FORM 10-Q EXHIBIT INDEX ON
PAGE 10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 0-22682
CARSON PIRIE SCOTT & CO.
(Exact name of registrant as specified in its charter)
ILLINOIS 37-0175980
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
331 West Wisconsin Avenue, Milwaukee, Wisconsin
53203
(Address of principal executive offices)
(Zip Code)
414-347-4141
(Registrant's telephone number, including area code)
____________________________________________
(Former name, former address and former fiscal year,
if changed from last report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
contribution of securities under a plan confirmed by a court.
Yes X No
Number of shares outstanding of each of the issuer's classes
of common stock, as of May 4, 1996:
Common Stock, $.01 par value 16,240,500 shares, exclusive of
21,555,068 shares held by
subsidiaries of the registrant
Page 1 of 12
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Balance Sheets
As of May 4, 1996
(Unaudited)
(dollars in thousands)
May 4, February 3,
Assets 1996 1996
- -------------------- -------- -----------
Current Assets:
Cash and cash equivalents $ 34,092 44,384
Accounts receivable, net 223,901 232,257
Merchandise inventories 191,641 178,632
Marketable securities - 25,140
Other current assets 20,476 17,575
---------- ----------
Total current assets 470,110 497,988
Property, fixtures and
equipment, net 145,369 140,851
Net deferred tax assets 40,462 37,789
Other assets 24,823 15,474
--------- ---------
$ 680,764 692,102
========= ==========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Current maturities of
long-term debt $ 3,162 3,081
Accounts payable 67,034 47,492
Accrued expenses 89,684 86,105
------- -------
Total current liabilities 159,880 136,678
Long-term debt,
less current maturities 155,046 192,705
Other liabilities 44,828 42,903
------- -------
Total liabilities 359,754 372,286
------- -------
Shareholders' equity:
Common stock 162 164
Paid-in capital 168,977 172,183
Unamortized stock compensation (377) (453)
Unrealized gain on investments 597 5,957
Retained earnings 151,651 141,965
------- -------
Total shareholders' equity 321,010 319,816
------- -------
$ 680,764 692,102
======= =======
See accompanying notes to consolidated financial statements.
Page 2 of 12
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Statements of Operations
Three months ended May 4, 1996 and April 29, 1995
(Unaudited)
(dollars in thousands, except per share amounts)
Three months ended
----------------------
May 4, April 29,
1996 1995
------ ---------
Net sales $ 236,769 249,356
Cost of sales (153,742) (169,685)
Selling, general and
administrative expenses (71,240) (70,506)
Depreciation, amortization
and other (4,125) (3,061)
Minnesota disposition gain - 55,000
------- --------
Income from operations 7,662 61,104
Interest expense, net (3,744) (3,804)
Gain on sale of
marketable securities 14,892 -
Other expense (2,827) -
-------- -------
Income before income taxes 15,983 57,300
Income tax expense (6,297) (22,920)
-------- --------
Net income $ 9,686 34,380
======== ========
Primary net income
per share $ 0.58 1.84
======= ========
Weighted average number
of common and common
equivalent shares 16,800,488 18,696,578
========== ==========
See accompanying notes to consolidated financial statements.
Page 3 of 12
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Consolidated Statements of Cash Flows
Three months ended May 4, 1996 and April 29, 1995
(Unaudited)
(dollars in thousands)
Three months ended
-----------------------
May 4, April 29,
1996 1995
------- ---------
Net cash provided by
operating activities $ 15,900 30,479
------ ------
Cash flows from investing activities:
Proceeds from sale of
marketable securities 31,094 -
Purchases of property
and equipment (8,351) (6,270)
Purchase of leasehold interests (4,369) -
Proceeds from disposition
of assets 603 70,801
------- -------
Net cash provided by
investing activities 18,977 64,531
------- -------
Cash flows from financing activities:
Stock options exercised 197 1
Repurchase of common stock (3,383) -
Repayments of long-term
debt and other obligations (639) (413)
Net repayments under
receivables facility (37,000) (23,907)
Deferred financing costs (194) -
Termination of interest rate
floor agreements (4,150) -
------- -------
Net cash used by
financing activities (45,169) (24,319)
Cash flow effect of
reorganization activities:
Change in reorganization payables - (157)
------ -------
Net cash used by
reorganization activities - (157)
------- -------
Net increase (decrease) in
cash and cash equivalents (10,292) 70,534
Cash and cash equivalents at
beginning of the period 44,384 30,244
------- -------
Cash and cash equivalents
at end of the period $ 34,092 100,778
======= =======
See accompanying notes to consolidated financial statements.
