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 April 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1308
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STRAWBRIDGE & CLOTHIER
- - -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1131660
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
801 Market Street
Philadelphia, PA 19107-3199
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(Address of principal executive offices) (Zip Code)
(215) 629-6779
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(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 May 30, 1994 is 7,178,255.
The number of shares of Series B Common Stock, par value $1 per share, of the
registrant outstanding at May 30, 1994 is 3,208,148.
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Form 10-Q
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
---------------------------------------
INDEX
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Page
PART I. FINANCIAL INFORMATION Number
- - ----------------------------- ------
Item 1. Financial Statements (unaudited)
Condensed consolidated statements of operations--
three months and trailing years ended April 30, 1994
and May 1, 1993. 3
Condensed consolidated balance sheets--April 30, 1994
and January 29, 1994. 4
Condensed consolidated statements of cash flows--three
months ended April 30, 1994 and May 1, 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 8
SIGNATURES 9
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Form 10-Q
Page 3
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<TABLE>
THREE MONTHS TRAILING YEAR
ENDED ENDED
--------------------------------------------
April 30, May 1, April 30, May 1,
1994 1993 1994 1993
--------------------------------------------
<S> <C> <C> <C> <C>
Net sales, including leased department sales $208,303 $197,151 $995,767 $959,338
Other income, net of other deductions 587 588 2,411 1,610
--------------------------------------------
208,890 197,739 998,178 960,948
Deduct:
Cost of sales, including occupancy
and buying costs 158,070 152,737 739,234 716,142
Selling and administrative expenses,
net of finance charges 38,590 38,195 172,230 166,760
Depreciation 7,454 7,166 29,117 28,398
Interest 4,537 5,130 20,316 21,423
Provision for doubtful accounts 1,735 1,007 5,452 5,786
--------------------------------------------
210,386 204,235 966,349 938,509
Earnings (loss) before income taxes (1,496) (6,496) 31,829 22,439
Income taxes (benefit) (508) (2,241) 10,835 7,530
--------------------------------------------
NET EARNINGS (LOSS) ($988) ($4,255) $20,994 $14,909
============================================
NET EARNINGS (LOSS) PER SHARE ($0.10) ($0.41) $2.03 $1.45
============================================
Cash dividends per share:
Series A Common Stock $0.275 $0.27 $1.10 $1.08
============================================
Series B Common Stock $0.25 $0.24 $1.00 $0.96
============================================
Average shares outstanding 10,386 10,293 10,350 10,250
============================================
See notes to condensed consolidated financial statements.
</TABLE>
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Form 10-Q
Page 4
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
April 30, January 29,
1994 1994
------------ ------------
ASSETS
CURRENT ASSETS
Cash and equivalents $1,819 $2,860
Accounts receivable, less allowance
(4/30/94 - $5,250; 1/29/94 - $5,000) 183,744 200,433
Merchandise inventories 168,105 143,132
Deferred income taxes 2,397 2,397
Prepaid expenses and other 9,149 7,379
------------ ------------
TOTAL CURRENT ASSETS 365,214 356,201
PROPERTY, FIXTURES AND EQUIPMENT 597,839 588,949
Less allowance for depreciation (296,036) (288,581)
------------ ------------
301,803 300,368
OTHER ASSETS 6,556 6,483
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$673,573 $663,052
============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes payable $65,000 $43,500
Accounts payable 69,681 60,138
Accrued expenses 18,559 20,724
Taxes on income 46 11,203
Long-term debt and capital lease
obligations due within one year 8,462 11,055
------------ ------------
TOTAL CURRENT LIABILITIES 161,748 146,620
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS - due after one year 204,917 205,808
ACCRUED RETIREMENT COSTS 49,840 49,795
DEFERRED INCOME TAXES 3,355 3,355
OTHER LIABILITIES 5,288 5,272
SERIES PREFERRED STOCK 0 0
SHAREHOLDERS' EQUITY
Common stock 10,386 10,386
Other shareholders' equity 238,039 241,816
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 248,425 252,202
------------ ------------
$673,573 $663,052
============ ============
See notes to condensed consolidated financial statements.
