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 July 30, 1994.
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 33-28522
ANNTAYLOR STORES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3499319
(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
(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 July 30, 1994
----- -------------
Common Stock, $.0068 par value 23,081,827
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INDEX TO FORM 10-Q
<TABLE><CAPTION>
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the Quarters and Six Months Ended July 30, 1994
and July 31, 1993 ............................................... 3
Condensed Consolidated Balance Sheets at
July 30, 1994 and January 29, 1994 .............................. 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended July 30, 1994 and
July 31, 1993 ................................................... 5
Notes to Condensed Consolidated Financial Statements .............. 6
Item 2. Management's Discussion and Analysis of Operations ................ 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............... 14
Item 6. Exhibits and Reports on Form 8-K .................................. 14
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Six Months Ended July 30, 1994 and July 31, 1993
(unaudited)
<TABLE><CAPTION>
Quarters Ended Six Months Ended
---------------------- -----------------------
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
---- ---- ---- ----
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
Net sales .................................................. $ 159,936 $ 124,837 $ 305,219 $ 245,012
Cost of sales .............................................. 87,991 68,720 164,394 134,072
---------- --------- ---------- ---------
Gross profit ............................................... 71,945 56,117 140,825 110,940
Selling, general and administrative expenses ............... 50,836 40,811 97,809 80,847
Amortization of goodwill ................................... 2,376 2,377 4,753 4,754
---------- --------- ---------- ---------
Operating income ........................................... 18,733 12,929 38,263 25,339
Interest expense ........................................... 3,117 5,108 6,573 10,077
Other (income) expense, net ................................ 186 (159) 326 (109)
---------- --------- ---------- ---------
Income before income taxes and extraordinary loss .......... 15,430 7,980 31,364 15,371
Income tax provision ....................................... 7,507 4,350 15,381 8,451
---------- --------- ---------- ---------
Income before extraordinary loss ........................... 7,923 3,630 15,983 6,920
Extraordinary loss (net of income tax benefit
of $654,000 and $5,652,000, respectively) ............... (868) (10,496) (868) (10,496)
---------- --------- ---------- ---------
Net income (loss) ...................................... $ 7,055 $ (6,866) $ 15,115 $ (3,576)
========== ========= ========== =========
Net income (loss) per share of common stock:
Income per share before extraordinary loss ......... $ .34 $ .16 $ .70 $ .32
Extraordinary loss per share ....................... (.04) (.47) (.04) (.48)
---------- --------- ---------- ---------
Net income (loss) per share ........................ $ .30 $ (.31) $ .66 $ (.16)
========== ========= ========== =========
Weighted average number of shares and share
equivalents outstanding ......................... 23,587 22,041 22,981 21,771
========== ========= ========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
July 30, 1994 and January 29, 1994
<TABLE><CAPTION>
July 30, 1994 January 29, 1994
------------- ----------------
(unaudited)
(in thousands)
ASSETS
<S> <C> <C>
Current assets
Cash ..................................................................... $ 1,257 $ 292
Accounts receivable, net of allowances of $778,000 and
$787,000, respectively ................................................. 54,953 49,279
Merchandise inventories .................................................. 68,308 60,890
Prepaid expenses and other current assets ................................ 6,253 7,184
Deferred income taxes .................................................... 3,750 3,750
------------- -------------
Total current assets ................................................. 134,521 121,395
Property and equipment, net of accumulated depreciation of
$31,342,000 and $28,703,000, respectively ................................ 63,877 48,053
Deferred financing costs, net of accumulated amortization of
$591,000 and $643,000, respectively ...................................... 2,977 4,990
Goodwill, net of accumulated amortization of $52,466,000 and
$47,713,000, respectively ................................................ 327,784 332,537
Deferred income taxes .......................................................... 1,500 1,500
Investment in CAT .............................................................. 2,939 2,245
Other assets ................................................................... 2,425 2,679
------------- -------------
Total assets ......................................................... $ 536,023 $ 513,399
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ......................................................... $ 40,657 $ 37,564
Accrued expenses ......................................................... 18,169 18,656
