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 July 29, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10738
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
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(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 August 27, 1995
----- ----------------
Common Stock, $.0068 par value 23,076,489
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INDEX TO FORM 10-Q
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 29,
1995 and July 30, 1994 3
Condensed Consolidated Balance Sheets at
July 29, 1995 and January 28, 1995 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended July 29, 1995 and
July 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 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
=======================================================================
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Six Months Ended July 29, 1995 and July 30, 1994
(unaudited)
Quarters Ended Six Months Ended
-------------------- -----------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
-------- -------- -------- --------
(in thousands, except per share amounts)
Net sales $183,695 $159,936 $352,001 $305,219
Cost of sales 114,869 87,991 206,224 164,394
------- ------- ------- -------
Gross profit 68,826 71,945 145,777 140,825
Selling, general and administrative
expenses 67,233 50,836 129,684 97,809
Amortization of goodwill 2,376 2,376 4,753 4,753
------- ------- ------- -------
Operating income (loss) (783) 18,733 11,340 38,263
Interest expense 4,468 3,117 8,966 6,573
Other (income) expense, net (231) 186 (174) 326
------- ------- ------ ------
Income (loss) before income taxes (5,020) 15,430 2,548 31,364
Income tax provision (benefit) (1,211) 7,507 2,866 15,381
------- ------- ------ ------
Income (loss) before extraordinary
loss (3,809) 7,923 (318) 15,983
Extraordinary loss (net of income
tax benefit of $654,000) --- (868) --- (868)
------ ------ ----- -----
Net income (loss) $ (3,809) $7,055 $ (318) $15,115
======= ===== ====== ======
Net income (loss) per share of
common stock:
Income (loss) per share before
extraordinary loss $ (.16) $ .34 $ (.01) $ .70
Extraordinary loss per share --- (.04) --- (.04)
------- ----- ----- -----
Net income (loss) per share $ (.16) $ .30 $ (.01) $ .66
======= ===== ====== ======
Weighted average number of shares
and share equivalents outstanding 23,225 23,587 23,337 22,981
====== ====== ====== ======
See accompanying notes to condensed consolidated financial statements.
===============================================================================
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
July 29, 1995 and January 28, 1995
July 29, January 28,
1995 1995
-------- ---------
(unaudited)
(in thousands)
ASSETS
Current assets
Cash $ 1,820 $ 1,551
Accounts receivable, net of allowances of $628,000
and $931,000, respectively 72,373 61,211
Merchandise inventories 99,411 93,705
Prepaid expenses and other current assets 14,302 7,956
Deferred income taxes 3,650 3,650
------- -------
Total current assets 191,556 168,073
Property and equipment
Land and building 9,175 499
Leasehold improvements 50,573 43,370
Furniture and fixtures 72,367 59,105
Construction in progress 36,952 24,867
------- -------
169,067 127,841
Less accumulated depreciation and amortization 38,950 31,503
------- -------
Net property and equipment 130,117 96,338
Goodwill, net of accumulated amortization of $61,972,000
and $57,219,000, respectively 318,278 323,031
Investment in CAT 4,436 3,792
Deferred income taxes 1,600 1,600
Deferred financing costs, net of accumulated
amortization of $1,341,000 and $956,000, respectively 2,444 2,829
Other assets 2,351 2,591
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Total assets $650,782 $598,254
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 45,425 $ 36,625
Accrued rent 6,487 5,243
Accrued salaries 4,781 5,929
Accrued expenses 12,087 18,095
------- -------
Total current liabilities 68,780 65,892
Long-term debt 249,000 200,000
Other liabilities 6,874 6,250
Commitments and contingencies
Stockholders' equity
Common stock, $.0068 par value; 40,000,000 shares
authorized; 23,120,831 and 23,106,572 shares
issued, respectively 157 157
Additional paid-in capital 311,222 310,714
Warrants to acquire 37,046 and 58,412 shares of
common stock, respectively 604 951
Retained earnings 14,678 14,996
Deferred compensation on restricted stock (97) (149)
------- -------
326,564 326,669
Less treasury stock, 45,342 and 65,843 shares,
respectively, at cost (436) (557)
------- -------
Total stockholders' equity 326,128 326,112
------- -------
Total liabilities and stockholders' equity $650,782 $598,254
======= =======
See accompanying notes to condensed consolidated financial statements.
