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Securities and Exchange Commission
þ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 36-3189198 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
Identification No.) | ||
500 Hanover Pike, Hampstead, MD | 21074-2095 | |
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if smaller reporting company) |
Class | Outstanding as of November 23, 2010 | |
Common Stock, $.01 par value | 27,622,054 |
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Exhibit 10.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | October 30, | October 31, | October 30, | |||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Net sales | $ | 161,309 | $ | 173,268 | $ | 490,969 | $ | 539,805 | ||||||||
Cost of goods sold | 60,502 | 62,429 | 188,531 | 197,320 | ||||||||||||
Gross profit | 100,807 | 110,839 | 302,438 | 342,485 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing, including occupancy costs | 67,450 | 73,961 | 200,079 | 218,228 | ||||||||||||
General and administrative | 14,043 | 16,421 | 43,514 | 50,332 | ||||||||||||
Total operating expenses | 81,493 | 90,382 | 243,593 | 268,560 | ||||||||||||
Operating income | 19,314 | 20,457 | 58,845 | 73,925 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 101 | 148 | 262 | 422 | ||||||||||||
Interest expense | (93 | ) | (33 | ) | (301 | ) | (128 | ) | ||||||||
Total other income (expense) | 8 | 115 | (39 | ) | 294 | |||||||||||
Income before provision for income taxes | 19,322 | 20,572 | 58,806 | 74,219 | ||||||||||||
Provision for income taxes | 7,594 | 8,009 | 23,111 | 29,369 | ||||||||||||
Net income | $ | 11,728 | $ | 12,563 | $ | 35,695 | $ | 44,850 | ||||||||
Per share information: | ||||||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.43 | $ | 0.46 | $ | 1.30 | $ | 1.63 | ||||||||
Diluted | $ | 0.42 | $ | 0.45 | $ | 1.29 | $ | 1.61 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 27,438 | 27,534 | 27,437 | 27,529 | ||||||||||||
Diluted | 27,798 | 27,849 | 27,778 | 27,831 |
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(In Thousands)
January 30, 2010 | October 30, 2010 | |||||||
(Audited) | (Unaudited) | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 21,853 | $ | 98,507 | ||||
Short-term investments | 169,736 | 79,746 | ||||||
Accounts receivable, net | 5,860 | 11,950 | ||||||
Inventories: | ||||||||
Finished goods | 209,443 | 258,328 | ||||||
Raw materials | 8,878 | 10,373 | ||||||
Total inventories | 218,321 | 268,701 | ||||||
Prepaid expenses and other current assets | 16,035 | 27,949 | ||||||
Total current assets | 431,805 | 486,853 | ||||||
NONCURRENT ASSETS: | ||||||||
Property, plant and equipment, net | 124,139 | 133,742 | ||||||
Other noncurrent assets | 420 | 533 | ||||||
Total assets | $ | 556,364 | $ | 621,128 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 18,225 | $ | 44,991 | ||||
Accrued expenses | 85,256 | 76,726 | ||||||
Deferred tax liability — current | 5,064 | 4,595 | ||||||
Total current liabilities | 108,545 | 126,312 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Deferred rent | 51,853 | 50,205 | ||||||
Deferred tax liability — noncurrent | 1,608 | 2,532 | ||||||
Other noncurrent liabilities | 1,048 | 878 | ||||||
Total liabilities | 163,054 | 179,927 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock | 183 | 275 | ||||||
Additional paid-in capital | 83,249 | 86,289 | ||||||
Retained earnings | 309,823 | 354,582 | ||||||
Accumulated other comprehensive income | 55 | 55 | ||||||
Total stockholders’ equity | 393,310 | 441,201 | ||||||
Total liabilities and stockholders’ equity | $ | 556,364 | $ | 621,128 | ||||
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(In Thousands)
(Unaudited)
Nine Months Ended | ||||||||
October 31, 2009 | October 30, 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 35,695 | $ | 44,850 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 16,533 | 18,107 | ||||||
Loss on disposals of property, plant and equipment | 120 | 150 | ||||||
Non-cash equity compensation | — | 701 | ||||||
Increase (decrease) in deferred taxes | (200 | ) | 455 | |||||
Net (increase) in operating working capital and other components | (57,730 | ) | (59,194 | ) | ||||
Net cash provided by (used in) operating activities | (5,582 | ) | 5,069 | |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (10,595 | ) | (20,696 | ) | ||||
