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 29, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11980
ANNTAYLOR, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0297083
- - ------------------------------- --------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
142 West 57th Street, New York, NY 10019
- - --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(212) 541-3300
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(Registrant's telephone number, including area code)
Indicate by check mark whether 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 the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
Outstanding as of
Class May 26, 1995
------------------------------ ----------------
Common Stock, $1.00 par value 1
This registrant meets the conditions set forth in General
Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing
this form with the reduced disclosure format.
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INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Quarters Ended April 29, 1995 and
April 30, 1994 3
Condensed Consolidated Balance Sheets at
April 29, 1995 and January 28, 1995 4
Condensed Consolidated Statements of Cash Flows
for the Quarters Ended April 29, 1995 and
April 30, 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANNTAYLOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters Ended April 29, 1995 and April 30, 1994
(unaudited)
Quarters Ended
---------------------------------
April 29, 1995 April 30, 1994
-------------- --------------
(in thousands)
Net sales $168,306 $145,283
Cost of sales 91,355 76,403
------- -------
Gross profit 76,951 68,880
Selling, general and administrative expenses 62,451 46,973
Amortization of goodwill 2,377 2,377
------- -------
Operating income 12,123 19,530
Interest expense 4,498 3,456
Other expense, net 57 140
------- -------
Income before income taxes 7,568 15,934
Income tax provision 4,077 7,874
------- -------
Net income $ 3,491 $ 8,060
======= =======
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
April 29, 1995 and January 28, 1995
April 29, 1995 January 28, 1995
-------------- ---------------
(unaudited)
(in thousands)
ASSETS
Current assets
Cash $ 1,132 $ 1,551
Accounts receivable, net of allowances
of $750,000 and $931,000, respectively 69,021 61,211
Merchandise inventories 110,313 93,705
Prepaid expenses and other current assets 8,668 7,956
Deferred income taxes 3,650 3,650
------- -------
Total current assets 192,784 168,073
Property and equipment
Land 499 499
Leasehold improvements 46,392 43,370
Furniture and fixtures 62,782 59,105
Construction in progress 32,922 24,867
------- -------
142,595 127,841
Less accumulated depreciation
and amortization 34,001 31,503
------- -------
Net property and equipment 108,594 96,338
Goodwill, net of accumulated amortization of
$59,596,000 and $57,219,000, respectively 320,654 323,031
Investment in CAT 4,039 3,792
Deferred income taxes 1,600 1,600
Deferred financing costs, net of accumulated
amortization of $1,149,000 and $956,000,
respectively 2,636 2,829
Other assets 2,423 2,591
------- -------
Total assets $632,730 $598,254
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable $39,403 $36,625
Accrued rent 5,326 5,243
Accrued expenses 26,600 24,024
------- -------
Total current liabilities 71,329 65,892
Long-term debt 225,300 200,000
Other liabilities 6,392 6,250
Commitments and contingencies
Stockholder's equity
Common stock, $1.00 par value; 1,000 shares
authorized;1 share issued and outstanding 1 1
Additional paid-in capital 311,221 311,115
Retained earnings 18,487 14,996
------- -------
Total stockholder's equity 329,709 326,112
------- -------
Total liabilities and stockholder's
equity $632,730 $598,254
======= =======
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended April 29, 1995 and April 30, 1994
(unaudited)
Quarters Ended
---------------------------------
April 29, 1995 April 30, 1994
--------------- --------------
(in thousands)
Operating activities:
Net income $3,491 $8,060
Adjustments to reconcile net income to net
cash (used by) provided by operating
activities:
Equity earnings in CAT (247) (150)
Provision for loss on accounts receivable 122 298
Depreciation and amortization 3,566 2,583
Amortization of goodwill 2,377 2,377
Amortization of deferred financing costs 193 348
Amortization of deferred compensation 26 45
Loss on disposal of property and equipment 277 46
(Increase) decrease in:
Receivables (7,932) (8,986)
Merchandise inventories (16,608) (11,713)
Prepaid expenses and other current assets (401) 2,270
Increase in:
Accounts payable 2,778 601
Accrued expenses 1,274 7,489
Other non-current assets and liabilities,
net 312 244
------- -------
Net cash (used by) provided by operating
activities (10,772) 3,512
Investing activities:
Purchases of property and equipment (16,412) (4,883)
------- -------
Net cash used by investing activities (16,412) (4,883)
Financing activities:
Increase in bank overdrafts 1,385 1,598
Borrowing under line of credit agreement 27,000 1,000
Parent company contribution 80 1,677
Net repayments of receivables facility (1,700) (2,434)
Payment of financing costs --- (122)
------- -------
Net cash provided by financing activities 26,765 1,719
------- -------
Net (decrease) increase in cash (419) 348
Cash, beginning of period 1,551 292
------- -------
Cash, end of period $1,132 $ 640
======= =======
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for interest $1,489 $ 973
======= =======
Cash paid during the period for income taxes $1,587 $ 631
======= =======
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
- - -------------------------
The condensed consolidated financial statements are unaudited
but, in the opinion of management, contain all adjustments (which
are of a normal recurring nature) necessary to present fairly the
financial position, results of operations and cash flows for the
periods presented. All significant intercompany accounts and
transactions have been eliminated.
