<PAGE> 1
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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 31, 1999 or
-----------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to_________
Commission file number 0-20036
THE MEN'S WEARHOUSE, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
TEXAS 74-1790172
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5803 GLENMONT DRIVE
HOUSTON, TEXAS 77081-1701
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(713) 592-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]. No [ ].
The number of shares of common stock of the Registrant outstanding, par
value $.01 per share, outstanding at September 9, 1999 was 40,515,292. In
addition, there were 1,329,353 Exchangeable Shares outstanding at September 9,
1999.
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<PAGE> 2
REPORT INDEX
<TABLE>
<CAPTION>
PART AND ITEM NO. PAGE NO.
--------
<S> <C>
PART I - Financial Information
Item 1 - Financial Statements
General Information...................................................................... 1
Consolidated Balance Sheets as of August 1, 1998 (unaudited), July 31, 1999 (unaudited)
and January 30, 1999................................................................... 2
Consolidated Statements of Earnings for the Three and Six Months Ended August 1, 1998
(unaudited) and July 31, 1999 (unaudited).............................................. 3
Consolidated Statements of Cash Flows for the Six Months Ended August 1, 1998
(unaudited) and July 31, 1999 (unaudited).............................................. 4
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................................... 8
Item 3 - Qualitative and Quantitative Disclosures about Market Risk...................... 13
PART II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders............................. 15
Item 6 - Exhibits and Reports on Form 8-K................................................ 17
</TABLE>
<PAGE> 3
PART I, FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
GENERAL INFORMATION
The consolidated financial statements herein include the accounts of The
Men's Wearhouse, Inc. and its subsidiaries ("the Company") and have been
prepared without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission (the "SEC"). As applicable under such regulations,
certain information and footnote disclosures have been condensed or omitted. The
Company believes that the presentation and disclosures herein are adequate to
make the information not misleading, and the financial statements reflect all
elimination entries and normal adjustments which are necessary for a fair
statement of the results for the three and six months ended August 1, 1998 and
July 31, 1999.
The Company combined with Moores Retail Group Inc. ("Moores") on February
10, 1999 and with K&G Men's Center, Inc. ("K&G") on June 1, 1999 in transactions
accounted for as a pooling of interests. Both Moores and K&G are hereinafter
included in references to the Company. In accordance with the pooling of
interest method of accounting permitted by Accounting Principles Board Opinion
No. 16 "Business Combinations", all prior period consolidated financial
statements presented have been restated to include the accounts of Moores and
K&G. In addition, the combined financial results presented include
reclassifications to conform the accounting policies of Moores and K&G to those
of the Company.
Operating results for interim periods are not necessarily indicative of the
results for full years. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial statements for
the year ended January 30, 1999 and the related notes thereto included in the
Company's 1998 Annual Report on Form 10-K filed with the SEC.
1
<PAGE> 4
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
August 1, July 31, January 30,
1998 1999 1999
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,102 $ 5,239 $ 31,012
Inventories 308,632 338,166 302,717
Other current assets 33,032 27,920 25,903
---------- ---------- ----------
Total current assets 352,766 371,325 359,632
PROPERTY AND EQUIPMENT, NET 107,415 126,558 123,771
OTHER ASSETS 52,632 47,126 51,673
---------- ---------- ----------
Total assets $ 512,813 $ 545,009 $ 535,076
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 68,984 $ 73,251 $ 71,034
Accrued expenses 31,067 34,530 37,592
Revolver and current portion of long-term debt 12,002 2,263 11,212
Income taxes payable 3,766 2,490 9,170
---------- ---------- ----------
Total current liabilities 115,819 112,534 129,008
LONG-TERM DEBT 104,421 58,388 44,870
OTHER LIABILITIES 7,554 9,418 9,743
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock -- -- --
Common stock 266 397 393
Capital in excess of par 141,869 181,837 178,144
Retained earnings 143,219 183,734 174,146
Currency translation adjustment (259) (193) (233)
---------- ---------- ----------
285,095 365,775 352,450
Less:
Treasury stock, at cost (76) (1,106) (995)
---------- ---------- ----------
Total shareholders' equity 285,019 364,669 351,455
---------- ---------- ----------
Total liabilities and shareholders' equity $ 512,813 $ 545,009 $ 535,076
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 5
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- --------------------------
August 1, July 31, August 1, July 31,
1998 1999 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 226,580 $ 256,567 $ 456,410 $ 515,431
Cost of goods sold, including buying and
occupancy costs 143,590 163,273 292,874 330,702
---------- ---------- ---------- ----------
Gross margin 82,990 93,294 163,536 184,729
Selling, general and administrative expenses 62,682 70,706 127,108 143,310
Transaction costs -- 2,155 -- 7,707
Duplicative store closing costs -- 3,137 -- 6,070
Merger related litigation costs -- 930 -- 930
---------- ---------- ---------- ----------
Operating income 20,308 16,366 36,428 26,712
Interest expense, net 2,084 587 4,031 1,259
---------- ---------- ---------- ----------
Earnings before income taxes 18,224 15,779 32,397 25,453
Provision for income taxes 7,835 7,029 13,882 12,953
---------- ---------- ---------- ----------
Earnings before extraordinary item 10,389 8,750 18,515 12,500
Extraordinary item, net of tax -- -- -- 2,912
---------- ---------- ---------- ----------
Net earnings $ 10,389 $ 8,750 $ 18,515 $ 9,588
========== ========== ========== ==========
Net earnings per basic share:
Earnings before extraordinary item $ 0.26 $ 0.21 $ 0.46 $ 0.30
Extraordinary item -- -- -- (0.07)
---------- ---------- ---------- ----------
Net earnings $ 0.26 $ 0.21 $ 0.46 $ 0.23
========== ========== ========== ==========
Net earnings per diluted share:
Earnings before extraordinary item $ 0.25 $ 0.21 $ 0.45 $ 0.29
Extraordinary item -- -- -- (0.07)
---------- ---------- ---------- ----------
Net earnings $ 0.25 $ 0.21 $ 0.45 $ 0.22
