<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
October 31, 1996 0-23570
JUST FOR FEET, INC.
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(Exact name of registrant as specified in its charter)
Alabama 63-0734234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
153 Cahaba Valley Parkway North, Birmingham, Alabama 35124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 403-8000
--------------
N/A
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(Former name, former address and former fiscal year, if changed since 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
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Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common Stock, par value $.0001 per share 28,486,851 shares
- ----------------------------------------- -------------------------------
Class Outstanding at December 10, 1996
The following items are amended:
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Just For Feet, Inc. and subsidiaries (the "Company") hereby amends Items 1 and 2
of Part I of its statement Form 10-Q for its third fiscal quarter ended October
31, 1996, as follows:
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------------------------------
October 31, January 31,
1996 1996
Unaudited
ASSETS (Restated)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 57,540,400 $ 96,854,200
Marketable securities available for sale 31,296,400 32,634,200
Accounts receivable, net 6,885,900 3,409,500
Merchandise inventories 92,799,400 56,637,900
Other 2,936,700 4,166,100
------------ ------------
Total current assets 191,458,800 193,701,900
PROPERTY AND EQUIPMENT, NET 44,881,500 23,387,900
REPURCHASED FRANCHISE RIGHTS, NET 3,157,900 3,293,200
MARKETABLE SECURITIES AVAILABLE FOR
SALE, NON-CURRENT 4,261,500 22,647,400
OTHER ASSETS 92,600 549,500
------------ ------------
$243,852,300 $243,579,900
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 55,000,000
Accounts payable $ 13,966,600 22,268,600
Accrued liabilities 3,628,800 2,777,200
Income taxes 1,815,700 3,552,000
Deferred income taxes 681,100
Obligations under capital leases and long-term
debt due within one year 1,539,400 1,119,500
------------ ------------
Total current liabilities 20,950,500 85,398,400
CAPITAL LEASE OBLIGATIONS 2,035,700 1,456,200
LONG-TERM DEBT 5,207,700 5,239,500
DEFERRED LEASE RENTALS 2,446,800 1,580,400
DEFERRED INCOME TAXES 344,900 635,600
------------ ------------
Total liabilities 30,985,600 94,310,100
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - par value $.0001 per share; 70,000,000 shares
authorized; 28,394,436 and 26,298,144 shares issued and
outstanding at October 31, 1996 and January 31, 1996, respectively 2,800 2,600
Paid-in capital 189,628,700 135,124,200
Retained earnings 23,235,200 14,143,000
------------ ------------
Total shareholders' equity 212,866,700 149,269,800
------------ ------------
$243,852,300 $243,579,900
============ ============
The accompanying notes are an integral part of these unaudited financial statements.
-1-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------------- -----------------------------
1996 1995 1996 1995
(Restated) (Restated)
<S> <C> <C> <C> <C>
NET SALES $69,738,800 $34,769,700 $177,268,200 $81,340,900
COST OF SALES 40,299,700 20,173,700 102,263,800 47,075,600
----------- ----------- ------------ -----------
GROSS PROFIT 29,439,100 14,596,000 75,004,400 34,265,300
----------- ----------- ------------ -----------
FRANCHISE FEES AND
ROYALTIES EARNED 161,200 126,000 395,500 342,000
----------- ----------- ------------ -----------
OPERATING EXPENSES:
Store operating 18,116,500 9,663,400 47,456,000 22,578,800
Store opening costs 2,694,600 611,500 8,297,300 1,652,300
General and administrative 2,284,700 1,014,800 5,671,900 2,664,700
----------- ----------- ------------ -----------
Total operating expenses 23,095,800 11,289,700 61,425,200 26,895,800
----------- ----------- ------------ -----------
OPERATING INCOME 6,504,500 3,432,300 13,974,700 7,711,400
