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 July 30, 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 August 30, 1994 is 7,237,286.
The number of shares of Series B Common Stock, par value $1 per share,
of the registrant outstanding at August 30, 1994 is 3,186,165.
<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 six months and trailing years ended July 30,
1994 and July 31, 1993. 3
Condensed consolidated balance sheets--July 30, 1994
and January 29, 1994. 4
Condensed consolidated statements of cash flows--six
months ended July 30, 1994 and July 31, 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 4. Submission of Matters to a Vote of Security Holders 8
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)
THREE MONTHS ENDED SIX MONTHS ENDED TRAILING YEAR ENDED
------------------------------------------------------------
July 30, July 31, July 30, July 31, July 30, July 31,
1994 1993 1994 1993 1994 1993
------------------------------------------------------------
Net sales $222,894 $225,018 $431,197 $422,170 $993,643 $969,931
Other income,
net of other
deductions 515 523 1,102 1,111 2,403 2,111
------------------------------------------------------------
223,409 225,541 432,299 423,281 996,046 972,042
Deduct:
Cost of sales,
including
occupancy and
buying costs 169,517 173,634 327,587 326,371 735,117 724,557
Selling and
administrative
expenses, net
of finance
charges 39,548 40,567 78,138 78,762 171,211 169,029
Depreciation 7,477 7,193 14,931 14,359 29,401 28,511
Interest 4,818 5,205 9,355 10,335 19,929 21,280
Provision for
doubtful
accounts 1,680 1,117 3,415 2,124 6,015 5,667
------------------------------------------------------------
223,040 227,716 433,426 431,951 961,673 949,044
Earnings (loss)
before income
taxes 369 (2,175) (1,127) (8,670) 34,373 22,998
Income taxes
(benefit) 125 (750) (383) (2,991) 11,710 7,721
------------------------------------------------------------
NET EARNINGS
(LOSS) $244 ($1,425) ($744) ($5,679) $22,663 $15,277
============================================================
NET EARNINGS
(LOSS) PER SHARE $0.02 ($0.14) ($0.07) ($0.55) $2.18 $1.49
============================================================
Cash dividends
per share:
Series A
Common Stock $0.275 $0.275 $0.55 $0.545 $1.10 $1.085
============================================================
Series B
Common Stock $0.25 $0.25 $0.50 $0.49 $1.00 $0.97
============================================================
Average shares
outstanding 10,402 10,290 10,393 10,274 10,378 10,259
============================================================
See notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
Page 4
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
July 30, January 29,
1994 1994
----------- -----------
ASSETS
CURRENT ASSETS
Cash and equivalents $4,187 $2,860
Accounts receivable, less allowance
(7/30/94 - $5,400; 1/29/94 - $5,000) 178,050 200,433
Merchandise inventories 158,897 143,132
Deferred income taxes 2,397 2,397
Prepaid expenses and other 9,347 7,379
----------- -----------
TOTAL CURRENT ASSETS 352,878 356,201
PROPERTY, FIXTURES AND EQUIPMENT 605,065 588,949
Less allowance for depreciation (303,421) (288,581)
----------- -----------
301,644 300,368
OTHER ASSETS 6,746 6,483
----------- -----------
$661,268 $663,052
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes payable $56,500 $43,500
Accounts payable 62,428 60,138
Accrued expenses 22,974 20,724
Taxes on income 1,158 11,203
Long-term debt and capital lease
obligations due within one year 8,426 11,055
----------- -----------
TOTAL CURRENT LIABILITIES 151,486 146,620
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS - due after one year 204,016 205,808
ACCRUED RETIREMENT COSTS 49,935 49,795
DEFERRED INCOME TAXES 3,355 3,355
OTHER LIABILITIES 5,973 5,272
SERIES PREFERRED STOCK 0 0
COMMON SHAREHOLDERS' EQUITY
Common stock 10,423 10,386
Other shareholders' equity 236,080 241,816
----------- -----------
TOTAL COMMON SHAREHOLDERS' EQUITY 246,503 252,202
----------- -----------
$661,268 $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)
SIX MONTHS ENDED
-----------------------
July 30, July 31,
1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES $14,262 $8,631
NET CASH USED FOR INVESTING ACTIVITIES
Acquisition of property, fixtures and equipment (16,116) (9,210)
Changes in other assets (263) (410)
-------- --------
TOTAL (16,379) (9,620)
-------- --------
NET CASH PROVIDED BY(USED FOR) FINANCING ACTIVITIES
Payment of long-term debt and capital lease
obligations (4,421) (9,264)
Increase in short-term notes payable 13,000 16,000
Purchase of preferred stock and treasury stock (189) (202)
Proceeds from issuance of common stock 622 717
Cash dividends (5,568) (5,433)
-------- --------
TOTAL 3,444 1,818
-------- --------
CHANGE IN CASH AND EQUIVALENTS 1,327 829
Cash and equivalents at beginning of period 2,860 5,372
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $4,187 $6,201
======== ========
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 six months
ended July 30, 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 changes in comparison to the comparable periods in the preceding
year were a decrease of .9% and increases of 2.1% and 2.4% for the three
months, six months and trailing year ended July 30, 1994, respectively.