========== ========== ========== ==========
Weighted average shares outstanding:
Basic 40,113 41,872 40,068 41,838
========== ========== ========== ==========
Diluted 43,504 42,507 43,363 42,523
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
--------------------------
August 1, July 31,
1998 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 18,515 $ 9,588
Adjustments to reconcile net earnings to net cash used in operating
activities:
Extraordinary item, net of tax -- 2,912
Depreciation and amortization 12,700 14,312
Stock option compensation expense -- 889
Loss on disposal of property and equipment -- 3,417
Increase in inventories (52,298) (35,522)
Increase in other assets (757) (2,184)
(Decrease) increase in accounts payable and accrued expenses (2,366) 3,085
Decrease in income taxes payable (7,404) (5,408)
Increase in other liabilities 8 42
---------- ----------
Net cash used in operating activities (31,602) (8,869)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (25,108) (19,308)
Investment in trademark, tradenames and other intangibles (6,631) (238)
Sale of marketable securities 12,679 3,680
Purchase of marketable securities (7,855) (2,500)
Purchase of minority interests -- (1,400)
---------- ----------
Net cash used in investing activities (26,915) (19,766)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings 5,736 62,077
Principal payments on bank debt (1,677) (58,660)
Distribution to minority investors (176) --
Payment of deferred loan costs -- (623)
Proceeds from issuance of common stock 2,920 1,387
Tax payments related to options exercised (683) (304)
Purchase of treasury stock -- (1,032)
---------- ----------
Net cash provided by financing activities 6,120 2,845
---------- ----------
Effect of exchange rate changes on cash and cash equivalents (69) 17
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (52,466) (25,773)
CASH AND CASH EQUIVALENTS, beginning of period 63,568 31,012
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 11,102 $ 5,239
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 7
THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES--
The Consolidated Financial Statements include the accounts of The Men's
Wearhouse, Inc. and its subsidiaries (the "Company"). There have been no
significant changes in the accounting policies of the Company during the periods
presented. For a description of these policies, see Note 1 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended January 30, 1999.
2. EARNINGS PER SHARE--
Basic earnings per share ("EPS") is computed using the weighted average
number of common shares outstanding during the period and net earnings. Diluted
EPS gives effect to the potential dilution which would have occurred if
additional shares were issued for stock options exercised under the treasury
stock method and, in fiscal 1998, conversion of the convertible debt ("Notes"),
with fiscal 1998 net earnings adjusted for interest expense associated with the
Notes. The following table reconciles the earnings and shares used in the basic
and diluted EPS computations (in thousands, except per share amounts):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
----------------------------- -----------------------------
AUGUST 1, JULY 31, AUGUST 1, JULY 31,
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Basic EPS
Earnings before extraordinary item $ 10,389 $ 8,750 $ 18,515 $ 12,500
Extraordinary item, net of tax -- -- -- 2,912
------------ ------------ ------------ ------------
Net earnings 10,389 8,750 18,515 9,588
============ ============ ============ ============
Weighted average number of common shares outstanding 40,113 41,872 40,068 41,838
============ ============ ============ ============
Basic EPS:
Earnings before extraordinary item $ 0.26 $ 0.21 $ 0.46 $ 0.30
Extraordinary item, net of tax -- -- -- (0.07)
------------ ------------ ------------ ------------
Net earnings $ 0.26 $ 0.21 $ 0.46 $ 0.23
============ ============ ============ ============
Diluted EPS
Earnings before extraordinary item $ 10,389 $ 8,750 $ 18,515 $ 12,500
Interest on Notes, net of taxes 486 -- 971 --
------------ ------------ ------------ ------------
As adjusted net earnings $ 10,875 $ 8,750 $ 19,486 $ 12,500
Extraordinary item, net of tax -- -- -- 2,912
------------ ------------ ------------ ------------
As adjusted net earnings $ 10,875 $ 8,750 $ 19,486 $ 9,588
============ ============ ============ ============
Weighted average number of common shares outstanding 40,113 41,872 40,068 41,838
Assumed exercise of stock options 864 635 768 685
Assumed conversion of Notes 2,527 -- 2,527 --
------------ ------------ ------------ ------------
As adjusted shares 43,504 42,507 43,363 42,523
============ ============ ============ ============
Diluted EPS:
Earnings before extraordinary item $ 0.25 $ 0.21 $ 0.45 $ 0.29
Extraordinary item, net of tax -- -- -- (0.07)
------------ ------------ ------------ ------------
Net earnings $ 0.25 $ 0.21 $ 0.45 $ 0.22
============ ============ ============ ============
</TABLE>
5
<PAGE> 8
3. COMPREHENSIVE INCOME AND SUPPLEMENTAL CASH FLOWS--
The Company's comprehensive income, which encompasses net income and
currency translation adjustments, is as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------ ------------------------------
AUGUST 1, JULY 31, AUGUST 1, JULY 31,
1998 1999 1998 1999
------------ ------------- ------------- -- -------------
<S> <C> <C> <C> <C>
Net earnings $ 10,389 $ 8,750 $ 18,515 $ 9,588
Currency translation adjustments, net of tax (129) (44) (71) 40
----------- ----------- ----------- -----------
Comprehensive income $ 10,260 $ 8,706 $ 18,444 $ 9,628
=========== =========== =========== ===========
</TABLE>
The Company paid cash during the first two quarters of 1998 of $4.3 million
for interest and $20.9 million for taxes, compared with $2.3 million for
interest and $20.1 million for taxes during the first two quarters of 1999.
4. BUSINESS COMBINATIONS --
On February 10, 1999, the Company combined with Moores Retail Group Inc.
("Moores"), a privately owned Canadian corporation, in exchange for securities
("Exchangeable Shares") exchangeable for 2.5 million shares of the Company's
common stock. The Exchangeable Shares have substantially identical economic and
legal rights as, and will ultimately be exchanged on a one-on-one basis for,
shares of the Company's common stock. The Exchangeable Shares were issued to the
shareholders and option holders of Moores in exchange for all of the outstanding
shares of capital stock and options of Moores because of Canadian tax law
considerations. All Exchangeable Shares must be converted into common stock of
the Company within five years and are reflected as common stock outstanding for
financial reporting purposes by the Company. The combination with Moores has
been accounted for as a pooling of interests.