INTEREST INCOME 1,697,300 1,020,300 4,081,600 2,185,100
INTEREST EXPENSE (299,400) (173,600) (719,800) (433,300)
----------- ----------- ------------ -----------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 7,902,400 4,279,000 17,336,500 9,463,200
PROVISION FOR INCOME TAXES 2,874,700 1,327,600 6,203,600 2,997,100
----------- ----------- ------------ -----------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING 5,027,700 2,951,400 11,132,900 6,466,100
CUMULATIVE EFFECT ON PRIOR YEARS
(TO JANUARY 31, 1996) OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF
INCOME TAXES 0 0 2,040,700 0
----------- ----------- ------------ -----------
NET INCOME $ 5,027,700 $ 2,951,400 $ 9,092,200 $ 6,466,100
=========== =========== ============ ===========
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $ 0.17 $ 0.11 $ 0.39 $ 0.26
CUMULATIVE EFFECT ON PRIOR
YEARS (TO JANUARY 31, 1996) OF
CHANGE IN ACCOUNTING PRINCIPLE 0 0 0.07 0
----------- ----------- ------------ -----------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ 0.17 $ 0.11 $ 0.32 $ 0.26
=========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 29,763,017 26,347,670 28,866,110 24,783,746
=========== =========== ============ ===========
PROFORMA AMOUNTS ASSUMING THE CHANGE
IN ACCOUNTING IS APPLIED RETROACTIVELY:
NET INCOME $ 2,113,700 $ 5,010,600
=========== ===========
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ 0.08 $ 0.20
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Nine Months Ended
October 31,
----------------------------
1996 1995
(Restated)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 9,092,200 $ 6,466,600
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Cumulative effect of change in accounting principle 2,040,700
Depreciation and amortization 2,822,600 894,200
Amortization of franchise rights 135,300 135,300
Deferred income taxes (265,600) (41,400)
Deferred lease rentals 866,400 476,600
Changes in assets and liabilities providing (using) cash:
Accounts receivable (3,476,400) (529,200)
Merchandise inventories (36,161,500) (19,608,100)
Other assets (1,035,600) (1,969,600)
Accounts payable - trade (8,302,000) 4,852,200
Accrued expenses 851,600 757,500
Income taxes (1,736,300) 879,100
----------- -----------
Net cash used in operating activities (35,168,600) (7,686,800)
----------- -----------
INVESTING ACTIVITIES:
Purchases of marketable securities (27,327,900) (49,429,000)
Maturities and sales of marketable securities 47,051,600 21,603,100
Purchases of property and equipment (23,161,400) (8,799,100)
Other (25,000) (7,200)
----------- -----------
Net cash used in investing activities (3,462,700) (36,632,200)
----------- -----------
FINANCING ACTIVITIES:
Net repayments under credit agreements (55,000,000)
Proceeds from long-term debt 659,100 2,936,800
Principal payments on long-term debt (439,200) (536,000)
Principal payments on capital lease obligations (407,100) (15,700)
Net proceeds from issuance of common stock 52,916,700 65,799,200
Exercise of stock options 1,588,000
----------- -----------
Net cash provided by (used in) financing activities (682,500) 68,184,300
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (39,313,800) 23,865,300
BEGINNING OF PERIOD 96,854,200 36,353,300
----------- -----------
END OF PERIOD $57,540,400 $60,218,600
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
-3-
<PAGE>
JUST FOR FEET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions of Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, which Just For Feet, Inc. (the "Company") considers necessary for a
fair presentation of the financial position and the results of operations for
these periods.
The results of operations for the three and nine months ended October 31, 1996
are not necessarily indicative of the results to be expected for the full year
ending January 31, 1997. For further information, refer to the financial
statements and footnotes thereto for the fiscal year ended January 31, 1996
included in the Company's Form 10-K as filed with the Securities and Exchange
Commission.