============================================================================
ANNTAYLOR STORES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended July 29, 1995 and July 30, 1994
(unaudited)
Six Months Ended
-------------------
July 29, July 30,
1995 1994
-------- -------
(in thousands)
Operating activities:
Net income (loss) $ (318) $ 15,115
Adjustments to reconcile net income (loss) to
net cash (used by) provided by operating
activities:
Equity earnings in CAT (644) (694)
Extraordinary loss --- 1,522
Provision for loss on accounts receivable 457 811
Depreciation and amortization 9,139 5,278
Amortization of goodwill 4,753 4,753
Amortization of deferred financing costs 385 613
Amortization of deferred compensation 52 250
Loss on disposal of property and equipment 401 759
(Increase) decrease in:
Receivables (11,619) (6,485)
Merchandise inventories (5,706) (7,418)
Prepaid expenses and other current assets (6,346) 931
Increase (decrease) in:
Accounts payable 8,800 3,093
Accrued expenses (5,912) 61
Other non-current assets and liabilities, net 864 258
------- -------
Net cash (used by) provided by operating activitie (5,694) 18,847
Investing activities:
Purchases of property and equipment (43,319) (21,861)
------- -------
Net cash used by investing activities (43,319) (21,861)
Financing activities:
Borrowings under revolving credit agreement 45,000 26,000
Payment of bank term loan --- (56,000)
Net proceeds from common stock offering --- 30,414
Exercise of stock options 282 2,121
Net borrowings under receivables facility 4,000 1,566
Payment of financing costs --- (122)
------- -------
Net cash provided by financing activities 49,282 3,979
------- -------
Net increase in cash 269 965
Cash, beginning of period 1,551 292
------- -------
Cash, end of period $ 1,820 $ 1,257
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 8,035 $ 5,969
======= =======
Cash paid during the period for income taxes $ 5,915 $ 14,169
======= =======
See accompanying notes to condensed consolidated financial statements.
==========================================================================
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 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 Stores Corporation.
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 July 29, 1995 and July 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 Stores Corporation 1994 Annual Report
to Stockholders.
2. Income Per Share
----------------
Net income per share is calculated by dividing net income 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 calculation was as follows:
Quarters Ended Six Months Ended
----------------- -----------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
-------- -------- -------- -------
(in thousands)
Common shares 23,057 22,947 23,051 22,362
Warrants 52 60 54 120
Stock options 116 580 232 499
------ ------ ------ ------
23,225 23,587 23,337 22,981
====== ====== ====== ======
3. Long-term Debt
--------------
The following summarizes long-term debt outstanding at July
29, 1995:
(in thousands)
Revolving Credit Agreement $109,000
8-3/4% Notes 100,000
Receivables Facility 40,000
-------
Total long-term debt $249,000
=======
The maturity date of the revolving credit agreement has been
extended to July 29, 1998.
At July 29, 1995, AnnTaylor, Inc. and AnnTaylor Funding, Inc.
were not in compliance with one financial covenant under the
revolving credit agreement and the receivables facility relating
to AnnTaylor, Inc.'s fixed charge coverage ratio. The revolving
credit agreement and the receivables facility were amended as of
September 7, 1995 and September 11, 1995, respectively, to reduce
the required fixed charge coverage ratio for the second quarter,
as a result of which the Company satisfied this covenant, and to
reduce the required fixed charge coverage ratio for the third and
fourth quarters of 1995. The amendment to the revolving credit
agreement also, among other things, revised the cleandown
provision for 1995 to require the Company to reduce the
outstanding loan balance under the agreement to $85,000,000
or less for at least fifteen consecutive days during the last
six months of fiscal 1995 and added limitations on
capital expenditures for fiscal 1995 through 1998 as follows:
1995: $78.2 million; 1996: $45 million; 1997: $30 million and
1998: $30 million.
===================================================================
Item 2. Management's Discussion and Analysis of Operations
Results of Operations
Quarters Ended Six Months Ended
---------------- -----------------
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
------- -------- -------- -------
Number of Stores:
Open at beginning of period 275 234 262 231
Opened during period 14 3 29 8
Expanded during period* 5 11 17 13
Closed during period --- 2 2 4
Open at end of period 289 235 289 235
Type of Stores Open at End of
Period:
AnnTaylor Stores 247 222
AnnTaylor Factory Stores 23 13
Ann Taylor Loft stores 11 ---
AnnTaylor Studio stores 8 ---
-------
* Expanded stores are excluded from comparable store sales
for the first year following expansion.
Quarter Ended July 29, 1995 Compared to Quarter Ended July 30, 1994
The Company's net sales in the second quarter of 1995
increased to $183,695,000 from $159,936,000 in the second quarter
of 1994, an increase of $23,759,000 or 14.9%. The increase in
net sales was attributable to the opening of new stores and the
expansion of existing stores, offset by a 5.6% decrease in
comparable store sales in the second quarter of 1995. The
decrease in comparable store sales is attributable to weak
customer response to the Company's spring merchandise selections,
as well as to continued weakness in demand for women's apparel
generally.
Gross profit as a percentage of net sales decreased to 37.5%
in the second quarter of 1995 from 45.0% in the second quarter of
1994. This decrease was attributable to increased cost of goods
sold as a percentage of net sales, primarily resulting from
markdowns associated with increased promotional activities.
Selling, general and administrative expenses represented 36.6%
of net sales in the second quarter of 1995, compared to 31.8% of
net sales in the second 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 74%
of the increase), higher distribution expense relating to start-
up costs of the Company's new distribution facility in
Louisville, Kentucky (approximately 14% of the increase),
additional catalog expense relating to the Company's test of its
catalog as a mail order vehicle (approximately 5% of the
increase) and higher merchandising and design expense
(approximately 7% 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, the Company had an operating
loss of $783,000, or 0.4% of net sales, in the second quarter of
1995, compared to operating income of $18,733,000, or 11.7% of
net sales, in the second quarter of 1994. Amortization of
goodwill was $2,376,000 in the second quarter of 1995 and 1994.