On June 1, 1999, the Company combined with K&G Men's Center, Inc. ("K&G"),
a superstore retailer of men's apparel and accessories operating 34 stores in 16
states, with K&G becoming a wholly owned subsidiary of the Company. The Company
issued approximately 4.4 million shares of the its common stock to K&G
shareholders based on an exchange ratio of 0.43 of a share of the Company's
common stock for each share of K&G common stock outstanding. In addition, the
Company converted the outstanding options to purchase K&G common stock, whether
vested or unvested, into options to purchase 228,000 shares of the Company's
common stock based on the exchange ratio of 0.43. The combination has been
accounted for as a pooling of interests.
In conjunction with the Moores and K&G combinations, the Company recorded
transaction costs of $7.7 million, duplicative stores closing costs of $6.1
million and litigation costs of $0.9 million. The transaction costs were
composed primarily of investment banking fees, professional fees and contract
termination payments, while the duplicative store closing costs consisted
primarily of lease termination payments and the write-off of fixed assets
associated with the closing of duplicate stores sites in existing markets. The
litigation charge resulted from the settlement of a lawsuit filed by a former
K&G employee related to his employment relationship with K&G. In addition, the
Company recorded an extraordinary charge of $2.9 million, net of a $1.4 million
tax benefit, related to the write-off of deferred financing costs and prepayment
penalties for the refinancing of approximately US$57 million of Moores'
indebtedness.
6
<PAGE> 9
The following is a reconciliation of the amounts of revenues and net
earnings previously reported by the Company to the combined amounts of revenues
and earnings after giving effect to the combinations with Moores on February 10,
1999 and K&G on June 1, 1999 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS THREE MONTHS
------------------------- ENDED ENDED
MAY 2, AUGUST 1, AUGUST 1, MAY 1,
1998 1998 1998 1999
----------- ----------- ----------- -----------
Revenues
<S> <C> <C> <C> <C>
The Men's Wearhouse (as previously reported) $ 170,850 $ 162,858 $ 333,708 $ 222,183
Moores 28,671 33,452 62,123 --
K&G 30,309 30,270 60,579 36,669
----------- ----------- ----------- -----------
Combined $ 229,830 $ 226,580 $ 456,410 $ 258,852
=========== =========== =========== ===========
Net earnings (loss)
The Men's Wearhouse (as previously reported) $ 6,718 $ 8,014 $ 14,732 $ (500)
Moores 86 1,074 1,160 --
K&G 1,322 1,301 2,623 1,340
----------- ----------- ----------- -----------
Combined $ 8,126 $ 10,389 $ 18,515 $ 840
=========== =========== =========== ===========
</TABLE>
The separate results of operations for K&G in fiscal 1999 for the period
prior to its combination with the Company are reflected in the table above for
the three months ended May 1, 1999. The fiscal 1999 extraordinary item of
$2,912, net of tax, reported by the Company was not affected by the combination
with K&G.
7
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
For supplemental information, it is suggested that "Management's Discussion
and Analysis of Financial Condition and Results of Operations" be read in
conjunction with the corresponding section included in the Company's Annual
Report on Form 10-K for the year ended January 30, 1999. References herein to
years are to the Company's 52-week or 53-week fiscal year which ends on the
Saturday nearest January 31 in the following calendar year. For example,
references to "1999" mean the fiscal year ending January 29, 2000.
In large part, changes in net sales and operating results are impacted by
the number of stores operating during the fiscal period. The following table
presents information with respect to stores in operation during each of the
respective fiscal periods.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED YEAR ENDED
------------------------------ ------------------------------- ---------------
AUGUST 1, JULY 31, AUGUST 1, JULY 31, JANUARY 30,
1998 1999 1998 1999 1999
------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Stores open at beginning of period 542 584 526 579 526
Opened 14 10 29 23 65
Acquired -- -- 4 -- 4
Closed (1) (5) (4) (13) (16)
--- --- --- --- ----
Stores open at end of period 555 589 555 589 579
=== === === === ===
Stores open at end of period:
U.S. --
Men's Wearhouse 386 426 386 426 411
K&G/SuitMax/Suit Warehouse 41 52 41 52 49
C&R and Moores 24 -- 24 -- 12
--- --- --- --- ----
451 478 451 478 472
Canada-- Moores 104 111 104 111 107
--- --- --- --- ---
555 589 555 589 579
=== === === === ===
</TABLE>
RESULTS OF OPERATIONS
Three Months Ended August 1, 1998 and July 31, 1999
The Company's net sales increased $30.0 million, or 13.2%, to $256.6 million
for the quarter ended July 31, 1999 due primarily to sales resulting from the
increased number of stores and increased sales at existing stores. Sales from
U.S. stores represented 88.0% of total sales in the second quarter of 1999,
compared with 85.7% of total sales in the second quarter of 1998. Comparable
store sales (which are calculated by excluding the net sales of a store for any
month of one period if the store was not open throughout the same month of the
prior period) increased 7.4% for the U.S. stores from the same prior year
quarter, while comparable store sales for the Canadian stores decreased 3.5%
from the same prior year quarter.
Gross margin increased $10.3 million to $93.3 million in the second quarter
of 1999 which was a 12.4% increase from the same prior year quarter. As a
percentage of sales, gross margin decreased from 36.6% in the second quarter of
1998 to 36.4% in the second quarter of 1999. This decrease in gross margin
predominantly resulted from an increase in occupancy and alteration costs as a
percentage of sales offset, in part, by decreased product costs as a percentage
of sales.
Selling, general and administrative ("SG&A") expenses decreased as a
percentage of sales from 27.7% for the quarter ended August 1, 1998 to 27.6% for
the quarter ended July 31, 1999, and SG&A expenditures increased by $8.0 million
to $70.7 million. On an absolute dollar basis, the principal components of SG&A
expenses increased primarily due to the
8
<PAGE> 11
Company's growth. Advertising expense decreased from 6.1% to 5.3% of net sales;
store salaries increased from 10.9% to 11.2% of net sales and other SG&A
expenses increased from 10.6% to 11.1% of net sales.