RESTATEMENT
In the fourth quarter of fiscal year 1996, the Company decided to change its
method of accounting for store opening costs effective February 1, 1996, which
are costs principally for pre-opening salaries and travel that are incremental
and directly attributable to the opening of a new store. Under the new method of
accounting the Company charges store opening costs to operations in the month
that the store opens. Previously, store opening costs were capitalized and
amortized over the twelve months following the store opening. The cumulative
effect of this change in accounting principle resulted in $2,040,700 ($0.07 per
share) charge to operations for the effect on prior years (to January 31, 1996),
net of income taxes of $1,136,600. This change increased operating expenses for
the three months ended October 31, 1996 by $1,253,600 and decreased income
before the cumulative effect of the change in accounting principle by $805,000.
The effect on the nine month period ended October 31, 1996 was to increase
operating expense by $4,240,000 and to decrease income before the cumulative
effect of the change in accounting principle by $2,722,900.
The accompanying unaudited condensed financial statements for the three and nine
month periods ended October 31, 1996 have been restated to reflect the effects
of the change in accounting principle.
NOTE 2 - LINE OF CREDIT
During July 1996, the Company renewed its revolving bank line of credit
agreement to now expire on July 1, 1997. The line of credit permits the
Company to borrow up to $20,000,000 with interest payable at either the bank's
prime rate or a rate based on LIBOR. Borrowings under the line of credit, if
any, are unsecured.
-4-
<PAGE>
NOTE 3 - STOCKHOLDERS' EQUITY
On May 28, 1996, the Company's shareholders increased the authorized number of
common shares to 70,000,000 and the number of common shares reserved for
issuance under the employees incentive stock option plan to 3,000,000.
In June 1996, the Company completed an offering of common stock in which the
Company sold 1,638,750 shares of common stock at a price of $34.25 for which
net proceeds (after offering costs) to the Company totaled approximately
$52,916,700.
The Company effected three for two stock splits of its common stock in July 1995
and October 1996. All share and per share information in the accompanying
unaudited condensed financial statements have been restated to reflect the
stock splits as if they had occurred as of the beginning of the earliest
period presented.
-5-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Just For Feet, Inc., was founded in 1977 by its current Chairman and Chief
Executive Officer, Harold Ruttenberg, with the opening of a small mall-based
store in Birmingham, Alabama. In 1988, Just For Feet opened its first
superstore adjacent to the Galleria Mall in Birmingham. As a result of the
success and high sales volume generated by the larger store format, since that
time the Company has focused on developing and refining its superstore concept.
As of October 31, 1996, there were 51 Just For Feet stores operating in 12
states, including seven stores operated by the Company's only franchisee. Of
the 44 Company operated stores, 17 have been opened during fiscal 1996. The
Company expects to open a total of 27 new stores during fiscal 1996 and the
first quarter of fiscal 1997. The Company intends to end fiscal 1997 with a
total of 65 Company operated stores. The Company may accelerate or delay the
opening of new stores in any one fiscal quarter.
In addition to its prototype stores, the Company has opened three high-
visibility, high-profile "flagship" stores, including its original Las Vegas
store. The Company has plans to open approximately an additional three flagship
stores in selected locations. Initial capital expenditures associated with
opening such flagship stores are higher than for prototype stores; however, the
Company believes that such increased costs will be offset by additional revenue
generated by the enhanced entertainment and visibility provided by such stores,
and that the overall profitability of such stores will be equivalent to that of
the Company's prototype stores.
In order to access markets too small to support a traditional Just For Feet
superstore, the Company is contemplating the introduction of a smaller store
concept, offering a more limited selection of athletic and outdoor footwear.
Management anticipates that, should it elect to pursue this new concept, it
would be developed either internally or through the acquisition of an existing
footwear retailer currently operating in the manner envisioned for the new
stores. Regardless of the means by which it may be developed, implementation of
this new concept could involve significant start-up costs.
In recent years, the Company has achieved positive comparable store sales
growth on an annual basis. During the first nine months of fiscal 1996,
comparable store sales increased 28.6%. No assurance can be given that
comparable store sales will continue to increase.
For fiscal 1996, the Company adopted a bonus plan for all corporate level
employees. Under the plan, such employees are eligible to receive a year-end
bonus equal to a percentage of their annual salaries based on the Company's per
share operating results in excess of a target level. A maximum of $2.5 million
can be distributed to participants under the plan.
