SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 October 29, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1308
------
STRAWBRIDGE & CLOTHIER
- - -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1131660
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
801 Market Street
Philadelphia, PA 19107-3199
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 629-6000
- - -------------------------------------------------------------------------------
(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 .
--- ---
The number of shares of Series A Common Stock, par value $1 per share, of the
registrant outstanding at November 30, 1994 is 7,251,268.
The number of shares of Series B Common Stock, par value $1 per share, of the
registrant outstanding at November 30, 1994 is 3,172,183.
<PAGE>
Form 10-Q
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
---------------------------------------
INDEX
-----
Page
PART I. FINANCIAL INFORMATION Number
- - ------------------------------ ------
Item 1. Financial Statements (unaudited)
Condensed consolidated statements of operations--
three and nine months and trailing years ended October 29,
1994 and October 30, 1993 3
Condensed consolidated balance sheets--October 29, 1994
and January 29, 1994 4
Condensed consolidated statements of cash flows--nine
months ended October 29, 1994 and October 30, 1993 5
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
- - ----------
<PAGE>
Form 10-Q
Page 3
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED TRAILING YEAR ENDED
------------------------------------------------------------------------------
October 29, October 30, October 29, October 30, October 29, October 30,
1994 1993 1994 1993 1994 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $226,559 $223,639 $657,756 $645,808 $996,563 $977,832
Other income,
net of other
deductions 546 583 1,648 1,695 2,365 2,622
------------------------------------------------------------------------------
227,105 224,222 659,404 647,503 998,928 980,454
Deduct:
Cost of sales,
including
occupancy and
buying costs 168,000 166,941 495,586 493,312 736,175 729,653
Selling and
administrative
expenses, net
of finance
charges 43,590 43,532 121,728 122,294 171,269 170,787
Depreciation 7,311 7,241 22,242 21,600 29,471 28,606
Interest 5,007 5,302 14,362 15,637 19,634 21,124
Provision for
doubtful
accounts 2,409 1,414 5,824 3,538 7,010 5,465
------------------------------------------------------------------------------
226,317 224,430 659,742 656,381 963,559 955,635
Earnings (loss)
before income
taxes 788 (208) (338) (8,878) 35,369 24,819
Income taxes
(benefit) 263 (277) (120) (3,268) 12,250 8,142
------------------------------------------------------------------------------
NET EARNINGS
(LOSS) $525 $69 ($218) ($5,610) $23,119 $16,677
==============================================================================
NET EARNINGS
(LOSS) PER SHARE $0.05 $0.01 ($0.02) ($0.54) $2.22 $1.62
==============================================================================
Cash dividends
per share:
Series A
Common Stock $0.275 $0.275 $0.825 $0.82 $1.10 $1.09
==============================================================================
Series B
Common Stock $0.25 $0.25 $0.75 $0.74 $1.00 $0.98
==============================================================================
Average shares
outstanding 10,444 10,367 10,409 10,299 10,399 10,297
==============================================================================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
Page 4
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
October 29, January 29,
1994 1994
----------- -----------
ASSETS
CURRENT ASSETS
Cash and equivalents $2,640 $2,860
Accounts receivable, less allowance
(10/29/94 - $5,600; 1/29/94 - $5,000) 185,407 200,433
Merchandise inventories 224,087 143,132
Deferred income taxes 2,397 2,397
Prepaid expenses and other 8,701 7,379
----------- -----------
TOTAL CURRENT ASSETS 423,232 356,201
PROPERTY, FIXTURES AND EQUIPMENT 610,272 588,949
Less allowance for depreciation (310,732) (288,581)
----------- -----------
299,540 300,368
OTHER ASSETS 12,211 6,483
----------- -----------
$734,983 $663,052
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes payable $100,000 $43,500
Accounts payable 98,629 60,138
Accrued expenses 22,565 20,724
Taxes on income 758 11,203
Long-term debt and capital lease
obligations due within one year 8,400 11,055
----------- -----------
TOTAL CURRENT LIABILITIES 230,352 146,620
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS - due after one year 200,269 205,808
ACCRUED RETIREMENT COSTS 50,617 49,795
DEFERRED INCOME TAXES 3,355 3,355
OTHER LIABILITIES 6,151 5,272
SERIES PREFERRED STOCK 0 0
COMMON SHAREHOLDERS' EQUITY
