[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] 07-27-1996
[PERIOD-END] 04-27-1996
[CASH] 6646017
[SECURITIES] 78026898
[RECEIVABLES] 3029716
[ALLOWANCES] 0
[INVENTORY] 99056510
[CURRENT-ASSETS] 186759141
[PP&E] 149864193
[DEPRECIATION] 71388485
[TOTAL-ASSETS] 266025102
[CURRENT-LIABILITIES] 68399915
[BONDS] 3500000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1176492
[OTHER-SE] 191758532
[TOTAL-LIABILITY-AND-EQUITY] 266025102
[SALES] 381651631
[TOTAL-REVENUES] 381651631
[CGS] 250731721
[TOTAL-COSTS] 98806728
[OTHER-EXPENSES] 14100000
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] (2453234)
[INCOME-PRETAX] 20466416
[INCOME-TAX] 7573000
[INCOME-CONTINUING] 12893416
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 12893416
[EPS-PRIMARY] .58
[EPS-DILUTED] .58
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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 October 26, 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 00,000,000 shares on December 6, 1996
Page 1 of 10
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
INDEX
Page
Number
Part I. FINANCIAL INFORMATION (Unaudited):
Item 1. Financial Statements:
Consolidated Balance Sheets
October 26, 1996 and
and July 27, 1996 I-3
Consolidated Statements of Income
for the Thirteen weeks ended
October 26, 1996 and October 28, 1995 I-4
Consolidated Statements of Cash Flows
for the Thirteen weeks ended
October 26, 1996 and October 28, 1995 I-5
Notes to Consolidated Financial
Statements I-6 and 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. Submissions 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.
I - 2
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
<CAPTION>
October 26, July 27,
ASSETS 1996 1996
--------------- ----------------
<S> <C> <C>
Current Assets:
Cash & cash equivalents $19,252,635 $9,517,302
Marketable securities and investments 85,827,666 $81,787,882
Merchandise inventories 99,681,689 $89,790,984
Prepaid expenses and other 4,025,932 $2,769,809
--------------- ----------------
Total Current Assets 208,787,922 183,865,977
--------------- ----------------
Property and Equipment:
Leasehold improvements 51,798,975 $51,008,298
Fixtures and equipment 90,986,949 $88,454,311
Computer software 8,108,975 $7,603,314
Automotive equipment 379,241 $342,283
--------------- ----------------
151,274,140 147,408,206
Less accumulated depreciation
and amortization 70,931,585 $66,503,707
--------------- ----------------
80,342,555 80,904,499
--------------- ----------------
Other Assets 1,056,603 952,211
--------------- ----------------
$290,187,080 $265,722,687
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade $46,419,150 $37,198,907
Accrued expenses 23,624,587 20,903,368
Customer credits 1,932,795 2,062,184
Income taxes payable 4,812,266 971,762
--------------- ----------------
Total Current Liabilities 76,788,798 61,136,221
--------------- ----------------
Deferred Income Taxes 1,990,562 1,990,562
--------------- ----------------
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- 23,655,226 and 23,573,462
shares, respectively
Outstanding- 22,650,226 and 22,568,462
shares, respectively 1,182,761 1,178,673
Additional paid-in capital 17,141,911 16,529,497
Retained earnings 195,034,138 187,110,242
Treasury stock, at cost (5,705,612) (5,705,612)
Unrealized holding gain (loss) on investments 254,522 (16,896)
--------------- ----------------
207,907,720 199,095,904
--------------- ----------------
$290,187,080 $265,722,687
================ ===============
See notes to unaudited consolidated financial statements
I-3
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
<CAPTION>
Thirteen Weeks Ended
-------------------------------------
October 26, October 28,
1996 1995
--------------- ----------------
<S> <C> <C>
Net sales $142,755,018 $137,350,550
--------------- ----------------
Costs and expenses:
Cost of sales, including
occupancy and buying costs 92,795,139 88,964,000
Selling, general and administrative 34,034,521 34,830,367
Depreciation and amortization 4,390,344 4,736,074
Interest (income) - net (942,865) (743,118)
--------------- ----------------
Total expenses 130,277,139 127,787,323
--------------- ----------------
Income before income taxes 12,477,879 9,563,227
Income taxes 4,554,000 3,538,000
--------------- ----------------
Net Income $7,923,879 $6,025,227
=============== ================
Earnings per share $0.35 $0.27
=============== ================
Weighted average shares outstanding 22,597,842 22,323,404
=============== ================
See notes to unaudited consolidated financial statements
