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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 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
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Commission file number 0-15934
JAY JACOBS, INC.
(Exact name of registrant as specified in its charter)
Washington 91-0698077
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
Number)
1530 Fifth Avenue, Seattle, Washington 98101
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number,
including area code: (206) 622-5400
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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of July 27, 1996
(Common Stock, 6,126,871 shares)
Page 1 of 11 pages
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PART I. FINANCIAL INFORMATION
JAY JACOBS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Six months ended
July 27 July 29
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,451) $(2,577)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 625 760
Non-cash restructuring items 189
Change in deferred rents (377) (179)
Change in assets and liabilities:
Accounts receivable (163) (256)
Inventories 663 (989)
Prepaid expenses and other (68) (456)
Accounts payable 4,091 1,848
Accrued payroll (529) (153)
Other accrued expenses 299 (293)
Obligations subject to compromise (3,877) (1,482)
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(1,787) (3,588)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in property and equipment (1,029) (140)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing from line of credit 2,217 0
Proceeds from options exercised 71 0
Proceeds from sales of fixed assets 0 0
Net change in cash and cash equivalents (528) (3,728)
Cash and cash equivalents - beginning of period 705 8,745
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Cash and cash equivalents - end of period $ 177 $ 5,017
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Cost of sales, buying and occupancy costs increased as a percentage
of sales by (7%). This was primarily due to a more aggressive promotional
program that was implemented to improve inventory turnover.
Selling, general and administrative expenses decreased as a
percentage of sales by 0.9%, primarily as a result of the Company's effort
to reduce store expense and corporate overhead.
Interest expense as a percent of sales was 0.6% in the second
quarter of fiscal 1997 compared to interest income of (0.5%) of sales in
the second quarter of 1996. This was a result of the decline in cash and
increase in short term borrowing during the quarter.
The Company incurred a loss of $653,000 during the second quarter
of 1997, ($0.11 per share) up from $589,000 in the second quarter of 1996
($0.10 per share). The loss can be attributed to an increase in cost of
goods sold partially offset by a reduction in SG & A expenses.
SIX MONTHS ENDED JULY 27, 1996 COMPARED TO SIX MONTHS ENDED JULY 29, 1995
Net sales decreased $5.6 million, or 16.0% in the six months ended
July 27, 1996 as compared to the same period in 1995. This decrease was
primarily due to store closures. The Company operated 38 fewer stores at
the beginning of the period than it did one year earlier. In addition to
the store closures, the Company attributes a portion of the sales decline
to a 3% decrease in comparable store sales. Comparable store sales declined
as a result of a generally soft demand for apparel merchandise during the
first quarter of 1997, particularly during the month of April when
comparable store sales declined 11%.
Cost of sales, buying and occupancy costs decreased as a percentage
of net sales by 0.5%, due primarily to an improvement in cost of goods sold
during the first quarter of 1997.
Selling, general and administrative expenses increased as a percentage
of net sales by 0.5%, primarily as a result of the comparable store sales
decline during the first quarter of 1997, partially offset by expense
reductions during the second quarter of 1997.
Interest expense as a percent of sales was 0.6% for the first half
of 1997 compared to interest income of (0.3%) in the second half of 1996.
This was a result of the decline in cash and increase in short term
borrowing during the first half.
The Company incurred a loss of $2.45 million during the first half
of 1997 compared to a $2.58 million during the first half of 1996. The loss
can be primarily attributed to the decline in store count and decline in
comparable store sales.
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LIQUIDITY AND CAPITAL RESOURCES
THE LASALLE FACILITY
On November 29, 1995, the Bankruptcy Court approved a financing
agreement on a revolving credit basis between the Company and LaSalle
National Bank ("LaSalle"). The LaSalle Facility provides for borrowing and
letters of credit, the aggregate of which cannot exceed the lower of $10
million or a computed borrowing base based on 50% of inventory and
outstanding letters of credit. Letters of credit are limited to a maximum
of $5 million. A first and only lien is granted to LaSalle on all Company
assets (excluding capitalized leases and excluding permitted liens up to
$400,000). The Company must maintain a scheduled minimum tangible net worth
and may not declare or pay dividends or other distributions on account of
any equity interest in the Company until payment or satisfaction in full of
liabilities under the LaSalle Facility and termination of the financing
agreement. Interest is charged at LaSalle's announced prime rate. The
Company is charged an annual fee of 1% of the aggregate loan limit, normal
audit fees, and a letter of credit fee of 1.25% per annum on the aggregate
undrawn face amount of letters of credit outstanding. The agreement has a
three-year term and was signed on December 4, 1995.
As of the end of the second quarter of 1997 the Company had
$2,217,000 of direct borrowing and $73,000 of outstanding letters of
credit.
GENERAL
The Company's principal needs for liquidity are to finance the
purchase of merchandise inventories, fund its operations and make payments
under its Plan of Reorganization.
Net cash used for operations for the second quarter 1997 and 1996
was $1.8 and $3.6 million, respectively. The use of cash during the second
quarter of 1997 resulted primarily from operating losses during the quarter
and payments made under the Plan of Reorganization.
Payments under the Plan of Reorganization of $2,289,000 were made
for Allowed Claims in late January 1996, subsequent to fiscal year
end.Additional payments were made for Allowed Priority Tax Claims, disputed
claims that were subsequently settled and other costs associated with the
Plan of Reorganization in the aggregate amount of $1,588,000.
Property and equipment expenditures were $1,029,000 and $140,000
respectively. The expenditures during the first quarter of 1997 were a
result of opening 15 stores and converting 5 stores to new formats. Future
expenditures on property and equipment have been curtailed until additional
working capital is available.
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SIGNATURES
Pursuant to 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.
JAY JACOBS, INC.
September 10, 1996 /s/ William L. Lawrence, Jr.
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William L. Lawrence, Jr.,Senior Vice President and
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
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