Page 4 of 12
<PAGE>
Carson Pirie Scott & Co. and Subsidiaries
Notes to Consolidated Financial Statements
May 4, 1996
(Unaudited)
(dollars in thousands)
(1) The Company
Carson Pirie Scott & Co.(CPS) and its subsidiaries (together, the
Company) operate 51 traditional department stores and three
furniture stores which are located in Illinois, Wisconsin,
Indiana and Minnesota.
(2) Opinion of Management
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments,
consisting of normal recurring accruals, considered necessary to
present fairly the Company's consolidated financial statements.
All intercompany balances and transactions have been
eliminated in consolidation. The accompanying consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto filed in
CPS's annual report on Form 10-K for the year ended
February 3, 1996.
The results of operations for the three months ended May 4, 1996
are not necessarily indicative of the results to be expected for
the full year due to the seasonal nature of the retail industry.
(3) Marketable Securities
During the three months ended May 4, 1996, the Company sold
1,026,550 shares of Proffitt's, Inc. (Proffitt's) common stock
for $31.1 million and realized a gain of $14.9 million.
(4) New Store Acquisitions
In February 1996, the Company purchased a department store
located in Aurora, Illinois from The May Department Stores
Company. In March 1996, the Company purchased the leasehold
interests for two department stores located in Rockford, Illinois
from Younkers, Inc.
(5) Other Expense
The Company made a $2.5 million cash contribution to the Carson
Pirie Scott Foundation.
Page 5 of 12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial information, discussion, and analysis which follow
are based upon and should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto.
Results of Operations
Comparison of the three months ended May 4, 1996 and April 29, 1995
Net sales. Net sales were $236.8 million for the three months
ended May 4, 1996 as compared to $249.4 million for the three
months ended April 29, 1995, a decrease of $12.6 million or 5.1%.
The decrease was due to the Company's sale of eight of its nine
Minnesota stores (the Minnesota Closed Stores) in March 1995. The
Minnesota Closed Stores had sales of $25.0 million during the
three months ended April 29, 1995. On a comparable store basis,
net sales for the period increased by 4.6%. The five stores
which the Company renovated in 1995 recorded a 31.1% sales
increase for the three months ended May 4, 1996. Sales of
Feminine Apparel and Men's Apparel increased at rates of 9.7%
and 10.7%, respectively, for the quarter.
Gross margin. Gross margin was $83.0 million for the 1996 three-
month period versus $79.7 million for the 1995 three-month
period, an increase of $3.3 million or 4.1%. The increase in
gross margin dollars was due to the increase in comparable store
sales. Gross margin as a percentage of net sales was 35.1% for
the 1996 three-month period compared to 32.0% for the comparable
prior period. Excluding the Minnesota Closed Stores clearance
sales, the prior year rate is 35.5%. Clearance sales at the
Minnesota Closed Stores did not contribute to gross margin in the
1995 period.
Selling, general and administrative expenses. Selling, general
and administrative expenses were $71.2 million for the 1996
three-month period versus $70.5 million for the 1995 three-month
period, an increase of $0.7 million or 1.0%. Selling, general and
administrative expenses as a percentage of sales were 30.1% and
31.4% (excluding the Minnesota Closed Stores clearance sales) for
the quarters ended May 4, 1996 and April 29, 1995, respectively.
The rate improvement resulted from maintaining expenses
consistent with the prior year while increasing comparable store
sales.