As a result of the June 1, 1999 pooling of interest combination of the
Company and K&G Men's Centers, Inc., non-recurring transaction costs of $2.2
million were charged to operations in the second quarter of 1999. These costs
consisted primarily of professional fees and contract termination payments. An
additional $3.1 million was charged to operations for non-recurring duplicative
store closing costs, which consisted primarily of lease termination payments and
the write-off of fixed assets associated with the closing of duplicate store
sites in existing markets. Non-recurring litigation costs of $0.9 million in
connection with the settlement of a lawsuit filed by a former employee of K&G
related to his employment relationship with K&G were charged to earnings during
the second quarter of 1999.
Interest expense, net of interest income, decreased from $2.1 million in the
second quarter of 1998 to $0.6 million in the second quarter of 1999. Weighted
average borrowings outstanding decreased $52.3 million from the prior year to
$63.2 million in the second quarter of 1999, and the weighted average interest
rate on outstanding indebtedness decreased from 9.0% to 6.6%. The weighted
average borrowings outstanding decreased primarily as a result of the redemption
of the 5 1/4% Convertible Subordinated Notes in the third quarter of 1998. The
decrease in the weighted average interest rate was due primarily to the
refinancing of debt concurrent with the Moores combination.
The Company's effective income tax rate decreased from 43.0% for the quarter
ended August 1, 1998 to 40.9% (before the effect of transaction costs which are
mostly not deductible for income tax purposes) for the quarter ended July 31,
1999. The effective tax rate for the second quarter of 1999 was higher than the
statutory U.S. federal rate of 35% primarily due to the effect of state income
taxes, Canadian earnings which are taxed at a higher statutory rate and the
nondeductibility of a portion of meal and entertainment expenses.
The Company's earnings before extraordinary item, as reported and after the
effect of non-recurring charges, were as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
AUGUST 1, JULY 31,
1998 1999
------------ --------
<S> <C> <C>
Earnings before extraordinary item, as reported $ 10,389 $ 8,750
Transaction costs, net of tax benefit of $299 -- 1,856
Duplicative store closing costs, net of tax benefit of $1,276 -- 1,861
Litigation costs, net of tax benefit of $372 -- 558
------------ --------
Earnings before extraordinary item and non-recurring charges $ 10,389 $ 13,025
============ ========
Diluted earnings per share before extraordinary
item, as reported $ 0.25 $ 0.21
============ ========
Diluted earnings per share before extraordinary
item and non-recurring charges $ 0.25 $ 0.31
============ ========
</TABLE>
Six Months Ended August 1, 1998 and July 31, 1999
The Company's net sales were $515.4 million for the six months ended July
31, 1999, a $59.0 million, or 12.9%, increase from the six months ended August
31, 1998. This increase was due primarily to sales resulting from the increased
number of stores and increased sales at existing stores. Sales from U.S. stores
represented 88.8% of total sales in the first two quarters of 1999, compared
with 86.9% of total sales in the same period of 1998. Comparable store sales
increased 6.5% for the U.S. stores from the same prior year period, while
comparable store sales for the Canadian stores decreased 4.9% from the same
prior year period.
9
<PAGE> 12
Gross margin increased to $184.7 million for the first six months of 1999
which was a 13.0% increase from the same prior year period. As a percentage of
sales, gross margin remained constant at 35.8% for the first two quarters of
1998 and 1999. A decrease in product costs as a percentage of sales was offset
by higher occupancy and alteration costs.
Selling, general and administrative expenses as a percentage of sales
remained constant at 27.8% for the first six months of 1998 and 1999, and SG&A
expenditures increased by $16.2 million to $143.3 million. On an absolute dollar
basis, the principal components of SG&A expenses increased primarily due to the
Company's growth. Advertising expense decreased from 6.3% to 5.8% of net sales,
store salaries increased from 10.7% to 10.9% of net sales and other SG&A
expenses increased from 10.9% to 11.1% of net sales.
As a result of the Moores and K&G combinations, the Company recorded
transaction costs of $7.7 million, duplicative stores closing costs of $6.1
million and litigation costs of $0.9 million. The transaction costs were
composed primarily of investment banking fees, professional fees and contract
termination payments, while the duplicative store closing costs consisted
primarily of lease termination payments and the write-off of fixed assets
associated with the closing of duplicate stores sites in existing markets. The
litigation charge resulted from the settlement of a lawsuit filed by a former
K&G employee related to his employment relationship with K&G. In addition, the
Company recorded an extraordinary charge of $2.9 million, net of a $1.4 million
tax benefit, related to the write-off of deferred financing costs and prepayment
penalties for the refinancing of approximately US$57 million of Moores'
indebtedness.
Interest expense, net of interest income, decreased from $4.0 million for
the first six months of 1998 to $1.3 million for the first six months of 1999.
Weighted average borrowings outstanding decreased $53.9 million from the prior
year to $63.4 million in the first two quarters of 1999, and the weighted
average interest rate on outstanding indebtedness decreased from 9.2% to 6.8%.
The weighted average borrowings outstanding decreased primarily as a result of
the redemption of the 5 1/4% Convertible Subordinated Notes in the third quarter
of 1998. The decrease in the weighted average interest rate was due primarily to
the refinancing of debt concurrent with the Moores combination.
The Company's effective income tax rate decreased from 42.9% for the six
months ended August 1, 1998 to 41.0% (before the effect of transaction costs
which are mostly not deductible for income tax purposes) for the six months
ended July 31, 1999. The effective tax rate for the first two quarters of 1999
was higher than the statutory U.S. federal rate of 35% primarily due to the
effect of state income taxes, Canadian earnings which are taxed at a higher
statutory rate and the nondeductibility of a portion of meal and entertainment
expenses.