Common stock 10,423 10,386
Other shareholders' equity 233,816 241,816
----------- -----------
TOTAL COMMON SHAREHOLDERS' EQUITY 244,239 252,202
----------- -----------
$734,983 $663,052
=========== ===========
See notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
Page 5
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
NINE MONTHS ENDED
-----------------------
Oct. 29, Oct. 30,
1994 1993
-------- --------
CASH FLOWS USED IN OPERATING ACTIVITIES ($13,552) ($22,656)
NET CASH USED FOR INVESTING ACTIVITIES
Acquisition of property, fixtures and equipment (21,323) (15,949)
Temporary investment of debt offering proceeds 0 (49,255)
Changes in other assets (5,728) (1,142)
-------- --------
TOTAL (27,051) (66,346)
-------- --------
NET CASH PROVIDED BY(USED FOR) FINANCING ACTIVITIES
Additional long-term borrowings 0 49,255
Payment of long-term debt and capital lease
obligations (8,194) (10,284)
Increase in short-term notes payable 56,500 53,000
Purchase of preferred stock and treasury stock (189) (202)
Proceeds from issuance of common stock 622 717
Cash dividends (8,356) (8,201)
-------- --------
TOTAL 40,383 84,285
-------- --------
CHANGE IN CASH AND EQUIVALENTS (220) (4,717)
Cash and equivalents at beginning of period 2,860 5,372
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $2,640 $655
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
Page 6
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
- - ------------------------------
The accompanying unaudited condensed consolidated 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 information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results of operations for the three and nine months ended
October 29, 1994 are not necessarily indicative of the results that may be
anticipated for the full fiscal year. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended January 29, 1994.
Note B - Per Share Data
- - -----------------------
Earnings (loss) per share amounts are based on the weighted average number of
shares of common stock and dilutive common stock equivalents (employee stock
options) outstanding during each period, after recognition of preferred stock
dividends.
<PAGE>
Form 10-Q
Page 7
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - ---------------------
Net sales increases in comparison to the comparable periods in the preceding
year were 1.3%, 1.9% and 1.9% for the three months, nine months and trailing
year ended October 29, 1994, respectively. Sales results for the third
quarter were negatively impacted by unusually warm weather, while current
year nine months and trailing year were positively affected by less severe
weather conditions than the prior year periods. The Company's current
outlook for 1994 does not anticipate any significant increases in consumer
buying patterns in the Company's trading area.
Costs and expenses as a percentage of sales and the effective tax rates were as
follows:
THREE MONTHS NINE MONTHS TRAILING YEAR
ENDED ENDED ENDED
------------------ ----------------- ------------------
10/29/94 10/30/93 10/29/94 10/30/93 10/29/94 10/30/93
-------- -------- -------- -------- -------- --------
Cost of sales,
including occupancy
and buying costs 74.2 74.6 75.3 76.4 73.9 74.6
Selling and adminis-
trative expenses, net
of finance charges 19.2 19.5 18.5 18.9 17.2 17.5
Depreciation 3.2 3.2 3.4 3.3 3.0 2.9
Interest 2.2 2.4 2.2 2.4 2.0 2.2
Provision for
doubtful accounts 1.1 .6 .9 .5 .7 .6
Effective tax rate 33.4 133.2 35.5 36.8 34.6 32.8
Cost of sales, including occupancy and buying costs, for the three months,
nine months and trailing year ended October 29, 1994, benefited from reduced
occupancy and buying costs. The current year nine month and trailing year
periods also reflect increased margins, while margins for the third quarter
were similar to the prior year. Selling and administrative expenses, net of
finance charges, for the periods ended October 29, 1994, reflect increased
finance charge income and continued emphasis on expense control. Interest
expense for the three months, nine months and trailing year ended October
29, 1994, declined due to the refinancing of high-rate debt, partially
offset by increased outstanding floating rate debt and increased short-term
borrowing rates. The increased provisions for doubtful accounts for the
three months, nine months and trailing year ended October 29, 1994, reflect
increased accounts receivable balances in comparison to the comparable
periods of the preceding year and increased write-offs during the first nine
months of 1994. The effective tax rates for the periods ended October 30,
1993, reflect the effects of enactment of the 1993 Tax Act during the third
quarter of 1993 and the retroactive effect of certain provisions of the Act.
