United States Securities and Exchange Commission
Washington, DC 20549
FORM 10 - Q
x Quarterly report pursuant to Section 13 or 14(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 Exchange
Act of 1934
Commission File Number 33-76282
Jos. A. Bank Clothiers, Inc.
Delaware 5611 36-3189198
(State of other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation or Classification Number)
organization) Code Number)
500 Hanover Pike, Hampstead, MD 21074-2095
none
(Former name or former address, 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 [ ]
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of June 11, 1996
Common stock. $.01 par value 6,790,152
<PAGE>
Jos. A. Bank Clothiers, Inc.
Index
Part I. Financial Information Page No.
Item 1. Financial Statements
Condensed Consolidated Statements 3
of Income (Loss) --Three months ended
May 4, 1996 and April 29, 1995
Condensed Consolidated Balance 4
Sheets--as of May 4, 1996 and February 3, 1996
Condensed Consolidated Statements 5
of Cash Flows--Three months ended
May 4, 1996 and April 29, 1995
Notes to Condensed Consolidated 6-7
Financial Statements
Item 2. Management's Discussion and Analysis 8-10
of Results of Operations and
Financial Condition
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY
Condensed consolidated statements of income (loss)
(In thousands except per share data)
(Unaudited)
Three Months Ended
May 4 April 29
1996 1995
Net sales (Note 1) $ 37,346 $ 44,423
Costs and expenses:
Cost of goods sold 19,665 27,973
General and administrative 4,036 5,324
Sales and marketing 12,557 17,294
36,258 50,591
Operating income (loss) 1,088 (6,168)
Interest expense, net 715 722
Income (loss) before provision
(benefit) for income taxes 373 (6,890)
Provision (benefit) for income taxes 145 (2,687)
Net income (loss) $228 ($4,203)
Per share information:
Net income (loss) per share $0.03 ($0.62)
Weighted average number of
shares outstanding 6,791 6,790
See accompanying notes.
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<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY
Condensed consolidated balance sheets
(In thousands) (Unaudited)
May 4, February 3,
1996 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 647 $ 644
Accounts receivable 5,986 3,866
Inventories:
Raw materials 2,344 5,292
Work-in-process 2,488 2,331
Finished goods 35,888 35,650
Total inventories 40,720 43,273
Prepaid expenses and other
current assets 3,801 4,333
Deferred and refundable income taxes 2,200 5,200
Total current assets 53,354 57,316
Property, plant and equipment,
at cost 48,871 48,871
Accumulated depreciation and
amortization (24,218) (23,200)
Net property, plant and equipment 24,653 25,671
Deferred income taxes 5,091 5,967
Other assets 1,790 1,717
Total Assets $ 84,888 $ 90,671
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,666 $ 8,929
Accrued expenses 10,127 10,896
Current portion of long-term debt and other 1,727 1,769
Total current liabilities 18,520 21,594
Long-term liabilities 30,695 33,632
Total liabilities 49,215 55,226
Shareholders' equity:
Common stock 70 70
Additional paid-in capital 56,333 56,333
Accumulated deficit (18,810) (19,038)
37,593 37,365
Less treasury stock (1,920) (1,920)
Total shareholders' equity 35,673 35,445
Total liabilities and shareholders' equity $ 84,888 $ 90,671
See accompanying notes.
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<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY
Condensed consolidated statements of cash flows
(In thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 4, April 29,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 228 $ (4,203)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Deferred taxes 3,876 --
Depreciation and amortization 992 1,156
Net (increase) decrease in operating
working capital (1,910) 162
Net cash provided by (used in) operating activities 3,186 (2,885)
Cash flows from investing activities:
Additions to property, plant and equipment (159) (562)
Proceeds from disposal of assets 97 --
Net cash flows (used in) investing activities (62) (562)
Cash flows from financing activities:
Borrowings (repayments) under long-term revolving loan
agreement, net (2,679) 3,090
Changes in long-term debt (300) (265)
Payments related to debt financing (142) (75)
Net cash (used in) provided by financing activities (3,121) 2,750
Net increase (decrease) in cash and cash equivalents 3 (697)
Cash and cash equivalents - beginning of period 644 737
Cash and cash equivalents - end of period $ 647 $ 40
======== =========
</TABLE>
See accompanying notes.