The results of operations for the 1995 interim period shown in
this report are not necessarily indicative of results to be
expected for the fiscal year.
The January 28, 1995 condensed consolidated balance sheet
amounts have been derived from the previously audited
consolidated balance sheet of AnnTaylor, Inc..
Certain fiscal 1994 amounts have been reclassified to conform
to the 1995 presentation.
It is not considered necessary to include detailed footnote
information as of April 29, 1995 and April 30, 1994. The
financial information set forth herein should be read in
conjunction with the Notes to the Company's Consolidated
Financial Statements contained in the AnnTaylor, Inc. 1994 Annual
Report on Form 10-K.
2. Long-term Debt
- - -------------------
The following summarizes long-term debt outstanding at April
29, 1995:
(in thousands)
Revolving Credit Agreement $ 91,000
8-3/4% Notes 100,000
Revolving Receivables Facility 34,300
-------
Total long-term debt $225,300
========
At April 29, 1995, the Company and AnnTaylor Funding, Inc.
were not in compliance with one financial covenant under the
revolving credit agreement and the receivables financing
agreement relating to the Company's fixed charge coverage ratio,
which event of noncompliance was waived by Bank of America, NT &
SA, as agent for the lenders under the revolving credit
agreement, and by the parties to the receivables financing
agreement.
Item 2. Management's Discussion and Analysis of Operations
- - -----------------------------------------------------------
Results of Operations
Quarters Ended
--------------------
April 29, April 30,
1995 1994
--------- ---------
Number of Stores:
Open at beginning of period 262 231
Opened during period 15 5
Expanded during period* 12 2
Closed during period (2) (2)
Open at end of period 275 234
Type of Stores Open at End of Period:
AnnTaylor Stores 240 223
AnnTaylor Factory Stores 23 11
Ann Taylor Loft stores 6 ---
AnnTaylor Studio stores 6 ---
------------
* Expanded stores are excluded from comparable store sales
for the first year following expansion.
Quarter Ended April 29, 1995 Compared to Quarter Ended April 30, 1994
- - ----------------------------------------------------------------------
The Company's net sales in the first quarter of 1995 increased
to $168,306,000 from $145,283,000 in the first quarter of 1994,
an increase of $23,023,000 or 15.8%. The increase in net sales
was attributable to the opening of new stores and the expansion
of existing stores, offset by the closing of two stores and a
0.7% decrease in comparable store sales in the first quarter of
1995. The decrease in comparable store sales was due primarily
to negative comparable sales in the dress department.
Gross profit as a percentage of net sales decreased to 45.7%
in the first quarter of 1995 from 47.4% in the first quarter of
1994. This decrease was attributable to increased cost of goods
sold as a percentage of net sales resulting from markdowns
associated with increased promotional activities.
Selling, general and administrative expenses represented 37.1%
of net sales in the first quarter of 1995 compared to 32.3% of
net sales in the first quarter of 1994. The 4.8% increase is
primarily attributable to higher tenancy, store maintenance and
store selling costs as a percentage of sales (approximately 70%
of the increase), additional catalog expense relating to the
Company's test of its catalog as a mail order vehicle
(approximately 15% of the increase) and higher merchandising and
design expense (approximately 15% of the increase). The Company
has decided to return its catalog format to principally an
advertising vehicle, rather than a mail order business,
commencing Fall 1995.
As a result of the foregoing, operating income decreased to
$12,123,000, or 7.2% of net sales, in the first quarter of 1995
from $19,530,000, or 13.4% of net sales, in the first quarter of
1994. Amortization of goodwill was $2,377,000 in the first
quarter of 1995 and 1994. Operating income, without giving
effect to such amortization in either year, was $14,500,000, or
8.6% of net sales, in the 1995 period and $21,907,000, or 15.1%
of net sales, in the 1994 period.
Interest expense was $4,498,000, including $193,000 of non-
cash interest expense, in the first quarter of 1995, and
$3,456,000, including $348,000 of non-cash interest expense, in
the first quarter of 1994. The increase in interest expense is
primarily attributable to higher interest rates and higher
outstanding indebtedness in 1995.
The income tax provision was $4,077,000, or 53.9% of income
before income taxes, in the first quarter of 1995 compared to
$7,874,000, or 49.4% of income before income taxes, in the first
quarter of 1994. The effective income tax rate for both periods
was higher than the statutory rate primarily because of non-
deductible goodwill amortization.
As a result of the foregoing factors, the Company had net
income of $3,491,000, or 2.1% of net sales, for the first quarter
of 1995 compared to $8,060,000, or 5.5% of net sales, for the
first quarter of 1994.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
=================================================================
SIGNATURES
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.
AnnTaylor, Inc.
Date: June 13, 1995 By: /s/ Paul E. Francis
--------------------------
Paul E. Francis
Executive Vice President -
Finance and Administration
(Chief Financial Officer)
Date: June 13, 1995 By: /s/ Walter J. Parks
----------------------------
Walter J. Parks
Senior Vice President -
Finance
(Principal Accounting Officer)
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY OF FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CONDENSED CONSOLIDATED
BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
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<NAME> ANNTAYLOR INC.
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