-6-
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, income statement
data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
----------------------------------------------
1996 1995 1996 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0% 100.0%
COST OF SALES 57.8 58.0 57.7 57.9
----- ----- ----- -----
42.2 42.0 42.3 42.1
GROSS PROFIT
FRANCHISE FEES AND ROYALTIES
EARNED .2 0.4 .2 0.4
OPERATING EXPENSES:
Store operating 26.0 27.8 26.8 27.7
Store opening costs 3.9 1.8 4.7 2.0
General and administrative 3.3 2.9 3.2 3.3
----- ----- ----- -----
OPERATING INCOME 9.2 9.9 7.8 9.5
INTEREST INCOME - NET 2.0 2.4 1.9 2.2
----- ----- ----- -----
INCOME BEFORE INCOME TAXES
AND CUMULATIAVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE 11.2 12.3 9.7 11.7
PROVISION FOR INCOME TAXES 4.1 3.8 3.5 3.7
----- ----- ----- -----
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 7.1 8.5 6.2 8.0
CUMULATIVE EFFECT ON PRIOR
YEARS (TO JANUARY 31, 1996)
OF CHANGE IN ACCOUNTING
PRINICPLE, NET OF INCOME TAXES -- -- 1.2 --
----- ----- ----- -----
NET INCOME 7.1% 8.5% 5.0% 8.0%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED OCTOBER 31, 1996 COMPARED TO THREE MONTHS ENDED OCTOBER 31,
1995
Net Sales. Net sales increased $35.0 million or 100.6% to $69.7 million in
the third quarter of fiscal 1996 compared to net sales of $34.8 million for the
third quarter of fiscal 1995. This increase was primarily attributable to 20
new stores opened since October 31, 1995 and an increase in comparable store
sales of 18.5%. The calculation of comparable store sales included a total of 24
stores at October 31, 1996. The comparable store sales increase was due
primarily to a 28.0% increase in the number of footwear units sold.
Gross Profit. Gross profit as a percentage of net sales increased to 42.2%
for the third quarter of fiscal 1996 from 42.0% for the third quarter of fiscal
1995.
Store Operating Expenses. Store operating expenses increased $8.5 million or
87.5% to $18.1 million from $9.7 million in the third quarter of fiscal 1995.
The increase was primarily attributable to the operating expenses of the 20
stores opened since October 31, 1995. As a percentage of net sales, store
operating expenses decreased to 26% in the third quarter of fiscal 1996 from
27.8% in the third quarter of fiscal 1995.
-7-
<PAGE>
Store Opening Costs. As discussed in Note 1 to the Company's unaudited
financial statements, effective February 1, 1996, the Company changed its method
of accounting for store opening costs, which are costs principally for pre-
opening salaries and travel that are incremental and directly attributable to
the opening of a new store. Under the new method, the Company charges these
costs to operations in the month that the store opens. Previously, store
opening costs were capitalized and amortized over the twelve months following
the store opening. The accompanying condensed financial statements as of and
for the three and nine month periods ended October 31, 1996 have been restated
to reflect this change as though it occurred as of February 1, 1996. Had the
statement of income for the three month period ended October 31, 1995 been
restated for the effects of this change, store opening costs for the three
months ended October 31, 1995 would have increased from the $611,500 as reported
in the accompanying statement of operations to $1,865,800. The increase from
the pro forma 1995 amount of $1,865,800 to the restated 1996 amount of
$2,694,600 resulted from increased store openings and an increase in the
dedicated corporate staff to support new store openings.
General and Administrative Expense. General and administrative expense
increased $1.3 million or 125.1%, from $1.0 million in the third quarter of
fiscal 1995, and increased as a percentage of net sales in the third quarter of
fiscal 1996 to 3.3% from 2.9% in the third quarter of fiscal 1995. The increase
was primarily due to increased personnel and infrastructure costs associated
with store operations and management information systems.