The slight sales decline for the quarter was caused principally by a less
aggressive promotional effort when compared to the prior year's 125th
Anniversary advertising campaign. Sales results for the first half 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.
Costs and expenses as a percentage of sales and the effective tax rates
were as follows:
THREE MONTHS SIX MONTHS TRAILING YEAR
ENDED ENDED ENDED
----------------- ----------------- -----------------
7/30/94 7/31/93 7/30/94 7/31/93 7/30/94 7/31/93
------- ------- ------- ------- ------- -------
Cost of sales,
including occupancy
& buying costs 76.1 77.2 76.0 77.3 74.0 74.7
Selling & adminis-
trative expenses, net
of finance charges 17.7 18.0 18.1 18.7 17.2 17.4
Depreciation 3.4 3.2 3.5 3.4 3.0 2.9
Interest 2.2 2.3 2.2 2.4 2.0 2.2
Provision for
doubtful accounts .8 .5 .8 .5 .6 .6
Effective tax rate 33.9 34.5 34.0 34.5 34.1 33.6
Cost of sales, including occupancy and buying costs, for the three
months, six months and trailing year ended July 30, 1994, reflect increased
margins and reduced occupancy and buying costs. Selling and administrative
expenses, net of finance charges, for the periods ended July 30, 1994
reflect increased finance charge income and continued control of operating
expenses, partially offset by planned increases in advertising expense.
Interest expense for the three months, six months and trailing year ended
July 30, 1994 declined due to the refinancing of high-rate long-term debt.
Increases in short-term borrowing rates did not materially affect the
current periods results. The increased provisions for doubtful accounts
for the three and six months ended July 30, 1994 reflect increased accounts
receivable balances in comparison to the comparable periods of the
preceding year and increased write-offs in the first half of fiscal 1994.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations included in the Company's annual report on Form 10-K for the
year ended January 29, 1994 for discussion of additional matters affecting
the trailing year results.
<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 & LIQUIDITY
- - -------------------------------
Operating activities generated cash flows of $14.3 million for the six
months ended July 30, 1994, compared to $8.6 million in the prior year.
The increase is primarily a result of the $4.9 million improvement
in net earnings.
Capital expenditures of $16.1 million for the six months ended July 30,
1994, 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 $9.2 million
included the renovation of the third floor of the Philadelphia store and
other renovation projects. At its annual meeting on May 25, 1994, the
Company announced plans to open a new Clover store in 1995. Other possible
new store sites are also being considered and the Company is currently
negotiating related leases and construction contracts. Capital
expenditures for fiscal 1994 are estimated to total $39.9 million. These
capital expenditures are expected to be financed by cash generated from
operations and additional long-term borrowings. Capital expenditure plans
may change as opportunities for new stores develop. Cash provided by
financing activities resulted from additional short-term borrowings and was
$3.4 million for the six months ended July 30, 1994, compared to $1.8
million for the prior year period.
The ratio of current assets to current liabilities was 2.33 at the end of
the second quarter of fiscal 1994, compared to 2.43 at the end of fiscal
1993 and 2.57 at the end of the second quarter of fiscal 1993. The changes
in working capital components such as accounts receivable, merchandise
inventories and accrued income taxes, as compared to January 29, 1994,
reflect normal seasonal variations. Consistent with the increase for
fiscal 1993, accounts receivable at July 30, 1994 reflects an increase of
$22,373,000 over the July 31, 1993 amount. Long-term debt and capital
lease obligations were 45.3% of capitalization at July 30, 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.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On May 25, 1994, the Annual Meeting of Shareholders of Strawbridge &
Clothier was held. The shareholders elected the five individuals nominated
to the Board of Directors, four for a term of three years expiring in 1997
and one for a term of two years expiring in 1996. The shareholders also
approved the designation of Ernst & Young as independent auditors. No
other matters were considered at the meeting. The number of votes cast for
and withheld from the election of each nominee is set forth below. There
were no votes against, abstentions or broker non-votes in the election of
directors.
Election of Directors: For Withheld
- - ---------------------- --- --------
Term expiring in 1996:
Warren W. White 37,588,149 8,393
Term expiring in 1997:
Jennifer S. Braxton 37,512,789 83,753
Thomas B. Harvey, Jr. 37,593,896 2,646
David W. Strawbridge 37,534,346 62,196
Natalie B. Weintraub 37,589,202 7,340
<PAGE>
Form 10-Q
Page 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a vote of Security Holders (cont'd)
------------------------------------------------------------
The number of votes cast for and against, and the number of abstentions in
the approval of the designation of Ernst & Young is as follows: For,
37,571,625; Against, 9,986; Abstain, 14,931. There were no broker non-votes.
- - ---------- ----- ------
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: September 12, 1994
------------------
/s/ Steven L. Strawbridge
---------------------------------------------
Steven L. Strawbridge
Vice President, Treasurer & Secretary
(principal financial officer)
SECOND
QUARTER
REPORT
1994
STRAWBRIDGE
& CLOTHIER
[LOGO]
To Our Shareholders:
In the second quarter of the fiscal year
1994, ended July 30, sales were $222,894,000
compared to $225,018,000 for the same period
last year, a decrease of .9%. Earnings for
the quarter were $244,000 compared to a loss
of $1,425,000 in 1993. Earnings per share
were $.02 compared to a loss of $.14 in last
year's second quarter.
