SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended Commission file number
March 30, 1996 0-20052
STEIN MART, INC.
(Exact name of registrant as specified in its charter)
Florida 64-0466198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1200 Riverplace Blvd., Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
(904) 346-1500
(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
--- ---
At May 6, 1996, the latest practicable date, there were 22,166,391 shares
outstanding of Common Stock, $.01 par value.
<PAGE>
STEIN MART, INC.
INDEX TO FORM 10-Q
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets at March 30, 1996, December 30,
1995 and April 1, 1995 3
Statement of Income for the three months ended
March 30, 1996 and April 1, 1995 4
Statement of Cash Flows for the three months ended
March 30, 1996 and April 1, 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
PART II - OTHER INFORMATION 10
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 11
2
<PAGE>
<TABLE>
STEIN MART, INC.
BALANCE SHEET
(In Thousands)
<CAPTION>
March 30, December 30, April 1,
1996 1995 1995
--------- ------------ ---------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 8,057 $ 15,141 $ 6,163
Trade and Other Receivables 1,558 1,311 915
Inventories 138,247 112,961 112,857
Prepaid Expenses and Other Current Assets 2,706 1,955 2,822
-------- -------- --------
Total Current Assets 150,568 131,368 122,757
Property and Equipment, Net 42,424 40,691 33,283
Other Assets 1,411 1,458 2,813
-------- -------- --------
Total Assets $194,403 $173,517 $158,853
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 53,431 $ 47,616 $ 42,358
Accrued Liabilities 12,538 14,622 9,089
Income Taxes Payable 5,445
-------- -------- --------
Total Current Liabilities 65,969 67,683 51,447
Notes Payable to Bank 25,099 1 20,538
Deferred Income Taxes 4,397 4,397 3,324
-------- -------- --------
Total Liabilities 95,465 72,081 75,309
Stockholders' Equity:
Preferred stock - $.01 par value; 1,000,000 shares
authorized; there are no shares outstanding
Common stock - $.01 par value; 50,000,000 shares
authorized 22,157,716 issued and
outstanding at March 30, 1996; 22,365,584 shares
issued and outstanding at December 30, 1995 and
22,459,585 shares issued and outstanding at April 1, 1995 222 224 225
Paid-in Capital 34,223 36,155 37,281
Retained Earnings 64,493 65,057 46,038
-------- -------- --------
Total Stockholders' Equity 98,938 101,436 83,544
-------- -------- --------
Total Liabilities and Stockholders' Equity $194,403 $173,517 $158,853
======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
STEIN MART, INC.
STATEMENT OF INCOME
(Unaudited)
(In Thousands Except Per Share Amounts)
<CAPTION>
For The
Three Months Ended
-----------------------
March 30, April 1,
1996 1995
-------- --------
<S> <C> <C>
Net Sales $108,517 $ 87,709
Cost of Merchandise Sold 83,637 68,646
-------- ---------
Gross Profit 24,880 19,063
Selling, General and Administrative Expenses 27,163 22,149
Other Income, Net 1,641 1,168
-------- ---------
Loss From Operations (642) (1,918)
Interest Expense 282 149
-------- ---------
Loss Before Income Taxes (924) (2,067)
Income Tax Benefit 360 806
-------- ---------
Net Loss $ (564) $ (1,261)
======== =========
Weighted Average Shares Outstanding 23,357 23,409
Loss Per Share $ (0.02) $ (0.05)
======== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
STEIN MART, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
<CAPTION>
For The
Three Months Ended
------------------
March 30, April 1,
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (564) $ (1,261)
Adjustments to Reconcile Net Loss to Net Cash
Used in Operating Activities:
Depreciation and Amortization 1,520 1,156
(Increase) Decrease In:
Trade and Other Receivables (247) 85
Inventories (25,286) (17,913)
Prepaid Expenses and Other Current Assets (751) (955)
Other Assets 47 48
Increase (Decrease) In:
Accounts Payable 5,815 (4,662)
Accrued Liabilities (2,084) (3,690)
Income Taxes Payable (5,445) (5,638)
------ ------
Net Cash Used in Operating Activities (26,995) (32,830)