Depreciation, amortization and other. Depreciation, amortization
and other expense increased to $4.1 million for the three months
ended May 4, 1996 from $3.1 million for the three months ended
April 29, 1995. Depreciation expense rose $0.9 million for the
1996 period reflecting the increased carrying value of property,
fixtures and equipment due to the Company's capital
expenditure program.
Gain on sale of marketable securities. During the three months
ended May 4, 1996, the Company sold 1,026,550 shares of
Proffitt's common stock for $31.1 million and realized a gain of
$14.9 million.
Page 6 of 12
<PAGE>
Other expense. The Company made a $2.5 million cash contribution
to the Carson Pirie Scott Foundation.
Interest expense, net. Interest expense, net was $3.7 million
for the three month period ended May 4, 1996 as compared to $3.8
million for the three month period ended April 29, 1995.
Income tax expense. Income tax expense for the three months
ended May 4, 1996 and April 29, 1995 was $6.3 million and $22.9
million, respectively, resulting in effective income tax rates of
39.4% and 40.0%, respectively.
Liquidity and Capital Resources
The Company's cash and cash equivalents position on May 4, 1996
totaled $34.1 million and outstanding debt totaled $158.2
million, resulting in a net debt position (Net Debt) of $124.1
million. Net Debt is outstanding debt less cash and cash
equivalents. The Company believes Net Debt is a useful
measure of its liquidity position given the Company's ability to
apply cash to its outstanding debt. For the three months ended
May 4, 1996, Net Debt declined $27.3 million, which is
attributable primarily to the proceeds of $31.1 million from the
sale of the Company's 1,026,550 shares of Proffitt's common stock.
A subsidiary of the Company has the right to borrow, subject to
certain limitations, including compliance with certain
restrictive covenants, up to $216.0 million under a receivables
facility. As of May 4, 1996, borrowings under the receivables
facility totaled $107.0 million. The receivables facility
expires July 1998. In addition, the Company has the right to
borrow, subject to certain limitations, up to $150.0 million
under a working capital facility. The working capital facility
had outstanding letters of credit for $19.4 million as of May 4,
1996, which reduce availability. No cash borrowings were
outstanding under the working capital facility during the
three months ended May 4, 1996. In May 1996, the working capital
facility was replaced with a similar facility that expires
May 1999.
In fiscal 1996, the Company anticipates spending $60 million for
capital expenditures which will be allocated as follows: store
programs of $26 million, new store acquisitions and renovations
of $25 million, technology programs of $4 million and other
programs of $5 million. Store programs include the completion of
five store renovations. New store acquisitions and renovations
include the three stores acquired in the first quarter of fiscal
1996 and a freestanding furniture store.
As of February 3, 1996, the Company had federal and state net
operating loss (NOL) carryforwards of approximately $138 million.
Although subject to limitation, the future utilization of the NOL
carryforwards and other tax benefits will enable the Company to
reduce its cash requirements for income tax payments in the next
several fiscal years from that which would otherwise be payable.
Page 7 of 12
<PAGE>
The Company believes that it will have sufficient funds available
from cash on hand, cash from operations, the receivables facility
and the working capital facility to satisfy the Company's needs
for working capital, planned capital expenditures, debt service
and operations during the next several fiscal years. However,
the Company can give no assurance that the Company's future
operating performance, net sales and cash flows, all of which are
subject to financial, general and regional economic, competitive
and other factors affecting the Company, many of which are beyond
its control, will be adequate to generate sufficient funds to
meet the Company's needs during the next several fiscal years.
Seasonality and Inflation
The Company's business is seasonal in nature with a high
proportion of sales and net income generated in November and
December. Over the last several years, the Company's customers
have demonstrated an inclination to buy closer to the time of
need. In response, the Company has been adjusting the flow of
merchandise to better anticipate customer buying patterns.
Working capital requirements fluctuate during the year,
increasing somewhat in mid-summer in anticipation of the fall
merchandising season and increasing substantially prior to the
Christmas season when the Company must carry significantly higher
inventory levels. Inflationary pressures on the cost of
merchandise inventory and operating expenses have been low, and
historically, have been offset by a combination of increased
comparable-store sales and improved productivity.