I-4
<PAGE>
The Dress Barn, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
<CAPTION>
Thirteen Weeks Ended
-------------------------------------
October 26, October 28,
1996 1995
--------------- ----------------
<S> <C> <C>
Operating Activities:
Net income $7,923,879 $5,863,193
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment 4,390,344 4,736,074
Deferred compensation 69,753 46,387
Changes in operating assets and liabilities:
Increase in merchandise inventories (9,890,705) (10,878,918)
(Increase) decrease prepaid expenses (1,256,123) 113,796
Increase in other assets (104,392) (137,710)
Increase in accounts payable- trade 9,220,243 6,163,712
Increase (decrease) in accrued expenses 1,971,219 (3,439,629)
Decrease in customer credits (129,389) (133,352)
Increase in income taxes payable 3,840,504 1,646,013
--------------- ----------------
Total adjustments 8,111,454 (1,883,627)
--------------- ----------------
Net cash provided by operating activities 16,035,333 3,979,566
--------------- ----------------
Investing Activities:
Expenditures for property and equipment - net (3,078,400) (5,815,092)
Sales of marketable securities 9,981,691 1,978,843
Maturities of marketable securities 11,436,795 7,000,000
Purchases of marketable securities (25,186,852) (8,046,982)
--------------- ----------------
Net cash used in investing activities (6,846,766) (4,883,231)
--------------- ----------------
Financing Activities:
Proceeds from Employee Stock Purchase Plan 42,757 87,500
Proceeds from stock options exercised 504,010 93,322
--------------- ----------------
Net cash provided by financing activities 546,766 180,822
--------------- ----------------
Net increase (decrease)in cash and cash equivalents 9,735,333 (722,843)
Cash and cash equivalents- beginning of period 9,517,302 7,378,747
--------------- ----------------
Cash and cash equivalents- end of period $19,252,635 $6,655,904
=============== ================
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $713,496 $1,891,987
=============== ================
See notes to unaudited consolidated financial statements
I-5
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring adjustments)
which management considers necessary to present fairly and consolidated
financial position of The Dress Barn Inc. and its wholly owned subsidiaries (the
"Company") as of October 26, 1996 and July 27, 1996, the consolidated results of
its operations for the thirteen weeks ended October 26, 1996 and October 28,
1995, and cash flows for the thirteen ended October 26, 1996 and October 28,
1995. The results of operations for thirteen week periods may not be indicative
of the results for the entire year.
These consolidated financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
July 27, 1996 Annual Report to Shareholders. Accordingly, significant accounting
policies and other disclosures necessary for complete financial statements in
conformity with generally accepted accounting principles have been omitted since
such items are reflected in the Company's audited financial statements and
related notes thereto.
2. Forward-Looking Statements and Factors Affecting Future Performance
This Form 10-Q contains forward looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
reflect the Company's current views with respect to future events and financial
performance. The Company's actual results of operations and future financial
condition may differ materially from those expressed or implied in any such
forward looking statements.
The woman's retail apparel industry in which the Company operates is
subject to rapid change and is highly competitive. It currently is plagued by
overcapacity. The industry is subject to changes in the retail environment which
may be affected by overall economic conditions, woman's apparel fashions,
demographics, macroeconomic factors that may affect the level of spending for
the types of merchandise sold by the Company and other factors. Apparel
retailers have also experienced continuing price deflation during the last
several years. The Company's sales and results of operations may also be
affected by unusual weather patterns, the prevalence of discounting, close-outs
and going-out-of-business sales and other promotional activities by other
women's apparel retailers, among other factors. The level of occupancy costs,
merchandise, labor and other costs will affect future results of operations. The
Company's long term continued success also will depend upon its ability to open
and operate new stores on a profitable basis.