Cash Flows Used in Investing Activities:
Net Acquisition of Property and Equipment (3,253) (2,366)
Cash Flows from Financing Activities:
Net Borrowings Under Notes Payable to Bank 25,098 20,537
Proceeds from Exercise of Stock Options and
Related Income Tax Benefits 399 48
Purchase of Common Stock (2,333) (520)
------ ----
Net Cash Provided By Financing Activities 23,164 20,065
------ ------
Net Decrease in Cash and Cash Equivalents (7,084) (15,131)
Cash and Cash Equivalents at Beginning of Year 15,141 21,294
------ ------
Cash and Cash Equivalents at End of Period $ 8,057 $ 6,163
======== ==========
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 237 $ 88
Income Taxes Paid 5,750 5,536
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
STEIN MART, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month periods are not necessarily indicative of the results that may be
expected for the entire year. For further information, refer to the financial
statements and footnotes thereto included in the Stein Mart, Inc. annual report
on Form 10-K for the year ended December 30, 1995.
COMMON STOCK REPURCHASE
In February 1996, the Board of Directors authorized the repurchase of an
additional 500,000 shares of the Company's common stock in the open market,
bringing the total repurchases authorized to 1,000,000 shares. During the three
months ended March 30, 1996, the Company repurchased 255,000 shares for
$2,334,000.
EARNINGS PER SHARE
Net income (loss) per share is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding plus the
common stock equivalents related to stock options for each period.
6
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three stores were opened and one store was closed during the first quarter of
this year, bringing to 102 the number of stores in operation this year compared
to 81 stores in operation at the end of the first quarter of 1995.
Net sales for the quarter ended March 30, 1996 were $108.5 million, a 23.7
percent increase over the $87.7 million for the first quarter of 1995.
Comparable store net sales increased 3.2 percent from the first quarter of 1995.
Gross profit for the quarter ended March 30, 1996 increased to $24.9 million, a
30.5 percent increase over the $19.1 million for the first quarter of 1995.
Gross profit as a percent of net sales increased 1.2 percent to 22.9 percent for
the first quarter this year from 21.7 percent for the first quarter last year.
This increase resulted primarily from a slight improvement in markup and
somewhat lower markdowns, partially offset by a small increase in occupancy
costs.
For the quarter ended March 30, 1996 selling, general and administrative
expenses were $27.2 million, or 25.0 percent of net sales, compared to $22.1
million, or 25.3 percent of net sales for the same 1995 quarter. The $5.1
million increase in selling, general and administrative expenses is primarily
due to the additional stores in operation during the first quarter of 1996 as
compared to the number of stores in operation during the first quarter of 1995.
The decrease of 0.3 percent of sales resulted from leveraging of selling
general and administrative expenses.
Other income, primarily from in-store leased shoe departments, increased to $1.6
million for the first quarter of 1996 compared to $1.2 million for the first
quarter of 1995. The increase resulted from the additional stores operated
during the quarter this year and from the fragrance department which became a
leased operation at the beginning of the second quarter of 1995.
Interest expense was $282,000 for the first quarter of 1996 and $149,000 for the
first quarter of 1995. The $133,000 increase in interest expense resulted from
increased borrowings for working capital for the additional stores, partially
offset by lower interest rates than were in effect last year.
The effective tax rate of 39.0 percent remained constant for the first quarter
of both years.
The net loss for the first quarter of 1996 was $564,000 or $0.02 loss per share
compared to a net loss of $1.3 million or $0.05 loss per share for the first
quarter of 1995.