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Form 10-Q
Page 5
STRAWBRIDGE & CLOTHIER AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
THREE MONTHS ENDED
-----------------------
April 30, May 1,
1994 1993
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CASH FLOWS USED IN OPERATING ACTIVITIES ($7,125) ($16,615)
NET CASH USED FOR INVESTING ACTIVITIES
Acquisition of property, fixtures and equipment (8,890) (4,097)
Changes in other assets (73) (229)
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TOTAL (8,963) (4,326)
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NET CASH PROVIDED BY(USED FOR) FINANCING
ACTIVITIES
Payment of long-term debt and capital lease
obligations (3,484) (3,031)
Increase in short-term notes payable 21,500 24,500
Purchase of preferred stock and treasury stock (189) (202)
Cash dividends (2,780) (2,665)
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TOTAL 15,047 18,602
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CHANGE IN CASH AND EQUIVALENTS (1,041) (2,339)
Cash and equivalents at beginning of period 2,860 5,372
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CASH AND EQUIVALENTS AT END OF PERIOD $1,819 $3,033
========== ==========
See notes to condensed consolidated financial statements.
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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 months ended April 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.
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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 increases of 5.7% and 3.8% for the three months and trailing year ended
April 30, 1994, respectively. The increase in sales for the current quarter
reflects signs of economic improvement in the Company's trading area.
Additionally, weather conditions for the current-year quarter were less severe
than the prior year.
Costs and expenses as a percentage of sales and the effective tax rates were as
follows:
THREE MONTHS ENDED TRAILING YEAR ENDED
------------------ -------------------
4/30/94 5/1/93 4/30/94 5/1/93
--------- -------- --------- --------
Cost of sales, including occupancy
and buying costs 75.9 77.5 74.2 74.6
Selling and administrative expenses,
net of finance charges 18.5 19.4 17.3 17.4
Depreciation 3.6 3.6 2.9 3.0
Interest 2.2 2.6 2.0 2.2
Provision for
doubtful accounts .8 .5 .5 .6
Effective tax rate 34.0 34.5 34.0 33.6
Cost of sales, including occupancy and buying costs, for the three months ended
April 30, 1994, reflect increased margins and reduced occupancy and buying
costs. The decrease in trailing year cost of sales as a percentage of sales
reflects reduced occupancy and buying costs which offset a slight decrease in
margins. Selling and administrative expenses, net of finance charges, for the
three months and trailing year ended April 30, 1994, reflect continued control
of operating expenses, partially offset by planned increases in advertising
expenses. Interest expense for the three months and trailing year ended April
30, 1994, declined due to the refinancing of high-rate long-term debt.
Increases in short-term borrowing rates did not materially affect first quarter
fiscal 1994 results. The provision for doubtful accounts for the three months
and trailing year ended April 30, 1994 includes an increase in the bad debt
reserve of $250,000, taken in response to an increase in accounts receivable
write-offs in the current three month period. 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.
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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 resulted in a use of $7.1 million of cash for the three
months ended April 30, 1994, compared to $16.6 million in the prior year. The
change is primarily a result of careful control of inventory levels.
Capital expenditures of $8.9 million for the three months ended April 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 $4.1 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. The Company is currently negotiating related
leases and construction contracts. Capital expenditures for fiscal 1994 are
expected to total $34.6 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 $15.0 million for the three months ended April 30, 1994,
compared to $18.6 million for the prior year period.
The ratio of current assets to current liabilities was 2.26 at the end of the
first quarter of fiscal 1994, compared to 2.43 at the end of fiscal 1993 and
2.37 at the end of the first 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 April 30, 1994 reflect an increase of $23,522,000 over the May 1, 1993
amount. Long-term debt and capital lease obligations were 45.2% of
capitalization at April 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 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
--------
None.
(b) Reports on Form 8-K
-------------------
None.
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Form 10-Q
Page 9
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: June 13, 1994
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/s/ Steven L. Strawbridge
----------------------------------------
Steven L. Strawbridge
Vice President, Treasurer & Secretary
(principal financial officer)
To Our Shareholders:
For the first quarter of the fiscal year
1994, ended April 30, sales were $208,303,000
compared to $197,151,000 for the same period
last year, an increase of 5.7%. The Company
incurred a loss for the quarter of $988,000
compared to a loss of $4,255,000 last year.
