1996 as compared with 738 at January 28, 1995. During the twenty-six
weeks ended January 27, 1996, the Company opened 29 stores and closed 36 for a
net reduction of 7 stores during the six months. The Company did convert 10
freestanding Dress Barn locations to DB/DBW combination units during the six
month period. As of January 27, 1996, the Company had in operation 107 DB/DBW
combination units, compared to 59 at January 28, 1995.
The following summarizes the financial results for the thirteen and
twenty-six week periods ended January 27, 1996 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 2.1% 3.9%
Gross Profit, less
Occupancy & Buying 0.4% 32.5% 33.1% 2.2% 34.0% 34.6%
Selling, General and
Admin. Expenses 1.5% 27.2% 27.3% 2.6% 26.2% 26.5%
Depreciation 36.2% 3.8% 2.9% 37.0% 3.6% 2.7%
Operating Income -45.4% 1.5% 2.9% -18.1% 4.2% 5.3%
Interest Income 91.0% 0.8% 0.4% 69.1% 0.6% 0.4%
Income Taxes -28.4% 0.8% 1.2% -12.0% 1.8% 2.1%
Net Income -28.6% 1.5% 2.1% -12.0% 3.0% 3.6%
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 5% for both the three and six month periods.
Gross profit less occupancy and buying costs for both the quarter and the
six months decreased as a percentage of sales. This was due to an increase in
markdowns and the decline in comparable sales versus the prior year, which
resulted in occupancy costs increasing as a percent of sales this year versus
last year.
The decrease in selling, general and administrative expenses as a
percentage of net sales resulted the Company's continued focus on cost controls.
Reductions in supply costs, repairs and maintenance and Home Office payroll
offset increased expenditures for store payroll and advertising.
Interest income increased in both periods as an increase in funds
available for short term investment was accompanied by an increase in short term
interest rates. In accordance with SFAS 115 ("Accounting for Certain Investments
and Debt Securities"), changes in the market value of the municipal bond
portfolio are included in shareholders' equity rather than impact the current
period's operating results.
The effective tax rate for the twenty-six weeks ended January 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 six months ended January 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 January 27, 1996, the Company had working capital of $111,709,000 and
four bank credit lines totaling $100,000,000 without any outstanding borrowings.
<PAGE>
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 11, 1995.
(c) The Company's shareholders approved the adoption of The Dress Barn
Inc. 1995 Stock Option Plan (13,298,652 shares voted for approval and
2,584,792 shares withheld authority with respect to or voted against
approval). The Company's shareholders also voted for the reelection of
Elliot S. Jaffe and Burt Steinberg as Directors (18,548,947 and 18,548,519
shares, respectively, voted for reelection and 425,347 and 425,375 shares,
respectively, withheld authority for such election).
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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<FISCAL-YEAR-END> JUL-27-1996
<PERIOD-START> JUL-30-1995
<PERIOD-END> JAN-27-1996
<CASH> 6351627
<SECURITIES> 72041507
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 70361858
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<BONDS> 3500000
0
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<COMMON> 1167351
<OTHER-SE> 186403565
<TOTAL-LIABILITY-AND-EQUITY> 231125950
<SALES> 256477254
<TOTAL-REVENUES> 256477254
<CGS> 169340800
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