Operating Income. Operating income increased to $6.5 million in the third
quarter of fiscal 1996 from $3.4 million ($2.2 million on a pro forma basis) in
the third quarter of fiscal 1995. As a percentage of net sales, operating
income increased to 9.2% in the third quarter of fiscal 1996 from 6.3% on a pro
forma basis in the third quarter of fiscal 1995.
Net Interest Income. Net interest income increased $551,000 to $1.4 million
in the third quarter of fiscal 1996 compared to $847,000 in the third quarter of
fiscal 1995. This increase was primarily attributable to investment income
realized from investing the proceeds of public offerings of the Company's common
stock in September 1995 and June 1996. See "-- Liquidity and Capital
Resources."
Income Before Cumulative Effect of Change in Accounting Principle and Net
Income. As a result of the above factors, income before the cumulative effect of
the change in accounting principle for the quarter ended October 31, 1996
increased to $5.0 million compared to $3.0 million ($2.1 million on a pro forma
basis) for the quarter ended October 31, 1995.
NINE MONTHS ENDED OCTOBER 31, 1996 COMPARED TO NINE MONTHS ENDED OCTOBER 31,
1995
Net Sales. Net sales increased $95.9 million or 117.9% for the first nine
months fiscal 1996 to $177.3 million compared to net sales of $81.3 million for
the same period of fiscal 1995. This increase was primarily attributable to 20
new stores opened since October 31, 1995 and an increase in comparable store
sales of 28.6%. The calculation of comparable store sales included a total of 24
stores at October 31, 1996. The comparable store sales increase was due
primarily to a 40.2% increase in the number of footwear units sold.
Gross Profit. Gross profit as a percentage of net sales increased slightly
to 42.3% in the first nine months of fiscal 1996 from 42.1% in the same period
of fiscal 1995.
Store Operating Expenses. Store operating expenses increased $24.9 million
or 110.0% to $47.5 million in the first nine months of fiscal 1996 from $22.6
million in the first nine months of fiscal 1995. This increase was primarily
attributable to the operating expenses of the 20 stores opened since October 31,
1995. As a percentage of net sales, store operating expenses decreased to 26.8%
in the first nine months of fiscal 1996 from 27.7% in the first nine months of
fiscal 1995.
-8-
<PAGE>
Store Opening Costs. After considering the effects of the change in
accounting (see Note 1 to the accompanying unaudited financial statements),
store opening costs for the nine months ended October 31, 1996 increased to $8.3
million. Had the statement of income for the nine months ended July 31, 1995
been restated, store opening expense would have increased from the $1.6 million
as reported in the accompanying statement of income to $3.8 million. The
increase from the pro forma amount of $3.8 million in 1995 to the restated
amount of $8.3 million in 1996 resulted from increased store openings and an
increase in the dedicated corporate staff to support new store openings.
General and Administrative Expense. General and administrative expense
increased $3.0 million or 114.0% but decreased as a percentage of net sales in
the first nine months of fiscal 1996 to 3.2% from 3.3% in the first nine months
of fiscal 1995. The dollar increase was primarily due to increased personnel
and infrastructure costs associated with store operations and management
information systems, as well as an accrual of amounts related to the corporate
bonus plan. The percentage decrease resulted from greater economies of scale in
the Company's operations.
Operating Income. Operating income increased to $14.0 million in the first
nine months of fiscal 1996 from $7.7 million ($5.5 million on a pro forma basis)
in the first nine months of fiscal 1995 and increased as a percentage of net
sales to 7.9% from 6.8% on a pro forma basis in the comparable prior year
period. This increase was primarily due to 20 new stores opened since October
31, 1995.
Net Interest Income. Net interest income increased $1.6 million to $3.4
million in the first nine months of fiscal 1996 compared to $1.8 million in the
first nine months of fiscal 1995. The increase was primarily attributable to
investment income realized from investing the proceeds of public offerings of
the Company's common stock in September 1995 and June 1996. See "-- Liquidity
and Capital Resources."