Net maturities (purchases) of short-term investments | (64,879 | ) | 89,990 | |||||
Net cash provided by (used in) investing activities | (75,474 | ) | 69,294 | |||||
Cash flows from financing activities: | ||||||||
Income tax benefit from exercise of stock options | 57 | 1,300 | ||||||
Net proceeds from exercise of stock options | 38 | 1,012 | ||||||
Fractional share payments | — | (21 | ) | |||||
Net cash provided by financing activities | 95 | 2,291 | ||||||
Net increase (decrease) in cash and cash equivalents | (80,961 | ) | 76,654 | |||||
Cash and cash equivalents — beginning of period | 122,875 | 21,853 | ||||||
Cash and cash equivalents — end of period | $ | 41,914 | $ | 98,507 | ||||
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(Unaudited)
1. | BASIS OF PRESENTATION |
Fiscal year 2005 | January 28, 2006 | |
Fiscal year 2006 | February 3, 2007 | |
Fiscal year 2007 | February 2, 2008 | |
Fiscal year 2008 | January 31, 2009 | |
Fiscal year 2009 | January 30, 2010 | |
Fiscal year 2010 | January 29, 2011 |
2. | SIGNIFICANT ACCOUNTING POLICIES |
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3. | SUPPLEMENTAL CASH FLOW DISCLOSURE |
Nine Months Ended | ||||||||
October 31, 2009 | October 30, 2010 | |||||||
(In Thousands) | ||||||||
(Increase) in accounts receivable | $ | (5,849 | ) | $ | (6,090 | ) | ||
(Increase) in inventories | (42,612 | ) | (50,380 | ) | ||||
(Increase) in prepaids and other assets | (46 | ) | (11,978 | ) | ||||
Increase in accounts payable | 3,921 | 26,766 | ||||||
(Decrease) in accrued expenses | (11,800 | ) | (15,694 | ) | ||||
(Decrease) in deferred rent and other noncurrent liabilities | (1,344 | ) | (1,818 | ) | ||||
Net (increase) in operating working capital and other components | $ | (57,730 | ) | $ | (59,194 | ) | ||
Nine Months Ended | ||||||||
October 31, 2009 | October 30, 2010 | |||||||
(In Thousands) | ||||||||
Interest paid | $ | 226 | $ | 100 | ||||
Income taxes paid | $ | 36,263 | $ | 52,277 |
4. | EARNINGS PER SHARE |
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | October 30, | October 31, | October 30, | |||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
Weighted average shares outstanding for basic EPS | 27,438 | 27,534 | 27,437 | 27,529 | ||||||||||||
Dilutive effect of common stock equivalents | 360 | 315 | 341 | 302 | ||||||||||||
Weighted average shares outstanding for diluted EPS | 27,798 | 27,849 | 27,778 | 27,831 | ||||||||||||
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5. | INCOME TAXES |
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6. | SEGMENT REPORTING |
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Corporate and | ||||||||||||||||
Stores | Direct Marketing | Other | Total | |||||||||||||
Net sales(a) | $ | 154,881 | $ | 14,494 | $ | 3,893 | $ | 173,268 | ||||||||
Depreciation and amortization | 5,329 | 171 | 805 | 6,305 | ||||||||||||
Operating income (loss) (b) | 31,571 | 5,570 | (16,684 | ) | 20,457 | |||||||||||
Capital expenditures(c) | 5,533 | 254 | 2,438 | 8,225 |
Corporate and | ||||||||||||||||
Stores | Direct Marketing | Other | Total | |||||||||||||
Net sales(a) | $ | 145,759 | $ | 12,618 | $ | 2,932 | $ | 161,309 | ||||||||
Depreciation and amortization | 4,928 | 76 | 633 | 5,637 | ||||||||||||
Operating income (loss)(b) | 29,075 | 5,262 | (15,023 | ) | 19,314 | |||||||||||
Capital expenditures(c) | 2,504 | 449 | 229 | 3,182 |
Corporate and | ||||||||||||||||
Stores | Direct Marketing | Other | Total | |||||||||||||
Net sales(a) | $ | 484,477 | $ | 45,468 | $ | 9,860 | $ | 539,805 | ||||||||
Depreciation and amortization | 15,473 | 399 | 2,235 | 18,107 | ||||||||||||
Operating income (loss)(b) | 109,656 | 18,051 | (53,782 | ) | 73,925 | |||||||||||
Capital expenditures(c) | 12,873 | 1,173 | 6,650 | 20,696 |
Corporate and | ||||||||||||||||
Stores | Direct Marketing | Other | Total | |||||||||||||
Net sales(a) | $ | 440,570 | $ | 41,961 | $ | 8,438 | $ | 490,969 | ||||||||
Depreciation and amortization | 14,532 | 96 | 1,905 | 16,533 | ||||||||||||
Operating income (loss)(b) | 87,431 | 17,284 | (45,870 | ) | 58,845 | |||||||||||
Capital expenditures(c) | 8,404 | 1,295 | 896 | 10,595 |