Operating income, without giving effect to such amortization in
either year, was $1,593,000, or 0.9% of net sales, in the 1995
period and $21,109,000, or 13.2% of net sales, in the 1994
period.
Interest expense was $4,468,000 in the second quarter of 1995
and $3,117,000 in the second quarter of 1994. The increase in
interest expense is primarily attributable to higher interest
rates and higher outstanding indebtedness in 1995.
The income tax benefit was $1,211,000, or 24.1% of loss before
income taxes, in the second quarter of 1995 compared to the
income tax provision of $7,507,000, or 48.7% of income before
income taxes, in the second quarter of 1994. The effective
income tax rate for both periods differed from the statutory rate
primarily because of non-deductible goodwill amortization.
As a result of the foregoing factors, the Company had net loss
of $3,809,000, or 2.1% of net sales, for the second quarter of
1995 compared to net income before extraordinary loss of
$7,923,000, or 5.0% of net sales, for the second quarter of 1994.
In connection with debt refinancing activities in May and July
1994, the Company incurred an extraordinary loss of $868,000, net
of taxes, in the second quarter of 1994. After giving effect to
this extraordinary loss, the Company had net income of $7,055,000
in the second quarter of 1994.
AnnTaylor Stores Corporation conducts no business other than
the management of AnnTaylor, Inc.
Six Months Ended July 29, 1995 Compared to Six Months Ended July 30, 1994
The Company's net sales in the first six months of 1995
increased to $352,001,000 from $305,219,000 in the first six
months of 1994, an increase of $46,782,000 or 15.3%. 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 3.3% decrease in comparable store
sales in the first six months of 1995. The decrease in
comparable store sales is attributable to weak customer response
to the Company's spring merchandise selections, as well as to
continued weakness in demand for women's apparel generally.
Gross profit as a percentage of net sales decreased to 41.4%
in the first six months of 1995 from 46.1% in the first six
months of 1994. This decrease was attributable to the increased
cost of goods sold as a percentage of net sales, primarily
resulting from markdowns associated with increased promotional
activities.
Selling, general and administrative expenses represented 36.8%
of net sales in the first six months of 1995, compared to 32.0%
of net sales in the first six months of 1994. The increase in
selling, general and administrative expenses as a percentage of
net sales was primarily attributable to higher tenancy, store
maintenance and store selling costs as a percentage of sales
(approximately 71% of the increase), higher distribution center
expense relating to start-up costs of the Company's new
distribution facility in Louisville, Kentucky in the second
quarter (approximately 7% of the increase), additional catalog
expense relating to the Company's test of its catalog as a mail
order vehicle (approximately 11% of the increase) and higher
merchandising and design expense (approximately 11% 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
$11,340,000, or 3.2% of net sales, in the first six months of
1995, from $38,263,000, or 12.5% of net sales, in the first six
months of 1994. Amortization of goodwill was $4,753,000 in the
first six months of 1995 and 1994. Operating income, without
giving effect to such amortization in either year, was
$16,093,000, or 4.6% of net sales, in the 1995 period and
$43,016,000, or 14.1% of net sales, in the 1994 period.
Interest expense was $8,966,000 in the first six months of
1995 and $6,573,000 in the first six months of 1994. The
increase in interest expense is primarily attributable to higher
interest rates applicable to the Company's debt obligations and
higher outstanding indebtedness in 1995.
The income tax provision was $2,866,000, or 112.5% of income
before income taxes in the 1995 period, compared to $15,381,000,
or 49.0% of income before income taxes and extraordinary loss, in
the 1994 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 a net
loss of $318,000 or 0.1% of net sales, for the first six months
of 1995 compared to net income before extraordinary loss of
$15,983,000, or 5.2% of net sales, for the first six months of
1994.
In connection with the debt refinancing activities in May and
July 1994, the Company incurred an extraordinary loss of $868,000
net of taxes, in the second quarter of 1994. After giving effect
to these extraordinary losses, the Company had net income of
$15,115,000 in the first six months of 1994.
Financial Condition
For the first six months of 1995, net cash used by operating
activities totaled $5,694,000, primarily as a result of increases
in working capital, partially offset by non-cash operating
expenses. Cash used for investing activities during the first
six months of 1995 amounted to $43,319,000, for the purchase of
property and equipment. Cash provided by financing activities
during the first six months of 1995 amounted to $49,282,000,
primarily as a result of borrowings under the revolving credit
agreement and receivables facility.
Accounts receivable increased to $72,373,000 at July 29, 1995
from $61,211,000 at January 29, 1995, an increase of $11,162,000
or 18.2%. This increase was partially attributable to Ann Taylor
credit card receivables, which increased approximately
$5,683,000, and to third-party credit card receivables (American
Express, MasterCard and VISA), which increased $2,527,000 due to
the timing of payments by third-party credit card issuers.