<PAGE>
Form 10-Q
Page 8
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS(CONT'D)
FINANCIAL CONDITION AND LIQUIDITY
- - ---------------------------------
Operating activities resulted in a use of $13.6 million of cash for the nine
months ended October 29, 1994, compared to $22.7 million in the prior year .
The change is primarily a result of the $5.4 million improvement in net
earnings.
Expenditures for property, fixtures and equipment totalled $21.3 million for
the nine months ended October 29, 1994 and included the renovation of the
fourth floor of the Philadelphia store, the renovation of the Mercerville
and Cheltenham Clover stores and other renovation projects. Prior year
capital expenditures of $15.9 million included the renovation of the third
floor of the Philadelphia store, the renovation of the Marlton and Blackwood
Clover stores and other renovation projects. The Company has announced
plans to open two new Clover stores in the summer of 1995 and a Strawbridge
& Clothier Home Furnishings Store in the spring of 1995. Ground breaking
took place for Clover Brandywine, located in New Castle County, Delaware, on
September 27, 1994, and a lease agreement has been signed to open a Clover
store in the Gallery at Market East in Philadelphia, to be located on the
street and second floor levels of the former Gimbels/Stern's building. A
lease agreement has also been signed to open the Company's first Home
Furnishings store in the spring of 1995, to be located in the Concord Mall
in New Castle County, Delaware. The relocation of home furnishings into a
separate store will allow for a major renovation of the existing Strawbridge
& Clothier Concord store, with increased selling space for apparel, to be
completed in the fall of 1995. Capital expenditures for fiscal 1994 are
estimated to be $39.9 million, of which $27.8 million has been spent through
October 29, 1994, including $21.3 million for property, fixtures and
equipment and $6.5 million for the acquisition of land lease rights relating
to Clover Brandywine. These capital expenditures are expected to be
financed by cash generated from operations and the sale of a portion of the
Company's credit card receivables. Cash provided by financing activities
resulted from additional short-term borrowings and was $40.4 million for the
nine months ended October 29, 1994, compared to $84.3 million for the prior
year period. The prior year period also included $49.3 million in
additional long-term borrowings.
The ratio of current assets to current liabilities was 1.84 at the end of
the third quarter of fiscal 1994, compared to 2.43 at the end of fiscal 1993
and 1.83 at the end of the third quarter of fiscal 1993. The prior year
ratio would have been 2.05 exclusive of the effect of the short-term
investment of $49.3 million of public debt offering proceeds pending the
repayment of the $50.0 million of public debt included in current
liabilities. The working capital ratio is lower at the end of the third
quarter compared to the prior fiscal year end due to lower customer accounts
receivable balances immediately prior to the heavy Christmas sales volume
period, while inventories, short-term borrowings and merchandise accounts
payable are greater in preparation for this high volume period. Consistent
with the increase for fiscal 1993, accounts receivable at October 29, 1994
reflects an increase of $19,013,000 over the October 30, 1993 amount.