Accrued income taxes ..................................................... 1,737 1,180
Accrued interest ......................................................... 1,946 1,955
Current portion of long-term debt ........................................ 0 8,757
------------- -------------
Total current liabilities ............................................ 62,509 68,112
Long-term debt ................................................................. 160,566 180,243
Other liabilities .............................................................. 5,777 5,773
Commitments and contingencies
Stockholders' equity
Common stock, $.0068 par value; 40,000,000 shares authorized;
23,020,082 and 21,902,811 shares issued, respectively .................. 157 149
Additional paid-in capital ............................................... 308,370 271,810
Warrants to acquire 57,177 and 446,249 shares of
common stock, respectively ............................................. 931 7,378
Accumulated deficit ...................................................... (1,641) (16,756)
Deferred compensation on restricted stock ................................ (215) (119)
------------- -------------
307,602 262,462
Less treasury stock, 61,745 and 450,817 shares, respectively,
at cost ................................................................ (431) (3,191)
------------- -------------
Total stockholders' equity ..................................... 307,171 259,271
------------- -------------
Total liabilities and stockholders' equity ..................... $ 536,023 $ 513,399
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended July 30, 1994 and July 31, 1993
(unaudited)
<TABLE><CAPTION>
Six Months Ended
---------------------------------
July 30, 1994 July 31, 1993
------------- -------------
(in thousands)
<S> <C> <C>
Operating activities:
Net income (loss) ................................................... $ 15,115 $ (3,576)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary loss ............................................ 1,522 16,148
Equity earnings in CAT ........................................ (694) (249)
Provision for loss on accounts receivable ..................... 811 631
Depreciation and amortization ................................. 5,278 4,160
Amortization of goodwill ...................................... 4,753 4,754
Accretion of original issue discount .......................... --- 2,864
Amortization of deferred financing costs ...................... 613 679
Amortization of deferred compensation ......................... 250 139
Loss on disposal of property and equipment .................... 759 148
(Increase) decrease in:
Receivables ............................................. (6,485) (3,745)
Merchandise inventories ................................. (7,418) (8,911)
Prepaid expenses and other current assets ............... 931 (4,352)
Increase (decrease) in:
Accounts payable ........................................ 3,093 11,105
Accrued expenses ........................................ 61 (2,790)
Other non-current assets and liabilities, net ........... 258 184
--------- -----------
Net cash provided by operating activities ........................... 18,847 17,189
Investing activities:
Purchases of property and equipment ................................. (21,861) (6,516)
Investment in CAT ................................................... --- (1,640)
--------- -----------
Net cash used by investing activities ............................... (21,861) (8,156)
Financing activities:
Decrease in bank overdrafts ......................................... --- (2,361)
Repayments under line of credit agreement ........................... --- (5,500)
Payments of long-term debt .......................................... --- (96,969)
Exercise of stock options ........................................... 2,121 7,798
Repurchase of Debt Securities ....................................... --- (93,689)
Net proceeds from 8-3/4% Notes ...................................... --- 107,387
Payments of financing costs ......................................... (122) (3,523)
Proceeds from (payment of) bank term loan ........................... (56,000) 80,000
Borrowing under revolving credit facility ........................... 26,000 ---
Net proceeds from common stock offering ............................. 30,414 ---
Net borrowing on receivables facility ............................... 1,566 ---
--------- -----------
Net cash provided by (used by) financing activities 3,979 (6,857)
--------- -----------
Net increase in cash ...................................................... 965 2,176
Cash, beginning of period ................................................. 292 226
--------- -----------
Cash, end of period ....................................................... $ 1,257 $ 2,402
========= ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest ............................ $ 5,969 $ 5,280
========= ===========
Cash paid during the period for income taxes ........................ $ 14,169 $ 1,607
========= ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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ANNTAYLOR STORES CORPORATION
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 1994 interim period shown in this report
are not necessarily indicative of results to be expected for the fiscal year.