The Company's earnings before extraordinary item, as reported and after the
effect of non-recurring charges, were as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
----------------------------
AUGUST 1, JULY 31,
1998 1999
----------- -----------
<S> <C> <C>
Earnings before extraordinary item, as reported $ 18,515 $ 12,500
Transaction costs, net of tax benefit of $633 -- 7,074
Duplicative store closing costs, net of tax benefit of $2,471 -- 3,599
Litigation costs, net of tax benefit of $372 -- 558
----------- -----------
Earnings before extraordinary item and non-recurring charges $ 18,515 $ 23,731
=========== ===========
Diluted earnings per share before extraordinary
item, as reported $ 0.45 $ 0.29
=========== ===========
Diluted earnings per share before extraordinary
item and non-recurring charges $ 0.45 $ 0.56
=========== ===========
</TABLE>
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $8.9 million in the first six
months of 1999 compared with $31.6 million in the first six months of 1998.
These amounts primarily represent net earnings before extraordinary item plus
depreciation, amortization and other non-cash charges, offset by increases in
inventories and decreases in income taxes payable and other assets. Inventories
increased $35.5 million and $52.3 million for the two quarters ended July 31,
1999 and August 1, 1998, respectively. The increase for the first six months of
1999 and 1998 primarily related to seasonal inventory buildup and the addition
of inventory for new and/or acquired stores and stores expected to be opened in
the following quarter.
Working capital was $258.8 million at July 31, 1999, which is up from $230.6
million at January 30, 1999 and $236.9 million at August 1, 1998. Historically,
the Company's working capital has been at its lowest level in January and
February, and has increased through November as inventory buildup is financed
with both short-term and long-term borrowings in preparation for the fourth
quarter selling season.
Cash used in investing activities was $19.8 million and $26.9 million for
the first two quarters of 1999 and 1998, respectively. For the six months ended
July 31, 1999, cash used in investing activities was primarily comprised of
capital expenditures of $19.3 million relating primarily to stores opened,
remodeled or relocated during the quarter or under construction at the end of
the quarter and infrastructure technology investments.
In February 1999, the Company amended and restated its revolving credit
agreement with a group of banks (the "Credit Agreement"). This agreement
provides for borrowing of up to $125 million through February 5, 2004. Advances
under the Credit Agreement bear interest at a rate per annum equal to, at the
Company's option, the agent's prime rate or the reserve adjusted LIBOR rate plus
an interest rate margin varying between .75% to 1.25%. The Credit Agreement
provides for fees applicable to unused commitments of .125% to .225%. As of July
31, 1999, there was $1.0 million outstanding under the Credit Agreement.
The Credit Agreement contains certain restrictive and financial covenants,
including the requirement to maintain a minimum amount of Consolidated Net Worth
(as defined). The Company is also required to maintain certain debt to cash
flow, fixed charge and current ratios. In addition, the Credit Agreement limits
additional indebtedness, creation of liens, Restrictive Payments (as defined)
and Investments (as defined). The Credit Agreement also prohibits payment of
cash dividends on the common stock of the Company. The Credit Agreement permits,
with certain limitations, the Company to merge or consolidate with another
company, sell or dispose of its property, make acquisitions, issue options or
enter into transactions with affiliates. The Company is in compliance with the
covenants in the Credit Agreement.
In February 1999, the Company also entered into two new Canadian credit
facilities in conjunction with the combination with Moores. These facilities
include a revolving credit agreement which provides for borrowings up to Can$30
million (US$20 million) through February 5, 2004 and a term credit agreement
which provides for borrowings of Can$75 million (US$50 million) to be repaid in
quarterly installments of Can$0.9 million (US$0.6 million) beginning in May
1999; remaining unpaid principal is payable on February 5, 2004. Covenants and
interest rates are substantially similar to those contained in the Company's
Credit Agreement. Borrowings outstanding under these agreements of US$59.8
million at July 31, 1999 were used to repay approximately US$57 million in
outstanding indebtedness of Moores and to fund operating and other requirements
of Moores.
The Company anticipates that its existing cash and cash flow from
operations, supplemented by borrowings under the Credit Agreement, will be
sufficient to fund its planned store openings, other capital expenditures and
operating cash requirements for at least the next 12 months.
In connection with the Company's direct sourcing program, the Company may
enter into purchase commitments that are denominated in a foreign currency
(primarily the Italian lira). The Company generally enters into forward exchange
contracts to reduce the risk of currency fluctuations related to such
commitments. The majority of the forward exchange contracts are with one
financial institution. Therefore, the Company is exposed to credit risk in the
event of nonperformance by this party. However, due to the creditworthiness of
this major financial institution, full performance is anticipated. The Company
may
11
<PAGE> 14
also be exposed to market risk as a result of changes in foreign exchange rates.
This market risk should be substantially offset by changes in the valuation of
the underlying net assets.
YEAR 2000
The statements included in this section are intended to be and are
designated "Year 2000 Readiness Disclosure" statements within the meaning of the
Year 2000 Information and Readiness Disclosure Act.
Due to the dramatic changes in the state of the art of information
technology, both in general and with regard to the retail industry, in mid-1997
the Company commenced an enterprise-wide project to upgrade its U.S. information
technology by acquiring products that are generally available and field tested
and are designed to increase the efficiency and the future productivity of its
operations. The Company has benefited significantly from investments in
technology in the past, and it is anticipated that these modifications will
further increase the benefit that it derives from technology, both in the near
term and in the future. In completing these modifications, the Company expects
to achieve Year 2000 date conversion compliance. Capital expenditures related to
the project are anticipated to be between $20.0 million and $25.0 million
including past and future expenditures. The amounts of expenditures related
specifically to Year 2000 date conversion compliance are not separable from this
amount. The Company believes that substantially all of its business systems are
now Year 2000 compliant. However, no assurances can be given that the Company
will be able to completely identify or address all Year 2000 compliance issues,
or that third parties with whom it does business will not experience system
failures as a result of the Year 2000 issue, nor can the Company fully predict
the consequences of noncompliance.
