United States Securities and Exchange Commission
Washington, DC 20549
FORM 10 - Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended May 3, 1997
or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-23874
Jos. A. Bank Clothiers, Inc.
Delaware 5611 36-3189198
- --------------------- ----------------- ----------------
(State incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification
Classification Number)
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 May 30, 1997
---------------------------- ------------------------------
Common stock. $.01 par value 6,791,152
<PAGE>
Jos. A. Bank Clothiers, Inc.
Index
Part I. Financial Information Page No.
Item 1. Financial Statements
Condensed Consolidated Statements 3
of Income - Three Months
ended May 3, 1997 and
May 4, 1996
Condensed Consolidated Balance 4
Sheets - as of May 3, 1997 and
February 1, 1997
Condensed Consolidated Statements 5
of Cash Flows -Three Months
ended May 3, 1997 and
May 4, 1996
Notes to Condensed Consolidated 6-7
Financial Statements
Item 2. Management's Discussion and Analysis 8-11
of Results of Operations and
Financial Condition
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
(a) Exhibits - Exhibit 27-Financial Data
Schedule (EDGAR filing only)
Signatures 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands except per share data)
(Unaudited)
Three Months Ended
------------------------
May 3, May 4,
1997 1996
------ ------
Net sales $38,655 $37,346
Costs and expenses:
Cost of goods sold 19,793 19,665
General and administrative 4,213 4,036
Sales and marketing 13,427 12,557
------- -------
37,433 36,258
------- -------
Operating income 1,222 1,088
Interest expense, net 590 715
------- -------
Income before provision
for income taxes 632 373
Provision for income taxes 250 145
------- -------
Net income $ 382 $ 228
======= =======
Per share information:
Net income per share $ 0.06 $ 0.03
======= =======
Weighted average number of
shares outstanding 6,825 6,791
======= =======
See accompanying notes.
3
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands) (Unaudited)
May 3, February 1,
1997 1997
-------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 656 $ 719
Accounts receivable 3,573 3,300
Inventories:
Raw materials 5,844 4,062
Work-in-process 5,823 4,717
Finished goods 36,500 32,104
-------- --------
Total inventories 48,167 40,883
-------- --------
Prepaid expenses and other
current assets 4,549 4,874
Deferred and refundable income taxes 3,200 3,200
-------- --------
Total current assets 60,145 52,976
-------- --------
Property, plant and equipment,
at cost 47,828 48,078
Accumulated depreciation and
amortization (25,248) (25,238)
-------- --------
Net property, plant and equipment 22,580 22,840
-------- --------
Deferred income taxes 3,843 4,083
Other assets 1,384 1,511
-------- --------
Total Assets $ 87,952 $ 81,410
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 15,012 $ 12,357
Accrued expenses 9,083 10,484
Current portion of long-term debt 1,423 1,504
-------- --------
Total current liabilities 25,518 24,345
Long-term liabilities 26,353 21,366
-------- --------
Total liabilities 51,871 45,711
-------- --------
Shareholders' equity:
Common stock 70 70
Additional paid-in capital 56,336 56,336
Accumulated deficit (18,405) (18,787)
-------- --------
38,001 37,619
Less treasury stock (1,920) (1,920)
-------- --------
Total shareholders' equity 36,081 35,699
-------- --------
Total liabilities and shareholders' equity $ 87,952 $ 81,410
======== ========
See accompanying notes.
4
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
May 3, May 4,
1997 1996
------- ------
<S> <C>
Cash flows from operating activities:
Net income $ 382 $ 228
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Decrease in deferred taxes 240 3,876
Depreciation and amortization 916 992
Net increase in operating
working capital (6,014) (1,994)
Net cash provided by (used in) operating activities (4,476) 3,102
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (625) (159)
Proceeds from disposal of assets - 97
-------- -------
Net cash provided by (used in)
investing activities (625) (62)
-------- -------
Cash flows from financing activities:
Borrowings under long-term Credit Agreement 14,573 10,347
Repayment under long-term Credit Agreement (9,435) (13,026)
Changes in other long-term debt, net (100) (216)
Payments related to debt financing - (142)
-------- -------
Net cash provided by (used in) financing activities 5,038 (3,037)
-------- -------
Net increase (decrease) in cash and cash equivalents (63) 3
Cash and cash equivalents - beginning of period 719 644
-------- -------
Cash and cash equivalents - end of period $ 656 $ 647
======= =======
</TABLE>
See accompanying notes.
5
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/3/97
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. 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 1, 1997 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.