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<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/4/96
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Jos. A. Bank Clothiers, Inc. (the Company) is a manufacturer and
nationwide retailer of classic men's clothing through conventional
retail stores and catalog direct marketing. In 1995, the Company
discontinued its women's product line to concentrate solely on its
men's business. Sales from the women's product line were $8.2 million
in the first quarter of 1995.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
The results of operations for the interim periods shown in this report
are not necessarily indicative of results to be expected for the fiscal
year. In the opinion of management, the information contained herein
reflects all adjustments necessary to make the results of operations for
the interim periods a fair statement of such operations. These
adjustments are of a normal recurring nature.
Certain notes and other information have been condensed or omitted from
the interim financial statements presented in this Quarterly Report on
Form 10-Q. Therefore, these financial statements should be read in
conjunction with the Company's February 3, 1996 Annual Report on Form
10-K.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories are stated at the lower of first-in, first-out, cost or
market. The company capitalizes into inventories certain warehousing
and delivery costs associated with getting its manufactured and
purchased inventory to the point of sale.
Costs related to mail order catalogs and promotional materials are
included in prepaid expenses and other current assets. These costs are
amortized over the expected periods of benefit, not to exceed six
months.
The company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes
(SFAS 109). This standard requires, among other things, recognition of
future tax benefits, measured by enacted tax rates attributable to
deductible temporary differences between financial statement and income
tax basis of assets and liabilities and to tax net operating loss
carryforwards, to the extent that realization of such benefits is more
likely than not.
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<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/4/96
3. WORKING CAPITAL
The net change in operating working capital is composed of the
following:
Three Months Ended
May 4, April 29,
1996 1995
(in thousands)
(Increase) in accounts receivable $ (2,120) $ (563)
(Increase) decrease in inventories 2,553 (5,039)
(Increase) decrease in prepaids and other assets 532 (527)
Increase (decrease) in accounts payable (2,263) 6,404
(Decrease) in accrued expenses (612) (113)
Net (increase) decrease in operating working
capital $ (1,910) $ 162
4. FINANCING
In April 1996, the Company extended its credit agreement (the
"Credit Agreement") to April 1999 which changed the maximum borrowing
under the revolver facility to $38,000,000 and provides a term loan
facility of $2,000,000 payable in monthly installments over a five
year period. The Credit Agreement also includes financial
covenants concerning net worth and working capital, among others, and
limitations on capital expenditures and additional indebtedness and a
restriction on the payment of dividends. Interest rates under the
amended agreement range from prime plus 1.5% to prime plus 2.0% or
LIBOR plus 3.5%. The amended agreement also includes an early
termination fee and provisions for a seasonal over-advance.
Substantially all assets of the Company are collateralized
under the Credit Agreement.
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<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/4/96
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto and with the
Company's audited financial statements and notes thereto for the fiscal year
ended February 3, 1996.
Overview - During the three months ended May 4, 1996, the Company dramatically
improved its operating income to $1.1 million from an operating loss of $6.2
million in the first quarter of 1995 (which included a $3.9 million operating
loss from the recurring men's business). The first quarter of 1996 is the first
period in which the Company's operations were not encumbered by the women's
business which was discontinued in 1995. The Company was able to concentrate
entirely on its core men's business resulting in significantly improved margins,
lower operating expenses and higher tailored clothing sales.
Results of Operations - The following table is derived from the Company's
Condensed consolidated statements of operations and sets forth, for the periods
indicated, the items included in the Condensed consolidated statements of income
(loss), expressed as a percentage of net sales.
Percentage of Net Sales
Quarter Ended
May 4, April 29,
1996 1995
Net Sales 100.0% 100.0%
Costs of goods sold 52.7 63.0
Gross profit 47.3 37.0
General and administrative expenses 10.8 12.0
Sales and marketing expenses 33.6 38.9
Operating income (loss) 2.9 (13.9)
Interest expense 1.9 1.6
Income (loss) before income taxes 1.0 (15.5)
Income taxes and related items 0.4 (6.0)
Net income (loss) 0.6% (9.5%)
Net Sales - For the second quarter in a row, the Company achieved significant
increases in men's sales. Men's comparable store sales for the first quarter
of 1996 increased 8.6% over the same period in the prior year and total men's
sales excluding catalog sales increased $3.2 million, or 10.6%, from
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<PAGE>
$30.4 in 1995 to $33.6 million in 1996. Net sales decreased 15.9% to $37.3
million in the first quarter of 1996 from $44.4 million in the prior year's
quarter due primarily to the Company repositioning its merchandising to
eliminate the women's product line and focus solely on its men's business.
The Company reduced the number of catalogs mailed to prospects in the first
quarter of 1996 compared to the prior year to maximize catalog earnings, which
resulted in a $2.1 million decrease in men's catalog sales. The Company expects
to increase mailings to prospects in the second half of 1996, when response
rates are typically better.