The January 29, 1994 condensed consolidated balance sheet amounts have
been derived from the previously audited consolidated balance sheet of AnnTaylor
Stores Corporation.
Certain fiscal 1993 amounts have been reclassified to conform to the 1994
presentation.
It is not considered necessary to include detailed footnote information as
of July 30, 1994 and July 31, 1993. 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 Stores Corporation 1993 Annual
Report to Stockholders.
2. Income Per Share
----------------
Net income (loss) per share is calculated by dividing net income (loss) by
the total of the weighted average number of common shares and common share
equivalents outstanding, assuming the exercise of outstanding warrants and the
dilutive effect of outstanding stock options, computed in accordance with the
treasury stock method. The number of shares used in the calculations were as
follows:
<TABLE><CAPTION>
Quarters Ended Six Months Ended
------------------------------- -----------------------------
July 30, 1994 July 31, 1993 July 30, 1994 July 31, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Common shares .............................. 22,947,451 21,274,786 22,361,682 21,044,623
Warrants ................................... 59,645 485,396 119,592 496,727
Stock options .............................. 580,295 280,318 499,460 229,338
----------- ----------- ----------- -----------
23,587,391 22,040,500 22,980,734 21,770,688
=========== =========== =========== ===========
</TABLE>
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3. Long-term Debt
--------------
In May 1994, the Company applied $30,000,000 of the net proceeds from its
public stock Offering referred to in Note 4 below, to reduce the amount of the
Term Loan outstanding under its then-existing bank credit agreement.
In July 1994, the Company completed the refinancing of its outstanding
bank debt by entering into a new credit agreement (the "Revolving Credit
Agreement") providing for a revolving loan facility of $75,000,000. The Company
borrowed funds under this revolving credit facility to prepay in full its
outstanding Term Loan and other obligations under its then-existing bank credit
agreement.
The Revolving Credit Agreement has an initial term of three years. There
are no amortization payments required to be made under the agreement during its
term, although the Company is required to reduce the outstanding loan balance
under the facility to $50,000,000 or less for thirty consecutive days during
fiscal 1994, to $40,000,000 or less for thirty consecutive days during fiscal
1995, and to $30,000,000 or less for thirty consecutive days in each fiscal year
thereafter. The revolving credit facility bears interest at a rate per annum
equal to, at the Company's option, Bank of America's (1) Base Rate, or (2)
Eurodollar rate plus .75%. The effective rate of interest on funds borrowed
under the Revolving Credit Agreement is 1% lower than the interest rate on
borrowings under the bank credit agreement that it replaced. The Revolving
Credit Agreement contains financial and other covenants, including limitations
on indebtedness, liens and investments, restrictions on dividends or other
distributions to stockholders and maintaining certain financial ratios and
specified levels of net worth.
The following summarizes long-term debt outstanding at July 30, 1994:
(in thousands)
Revolving Credit Facility ......................... $ 26,000
8-3/4% Notes ...................................... 100,000
Receivables Facility .............................. 34,566
----------
Total Long-Term Debt $ 160,566
==========
4. Extraordinary Item
------------------
On May 18, 1994, the Company completed a public offering of its common
stock (the "Offering") in which it issued and sold 1,000,000 shares of common
stock at a price of $32.00 per share, resulting in aggregate net proceeds of
$30,414,000 (after payment of underwriting discounts and expenses of the
Offering payable by the Company). As required by the Company's then-existing
bank credit agreement, $30,000,000 of the net
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<PAGE>
proceeds of the Offering were used to reduce the amount of the Term Loan
outstanding under that agreement. The non-cash charge associated with the
payment on the Term Loan with the proceeds of the Offering and refinancing of
long term debt (see Note 3) resulted in an extraordinary loss during the
quarter of $1,522,000 ($868,000 net of taxes).
The Offering was consummated concurrently with the public offering and
sale by certain affiliates of Merrill Lynch Capital Partners (the "Selling
Stockholders") of 4,075,000 shares of the Company's Common Stock held by them.