Construction allowance receivables increased to $8,042,000 at
July 29, 1995 from $5,549,000 at January 29, 1995, an increase of
$2,493,000, due to the timing of receipts attributable to stores
opened in fiscal year 1994 and the spring of 1995, and the stores
planned to open in the fall of 1995.
Merchandise inventories were $99,411,000 at July 29, 1995,
compared to inventories of $93,705,000 at January 28, 1995.
Total square footage increased to 1,442,000 square feet at July
29, 1995 from 1,173,000 square feet at January 28, 1995. On a
per square foot basis, inventories were down 13.7% at the end of
the second quarter of 1995 compared to inventories per square
foot at the end of the previous fiscal year.
At July 29, 1995, $109,000,000 was outstanding under the
revolving credit agreement and $40,000,000 was outstanding under
AnnTaylor Funding, Inc's receivables facility. AnnTaylor, Inc.
can borrow up to $125,000,000 under the revolving credit
agreement and AnnTaylor Funding, Inc. can borrow up to
$40,000,000 under the receivables facility, depending upon its
accounts receivable balance. The maturity date of the revolving
credit agreement has been extended to July 29, 1998.
At July 29, 1995, AnnTaylor, Inc. and AnnTaylor Funding, Inc.
were not in compliance with one financial covenant under the
revolving credit agreement and the receivables facility relating
to AnnTaylor, Inc.'s fixed charge coverage ratio. The revolving
credit agreement and the receivables facility were amended as of
September 7, 1995 and September 11, 1995, respectively, to reduce
the required fixed charge coverage ratio for the second quarter,
as a result of which the Company satisfied this covenant, and to
reduce the required fixed charge coverage ratio for the third and
fourth quarters of 1995. Compliance with financial covenants in
future periods will be dependent upon the Company's sales and
earnings and the amount of capital expenditures made by the
Company. Depending upon the Company's sales and earnings, in
order to be in compliance with the revised fixed charge coverage
ratio for the third and fourth quarters of 1995, the Company may
finance certain planned capital expenditures through fixed asset
leasing transactions, described below, currently being pursued by
the Company.
The amendment to the revolving credit agreement also, among
other things, revised the clean down provision for 1995, to
require the Company to reduce the outstanding loan balance
under the agreement to $85,000,000 or less for at
least fifteen consecutive days during the last six months of
fiscal 1995 and added limitations on capital expenditures for
fiscal 1995 through 1998 as follows: 1995: $78.2 million; 1996:
$45 million; 1997: $30 million and 1998: $30 million. The
Company expects to be able to continue its plans for growth and
refurbishment within these limits. The Company currently expects
to add not more than 250,000 square feet of retail store space in
1996.
The Company's capital expenditures, which are primarily
attributable to the Company's store expansion, renovation and
refurbishment programs, totaled $61,341,000 and $25,062,000 in
1994 and 1993, respectively. Capital expenditures totaled
$43,319,000 in the first six months of 1995. The Company expects
total capital expenditures for 1995 to be approximately
$75,000,000. The Company is pursuing financing of up to
$38,000,000 of such expenditures through fixture and equipment
leasing transactions that may reduce its capital expenditures
by a like amount. The Company is also pursuing a $7,000,000 long-
term mortgage loan to be secured by the Company's Louisville
distribution center land and building.
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.
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. In addition, if completed, the fixture and equipment
leasing transactions and the distribution center mortgage
financing described above would provide the Company with
additional liquidity.
================================================================
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
AnnTaylor Stores Corporation's 1995 Annual Meeting of
Stockholders was held on June 7, 1995. The following matters
were voted upon and approved by the Company's stockholders at the
meeting:
1. Ms. Rochelle B. Lazarus and Mr. Robert C. Grayson were
reelected as Class I Directors of the Company, for terms
expiring in 1998. 18,485,908 and 18,401,674 shares were voted
in favor of, and 83,358 and 167,592 shares were voted against
or abstained from voting on the proposal for the re-election
of Ms. Lazarus and Mr. Grayson, respectively. Mr. James J.
Burke, Jr. and Ms. Sally Frame Kasaks continued as Class II
Directors, with terms expiring in 1996, and Mr. Gerald S.
Armstrong, Mr. Paul E. Francis and Ms. Hanne M. Merriman
continued as Class III Directors with terms expiring in 1997.
2. The appointment of Deloitte & Touche llp as the Company's
independent accountants for the 1995 fiscal year was ratified.
18,556,964 shares were voted in favor of, and 12,302 shares
were voted against or abstained from voting on, this proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.9.2 Extension of the final maturity date of
the Revolving Credit Agreement to July 29,
1998, dated as of June 29, 1995, among
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.
10.9.3 Amendment No. 2 to the Revolving Credit
Agreement, dated as of September 7, 1995,
among AnnTaylor, Inc., Bank of America, Fleet
Bank, the financial institutions party
thereto, and Bank of America, as Agent.