Page 8 of 12
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
----------
See Exhibit Index on page E-1 of this Quarterly
Report on Form 10-Q.
(b) Reports on Form 8-K
--------------------------
The following reports on Forms 8-K were filed on the dates
indicated below during the quarter ended May 4, 1996:
February 9, 1996 Reported under Item 5 that CPS (a) amended
and restated its Amended and Restated By-
laws and (b) increased the size of its Board
of Directors from five to seven members.
March 8, 1996 Reported under Item 5 CPS's earnings for the
fourth quarter.
March 28, 1996 Reported under Item 5 that the Board of
Directors of CPS (a) authorized the purchase
of up to $20 million of its common shares
over the next two years in the open market
and also through negotiated transactions and
(b) elected Stanton J. Bluestone as Chairman
of the Board.
April 8, 1996 Reported under Item 5 that CPS amended and
restated its Amended and Restated By-laws.
SIGNATURE
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 thereunder duly authorized.
Date: June 14, 1996
Carson Pirie Scott & Co.
/s/ David J. Biese
----------------------------
David J. Biese
Controller (chief accounting officer
and authorized officer)
Page 9 of 12
<PAGE>
EXHIBIT INDEX
Copies of documents listed below which are identified with an
asterisk (*)have previously been filed with the Securities and
Exchange Commission (the Commission) as exhibits to registration
statements or reports filed with the Commission and are
incorporated into this Quarterly Report on Form 10-Q by
reference and made a part hereof. The exhibit number and the
file number of each document previously filed and incorporated
into this Quarterly Report on Form 10-Q by reference are set
forth below. Exhibits not identified with an asterisk are filed
with this Quarterly Report on Form 10-Q.
Exhibit Sequential Page
Number Description Numbers
- --------- --------------- --------------
11.1 Computation of
Per Share Earnings. 11
27 Financial Data Schedule. 12
Page 10 of 12
EXHIBIT 11.1
Carson Pirie Scott & Co. and Subsidiaries
Computation of Per Share Earnings
(dollars in thousands, except per share amounts)
Three months ended
------------------------------
May 4, 1996 April 29, 1995
------------------------------
Net income $9,686 $34,380
========= =========
Primary:
Weighted average number of
common shares outstanding 16,325,904 18,393,730
Weighted average number of
common share equivalents--
stock options 474,584 302,848
----------- ---------
Total common and
common share equivalents 16,800,488 18,696,578
----------- -----------
Primary net income per share $0.58 $1.84
========== ==========
Fully Diluted:
Weighted average number of
common shares outstanding 16,325,904 18,393,730
Weighted average number of
common share equivalents--
stock options 531,968 302,848
---------- ---------
Total common and common
share equivalents 16,857,872 18,696,578
----------- -----------
Fully diluted net
income per share $0.57 $1.84
=========== ===========
Primary net income per share was computed using the treasury
stock method, assuming common share purchases at the average
market price of the common shares for the period.
Fully diluted net income per share was computed using the
treasury stock method, assuming common share purchases at the
greater of the average market price of the common shares for the
period or the ending price of the common shares.
Page 11 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MAY 4, 1996 AND
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 4, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> MAY-04-1996
<CASH> 34,092
<SECURITIES> 0
<RECEIVABLES> 223,901
<ALLOWANCES> 0
<INVENTORY> 191,641
<CURRENT-ASSETS> 470,110
<PP&E> 145,369
<DEPRECIATION> 0
<TOTAL-ASSETS> 680,764
<CURRENT-LIABILITIES> 159,880
<BONDS> 0
0
0
<COMMON> 162
<OTHER-SE> 320,848
<TOTAL-LIABILITY-AND-EQUITY> 680,764
<SALES> 236,769
<TOTAL-REVENUES> 236,769
<CGS> 153,742
<TOTAL-COSTS> 153,742
<OTHER-EXPENSES> 75,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,744
<INCOME-PRETAX> 15,983
<INCOME-TAX> 6,297
<INCOME-CONTINUING> 9,686
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,686
<EPS-PRIMARY> .58
<EPS-DILUTED> .57
</TABLE>