Long-term debt and capital lease obligations were 45.1% of capitalization at
October 29, 1994, compared to 44.9% at January 29, 1994.
The Company believes its relations with banks and credit sources are good and
that it has considerable flexibility in deciding how to fund future capital
expenditures and maturities of long-term debt.
<PAGE>
Form 10-Q
Page 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
--------
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None.
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 thereunto duly authorized.
STRAWBRIDGE & CLOTHIER
----------------------------------------------
Registrant
Date: December 12, 1994
-----------------
/s/ Steven L. Strawbridge
----------------------------------------------
Steven L. Strawbridge
Vice President, Treasurer & Secretary
(principal financial officer)
THIRD
QUARTER
REPORT
1994
STRAWBRIDGE
& CLOTHIER
To Our Shareholders:
In the third quarter of the fiscal
year 1994, ended October 29, sales were
$226,559,000 compared to $223,639,000
for the same period last year, an
increase of 1.3%. Earnings for the
quarter were $525,000 compared to
earnings of $69,000 in the prior year's
quarter. Earnings per share were $.05
compared to earnings of $.01 in last
year's third quarter.
Sales for the first three quarters of
the fiscal year were $657,756,000
compared to $645,808,000 last year, an
increase of 1.9%. Year-to-date the
Company incurred a loss of $218,000
compared to a loss of $5,610,000 last
year. Loss per share was $.02 in 1994
compared to a loss per share of $.54 in
1993.
We were pleased that despite the
small increase in sales, earnings
performance improved for the quarter.
Cost of sales decreased to 74.2% of
sales from 74.6% of sales last year
because of a reduction in occupancy and
buying costs. The decrease in selling,
general and administrative costs to
19.2% of sales from 19.5% reflects
continued emphasis on expense control.
On November 14, 1994, the Company
announced that an agreement had been
signed to lease the office building
attached to the Concord Mall, in New
Castle County, Delaware. This three-
level, 54,000 square foot building will
become the first Strawbridge & Clothier
Home Furnishings Store, scheduled to
open in the spring of 1995. The
relocation of home furnishings into a
separate store will allow for a major
renovation of the existing Strawbridge &
Clothier Concord store, to be completed
next fall.
In Clover, two new stores have been
announced. On September 27, 1994, ground
breaking took place for construction of
Clover Brandywine, a 94,000 square foot store
in New Castle County, Delaware, across from
the Concord Mall, mentioned above. This
store will complement the Kirkwood Plaza
Clover store in the southwest section of the
county, and is expected to open in the summer
of 1995.
A lease agreement for Clover's 27th
store has been signed, to be located on the
street and second floor levels of the former
Gimbels/Sterns building on Market Street East
in Philadelphia. This 130,000 square foot
store, to be named "Clover at the Gallery",
is planned for a summer, 1995 opening. The
store will be an important addition to the
successful Gallery at Market East shopping
center, immediately adjacent to the Company's
headquarters location.