10.31.3 Third Amendment to the Receivables
Financing Agreement, dated as of September
11, 1995, among AnnTaylor Funding, Inc.,
AnnTaylor, Inc., Clipper Receivables
Corporation, State Street Boston Capital
Corporation and PNC Bank National
Association.
==========================================================================
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued):
10.33.1 Amendment to the AnnTaylor Stores
Corporation Deferred Compensation Plan as
approved by the Board of Directors on August
11, 1995.
(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 Stores Corporation
Date: September 11, 1995 By: /s/ Paul E. Francis
--------------------- -------------------------
Paul E. Francis
Executive Vice President -
Finance and Administration
(Chief Financial Officer)
Date: September 11, 1995 By: /s/ Walter J. Parks
-------------------- ---------------------------
Walter J. Parks
Senior Vice President - Finance
(Principal Accounting Officer)
Bank of America
Agency Management Services
TO: The Bank Group
Ann Taylor, Inc.
Attention: James M. Smith, VP and Controller
SUBJECT: Ann Taylor, Inc.
Credit Agreement dated as of July 29, 1994, as amended
Extension of Final Maturity Date to July 29, 1998
Ladies and Gentlemen:
Please be advised that, as requested by Ann Taylor, Inc. all Banks have
consented to the extension of the Final Maturity Date. Please update
your records to reflect a Final Maturity Date of July 29, 1998.
Please feel free to contact me at (415) 953-8501 if you have any questions.
Sincerely,
/s/ Dietmar Schiel
-------------------
Vice President
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment")
---------
is entered into as of September 5, 1995 among ANNTAYLOR, INC., a
Delaware corporation (the "Borrower"), the various financial institutions
--------
named on the signature pages hereto (the "Lenders") and BANK OF AMERICA
-------
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent.
WHEREAS, the Borrower, the Lenders, the Co-Agents named therein,
BA Securities, Inc. as Arranger and the Agent are party to that certain
Credit Agreement dated as of July 29, 1994 (as from time to time amended,
the "Credit Agreement"); and
----------------
WHEREAS, the Borrower has requested the Lenders to amend certain
financial covenants and other provisions of the Credit Agreement and the
Lenders are willing to agree to the Borrower's request on the terms and
subject to the conditions set forth herein;
NOW THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Unless otherwise defined in
-------------
this Amendment, defined terms used herein shall have the meanings
assigned to such terms in the Credit Agreement.
Section 2. Amendment to Credit Agreement.
-----------------------------
(a) Amendment to Definition of "Fixed Charge Coverage
-------------------------------------------------
Ratio."
------
The definition of the term "Fixed Charge Coverage Ratio"
---------------------------
contained in Section 1.01 of the Credit Agreement is hereby
------------
amended to read as follows:
" 'Fixed Charge Coverage Ratio' shall mean, for any
---------------------------
period, the quotient obtained by dividing (a) EBITDA by
(b) the sum of (i) Capital Expenditures paid or accrued
during such periods excluding (A) any Capital Expenditures
---------
made in respect of the Distribution Center and (B) any
Capital Expenditures in the aggregate maximum amount of
$28,000,000 made in respect of the leasing or financing of
material handling equipment, furniture and fixtures in
stores of the Borrower and its Subsidiaries, plus
----
(ii) schedule payments made since the Initial Funding Date
for principal on Indebtedness excluding any payment made
---------
upon termination of a Receivables Transaction plus (iii)
----
Cash Interest Expense during such period plus (iv) income
----
tax expense during such period."
(b) Change in Cleandown Provisions. Clause (v) of Section
------------------------------ ---------- -------
2.01(a) of the Credit Agreement is hereby amended to read as
-------
follows:
"(v) The Borrower shall from time to time effect a
prepayment of the oustanding Loans (such amount, a "Cleandown")
---------
so as to cause the aggregate outstanding principal amount of
the Loans to be not more than (A) $50,000,000, for at least 30
consecutive days during the period from the Intitial Funding
Date to the last day of the Fiscal Year beginning on January
30, 1994, (B) $85,000,000, for at least 15 consecutive days in
the last six months of the Fiscal Year beginning on January
29, 1995 and (C) $50,000,000, for at lease 30 consecutive days
in each Fiscal Year thereafter (each such period, a "Cleandown
---------
Period"). Promptly after the end of any Cleandown Period,
------
the Borrower shall notify the Agent that a Cleandown Period
has occurred and the Agent shall notify the Lenders."
(c) Additional Indebtedness.
-----------------------
(i) Paragraph (j) of Section 8.01 of the Credit Agreement
------------- ------------
is hereby amended by deleting the work "and" appearing at the
end thereof.
(ii) A new paragraph (k) is hereby added to Section 8.01
------------- ------------
of the Credit Agreement reading as follows:
"(k) Indebtedness in connection with Liens
permitted under clause (x) of Section 8.02(b); and".
---------- --------------------
(iii) Present paragraph (k) of Section 8.01 of the Credit
------------- ------------
Agreement is hereby relettered as paragraph (1).