As part of its assessment of the Year 2000 issue, the Company has completed
an inventory of its hardware and software systems, including the embedded
systems in its buildings, property and equipment. The Company has completed
substantially all of the process of implementing converted and replacement
systems for all of its non-compliant hardware and software systems to ensure
that the operations of such systems will not be materially adversely affected by
the Year 2000 date change. The Company estimates that its efforts to make all
internal systems Year 2000 compliant are approximately 95% complete.
To date, the Company has made expenditures of approximately $500,000
related to its telephone and security systems specifically to address the Year
2000 issue. The Company does not anticipate that it will incur significant
additional expenditures to address the Year 2000 issue beyond those associated
with the updating and upgrading of the information systems discussed above.
The Company has requested and has received written responses from all of
its significant U.S. vendors and suppliers confirming that they will be Year
2000 compliant. Of the 50 current vendors and suppliers with whom the Company
exchanges information by some form of electronic transfer, 45 have indicated
that they have tested their systems and found them to be Year 2000 compliant and
5 have indicated that they are in the process of completing their conversion
and/or testing. The Company will continue to monitor these vendors and
suppliers, as well as any new vendors or suppliers.
The Company, through Moores, has also been in the process of updating and
upgrading its Canadian information systems to be Year 2000 compliant. Moores has
converted or reprogrammed its payroll, accounting and merchandising systems to
ensure that the operation of such systems will not be materially adversely
affected by the Year 2000 date change. With respect to its point of sale system,
Moores has completed the installation in its stores of new equipment and
software that is Year 2000 compliant. Moores has also completed the process of
evaluating the machinery and embedded technology involved in its manufacturing
operations and has determined that the manufacturing technology is Year 2000
compliant. Moores total costs related to Year 2000 compliance approximated
Can$500,000.
Moores has requested and is in the process of receiving written responses
from its vendors and suppliers confirming that the vendor or supplier is Year
2000 compliant. Moores will continue to monitor these vendors and suppliers, as
well as those that have not provided written assurance. Moores expects to use
alternate sources to replace those vendors and suppliers who do not provide
written assurance of their Year 2000 readiness.
12
<PAGE> 15
K&G has completed an evaluation of its management information systems to
determine their readiness in terms of Year 2000 issues, and determined that its
point-of-sale cash register systems are the only major application that required
significant modification in order to be Year 2000 ready. K&G has replaced its
current registers with a new computer-based register system. The costs to
purchase and implement these register systems totaled approximately $1.5
million. K&G has developed a plan to determine the Year 2000 readiness of its
suppliers or other third parties with which K&G conducts business. Additionally,
K&G has developed a contingency plan to address the possibility of failure of
any of its significant suppliers to reach Year 2000 readiness.
Assuming no general failure of utilities to provide basic services over
large geographic areas or of the banking systems generally to conduct business
substantially as usual, or of the credit card systems to confirm credit
generally, the Company believes that, at the store level, the worst case
scenario would require the processing of credit approvals by telephone and the
ordering and allocation of inventory by telephone. While each of these scenarios
would increase the cost of doing business and may result in the loss of some
sales, the Company does not believe that either of these situations would have a
material adverse effect on its results of operations.
If the Company is unable to purchase or receive inventory, or is unable to
arrange for the manufacture of acquired piece goods into tailored clothing, such
failure, depending on how extensive, could have a material adverse effect on its
operations. However, no vendor or supplier accounts for more than 10% of the
inventory the Company purchases and in most cases alternative suppliers are
available.
The Company anticipates that it will increase inventory for approximately
one month prior to the Year 2000 to insure that it has adequate inventory to
cover possible disruptions associated with the Year 2000 date change.
At the manufacturing level, if all suppliers were unable to supply the
fabric needs of the manufacturing operations, then, given this worst case
scenario, one to two months of production could be lost. However, no one
supplier accounts for more than 14% of the fabric used and this supplier has
provided a written response that it is Year 2000 compliant. Moores anticipates
that if any one supplier is unable to provide fabric, an alternate source could
be found to meet production needs. If there is a significant disruption in the
supply chain due to the Year 2000 issue and the amount of fabric available from
suppliers is limited, it may be difficult to obtain the fabric necessary to meet
the demands of the manufacturing operations and available fabric may experience
a significant increase in cost.
The Company has not developed any contingency plans except as discussed
above. However, if any new issues or risks become apparent as the Company
completes its Year 2000 readiness, it will adopt additional contingency plans as
necessary.
ITEM 3 - QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant quantitative or qualitative changes in the
Company's market risk sensitive instruments during the second quarter of 1999.
FORWARD-LOOKING STATEMENTS
Certain statements made herein and in other public filings and releases by
the Company contain "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risk and uncertainty.
These forward-looking statements may include, but are not limited to, future
capital expenditures, borrowings, acquisitions (including the amount and nature
thereof), future sales, earnings, margins, costs, number and costs of store
openings, demand for men's clothing, market trends in the retail men's clothing
business, currency fluctuations, inflation and various economic and business
trends. Forward-looking statements may be made by management orally or in
writing, including but not limited to, this Management's Discussion and Analysis
of Financial Condition and Results of Operations section and other sections of
the Company's filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and the Securities Act of 1933.
13
<PAGE> 16
Actual results and trends in the future may differ materially depending on a
variety of factors including, but not limited to, domestic and international
economic activity and inflation, the Company's successful execution of internal
operating plans and new store and new market expansion plans, performance issues
with key suppliers, foreign currency fluctuations, government export and import
policies and legal proceedings. Future results will also be dependent upon the
ability of the Company to continue to identify and complete successful
expansions and penetrations into existing and new markets, and its ability to
integrate such expansions with the Company's existing operations.
14
<PAGE> 17
PART II
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 1, 1999, the Company held its annual meeting of stockholders. At
the meeting, the stockholders voted on the following matters:
1. To elect ten directors of the Company to hold office until the next
Annual Meeting of Shareholders or until their respective successors
are duly elected and qualified.
2. To amend the Company's Restated Articles of Incorporation to increase
the number of authorized shares of the Company's common stock from
50,000,000 shares to 100,000,000 shares.