6
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/3/97
3. WORKING CAPITAL
The net change in operating working capital is composed of the
following:
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 3, May 4,
1997 1996
------- -------
(in thousands)
<S> <C>
(Increase) in accounts receivable $ (273) $(2,120)
(Increase) decrease in inventories (7,284) 2,553
Decrease in prepaids and other assets 395 532
Increase (decrease) in accounts payable 2,655 (2,263)
(Decrease) in accrued expenses and other liabilities (1,507) (696)
------- -------
Net (increase) in operating working capital $(6,014) $(1,994)
======= =======
</TABLE>
4. NEW ACCOUNTING STANDARDS
During early 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share," which becomes effective December 15,
1997, and as to which early adoption is not permitted. Under SFAS No.
128, a company will be required to disclose basic earnings per share
(with the principal difference from current disclosure being that
common stock equivalents will not be considered in the compilation of
basic earnings per share) and diluted earnings per share. The adoption
of this pronouncement will require restatement of all prior period
earnings per share data presented; however, the Company does not expect
this change to be material to the historical earnings per share.
7
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/3/97
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 1, 1997.
Overview - The Company's net income for the first quarter of fiscal 1997
increased to $.4 million or $.06 per share compared to net income of $.2
million or $.03 per share for the same period in the prior year.
The Company's strategy of expanding its store base by clustering stores in
existing markets is performing well, generating increased sales and profit. The
four new full-line stores that were opened in the fourth quarter of 1996 have
generated strong contributions. The Company has finalized leases for six
additional stores to be opened between May and September 1997 and is actively
pursuing up to four additional sites to be opened in 1997. These stores would
add to our base of 80 stores that were open at the beginning of fiscal 1997.
Comparable store sales decreased slightly by 1.5 percent primarily because of
the new stores opened in existing markets.
Catalog operations have generated higher sales due primarily to the increased
catalog circulation and better response rates. During the first quarter of 1997,
the Company spent $.9 million more on advertising primarily for a national image
advertising campaign which is to be run throughout the year and increased
catalog circulation in reaction to favorable response rates over the past year.
Gross profit improved compared to 1996 as all product categories performed
better than last year, particularly suits and ties.
The Company's availability under the Credit Agreement has increased to $13.1
million at May 30, 1997 compared to $11.6 million at the same time last year.
Total debt outstanding decreased $3.9 million from $23.5 million at May 3, 1997
compared to $27.4 million at May 4, 1996.
Results of Operations - The following table is derived from the Company's
condensed consolidated statements of income and sets forth, for the periods
indicated, the items included in the condensed consolidated statements of
income, expressed as a percentage of net sales.
8
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/3/97
Percentage of Net Sales
Quarter Ended
--------------------------
May 3, May 4,
1997 1996
------ ------
Net Sales.................................... 100.0% 100.0%
Cost of goods sold........................... 51.2 52.7
----- -----
Gross profit................................. 48.8 47.3
General and administrative expenses.......... 10.9 10.8
Sales and marketing expenses................. 34.7 33.6
----- -----
Operating income............................. 3.0 2.9
Interest expense, net........................ 1.5 1.9
----- -----
Income before income taxes................... 1.6 1.0
Provision for income taxes
and related items.......................... .6 0.4
----- -----
Net income................................... 1.0% 0.6%
===== =====
Net Sales - Total retail and catalog sales increased 6.2 percent to $38.7
million in the first quarter of 1997 from $36.4 million in the same period last
year. (The sales for 1996 exclude $.9 million of sales for contract
manufacturing work which the Company discontinued in the third quarter of 1996.)
The increase in sales reflects a 15 percent increase in existing markets where
three new stores were opened. In addition, catalog sales increased by 40 percent
during the quarter on an increase of approximately 20 percent in catalog
circulation. Comparable store sales (those opened over one year) decreased
slightly by 1.5 percent due to the impact of new stores opened in existing
markets and an aggressive promotional campaign during April 1996. As expected,
the new stores are drawing customers from our existing stores which reduces our
comparable store sales results.
Cost of Goods Sold - Gross profit improved by 1.5 percentage points for the
first quarter of 1997 compared to the same period in the prior year. This
improvement was consistent in all categories, particularly in the higher margin
suits and ties.
General and Administrative Expenses - General and administrative expenses
increased $.2 million to $4.2 million in the quarter compared to 1996. The
increase was primarily related to higher professional fees as the Company
negotiated the extension of the contract with its manufacturing and distribution
union.