-------------
(d) Additional Liens.
-----------------
(i) Clause (ix) of Section 8.02(b) of the Credit
----------- ---------------
Agreement is hereby amended to read as follows:
"(ix) Liens in respect of Indebtedness permitted
pursuant to Section 8.01(l);"
---------------
(ii) A new clause (x) is hereby added to Section 8.02(b)
---------- ---------------
of the Credit Agreement reading as follows:
"(x) Liens on the Distribution Center; and".
(iii) Present clause (x) of Section 8.02(b) of the Credit
---------- ---------------
Agreement is hereby renumbered as clause (xi).
-----------
(e) Additional Accommodation Obligations.
-------------------------------------
Section 8.04 of the Credit Agreement is hereby
------------
amended to read as follows:
"8.04. Accomodation Obligations. The Borrower
-------------------------
shall not, and shall not permit ATSC or any Restricted
Subsidiary to, create or become or be liable, directly
or indirectly, with respect to any Accommodation
Obligation except:
(a) guaranties resulting from endorsement of
negotiable instruments for collection in the ordinary
course of business;
(b) obligations, warranties and indemnities, not
relating to Indebtedness of any Person, which have
been or are undertaken or made in the ordinary course
of business and not for the benefit or in favor of an
Affiliate of the Borrower or such Subsidiary;
(c) obligations in respect of any Receivables
Transaction;
(d) guaranties of obligations of the Borrower
or Subsidiaries of the Borrower in connection with
the leasing or financing of material handling
equipment, furniture and fixtures in the ordinary
course of business;
(e) Accomodation Obligations arising in connection
with the Borrower's agreement to provide the CAT Joint
Venture with one or more Letters of Credit issued for the
benefit of the CAT Joint Venture pursuant to the CAT Joint
Venture Agreement to the extent permitted by section
-------
8.03(i) and similar arrangements for the benefit of other
-------
joint ventures; and
(f) with respect to ATSC, Accommodation Obligations
arising in connection with the ATSC Guaranty or
Accommodation Obligations for Indebtedness of the
Borrower or its wholly-owned Restricted Subsidiaries
permitted to be incurred under Section 8.01.
------------
(f) Limitation on Capital Expenditures.
----------------------------------
A new negative covenant is hereby added to the Credit
Agreement reading as follows:
"8.15 Capital Expenditures. The Borrower shall not
---------------------
make Capital Expenditures in any Fiscal Year set forth below
exceeding the amount set forth below with respect to such
Fiscal Year:
Fiscal Year Capital Expenditures
----------- --------------------
Fiscal Year beginning 1/29/95 $78,200,000
Fiscal Year beginning 2/04/96 $45,000,000
Each Fiscal Year thereafter $30,000,000
provided, however, that in the Fiscal Year beginning on
-------- -------
February 4, 1996 no more than $22,500,000 in Capital
Expenditures may be incurred or committed to be incurred
during the first six months of such Fiscal Year."
(g) Change in Minimum Fixed Charge Coverage Ratio.
----------------------------------------------
Section 9.03 of the Credit Agreement is hereby amended
------------
to read as follows:
"9.03 Minimum Fixed Charge Coverage Ratio. The
-----------------------------------
Borrower shall not permit the Fixed Charge Coverage
Ratio, as determined at the end of any fiscal quarter
for the preceding four fiscal quarters (or, if less,
the number of quarters elapsed since the Initial
Funding Date) to be less than the ratio set forth
opposite the month in which such fiscal quarter ends:
Quarter Ended Minimum Ratio
------------- -------------
October 1994 1.00 to 1.00
January 1995 1.00 to 1.00
April 1995 1.00 to 1.00
July 1995 0.76 to 1.00
October 1995 0.825 to 1.00
January 1996 0.820 to 1.00
April 1996 1.00 to 1.00
July 1996 1.05 to 1.00
October 1996
and thereafter 1.10 to 1.00"
Section 3. Representations and Warranties.
------------------------------
The Borrower represents and warrants that:
(a) (i) the execution and delivery of this Amendment
have been duly authorized by all necessary corporate action;
and (ii) do not violate any Requirement of Law nor conflict
with or result in the breach of any Contractual Obligation
binding on the Borrower; and
(b) after giving effect to this Amendment, the
representations and warranties of the Borrower contained in
Article V of the Credit Agreement (except for representations
---------
and warranties relating to a particular point in time) and in
each other Loan Document are true and correct in all material
respects as if made on and as of the date of this Amendment and
no Potential Event of Default or Event of Default has occurred
and is continuing.
Section 4. Effectiveness.
--------------
(a) This Amendment shall become effective as of the date
first above written when the Agent has received the following:
(i) counterparts hereof executed by the Borrower, the
the Requisite Lenders and the Agent and signed by ATSC
as a consenting party; and
(ii) a fee equal to 0.20% of the aggregate amount
of the Commitments to be allocated among the Lenders
having executed and delivered a counterpart of this
Amendment by September 6, 1995 ratably in accordance
with the amounts of the respective Commitments of
such Lenders.