3. To ratify the appointment by the Board of Directors of the firm
Deloitte & Touche LLP as independent auditors for the Company for
1999.
All proposals received the affirmative vote required for approval. The
number of votes cast for, against and withheld, as well as the number of
abstentions, as to each matter were as follows:
15
<PAGE> 18
Proposal
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
1. Election of Directors
George Zimmer 31,880,074 611,773
Robert E. Zimmer 31,883,779 608,068
James E. Zimmer 31,883,779 608,068
Richard E. Goldman 31,883,810 608,037
David H. Edwab 31,882,618 609,229
Harry M. Levy 31,883,810 608,037
Rinaldo Brutoco 31,880,909 610,938
Michael L. Ray 28,057,451 4,434,396
Sheldon I. Stein 31,883,810 608,037
Stephen H Greenspan 31,879,409 612,438
</TABLE>
<TABLE>
<CAPTION>
Affirmative Votes Negative Votes Abstentions
----------------- -------------- -----------
<S> <C> <C> <C>
2. Amendment of Restated
Articles of Incorporation 31,540,450 927,661 23,735
3. Ratification of
Auditors 32,455,374 15,673 20,799
</TABLE>
16
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
------- -------------
<S> <C>
3.1 -- Articles of Amendment to the Restated Articles of
Incorporation (filed herewith).
10.1 -- Amended and Restated Employment Agreement dated as of June 1,
1999, by and between K&G Men's Center, Inc. and Stephen H.
Greenspan (incorporated by reference from Exhibit 10.1 of the
Company's Current Report on Form 8-K dated June 11, 1999).
27.1 -- Financial Data Schedule. (filed herewith).
27.2 -- Restated Financial Data Schedule for the first, second and
third quarters in fiscal years 1997 and for fiscal years 1996
and 1997. (filed herewith).
27.3 -- Restated Financial Data Schedule for the first, second and
third quarters in fiscal years 1998, for the first quarter in
fiscal year 1999 and for fiscal year 1998. (filed herewith).
</TABLE>
17
<PAGE> 20
(b) Reports on Form 8-K.
On June 11, 1999, the Company filed a report on Form 8-K related to the
June 1, 1999 closing of the K&G merger. K&G consolidated financial statements,
including a consolidated balance sheet as of February 1, 1998 and January 31,
1999, a consolidated statement of operations, a consolidated statement of
stockholders' equity and a consolidated statement of cash flows, each for the
year ended February 2, 1997, February 1, 1998 and January 31, 1999, as well as
pro forma financial statements including a combined balance sheet as of January
30, 1999 and combined statements of earnings for the years ended February 1,
1997, January 31, 1998 and January 30, 1999, were included in this current
report on Form 8-K.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, The Men's Wearhouse, Inc., has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: September 14, 1999 THE MEN'S WEARHOUSE, INC.
By /s/ DAVID H. EDWAB
------------------------------------------------
David H. Edwab
President
By /s/ GARY G. CKODRE
------------------------------------------------
Gary G. Ckodre
Vice President - Finance and Principal Financial
and Accounting Officer
19
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 -- Articles of Amendment to the Restated Articles of
Incorporation (filed herewith).
10.1 -- Amended and Restated Employment Agreement dated as of June 1,
1999, by and between K&G Men's Center, Inc. and Stephen H.
Greenspan (incorporated by reference from Exhibit 10.1 of the
Company's Current Report on Form 8-K dated June 11, 1999).
27.1 -- Financial Data Schedule. (filed herewith).
27.2 -- Restated Financial Data Schedule for the first, second and
third quarters in fiscal years 1997 and for fiscal years 1996
and 1997. (filed herewith).
27.3 -- Restated Financial Data Schedule for the first, second and
third quarters in fiscal years 1998, for the first quarter in
fiscal year 1999 and for fiscal year 1998. (filed herewith).
</TABLE>
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
THE MEN'S WEARHOUSE, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Restated Articles of Incorporation:
ARTICLE ONE
The name of the corporation is The Men's Wearhouse, Inc.
ARTICLE TWO
The first paragraph of ARTICLE FOUR of the Restated Articles of
Incorporation is hereby amended in its entirety to read as follows:
"The total number of shares of all classes of stock that the
corporation shall be authorized to issue is 102,000,000, comprising
2,000,000 shares of preferred stock, of the par value of $.01 per
share (hereinafter call "Preferred Stock"), and 100,000,000 shares of
common stock, of the par value of $.01 per share (hereinafter called
"Common Stock")."
ARTICLE THREE
The amendment made by these Articles of Amendment to the Restated
Articles of Incorporation has been effected in conformity with the provisions
of the Texas Business Corporation Act, and was duly adopted by the shareholders
of the corporation on the 1st day of July, 1999.
ARTICLE FOUR
The number of shares of the Common Stock of the corporation
outstanding at the time of such adoption was 35,084,158; and the number of
shares of Common Stock of the corporation entitled to vote thereon was
35,084,158. The number of shares of Series A Special Voting Preferred Stock of
the corporation outstanding at the time of such adoption was one; and the
number of votes such one share of Series A Special Voting Preferred Stock was
entitled to vote thereon was 2,375,579. Accordingly, the Common Stock and the
Series A Special Voting Preferred Stock constitute one class with 37,459,737
votes (the "Aggregate Vote").
ARTICLE FIVE
The number of votes of the Aggregate Vote voted for such amendment was
31,540,450; and the number of votes of the Aggregate Vote voted against such
amendment was 927,661.
<PAGE> 2
Dated: July 13, 1999.
THE MEN'S WEARHOUSE, INC.