Income Before Cumulative Effect of Change in Accounting. As a result of the
above factors, income before the cumulative effect of the change in accounting
principle for the nine months ended October 31, 1996 increase to $11.1 million
compared to $6.5 million ($5.0 million on a pro forma basis) for the nine months
ended October 31, 1995. The cumulative effect on prior years (to January 31,
1996) totaled $2.0 million net of income taxes of $1.1 million.
LIQUIDITY AND CAPITAL RESOURCES
Just For Feet's primary sources of working capital are the proceeds of three
public offerings of common stock (January 1995, September 1995 and June 1996)
and the Company's ability to borrow under its line of credit. The Company had
working capital of $175.3 million and $108.3 million as of October 31, 1996 and
January 31, 1996, respectively. The principal use of working capital has been
to purchase inventory, equipment and fixtures. During the first nine months of
fiscal 1996, the Company acquired property and equipment totaling $23.2 million
to open 17 new stores and to support its continued growth. The Company's short
term operational cash requirements are not highly seasonal. The Company had
$88.9 million in cash and short-term marketable securities as of October 31,
1996.
In September 1995, the Company completed a public offering of 3,150,000
shares of common stock at $22.00 per share. Net proceeds of approximately $65.6
million are being used to acquire fixed assets and inventory for the opening of
new stores. A portion of such net proceeds was also used to upgrade and expand
the Company's management information systems.
In June 1996, the Company completed a public offering of 1,638,750 shares of
common stock at $34.25 per share. Net proceeds of approximately $52.9 million
are being used to acquire fixed assets and inventory for the opening of new
stores and for general corporate purposes.
-9-
<PAGE>
As of October 31, 1996, the Company had no borrowings under its revolving
bank line of credit. The line of credit, which expires July 1, 1997, permits
the Company to borrow up to $20.0 million for general working capital purposes.
Borrowings under such line of credit bear interest at either the bank's prime
rate (8.25% at October 31, 1996) or a rate based on LIBOR, and are unsecured.
The line of credit contains certain financial covenants and other restrictions.
The Company also has several lease arrangements with leasing companies that the
Company uses to finance certain store fixtures, point-of-sale equipment and
management information systems.
Just For Feet's primary capital requirements are for the openings of new
superstores. The Company estimates that the total cash required to open a new
15,000 to 20,000 square foot prototype superstore, including store fixtures and
equipment, leasehold improvements, and pre-opening costs, typically ranges from
$1.2 to $2.2 million, depending on the amount of vendor and landlord assistance.
During fiscal 1996 and the first quarter of fiscal 1997, the Company expects to
open a total of 27 new stores. The Company intends to end fiscal 1997 with a
total of 65 Company operated stores. Of the new stores to be opened,
approximately three are expected to be flagship stores.
The Company is currently constructing a new corporate headquarters facility
on approximately 25 acres of land in Birmingham, Alabama purchased for
approximately $1,150,000. The Company intends to construct an approximately
50,000 square foot, three story building on the site. The Company currently
estimates total construction costs to be between $6 million and $8 million, of
which the Company will finance approximately $5 million with a construction line
of credit. Construction of the corporate headquarters facility began in the
third quarter of the current fiscal year and is scheduled for completion during
fiscal 1997.
Although the Company has no current commitments with respect to the
acquisition of any entity, the Company has explored and continues to explore
acquisitions, including acquisitions of entities employing an alternative format
to that of Just For Feet. The Company may utilize an acquisition to develop a
new smaller store concept currently being considered by management. Regardless
of whether the Company utilizes an acquisition to implement its new concept or
develops the concept internally, the Company may incur significant start-up
costs. In addition, to support the Company's continued growth, the Company
plans to continue to invest in information systems and personnel. Except as
described above, the Company currently is not planning any major expenditures
other than new store openings and believes that the proceeds of its public stock
offerings, internally generated funds, cash on hand and its lines of credit will
be adequate to fund its anticipated needs through at least the end of fiscal
1997.