(a) | Stores net sales represent all Full-line Store sales. Direct Marketing net sales represent catalog call center and Internet sales. Net sales from segments below the GAAP quantitative thresholds are attributable primarily to three operating segments of the Company. Those segments are factory stores, franchise stores and regional tailor shops. None of these segments have ever met any of the quantitative thresholds for determining reportable segments and are included in “Corporate and Other.” |
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(b) | Operating income (loss) for the Stores and Direct Marketing segments represents profit before allocations of overhead from the corporate office and the distribution centers, interest and income taxes (“four wall” contribution). Total Company shipping costs to customers of approximately $2.2 million and $1.4 million for the third quarters of fiscal years 2010 and 2009, respectively, and approximately $7.6 million and $5.1 million for the first nine months of fiscal years 2010 and 2009, respectively, were recorded to “Sales and marketing, including occupancy costs” in the Condensed Consolidated Statements of Income. Operating income (loss) for “Corporate and Other” consists primarily of costs included in general and administrative costs. Total operating income represents profit before interest and income taxes. | |
(c) | Capital expenditures include payments for property, plant and equipment made for the reportable segment. |
7. | LEGAL MATTERS |
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8. | INCENTIVE STOCK OPTION AND OTHER EQUITY PLANS: |
9. | RELATED PARTY TRANSACTION: |
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Percentage of Net Sales | Percentage of Net Sales | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | October 30, | October 31, | October 30, | |||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of goods sold | 37.5 | 36.0 | 38.4 | 36.6 | ||||||||||||
Gross profit | 62.5 | 64.0 | 61.6 | 63.4 | ||||||||||||
Sales and marketing expenses | 41.8 | 42.7 | 40.8 | 40.4 | ||||||||||||
General and administrative expenses | 8.7 | 9.5 | 8.9 | 9.3 | ||||||||||||
Total operating expenses | 50.5 | 52.2 | 49.6 | 49.8 | ||||||||||||
Operating income | 12.0 | 11.8 | 12.0 | 13.7 | ||||||||||||
Total other income | — | 0.1 | — | 0.1 | ||||||||||||
Income before provision for income taxes | 12.0 | 11.9 | 12.0 | 13.7 | ||||||||||||
Provision for income taxes | 4.7 | 4.6 | 4.7 | 5.4 | ||||||||||||
Net income | 7.3 | % | 7.3 | % | 7.3 | % | 8.3 | % | ||||||||
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
October 31, 2009 | October 30, 2010 | October 31, 2009 | October 30, 2010 | |||||||||||||||||||||||||||||
Square | Square | Square | Square | |||||||||||||||||||||||||||||
Stores | Feet* | Stores | Feet* | Stores | Feet* | Stores | Feet* | |||||||||||||||||||||||||
Stores open at the beginning of the period | 467 | 2,121 | 487 | 2,188 | 460 | 2,091 | 473 | 2,131 | ||||||||||||||||||||||||
Stores opened | 3 | 10 | 12 | 52 | 10 | 40 | 29 | 118 | ||||||||||||||||||||||||
Stores closed | — | — | — | — | — | — | (3 | ) | (9 | ) | ||||||||||||||||||||||
Stores open at the end of the period | 470 | 2,131 | 499 | 2,240 | 470 | 2,131 | 499 | 2,240 | ||||||||||||||||||||||||
* | Square feet is presented in thousands and excludes the square footage of the Company’s franchise stores. |
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Nine Months Ended | ||||||||
October 31, 2009 | October 30, 2010 | |||||||
Cash provided by (used in): | ||||||||
Operating activities | $ | (5,582 | ) | $ | 5,069 | |||
Investing activities | (75,474 | ) | 69,294 | |||||
Financing activities | 95 | 2,291 | ||||||
Net increase (decrease) in cash and cash equivalents | $ | (80,961 | ) | $ | 76,654 | |||
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Amounts | ||||||||||||||||
Amounts | Collected | Amounts | ||||||||||||||
Collected in | YTD in | Outstanding | ||||||||||||||
Negotiated | Fiscal Year | Fiscal Year | October 30, | |||||||||||||
Amounts | 2009 | 2010 | 2010 | |||||||||||||
(In Thousands ) | ||||||||||||||||
Full Fiscal Year 2009 Store Openings (14 Stores) | $ | 2,829 | $ | 2,170 | $ | 649 | $ | 10 | ||||||||
First Nine Months of Fiscal Year 2010 Store Openings (29 Stores) | 3,648 | — | 1,041 | 2,607 | ||||||||||||
$ | 6,477 | $ | 2,170 | $ | 1,690 | $ | 2,617 | |||||||||
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Payments Due by Fiscal Year | ||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Beyond | ||||||||||||||||||||