The Company did not receive any of the proceeds of the shares sold by the
Selling Stockholders. After giving effect to this sale, the Selling
Stockholders and other affiliates of Merrill Lynch Capital Partners held shares
representing approximately 32.5% of the Company's Common Stock.
5. Supplementary Data
------------------
The following unaudited pro forma condensed consolidated operating data
for the quarter and six months ended July 30, 1994 have been presented to
reflect the Offering as if it had occurred at the beginning of such period.
<TABLE><CAPTION>
Quarter Ended Six Months Ended
July 30, 1994 July 30, 1994
------------------- --------------------
Actual Pro Forma Actual Pro Forma
------ --------- ------ ----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest expense ................................. $ 3,117 $ 3,017(a) $ 6,573 $ 6,073(b)
Income before extraordinary loss ................. 7,923 7,974 15,983 16,238
========= ========= ========= =========
Income before extraordinary loss per share ....... $ .34 $ .34 $ .70 $ .69
========= ========= ========= =========
Weighted average shares .......................... 23,587 23,587 22,981 23,481
========= ========= ========= =========
</TABLE>
-------------------
(a) Reflects interest expense savings of $100,000 related to the reduction
of the term loan with the net proceeds of the Offering.
(b) Reflects interest expense savings of $500,000 related to the reduction
of the term loan with the net proceeds of the Offering.
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<PAGE>
Item 2. Management's Discussion and Analysis of Operations
Results of Operations
Quarter Ended July 30, 1994 Compared to Quarter Ended July 31, 1993
The Company's net sales in the second quarter of 1994 increased to
$159,936,000 from $124,837,000 in the second quarter of 1993, an increase of
$35,099,000 or 28.1% over the second quarter of 1993. The increase in net sales
was attributable to the inclusion of the sales of 17 new stores and 11 expanded
stores opened during the last two quarters of 1993 and in the first quarter of
1994, one new Ann Taylor store, 10 expanded Ann Taylor stores, two new Ann
Taylor Factory Stores and one expanded Ann Taylor Factory Store opened in the
second quarter of 1994, and a 12.3% increase in comparable store sales. The
increase in comparable store sales was due primarily to positive customer
response to the Company's merchandise assortments. The increase in net sales
was partially offset by the closing of four stores during the first and second
quarters of 1994. The Company operated 235 stores at July 30, 1994 compared to
219 stores at July 31, 1993.
Gross profit as a percentage of net sales was 45.0% in the second quarter
of 1994 and in the second quarter of 1993.
Selling, general and administrative expenses decreased to 31.8% of net
sales in the second quarter of 1994 compared to 32.7% in the second quarter of
1993. The decrease in selling, general and administrative expenses as a
percentage of net sales was primarily attributable to an increase in net sales
at a rate greater than the rate of increase in selling, general and
administrative expenses; an increase in sales from the Company's factory stores,
which have lower store operating expenses than full price Ann Taylor stores; and
improved expense management.
As a result of the foregoing, operating income increased to $18,733,000,
or 11.7% of net sales, in the second quarter of 1994 from $12,929,000, or 10.4%
of net sales, in the second quarter of 1993. Amortization of goodwill was
$2,376,000 in the second quarter of 1994 and $2,377,000 in the second quarter of
1993. Operating income, without giving effect to such amortization in either
year, was $21,109,000, or 13.2% of net sales, in the 1994 period and
$15,306,000, or 12.3% of net sales, in the 1993 period.
Interest expense was $3,117,000, including $265,000 of non-cash interest
expense, in the second quarter of 1994, and $5,108,000, including $1,641,000 of
non-cash interest expense, in the second quarter of 1993. The decrease in
interest expense is primarily attributable to lower interest rates applicable to
the Company's
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debt obligations in the 1994 period, resulting principally from
refinancing transactions entered into in the fall of 1993 and the decrease in
May 1994 in the Company's total debt outstanding as a result of the reduction of
the Company's term loan with the net proceeds from the Offering.