7
<PAGE>
<TABLE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (continued)
The information in the following table is presented as a percentage of net sales
for the periods indicated:
<CAPTION>
Quarter Ended
-------------
3/30/96 4/1/95
------- ------
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Merchandise Sold 77.1 78.3
------- ------
Gross Profit 22.9 21.7
Selling, General and Administrative Expenses 25.0 25.3
Other Income, Net 1.5 1.4
------- ------
Loss from Operations (0.6) (2.2)
Interest Expense .3 0.2
------- ------
Loss before Income Taxes (0.9) (2.4)
Income Tax Benefit 0.4 0.9
------- ------
Net Loss (0.5)% (1.5)%
======= ======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $27.0 million and $32.8 million for
the first quarters of 1996 and 1995, respectively. During the first quarter of
both years inventory levels were increased to provide inventory for the
additional stores in operation and for the Easter selling season. Cash was used
to reduce the net amount of current liabilities by $1.7 in the first quarter of
1996 and $14.0 million in the first quarter of 1995. Based on historical cash
flow results, operating activities are expected to produce positive cash flow
for the year ending December 28, 1996.
8
<PAGE>
STEIN MART, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (continued)
During the first three months of 1996 and 1995, cash flow used in investing
activities was $3.3 million and $2.4 million respectively, for acquisition of
fixtures, equipment, and leasehold improvements for new stores, information
system enhancements and improvements to existing stores. Total capital
expenditures for 1996 are projected to be approximately $15.0 million.
Cash flow from financing activities was $23.2 million for the first quarter of
1996 and $20.1 million for the first quarter of 1995 which reflected in both
periods net borrowing under the Company's revolving credit agreement to meet
seasonal working capital requirements. Also, during this year's first quarter
cash was used to repurchase 255,000 shares of the Company's common stock for
$2.3 million and in last year's first quarter 50,000 shares were repurchased for
$0.5 million.
The Company believes that cash flow generated from operating activities,
combined with the revolving credit agreement and vendor credit will be
sufficient to fund current and long-term capital expenditures and working
capital requirements.
SEASONALITY AND INFLATION
The Company's business is seasonal in nature with the fourth quarter, which
includes the Christmas selling season, historically accounting for the largest
percentage of the Company's net sales and operating income. During the last
three years, the fourth quarter accounted for approximately 37 percent of the
Company's annual net sales and 64 percent of the Company's income from
operations. Accordingly, selling, general and administrative expenses are
typically higher as a percentage of net sales during the first three quarters of
each year.
Inflation affects the costs incurred by the Company in the purchase of
merchandise, the leasing of its stores, and in certain components of its
selling, general and administrative expenses. The Company has been successful in
offsetting the effects of inflation through the control of expenses during the
past three years. However, there can be no assurance that inflation will not
have a material effect in the future.
9
<PAGE>
STEIN MART, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 30, 1996.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Stein Mart, Inc.
Date: May 10, 1996 /s/ John H. Williams, Jr.
------------ -----------------------------------
John H. Williams, Jr.
President, Chief Operating Officer
/s/ James G. Delfs
-----------------------------------
James G. Delfs
Senior Vice President,
Chief Financial Officer
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information
extracted from the condensed consolidated balance sheet and condensed
consolidated statement of income found on the Company's Form 10-Q for the three
months ended March 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 8057
<SECURITIES> 0
<RECEIVABLES> 1558
<ALLOWANCES> 0
<INVENTORY> 138247
<CURRENT-ASSETS> 150568
<PP&E> 66680
<DEPRECIATION> 24256
<TOTAL-ASSETS> 194403
<CURRENT-LIABILITIES> 65969
<BONDS> 0
0
0
<COMMON> 222
<OTHER-SE> 98716
<TOTAL-LIABILITY-AND-EQUITY> 194403
<SALES> 108517
<TOTAL-REVENUES> 110158
<CGS> 83637
<TOTAL-COSTS> 110800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 282
<INCOME-PRETAX> (924)
<INCOME-TAX> (360)
<INCOME-CONTINUING> (564)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (564)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