(b) Upon the effectiveness of this Amendment (i) each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein", or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby and (ii) each
reference in each other Loan Document to the Credit Agreement shall
mean and be a reference to the Credit Agreement as amended hereby.
(c) Except as specifically amended above, the Credit Agreement
shall remain in full force and effect.
(d) The execution, delivery, and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of
any right, power, or remedy of any Lender or the Agent under the
Credit Agreement or any of the other Loan Documents, nor constitute
a waiver of any provision of any of the Loan Documents.
Section 5. Waiver of Defaults. The Lenders hereby waive any
-------------------
Potential Event of Default or Event of Default that may have occurred
as a result of a violation of Section 9.03 of the Credit Agreement
------------
prior to the date of this Amendment.
Section 6. Miscellaneous.
-------------
(a) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective duly authorized officers as of the date
first above written.
ANNTAYLOR, INC.
By: /s/ Walter J. Parks
---------------------
Title: Senior V.P. - Finance
---------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATIONS,
as Agent
By: /s/ Dietmar Schiel
-------------------------
Title: Vice President
-------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ John Pocalyko
---------------------------
Title: Vice President
-------------------------
FLEET BANK, NATIONAL ASSOCIATION
By: /s/ David W. Parmelee
---------------------------
Title: Executive Vice President
---------------------------
LTCB TRUST COMPANY
By: /s/ Rene O. LeBlanc
---------------------------
Title: Senior Vice President
---------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Mark Williams
---------------------------
Title: Vice President
---------------------------
SHAWMUT BANK, N.A.
By: /s/
---------------------------
Title:
---------------------------
Consenting Party:
ANNTAYLOR STORES CORPORATION
By: /s/ Walter J. Parks
---------------------------
Title: Sr. V.P. - Finance
--------------------------
CONSENT
-------
Reference is hereby made to the Liquidity Agreement, dated as of
January 27, 1994 (as heretofore amended, the "Liquidity Agreement"),
-------------------
among Clipper Receivables Corporation, as Borrower, PNC Bank, National
Association, as Liquidity Agent, State Street Boston Capital Corporation,
as Program Administrator, and the undersigned commercial lending
institutions, as Liquidity Banks. The undersigned hereby consent to the
execution and delivery by Borrower of the Third Amendment to Receivables
Financing Agreement substantially in the form attached hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of
this 11th day of September, 1995 by their respective duly authorized
officers.
PNC BANK, NATIONAL ASSOCIATION, as
Liquidity Agent and a Liquidity Bank
By: /s/ Mark J. Williams
_________________________
Title Vice President
------------------------
UNITED STATES NATIONAL BANK OF
OREGON
By: /s/ Craig Christenson
_________________________
Title Senior Vice President
------------------------
===========================================================================
THIRD AMENDMENT TO RECEIVABLES FINANCING AGREEMENT
--------------------------------------------------
THIS THIRD AMENDMENT TO RECEIVABLES FINANCING AGREEMENT, dated as of
September 11, 1995 (this "Amendment"), is among AnnTaylor Funding, Inc. a
---------
Delaware corporation (the "Company"), AnnTaylor, Inc., a Delaware corporation
-------
("AnnTaylor"), Clipper Receivables Corporation, a Delaware corporation
-----------
("Lender"), State Street Boston Capital Corporation, a Massachusetts
--------
corporation, as administrator for Lender (the "Administrator") and PNC Bank,
-------------
National Association, a national banking association (the "Relationship
------------
Bank").
----
BACKGROUND
1. The Company, AnnTaylor, Lender, the Administrator and the
Relationship Bank entered into a Receivables Financing Agreement, dated as
of January 27, 1994, as amended by the First Amendment to Receivables
Financing Agreement, dated as of May 31, 1994, and the Second Amendment to
Receivables Financing Agreement, dated as of March 31, 1995 (the "Agreement").
---------
2. The Company, AnnTaylor, Lender, the Administrator and the
Relationship Bank desire to amend the Agreement in certain respects as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. The capitalized terms used in this amendment
-----------
and not otherwise defined herein shall have the meanings assigned thereto in
the Agreement.