The income tax provision was $7,507,000, or 48.7% of income before income
taxes and extraordinary loss, in the second quarter of 1994 compared to
$4,350,000, or 54.5% of income before income taxes and extraordinary loss, in
the second quarter of 1993. 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 before
extraordinary loss of $7,923,000, or 5.0% of net sales, for the second quarter
of 1994 compared to net income before extraordinary loss of $3,630,000, or 2.9%
of net sales, for the second quarter of 1993.
In connection with debt refinancing activities in May and July 1994 (see
Financial Statements Notes 3 and 4), the Company incurred an extraordinary loss
of $868,000 net of taxes, in the second quarter of 1994. The Company also
incurred an extraordinary loss of $10,496,000 in the second quarter of 1993 as a
result of debt refinancing activities in June and July 1993. After giving
effect to these extraordinary losses, the Company had net income of $7,055,000
in the second quarter of 1994 compared to a net loss of $6,866,000 in the second
quarter of 1993.
AnnTaylor Stores Corporation conducts no business other than the
management of AnnTaylor, Inc.
Six Months Ended July 30, 1994 Compared to Six Months Ended July 31, 1993
The Company's net sales increased to $305,219,000 in the first six months
of 1994, from $245,012,000 in the first six months of 1993, an increase of
$60,207,000, or 24.6%. The increase in net sales was attributable to the
inclusion of the sales of 12 new stores and nine expanded stores opened during
the last two quarters of 1993, four new Ann Taylor stores, 12 expanded Ann
Taylor stores, four new Ann Taylor Factory Stores and one expanded Ann Taylor
Factory Store opened during the first six months of 1994, and a 10.6% increase
in comparable store sales. The increase in comparable store sales was due
primarily to positive customer response to the Company's merchandise
assortments. The increase in net sales was partially offset by the closing of
four stores during the first six months of 1994. The Company operated 235 stores
at July 30, 1994, compared to 219 stores at July 31, 1993.
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Gross profit as a percentage of net sales increased to 46.1% in the first
six months of 1994, from 45.3% in the first six months of 1993. The increase in
gross margin reflected a higher level of full price selling and lower levels of
promotional activity.
Selling, general and administrative expenses represented 32.0% of net
sales in the first six months of 1994, compared to 33.0% of net sales in the
first six months of 1993. The decrease in selling, general and administrative
expenses as a percentage of net sales was primarily attributable to an increase
in net sales at a rate greater than the rate of increase in selling, general and
administrative expenses; an increase in sales from the Company's factory stores,
which have lower store operating expenses than full price Ann Taylor stores; and
improved expense management.
As a result of the foregoing, operating income increased to $38,263,000,
or 12.5% of net sales, in the first six months of 1994, from $25,339,000, or
10.3% of net sales, in the first six months of 1993. Amortization of goodwill
was $4,753,000 in the first six months of 1994 and $4,754,000 in the first six
months of 1993. Operating income, without giving effect to such amortization in
either year, was $43,016,000, or 14.1% of net sales, in the 1994 period and
$30,093,000, or 12.3% of net sales, in the 1993 period.
Interest expense was $6,573,000, including $613,000 of non-cash interest
expense, in the first six months of 1994 and $10,077,000, including $3,543,000
of non-cash interest expense, in the first six months of 1993. The decrease in
interest expense is primarily attributable to lower interest rates applicable to
the Company's debt obligations in the 1994 period, resulting principally from
refinancing transactions entered into in the fall of 1993 and the decrease in
May 1994 in the Company's total debt outstanding as a result of the reduction of
the Company's term loan with the net proceeds from the Offering.
The income tax provision was $15,381,000, or 49.0% of income before income
taxes and extraordinary loss, in the 1994 period, compared to $8,451,000, or
55.0% of income before income taxes and extraordinary loss, in the 1993 period.
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 before
extraordinary loss of $15,983,000, or 5.2% of net sales, for the first six
months of 1994, compared to net income before extraordinary loss of $6,920,000,
or 2.8% of net sales, for the first six months of 1993.