2010 | 2011-2013 | 2014-2015 | 2015 | Total(f) | ||||||||||||||||
Operating leases(a) (b) | $ | 57,299 | $ | 175,150 | $ | 81,094 | $ | 77,490 | $ | 391,033 | ||||||||||
Inventory Purchase Commitments(c) | 78,791 | 208,476 | — | — | 287,267 | |||||||||||||||
Related Party Agreement(d) | 825 | 2,475 | — | — | 3,300 | |||||||||||||||
License agreement (e) | 165 | 495 | 330 | — | 990 |
(a) | Includes various lease agreements for stores to be opened and equipment placed in service subsequent to October 30, 2010. | |
(b) | Excludes contingent rent and other lease costs. | |
(c) | Represents the value of expected future inventory purchases for receipts out to the end of fiscal year 2011 for which purchase orders have been issued or other commitments have been made to vendors as of October 30, 2010. | |
(d) | Relates to consulting agreement with the Company’s current Chairman of the Board to consult on matters of strategic planning and initiatives. | |
(e) | Related to an agreement with David Leadbetter, a golf professional, which allows the Company to produce golf and other apparel under his name. | |
(f) | Obligations related to unrecognized tax benefits and related penalties and interest of $0.7 million have been excluded from the above table as the amount to be settled in cash and the specific payment dates are not known. |
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Our business could be adversely affected by increased costs of the raw materials and other resources that are important to our business.
Our products are manufactured using several key raw materials, including wool and cotton, which are subject to fluctuations in price and availability. The prices for these raw materials can be volatile due to the demand for fabrics, weather conditions, supply conditions, government regulations, economic, climate and other unpredictable factors. We purchase the raw materials for approximately 11% of our finished products. Five vendors accounted for over 83% of the raw materials purchased directly by us in fiscal year 2009. The remainder of our finished products are purchased as finished units, with the vendor responsible for the acquisition of the raw materials. Some of these finished unit vendors purchase raw materials from the same suppliers as the Company. Changes in raw materials costs, such as wool and cotton, to the vendors or to us may impact the long-term cost of our finished products. Specifically, as set in this Quarterly Report on Form 10-Q under Management’s Discussion and Analysis of Financial Condition and Results of Operations, in recent months the prices of cotton and other production inputs have increased significantly. The Company expects these prices to continue to remain at these elevated levels in 2011, which will have a significant impact on the Company’s product costs and potentially have a negative impact on its gross profit margin. Fuel costs and labor costs could also have an adverse impact on our vendors’ manufacturing costs and on our freight and other costs. Any significant fluctuations in price or availability of our raw materials and other resources or any significant increase in the price or decrease in the availability of the raw materials and other resources that are important to our business could have a material adverse impact on our business, financial condition and results of operations.
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Exhibits | ||||
10.1 | First Amendment, dated November 30, 2010, to Consulting Agreement, dated as of September 9, 2008, between Jos. A Bank Clothiers, Inc. and Robert N. Wildrick. | |||
31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1 | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Jos. A. Bank Clothiers, Inc. (Registrant) | ||||
Dated: December 1, 2010 | /s/ DAVID E. ULLMAN | |||
David E. Ullman | ||||
Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer) |
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Exhibits | ||||
10.1 | First Amendment, dated November 30, 2010, to Consulting Agreement, dated as of September 9, 2008, between Jos. A Bank Clothiers, Inc. and Robert N. Wildrick. | |||
31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1 | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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