I-6
<PAGE>
The Company's strategy in what it believes to be a difficult retail
environment is a commitment to being leaner and more productive. The Company
utilizes three merchandising formats : Dress Barn ("DB"), Dress Barn Woman
("DBW") and DB/DBW Combination stores ("Combos"). The Company is planning to
continue to close or relocate underperforming stores (primarily single-format DB
or DBW stores) and replace them with larger and more productive Combo locations
and maintain tight cost controls in all areas with a view to increasing
shareholder value. There can be no assurance that the Company's strategy will
result in a continuation of revenue and profit growth. Future economic and
industry trends that could impact revenue and profitability remain difficult to
predict.
3. Reclassification
Certain reclassifications have been made to prior year's financial
statements to conform with the current year's presentation.
I - 7
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The increase in net sales in the current year resulted from the Company's
store development activity and a 2% increase in same store sales. Although the
Company had 728 stores in operation as of October 26, 1996 versus 776 at October
28, 1995, the Company increased its selling square footage approximately 4% by
opening new larger-sized Combo stores and converting single-format stores into
combo stores. During the 13 weeks ended October 26, 1996, the Company opened or
converted to Combos 29 stores and closed 7. The Company's strategy for the
remainder of fiscal 1997 is to continue opening primarily combo stores and
converting its existing single-format stores into combos, while aggressively
closing its underperforming locations. The Company anticipates closing
approximately 25 stores during the next fiscal quarter. As of October 26, 1996,
the Company operated 471 Dress Barn stores, 91 DBW stores and 166 Combos.
Gross profit less occupancy and buying costs as a percentage of net sales
decreased to 35.0% from 35.2% last year for the thirteen week period. The
improvement in maintained margin did not offset the increase in store occupancy
costs as a percent of sales.
Selling, general and administrative (SG&A) expenses were $34.0 million for
the first quarter, compared to $34.8 million for last year's comparable quarter.
As a percent of sales, SG&A expenses (excluding depreciation) decreased both in
pure dollars and as a percentage of sales, from 25.4% of sales in 1995 to 23.8%
in 1996. This decrease reflected the resulting leverage from the 2% increase in
comp sales for the quarter. In addition, the Company has continued to
aggressively manage operating expenses to keep them in line with the sales
levels achieved. The company-wide focus on cost reductions and productivity
improvements continued. Depreciation as a percent of sales decreased to 3.1%
from 3.4% last year.
Interest income for the quarter increased to approximately $.9 million
this year versus $.7 million in last year's first quarter as the funds available
for short term investment increased.
The effective tax rate for the thirteen weeks ended October 26, 1996 was
36.5%, versus 37.0% for the fiscal year ended July 27, 1996. The Company's tax
planning strategies reduced its estimated effective rate for fiscal 1997.
As a result of the above factors, net income for the quarter ended October
26, 1996 was $7.9 million, a increase of 31.5% versus the $6.0 million earned
for the same period a year earlier.
I - 8
<PAGE>
THE DRESS BARN, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Liquidity and Capital Resources
At October 26, 1996, the Company had working capital of approximately $132
million and three bank credit lines totaling $95 million without any outstanding
borrowings. The Company had minimal long-term debt - a $3.5 million below-market
interest rate loan from New York State. Inventories were current and in line
with sales projections. Expenditures for property and equipment totaled $3.1
million for the three months ended October 26, 1996, compared to $5.8 million of
expenditures in last year's first three months.
The Company is currently planning very modest store development in fiscal
1997, pending more favorable business trends. The Company estimates that fiscal
1997 capital expenditures will approximate $16 million of which almost all will
be used for the opening of 60 new Combo locations and the conversion of 30
single format DB and DBW stores to Combos. The remainder of capital expenditures
are to upgrade existing computer systems, add additional software technology,
maintain existing facilities and close approximately 60 underperforming
locations.
The Company believes that its cash, cash equivalents and short-term
investments, together with cash flow from operations will be adequate to fund
the Company's proposed capital expenditures and other operating requirements.
I - 9
<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)
I - 10
<PAGE>
</TABLE>