Loss per share was $.10 in 1994's first
quarter compared to a loss per share of $.41
last year.
The increase in sales for the quarter was
due to signs of economic improvement in the
Company's trading region as well as less
adverse weather conditions than last year.
Cost of sales decreased to 75.9% of sales
from 77.5% of sales last year because of
increased margins and a reduction in
occupancy and buying costs. Selling, general
and administrative costs decreased to 18.5%
of sales from 19.4%, reflecting continued
expense controls partially offset by an
increase in promotional expense.
The Company is continuing its program of
renovating existing Clover stores, the last
two of which in Hamilton Township, New Jersey
and Cheltenham Township, Pennsylvania, were
completed earlier this spring. In addition,
construction is well along on the renovation
of the women's shoes, intimate apparel and
children's departments of the Company's
headquarters store.
The Annual Meeting of shareholders was
held on Wednesday, May 25, 1994 in the
Philadelphia store. The shareholders elected
the five Directors nominated in the Company's
proxy statement, including two new Directors.
The appointment of Ernst & Young as the
Company's independent auditors for fiscal
1994 was approved.
Chairman of the Board President
STRAWBRIDGE & CLOTHIER
==========================================================================
Consolidated Statements of Operations (Unaudited)
(in thousands, except number of shares and per share data)
==========================================================================
Thirteen Weeks Ended Trailing Year Ended
-------------------- ---------------------
4/30/94 5/1/93 4/30/94 5/1/93
-------------------- ---------------------
Net sales $208,303 $197,151 $995,767 $959,338
Other income, net of other
deductions 587 588 2,411 1,610
-------- -------- -------- --------
208,890 197,739 998,178 960,948
Cost of sales 158,070 152,737 739,234 716,142
Selling, general and
administrative costs 38,590 38,195 172,230 166,760
Depreciation 7,454 7,166 29,117 28,398
Interest 4,537 5,130 20,316 21,423
Provision for doubtful accounts 1,735 1,007 5,452 5,786
-------- -------- -------- --------
210,386 204,235 966,349 938,509
-------- -------- -------- --------
Earnings (loss) before income taxes (1,496) (6,496) 31,829 22,439
Provision for income taxes (benefit) (508) (2,241) 10,835 7,530
-------- -------- -------- --------
NET EARNINGS (LOSS) $ (988) $ (4,255) $ 20,994 $ 14,909
======== ======== ======== ========
NET EARNINGS (LOSS) PER SHARE $(.10) $(.41) $2.03 $1.45
Average shares outstanding 10,386,403 10,292,801 10,350,029 10,250,330
===============================================================================
NOTES: (1) This is an interim statement subject to audit.
(2) 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>
=============================================
Condensed Consolidated
Balance Sheets (Unaudited)
(in thousands)
=============================================
Assets 4/30/94 5/1/93
------- ------
Current assets:
Cash and
equivalents $ 1,819 $ 3,033
Accounts receivable,
net 183,744 160,222
Merchandise
inventories 168,105 179,783
Other current assets 11,546 12,051
-------- --------
Total current assets 365,214 355,089
Property, fixtures and
equipment, net 301,803 304,123
Other assets 6,556 4,546
-------- --------
$673,573 $663,758
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Notes payable $ 65,000 $ 52,000
Accounts payable 69,681 68,311
Other 27,067 29,654
-------- --------
Total current
liabilities 161,748 149,965
Long-term debt and
capital lease
obligations 204,917 219,138
Other liabilities 58,483 58,760
Shareholders'equity 248,425 235,895
-------- --------
$673,573 $663,758
======== ========
DEPARTMENT STORES
Philadelphia Exton FIRST
Ardmore Christiana QUARTER
Cherry Hill Burlington REPORT
Springfield Concord 1994
Plymouth Meeting The Court at
Neshaminy King of Prussia
Echelon Willow Grove Park
CLOVER STORES
Marlton Warrington STRAWBRIDGE
Blackwood Cheltenham & CLOTHIER
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
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