For the first half of the fiscal year sales
were $431,197,000 compared to $422,170,000
last year, an increase of 2.1%. The Company
incurred a loss for the first half of
$744,000 compared to a loss of $5,679,000
last year. Loss per share was $.07 in 1994
compared to a loss per share of $.55 in 1993.
The slight sales decline in the quarter was
caused principally by a less aggressive
promotional effort when compared to the prior
year's 125th Anniversary advertising
campaign. Cost of sales decreased to 76.1%
of sales from 77.2% of sales last year
because of increased margins and a reduction
in occupancy and buying costs. The decrease
in selling, general and administrative costs
to 17.7% of sales from 18.0%, reflects
continued emphasis on expense control.
In the Company's headquarters store,
renovation work has been completed in its
women's shoes, intimate apparel and
children's departments. Three blocks away, a
reconstruction project of Historic East
Market Street, from Independence Hall to the
Delaware River, has officially started, with
a scheduled completion in the fall of 1995.
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 Twenty-six Weeks Trailing Year
Ended Ended Ended
------------------ ------------------- ------------------
7/30/94 7/31/93 7/30/94 7/31/93 7/30/94 7/31/93
-------- -------- -------- -------- -------- --------
Net sales $222,894 $225,018 $431,197 $422,170 $993,643 $969,931
Other income,
net other
deductions 515 523 1,102 1,111 2,403 2,111
-------- -------- -------- -------- -------- --------
223,409 225,541 432,299 423,281 996,046 972,042
Cost of sales 169,517 173,634 327,587 326,371 735,117 724,557
Selling, general
and administra-
tive costs 39,548 40,567 78,138 78,762 171,211 169,029
Depreciation 7,477 7,193 14,931 14,359 29,401 28,511
Interest 4,818 5,205 9,355 10,335 19,929 21,280
Provision for
doubtful
accounts 1,680 1,117 3,415 2,124 6,015 5,667
-------- -------- -------- -------- -------- --------
223,040 227,716 433,426 431,951 961,673 949,044
-------- -------- -------- -------- -------- --------
Earnings (loss)
before income
taxes 369 (2,175) (1,127) (8,670) 34,373 22,998
Provision for
income taxes
(benefit) 125 (750) (383) (2,991) 11,710 7,721
-------- -------- -------- -------- -------- --------
NET EARNINGS
(LOSS) $ 244 $ (1,425) $ (744) $ (5,679) $ 22,663 $ 15,277
======== ======== ======== ======== ======== ========
NET EARNINGS
(LOSS) PER
SHARE $0.02 $(0.14) $(0.07) $(0.55) $2.18 $1.49
Average shares
outstanding 10,402 10,290 10,393 10,274 10,378 10,259
======================================================
Condensed Consolidated
Balance Sheets (Unaudited)
(in thousands)
======================================================
Assets 7/30/94 7/31/93
-------- --------
Current assets:
Cash and equivalents $ 4,187 $ 6,201
Accounts receivable, net 178,050 155,677
Merchandise inventories 158,897 157,724
Other current assets 11,744 13,888
-------- --------
Total current assets 352,878 333,490
Property, fixtures and
equipment, net 301,644 302,151
Other assets 6,746 4,727
-------- --------
$661,268 $640,368
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Notes payable $ 56,500 $ 43,500
Accounts payable 62,428 60,302
Other 32,558 26,162
-------- --------
Total current liabilities 151,486 129,964
Long-term debt and
capital lease
obligations 204,016 218,204
Other liabilities 59,263 58,572
Shareholders'equity 246,503 233,628
-------- --------
$661,268 $640,368
======== ========
DEPARTMENT STORES
Philadelphia Exton
Ardmore Christiana
Cherry Hill Burlington
Springfield Concord
Plymouth Meeting The Court at
Neshaminy King of Prussia
Echelon Willow Grove Park
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
----------------------------------
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> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JUL-30-1994
<CASH> 4,187
<SECURITIES> 0
<RECEIVABLES> 183,450
<ALLOWANCES> 5,400
<INVENTORY> 158,897
<CURRENT-ASSETS> 352,878
<PP&E> 605,065
<DEPRECIATION> 303,421
<TOTAL-ASSETS> 661,268
<CURRENT-LIABILITIES> 151,486
<BONDS> 204,016
<COMMON> 10,423
0
0
<OTHER-SE> 236,080
<TOTAL-LIABILITY-AND-EQUITY> 661,268
<SALES> 431,197
<TOTAL-REVENUES> 432,299
<CGS> 327,587
<TOTAL-COSTS> 327,587
<OTHER-EXPENSES> 93,069
<LOSS-PROVISION> 3,415
<INTEREST-EXPENSE> 9,355
<INCOME-PRETAX> (1,127)
<INCOME-TAX> (383)
<INCOME-CONTINUING> (744)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (744)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