Sales and Marketing Expenses - Sales and marketing expenses increased $.8
million in the first quarter of 1997 compared to 1996 primarily as a result of
higher catalog circulation and a national image advertising campaign. The
Company mailed approximately 20 percent more catalogs in the first quarter of
1997 compared to the same period in 1996 in reaction to favorable trends in the
catalog operations over the last year. The Company expects to continue to
increase catalog circulation in 1997. The national image campaign is to be run
throughout the year on CNN Headline News and is designed to increase the
awareness of the Jos. A. Bank name.
9
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/3/97
Interest Expense - Interest expense was $.1 million lower in the first quarter
ended May 3, 1997 compared to the same period in 1996 due primarily to a $3.9
million decrease in total debt outstanding at May 3, 1997 compared to May 4,
1996.
Income Taxes - The Company has net tax operating loss carryforwards (NOLs) of
approximately $20 million which expire through 2011. The NOLs were generated
during periods in which the Company operated its women's business along with the
men's business, primarily in fiscal 1995. In 1995, the Company discontinued its
women's business to focus its efforts on its men's business. Realization of the
future tax benefits of the NOLs 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 earnings, its recent operating
results and growth plans, that future earnings of the Company will more likely
than not be sufficient to utilize at least $16 million of the NOLs prior to
their expiration. Accordingly, the Company has recorded a deferred tax asset of
$6.1 million relating to the NOLs.
The average minimum taxable income that the Company would need to generate prior
to the expiration of the NOLs would be less than the average taxable income that
the Company earned during fiscal years 1992 through 1994, as adjusted for
unusual charges. Management believes that although the recent earnings and
estimated future earnings might justify a higher amount, the $6.1 million
represents a reasonable estimate of the future utilization of the NOLs and will
continue to evaluate the likelihood of future profit and the necessity of future
adjustments to the deferred tax asset valuation allowance. No assurance can be
given that sufficient taxable income will be generated for full utilization of
the NOLs.
Liquidity and Capital Resources - At May 3, 1997 the Company had outstanding
borrowings of $23.1 million with $13.8 million of availability under its Credit
Agreement compared to borrowings of $26.2 million and availability of $9.7
million at the same time last year. The Company's availability at May 3, 1997
has increased by $4.1 million compared to the same time in 1996. The increase in
availability was generated principally by better terms with vendors and the
timing of inventory purchases.
The following table summarizes the Company's sources and uses of funds as
reflected in the condensed consolidated statements of cash flows:
Three Months Ended
-----------------------
May 3, May 4,
1997 1996
-------- --------
Cash provided by (used in):
Operating activities $(4,476) $ 3,102
Investing activities (625) (62)
Financing activities 5,038 (3,037)
------- -------
Net increase (decrease) in cash and cash equivalents $ (63) $ 3
======= =======
10
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/3/97
Cash used by operating activities was due primarily to higher inventory levels
to support new stores and to add product categories. Cash used in investing
activities relates primarily to improvements to two new stores that will open in
the second quarter of 1997 and for display fixtures to improve merchandise
presentations in our stores. Cash provided by financing activities represents
primarily borrowings on the revolving loan under the Credit Agreement.
The Company expects to spend between $4.0 and $5.0 million in capital
expenditures to open up to ten new stores and renovate existing stores in 1997.
The Company believes that its current liquidity and Credit Agreement will be
adequate to maintain its currently anticipated working capital and investment
needs. The store expansion program is being financed through operations and the
Company's Credit Agreement. Further expansion beyond 1998 may necessitate
revised financing arrangements for the Company.
The Company's plans and beliefs concerning 1997 contained herein are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
forecast due to a variety of factors that can adversely affect the Company's
operating results, liquidity and financial condition.
11
<PAGE>
PART 2. OTHER INFORMATION
Item 6. Exhibit
(a) Exhibit 27 - Financial Data Schedule
12
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/3/97
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 3, 1997 Jos. A. Bank Clothiers, Inc.
(Registrant)
-----------------------------------------
David E. Ullman
Executive Vice President, Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-03-1997
<CASH> 656
<SECURITIES> 0
<RECEIVABLES> 3,573
<ALLOWANCES> 0
<INVENTORY> 48,167
<CURRENT-ASSETS> 60,145
<PP&E> 47,828
<DEPRECIATION> 25,248
<TOTAL-ASSETS> 87,952
<CURRENT-LIABILITIES> 25,518
<BONDS> 0
0
0
<COMMON> 70
<OTHER-SE> 36,011
<TOTAL-LIABILITY-AND-EQUITY> 87,952
<SALES> 38,655
<TOTAL-REVENUES> 38,655
<CGS> 19,793
<TOTAL-COSTS> 17,640
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 590
<INCOME-PRETAX> 632
<INCOME-TAX> 250
<INCOME-CONTINUING> 382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 382
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