In connection with the debt refinancing activities described above (see
Financial Statements Notes 3 and 4), the Company incurred an extraordinary loss
of $868,000 net of taxes, in the second quarter of 1994. The Company also
incurred an
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extraordinary loss of $10,496,000, net of taxes, in the second quarter of 1993
as a result of debt refinancing activities undertaken in the second quarter of
1993. After giving effect to these extraordinary losses, the Company had net
income of $15,115,000 in the first six months of 1994 compared to a net loss of
$3,576,000 in the first six months of 1993.
Financial Condition
For the first six months of 1994, net cash provided by operating
activities totaled $18,847,000, primarily as a result of income from operations,
partially offset by increases in working capital. Cash used for investing
activities during the first six months of 1994 amounted to $21,861,000, and was
primarily used for acquiring leasehold improvements, furniture and fixtures for
opening new and expanded stores and for renovating stores; and for acquisition
of the property for and commencement of construction of a new distribution
center in Louisville, Kentucky. Cash provided by financing activities during
the first six months of 1994 amounted to $3,979,000, representing net proceeds
of $30,414,000 from the Offering, the borrowing of $26,000,000 under the
Revolving Credit Agreement and the proceeds of $2,121,000 received upon the
exercise of employee stock options, offset by the payment of $56,000,000 in
retirement of the old bank credit agreement.
Accounts receivable increased to $54,953,000 at July 30, 1994 from
$49,279,000 at January 29, 1994, an increase of $5,674,000 or 11.5%. This
increase was partially attributable to Ann Taylor credit card receivables, which
increased approximately $4,185,000, and to third-party credit card receivables
(American Express, MasterCard and VISA), which increased $2,110,000 due to the
timing of payments by third-party credit card issuers. Ann Taylor credit card
sales were 7.5% higher in the second quarter of 1994 compared to the last
quarter of 1993, which is partially attributable to the increase in total sales
compared to the prior period.
Merchandise inventories increased to $68,308,000 at July 30, 1994 from
$60,890,000 at January 29, 1994, an increase of $7,418,000. The higher
inventory level at July 30, 1994 was attributable to the purchase of inventory
for new and expanded stores opened in the first six months of 1994, anticipation
of store square footage increases in the fall of 1994 and planned comparable
store sales growth.
On July 29, 1994 the Company entered into the Revolving Credit Agreement
which provides the Company with a revolving credit facility of $75,000,000 (see
Financial Statements Note 3). The Company borrowed funds under this facility to
prepay in full its obligations outstanding under, and cancelled, its prior bank
credit agreement. At July 30, 1994, $26,000,000 was outstanding under the
Revolving Credit Agreement.
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<PAGE>
At July 30, 1994, $34,566,000 was outstanding under AnnTaylor Funding,
Inc.'s receivables facility. AnnTaylor Funding, Inc. can borrow up to
$40,000,000 under the receivables facility, depending upon its accounts
receivable balance.
The Company's capital expenditures, which are primarily attributable to
the Company's store expansion, renovation and refurbishment programs, totaled
$25,062,000, $4,303,000, and $10,004,000 in 1993, 1992 and 1991, respectively.
Capital expenditures totaled $21,900,000 in the first six months of 1994. The
Company now expects its capital expenditure requirements for the remainder of
1994 to be approximately $20,000,000, plus approximately $12,000,000 for the
Company's new distribution center currently under construction in Louisville,
Kentucky. The actual amount of the Company's capital expenditures will depend,
in part, on the number of stores opened, expanded and refurbished, and on the
amount of construction allowances the Company receives from the landlords of its
new or expanded stores.
Dividends and distributions from AnnTaylor, Inc. to the Company are
restricted by both the Revolving Credit Agreement and the indenture relating to
AnnTaylor, Inc.'s
8-3/4% Subordinated Notes due 2000. The payment by the Company of cash
dividends on its Common Stock is restricted by the Company's guarantee of
obligations under the Revolving Credit Agreement.