Cost of Goods Sold - Cost of goods sold decreased to 52.7% of sales for the
quarter ended May 4, 1996 from 63.0% during the same period in the prior year
due to the elimination of the women's product line and the improvement of
margins in the continuing men's business, particularly in tailored clothing.
General and Administrative Expenses - General and administrative expenses
decreased to $4.0 million, or 10.8% of sales, in the first quarter of 1996 from
$5.3 million, or 12.0% of sales, in the first quarter of 1995. Approximately $.7
million of the decrease was related to severance accrued in the first quarter of
1995 for terminated employees. The remainder of the improvement was due
primarily to lower professional fees and payroll and related expenses which
reflects the Company's continued focus on controlling overhead costs.
Sales and Marketing Expenses - Sales and marketing expenses decreased $4.7
million to $12.6 million, or 33.6% of sales, in the first quarter of 1996 from
$17.3 million, or 38.9% in the prior year's quarter. The decrease was due
primarily to the elimination of the women's product line and its related costs,
the reduction of the number of catalogs mailed to prospects and lower store
operating expenses.
Interest Expense - Interest expense was consistent in the first quarter of 1996
compared to the same period of 1995.
Income Taxes - The Company has net tax operating loss carryforwards (NOLs) of
approximately $16 million which expire through 2011. Realization of the future
tax benefits is dependent on the Company's ability to generate taxable income
within the carryforward period. Management has determined, based on the
Company's history of prior operating earnings and its expectations for the
future, that future operating income of the Company will more likely than not be
sufficient to utilize fully the NOLs prior to their expiration. Accordingly, the
Company has recorded a deferred tax asset of $6.3 million relating to the NOLs.
No assurance can be given that sufficient taxable income will be generated for
full utilization of the NOLs.
Liquidity and Capital Resources - Net working capital was $34.8 million at May
4, 1996 compared to $35.7 million at February 3, 1996. At May 4, 1996, the
Company had outstanding borrowings of $26.2 million under its revolving loan
agreement as compared to $28.9 million at February 3, 1996.
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<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/4/96
The following table summarizes the Company's sources and uses of funds as
reflected in the condensed consolidated statement of cash flows:
Three Months Ended
May 4, April 29,
1996 1995
Cash provided by (used in):
Operating activities $ 3,186 $ (2,885)
Investing activities (62) (562)
Financing activities (3,121) 2,750
Net increase (decrease) in cash and cash equivalents $ 3 $ (697)
Cash provided by the Company's operating activities was due primarily to the
$3.8 million income tax refund received from its pre-1986 parent in the first
quarter of 1996. Cash used in investing activities relates primarily to
continued consolidation of the Company's tailoring operations and improvements
in stores, net of proceeds from the sale of fixed assets. Cash used in financing
activities represented primarily repayments of the revolving loan.
The Company expects to increase its rate of capital expenditures in 1996 as it
continues its program to reposition its existing store base, which includes
opening and relocating several stores, downsizing stores which have more space
than is needed to support the continuing men's business and closing several
unprofitable stores.
In April, 1996 the Company extended its Credit Agreement to April 1999, which
reduced the financial covenants and provides for a seasonal over-advance. At May
4, 1996, the Company had outstanding borrowings of $26.2 million with $9.9
million of availability compared to borrowings of $28.9 million and availability
of $5.5 million at February 3, 1996. The Company believes that its current
liquidity and revolving loan facility will be adequate to maintain its currently
anticipated working capital needs.
PART 2. OTHER INFORMATION
Not applicable.
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<PAGE>
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.
Dated: June 11, 1996 Jos. A. Bank Clothiers, Inc.
(Registrant)
-------------------------------
David E. Ullman
Executive Vice President and Chief
Financial Officer
-11-
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> MAY-01-1996
<CASH> 647
<SECURITIES> 0
<RECEIVABLES> 5,986
<ALLOWANCES> 0
<INVENTORY> 40,720
<CURRENT-ASSETS> 53,354
<PP&E> 48,871
<DEPRECIATION> (24,218)
<TOTAL-ASSETS> 84,888
<CURRENT-LIABILITIES> 18,520
<BONDS> 0
0
0
<COMMON> 70
<OTHER-SE> 35,603
<TOTAL-LIABILITY-AND-EQUITY> 84,888
<SALES> 37,346
<TOTAL-REVENUES> 37,346
<CGS> 19,665
<TOTAL-COSTS> 16,593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 715
<INCOME-PRETAX> 373
<INCOME-TAX> 145
<INCOME-CONTINUING> 228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
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