SECTION 2. Fixed Charge Coverage Ratio. Section 7.05 (e) of the
--------------------------- ----------------
Agreement is hereby amended by deleting such Section in its entirety, and
substituting therefor the following:
"Permit the Fixed Charge Coverage Ratio, as determined at
at the end of any fiscal quarter for the preceding four fiscal
quarters to be less than the ratio set forth opposite the
month in which such fiscal quarter ends:
Quarter Ended Minimum Ratio
------------- -------------
October 1994 1.00 to 1.00
January 1995 1.00 to 1.00
April 1995 1.00 to 1.00
July 1995 0.76 to 1.00
October 1995 0.825 to 1.00
January 1996 0.82 to 1.00
April 1996 1.00 to 1.00
July 1996 1.05 to 1.00
October 1996 and thereafter 1.10 to 1.00
SECTION 3. Definitions of Fixed Charge Coverage Ratio. The definition
-------------------------------------------
of "Fixed Charge Coverage Ratio" that appears in Appendix A to the Agreement
is hereby amended by deleting such definition in its entirety, and
substituting therefor the following:
"Fixed Charge Coverage Ratio" shall mean, for any period, the
---------------------------
period, the quotient obtained by dividing (a) EBITDA by (b) the sum
of (i) Capital Expenditures paid or accrued during such period
excluding (A) any Capital Expenditures made in respect of the
---------
Distribution Center and (B) any Capital Expenditures in the aggregate
maximum amount of $28,000,000 made in respect of the leasing or
financing of material handling equipment, furniture and fixtures in
stores of AnnTaylor and its Subsidiaries, plus (ii) scheduled
----
payments made since July 29, 1994 for principal on Indebtedness
excluding any payment made upon termination of the transactions
---------
contemplated by this Agreement, plus (iii) Cash Interest Expense
----
during such period, plus (iv) income tax expense during such period."
----
SECTION 4. Effectiveness. This Amendment shall become effective as
--------------
of date first above written upon (i) receipt by the Administrator of
counterparts hereof executed by each of the parties hereto and (ii) receipt
by the Relationship Bank of a fee equal to 0.20% of the Lending Limit, which
fee shall be allocated among the Administrator, Lender and the Relationship
Bank in such manner as is specified by the Relationship Bank.
SECTION 5. Representations and Warranties. Each of the Company and
------------------------------
AnnTaylor hereby represent and warrant that the representations and
warranties set forth in Sections 6.01 and 6.02, respectively, of the
------------- ----
Agreement are true and correct on the date hereof, after giving effect
hereto, as if made on the date hereof, and shall be deemed to have been made
on the date hereof.
SECTION 6. Miscellaneous. The Agreement, as amended hereby, remains
-------------
in full force and effect. Any reference to the Agreement from and after the
date hereof shall be deemed to refer to the Agreement as amended hereby unless
otherwise expressly stated. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement. This
Amendment shall be governed by the laws of the State of New York. The
Company hereby agrees to pay, promptly upon demand, all costs and expenses
incurred by Lender, the Administrator or the Relationship Bank in
connection with this Amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
ANNTAYLOR FUNDING, INC.
By: /s/ Walter J. Parks
_________________________
Title Vice President
------------------------
ANNTAYLOR, INC.
By: /s/ Walter J. Parks
_________________________
Title Senior V.P. - Finance
------------------------
CLIPPER RECEIVABLES CORPORATION
By: /s/ Jeffrey R. Gray
_________________________
Title Senior Vice President
------------------------
STATE STREET BOSTON CAPITAL
CORPORATION, as Administrator
By: /s/ David B. Coleman
_________________________
Title Managing Director
------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Mark J. Williams
_________________________
Title Vice President
------------------------
SECRETARY'S CERTIFICATE
The undersigned, being the duly appointed and acting
Secretary of AnnTaylor Stores Corporation (the
"Corporation"), hereby certifies that the following
resolutions were duly adopted by the Board of Directors of
the Corporation at a meeting duly held on August 11, 1995 at
which a quorum was at all times present, and that such
resolutions have not been amended, modified or rescinded and
remain in full force and effect as of the date hereof:
RESOLVED, that the AnnTaylor Stores
Corporation Deferred Compensation Plan (the
"Plan") be and hereby is amended to provide that
(1) the Plan shall commence and be effective as of
September 1, 1995, (2) deferrals of compensation
may be made in whole percentages only, and (3) for
the 1995 Plan Year, incentive compensation
attributable to the "incentive compensation
period" commencing in August 1995 shall be
included as Incentive Compensation that may be
deferred under the Plan; and be it further
RESOLVED, that the officers of the
Corporation are authorized and directed to modify
the Plan document to incorporate and give effect
to the amendments to the Plan adopted by the Board
of Directors on the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on behalf of AnnTaylor Stores Corporation the
11th day of August, 1995.
________________________
Jocelyn F.L. Barandiaran
Secretary
doc\cerif
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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.
</LEGEND>
<CIK> 0000874214
<NAME> ANNTAYLOR STORES CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> JUL-29-1995
<CASH> 1,820
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<RECEIVABLES> 73,001
<ALLOWANCES> 628
<INVENTORY> 99,411
<CURRENT-ASSETS> 191,556
<PP&E> 169,067
<DEPRECIATION> 38,950
<TOTAL-ASSETS> 650,782
<CURRENT-LIABILITIES> 68,780
<BONDS> 0
<COMMON> 157
0
0
<OTHER-SE> 325,971
<TOTAL-LIABILITY-AND-EQUITY> 650,782
<SALES> 352,001
<TOTAL-REVENUES> 352,001
<CGS> 206,224
<TOTAL-COSTS> 206,224
<OTHER-EXPENSES> 134,263
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,966
<INCOME-PRETAX> 2,548
<INCOME-TAX> 2,866
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (318)
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