In order to finance its operations and capital requirements, the Company
expects to use internally generated funds and funds available to it under the
Revolving Credit Agreement. The Company believes that cash flow from operations
and funds available under the Revolving Credit Agreement will be sufficient to
enable it to meet its ongoing cash needs for the foreseeable future.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
AnnTaylor Stores Corporation's 1994 Annual Meeting of Stockholders was held
on June 1, 1994. The following matters were voted upon and approved by the
Company's stockholders at the meeting:
1. Mr. Gerald S. Armstrong, Mr. Paul E. Francis and Ms. Hanne M. Merriman were
reelected as Class III Directors of the Company, for terms expiring in
1997. Mr. James J. Burke, Jr. and Ms. Sally Frame Kasaks continued as
Class II Directors, with terms expiring in 1996, and Mr. Robert C. Grayson
and Ms. Rochelle B. Lazarus continued as Class I Directors, with terms
expiring in 1995.
2. The amendment and restatement of the Company's 1992 Stock Option Plan was
approved. 18,224,567 shares were voted in favor of, and 1,539,556 shares
were voted against or abstained from voting on, this proposal.
3. The Company's Amended and Restated Management Performance Compensation Plan
was approved. 19,087,844 shares were voted in favor of, and 676,279 shares
were voted against or abstained from voting on, this proposal.
4. The appointment of Deloitte & Touche as the Company's independent public
accountants for the 1994 fiscal year was ratified. 19,287,133 shares were
voted in favor of, and 476,990 shares were voted against or abstained from
voting on, this proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.4 Credit Agreement, dated as of July 29, 1994,
between AnnTaylor, Inc., Bank of America National
Trust and Savings Association ("Bank of America"),
Fleet Bank, the financial institutions party
thereto, and Bank of America, as Agent.
Incorporated by Reference to Exhibit 10.4 on Form
10-Q of AnnTaylor, Inc. for the Quarter ended July
30, 1994 filed on September 12, 1994.
-14-
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
10.5 Guaranty, dated as of July 29, 1994, made by the
Company in favor of Bank of America, as Agent.
Incorporated by reference to Exhibit 10.5 on Form
10-Q of AnnTaylor, Inc. for the Quarter ended July
30, 1994 filed on September 12, 1994.
10.6 Pledge Agreement, dated as of July 29, 1994, made
by AnnTaylor, Inc. in favor of Bank of America, as
Agent. Incorporated by reference to Exhibit 10.6
to the Quarterly Report on Form 10-Q of AnnTaylor,
Inc. for the Quarter ended July 30, 1994 filed on
September 12, 1994.
10.7 Pledge Agreement, dated as of July 29, 1994, made
by the Company in favor of Bank of America, as
Agent. Incorporated by reference to Exhibit 10.7
to the Quarterly Report on Form 10-Q of AnnTaylor,
Inc. for the Quarter ended July 30, 1994 filed on
September 12, 1994.
27 Financial Data Schedule for the six months ended
July 30, 1994.
(b) Reports on Form 8-K:
None
-15-
<PAGE>
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 Stores Corporation
Date: September 12, 1994 By: /s/ Paul E. Francis
-------------------- --------------------------
Paul E. Francis
Executive Vice President -
Finance and Administration
(Chief Financial Officer)
Date: September 12, 1994 By: /s/ Walter J. Parks
-------------------- --------------------------
Walter J. Parks
Vice President - Finance
(Principal Accounting
Officer)
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY 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.
</LEGEND>
<CIK> 0000874214
<NAME> ANNTAYLOR STORES CORP
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 1,257
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<RECEIVABLES> 55,731
<ALLOWANCES> 778
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<CURRENT-ASSETS> 134,521
<PP&E> 95,219
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<OTHER-SE> 307,014
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<SALES> 305,219
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<OTHER-EXPENSES> 102,888
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<INTEREST-EXPENSE> 6,573
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<INCOME-TAX> 15,381
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