By: /s/ GARY G. CKODRE
------------------------------------
Name: Gary G. Ckodre
Title: Vice President - Finance
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 5,239
<SECURITIES> 4,845
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 338,166
<CURRENT-ASSETS> 371,325
<PP&E> 223,713
<DEPRECIATION> 97,155
<TOTAL-ASSETS> 545,009
<CURRENT-LIABILITIES> 112,534
<BONDS> 58,388
0
0
<COMMON> 397
<OTHER-SE> 364,272
<TOTAL-LIABILITY-AND-EQUITY> 545,009
<SALES> 515,431
<TOTAL-REVENUES> 515,431
<CGS> 330,702
<TOTAL-COSTS> 330,702
<OTHER-EXPENSES> 158,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,259
<INCOME-PRETAX> 25,453
<INCOME-TAX> 12,953
<INCOME-CONTINUING> 12,500
<DISCONTINUED> 0
<EXTRAORDINARY> 2,912
<CHANGES> 0
<NET-INCOME> 9,588
<EPS-BASIC> 0.23
<EPS-DILUTED> 0.22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE HISTORICAL RESULTS OF MOORES FOR FISCAL 1996 HAVE NOT BEEN COMBINED WITH THE
COMPANY'S FISCAL 1996 HISTORICAL RESULTS AS MOORES COMMENCED OPERATIONS ON
DECEMBER 23, 1996 AND ITS REPORTED NET LOSS OF $0.1 MILLION FOR THE 40 DAY
PERIOD FROM DECEMBER 23, 1996 TO JANUARY 31, 1997 IS NOT SIGNIFICANT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> FEB-01-1997 JAN-31-1998 JAN-31-1998 JAN-31-1998 JAN-31-1998
<PERIOD-START> FEB-04-1996 FEB-02-1997 FEB-02-1997 FEB-02-1997 FEB-02-1997
<PERIOD-END> FEB-01-1997 JAN-31-1998 MAY-03-1997 AUG-02-1997 NOV-01-1997
<CASH> 42,099 63,568 31,486 33,292 31,908
<SECURITIES> 15,794 17,678 15,606 13,402 10,435
<RECEIVABLES> 0 0 0 0 0
<ALLOWANCES> 0 0 0 0 0
<INVENTORY> 211,629 257,522 237,238 260,551 296,050
<CURRENT-ASSETS> 283,817 358,079 301,528 323,394 355,107
<PP&E> 123,268 161,369 142,607 148,584 157,311
<DEPRECIATION> 41,316 68,143 57,842 62,156 66,447
<TOTAL-ASSETS> 414,979 500,371 435,192 460,815 495,028
<CURRENT-LIABILITIES> 102,684 123,703 119,106 104,712 132,842
<BONDS> 112,250 107,800 110,214 111,940 110,113
0 0 0 0 0
0 0 0 0 0
<COMMON> 253 264 253 263 264
<OTHER-SE> 191,792 261,093 197,820 236,144 243,949
<TOTAL-LIABILITY-AND-EQUITY> 414,979 500,371 435,192 460,815 495,028
<SALES> 571,651 875,319 178,491 370,731 576,534
<TOTAL-REVENUES> 571,651 875,319 178,491 370,731 576,534
<CGS> 364,442 560,150 117,144 240,344 372,566
<TOTAL-COSTS> 364,442 560,150 117,144 240,344 372,566
<OTHER-EXPENSES> 162,067 240,836 50,896 103,795 161,783
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 1,454 8,464 2,020 4,239 6,488
<INCOME-PRETAX> 43,563 65,869 8,431 22,353 35,697
<INCOME-TAX> 17,836 28,535 3,527 9,440 15,296
<INCOME-CONTINUING> 25,727 37,334 4,904 12,913 20,401
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 25,727 37,334 4,904 12,913 20,401
<EPS-BASIC> 0.68 0.95 0.13 0.34 0.52
<EPS-DILUTED> 0.63 0.93 0.13 0.33 0.52
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 6-MOS 9-MOS 3-MOS
<FISCAL-YEAR-END> JAN-30-1999 JAN-30-1999 JAN-30-1999 JAN-30-1999 JAN-29-2000
<PERIOD-START> FEB-01-1998 FEB-01-1998 FEB-01-1998 FEB-01-1998 JAN-31-1999
<PERIOD-END> JAN-30-1999 MAY-02-1998 AUG-01-1998 OCT-31-1998 MAY-01-1999
<CASH> 31,012 39,235 11,102 13,795 39,297
<SECURITIES> 6,025 13,233 12,854 10,190 4,845
<RECEIVABLES> 0 0 0 0 0
<ALLOWANCES> 0 0 0 0 0
<INVENTORY> 302,717 299,812 308,632 348,408 335,090
<CURRENT-ASSETS> 359,632 371,511 352,766 392,365 401,358
<PP&E> 212,070 175,929 184,483 194,271 221,796
<DEPRECIATION> 88,299 73,813 77,068 82,200 94,895
<TOTAL-ASSETS> 535,076 528,854 512,813 554,672 574,237
<CURRENT-LIABILITIES> 129,008 140,872 115,819 141,033 144,981
<BONDS> 44,870 108,070 104,421 77,627 64,650
0 0 0 0 0
0 0 0 0 0
<COMMON> 392 265 266 392 419
<OTHER-SE> 351,063 272,091 284,753 327,952 354,676
<TOTAL-LIABILITY-AND-EQUITY> 535,076 528,854 512,813 554,672 574,237
<SALES> 1,037,831 229,830 456,410 690,683 258,852
<TOTAL-REVENUES> 1,037,831 229,830 456,410 690,683 258,852
<CGS> 659,997 149,284 292,874 443,496 167,236
<TOTAL-COSTS> 659,997 149,284 292,874 443,496 167,236
<OTHER-EXPENSES> 282,789 64,427 127,109 193,156 81,268
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 7,993 1,946 4,030 6,196 672
<INCOME-PRETAX> 87,052 14,173 32,397 47,835 9,676
<INCOME-TAX> 36,910 6,047 13,882 20,492 5,924
<INCOME-CONTINUING> 50,142 8,126 18,515 27,343 3,752
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 701 0 0 701 2,912
<CHANGES> 0 0 0 0 0
<NET-INCOME> 49,441 8,126 18,515 26,642 840
<EPS-BASIC> 1.21 0.20 0.46 0.66 0.02
<EPS-DILUTED> 1.17 0.20 0.45 0.64 0.02
</TABLE>