SEASONALITY
The Company does not experience significant seasonal fluctuations in its
business. However, the highest sales periods for the Company are the spring,
back-to-school and Christmas selling seasons. The Company also generally
experiences lower gross margins during January and February due to retail
markdowns taken to clear seasonal merchandise. Quarterly results may fluctuate
materially depending on the timing of new store openings and related pre-opening
expenses, net sales contributed by new stores and increases or decreases in
comparable store sales.
IMPACT OF INFLATION
The Company does not believe that inflation has had a material, adverse
effect on net sales or results of operations. The Company has generally been
able to pass on increased costs through increases in selling prices.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits. The following exhibit is filed with this report.
18 Letter from Deloitte & Touche LLP regarding change in
Accounting Principle
(b) Reports on Form 8-K. No report on Form 8-K was filed during the
quarter ended October 31, 1996.
-11-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
JUST FOR FEET, INC.
Dated: April 28, 1997 By: /s/ Harold Ruttenberg
-------------------------------
Harold Ruttenberg
Chairman, President and Chief
Executive Officer
Dated: April 28, 1997 By: /s/ Robert C. Wabler
------------------------------
Robert C. Wabler
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Item
Number
- --------
18 Letter from Deloitte & Touche LLP Regarding Change in Accounting
Principle
<PAGE>
EXHIBIT 18
April 24, 1997
Just For Feet, Inc.
153 Cahaba Valley Parkway North
Pelham, Alabama 35124
Dear Sirs:
We have audited the financial statements of Just For Feet, Inc., as of
January 31, 1997 and 1996, and for each of the three years in the period ended
January 31, 1997, included in your Annual Report on Form 10-K to the Securities
and Exchange Commission and have issued our report thereon dated March 17, 1997.
Note 1 to such financial statements contains a description of your adoption
during the year ended January 31, 1997 of a policy to defer store opening costs
and then expense all such costs at the date of store opening rather than to
defer and then amortize all such costs over the twelve month period following a
store opening. In our judgment, such change is to an alternative accounting
principle that is preferable under the circumstances.
Yours truly,
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JAN-31-1997 JAN-31-1996
<PERIOD-START> FEB-01-1996 FEB-01-1995
<PERIOD-END> OCT-31-1997 OCT-31-1996
<CASH> 57,540,400 96,854,200
<SECURITIES> 35,557,900 55,281,600
<RECEIVABLES> 6,885,900 3,409,500
<ALLOWANCES> 0 0
<INVENTORY> 92,799,400 56,637,900
<CURRENT-ASSETS> 191,458,800 193,701,900
<PP&E> 50,449,700 26,182,000
<DEPRECIATION> 5,568,200 2,794,100
<TOTAL-ASSETS> 243,852,300 243,579,900
<CURRENT-LIABILITIES> 20,950,500 85,398,400
<BONDS> 0 0
0 0
0 0
<COMMON> 2,800 2,600
<OTHER-SE> 212,863,900 149,267,200
<TOTAL-LIABILITY-AND-EQUITY> 243,852,300 243,579,900
<SALES> 177,268,200 81,340,900
<TOTAL-REVENUES> 181,745,300<F1> 83,868,100<F1>
<CGS> 102,263,800 47,075,600
<TOTAL-COSTS> 158,017,100<F2> 71,306,300<F2>
<OTHER-EXPENSES> 5,671,900 2,644,700
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 719,800 433,300
<INCOME-PRETAX> 17,336,500 9,463,200
<INCOME-TAX> 6,203,600 2,997,100
<INCOME-CONTINUING> 11,132,900 6,466,600
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 2,040,700 0
<NET-INCOME> 9,092,200 6,466,100
<EPS-PRIMARY> $0.32 $0.26
<EPS-DILUTED> $0.32 $0.26
<FN>
<F1>Includes sales, franchise fees and royalties earned and interest income.
<F2>Includes CGS, store operating and store opening costs.
</FN>
</TABLE>