Francis R. Strawbridge III Peter S. Strawbridge
Chairman of the Board President
STRAWBRIDGE & CLOTHIER
===============================================================================
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
===============================================================================
Thirteen Weeks Thirty-nine Weeks Trailing Year
Ended Ended Ended
----------------- ----------------- ------------------
10/29/94 10/30/93 10/29/94 10/30/93 10/29/94 10/30/93
-------- -------- -------- -------- -------- --------
Net sales $226,559 $223,639 $657,756 $645,808 $996,563 $977,832
Other income,
net of other
deductions 546 583 1,648 1,695 2,365 2,622
-------- -------- -------- -------- -------- --------
227,105 224,222 659,404 647,503 998,928 980,454
Cost of sales 168,000 166,941 495,586 493,312 736,175 729,653
Selling, general
and administra-
tive costs 43,590 43,532 121,728 122,294 171,269 170,787
Depreciation 7,311 7,241 22,242 21,600 29,471 28,606
Interest 5,007 5,302 14,362 15,637 19,634 21,124
Provision for
doubtful
accounts 2,409 1,414 5,824 3,538 7,010 5,465
-------- -------- -------- -------- -------- --------
226,317 224,430 659,742 656,381 963,559 955,635
-------- -------- -------- -------- -------- --------
Earnings (loss)
before income
taxes 788 (208) (338) (8,878) 35,369 24,819
Provision for
income taxes
(benefit) 263 (277) (120) (3,268) 12,250 8,142
-------- -------- -------- -------- -------- --------
NET EARNINGS
(LOSS) $ 525 $ 69 $ (218) $ (5,610) $ 23,119 $ 16,677
======== ======== ======== ======== ======== ========
NET EARNINGS
(LOSS) PER
SHARE $0.05 $0.01 $(0.02) $(0.54) $2.22 $1.62
Average shares
outstanding 10,444 10,367 10,409 10,299 10,399 10,297
<PAGE>
============================================
Condensed Consolidated
Balance Sheets (Unaudited)
(in thousands)
============================================
Assets 10/29/94 10/30/93
-------- --------
Current assets:
Cash and
equivalents $ 2,640 $ 655
Accounts receivable,
net 185,407 166,394
Merchandise
inventories 224,087 210,664
Other current assets 11,098 63,409
-------- --------
Total current assets 423,232 441,122
Property, fixtures and
equipment, net 299,540 301,672
Other assets 12,211 5,459
-------- --------
$734,983 $748,253
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Notes payable $100,000 $ 80,500
Accounts payable 98,629 84,996
Other 31,723 75,300
-------- --------
Total current
liabilities 230,352 240,796
Long-term debt and
and capital lease
obligations 200,269 217,151
Other liabilities 60,123 59,379
Shareholders'equity 244,239 230,927
-------- --------
$734,983 $748,253
======== ========
DEPARTMENT STORES
Philadelphia Exton
Ardmore Christiana
Cherry Hill Burlington
Springfield Concord
Plymouth Meeting The Court at
Neshaminy King of Prussia
Echelon Willow Grove Park
Concord Home Furnishings
(Opens Spring 1995)
CLOVER STORES
Marlton Warrington
Blackwood Cheltenham
Cinnaminson Whitehall Mall
Morrisville Palmer Park
Center Square Rising Sun Plaza
Baltimore Pike Township Line
Westmont Park City
Andorra Penrose Plaza
Frankford Ave. Whiteland
Cottman Ave. Towne Center
Bucks Mall Shore Mall
Mercerville Kirkwood Plaza
Granite Run Ralph's Corner
Brandywine
(Opens Summer 1995)
Gallery
(Opens Summer 1995)
TRANSFER AGENT AND RECORD KEEPER
Please direct address changes and
inquiries regarding stock transfer,
registration and record keeping to:
Mellon Securities Transfer Services
P.O. Box 444
Pittsburgh, PA 15230
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-29-1994
<CASH> 2,640
<SECURITIES> 0
<RECEIVABLES> 191,007
<ALLOWANCES> 5,600
<INVENTORY> 224,087
<CURRENT-ASSETS> 423,232
<PP&E> 610,272
<DEPRECIATION> 310,732
<TOTAL-ASSETS> 734,983
<CURRENT-LIABILITIES> 230,352
<BONDS> 200,269
<COMMON> 10,423
0
0
<OTHER-SE> 233,816
<TOTAL-LIABILITY-AND-EQUITY> 734,983
<SALES> 657,756
<TOTAL-REVENUES> 659,404
<CGS> 495,586
<TOTAL-COSTS> 495,586
<OTHER-EXPENSES> 143,970
<LOSS-PROVISION> 5,824
<INTEREST-EXPENSE> 14,362
<INCOME-PRETAX> (338)
<INCOME-TAX> (120)
<INCOME-CONTINUING> (218)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (218)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
