SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 2, 1998
-----------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from
__________ to __________
Commission file Number 0-14681
J. BAKER, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2866591
(State of Incorporation) (IRS Employer Identification Number)
555 Turnpike Street, Canton, Massachusetts 02021
(Address of principal executive offices)
(781) 828-9300
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such period that the Registrant was required to
file such reports), and (2) has been subject to filing such reports for the past
90 days.
YES [X] NO [ ]
13,940,940 shares of common stock were outstanding on May 2, 1998.
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
May 2, 1998 (unaudited) and January 31, 1998
May 2, January 31,
Assets 1998 1998
------ -------- -------
Current assets:
Cash and cash equivalents $ 1,086,156 $ 3,995,995
Accounts receivable:
Trade, net 14,924,625 9,576,156
Other 1,799,362 9,485,578
----------- -----------
16,723,987 19,061,734
---------- -----------
Merchandise inventories 172,193,582 159,407,002
Prepaid expenses 6,940,366 4,418,171
Deferred income taxes, net 4,900,000 5,230,000
---------- -----------
Total current assets 201,844,091 192,112,902
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 19,532,487 19,532,487
Furniture, fixtures and equipment 74,854,627 72,359,381
Leasehold improvements 25,849,506 24,832,306
----------- -----------
120,236,620 116,724,174
Less accumulated depreciation and amortization 47,265,260 44,595,098
----------- -----------
Net property, plant and equipment 72,971,360 72,129,076
----------- -----------
Deferred income taxes, net 55,254,380 55,950,000
Other assets, at cost, less accumulated amortization 11,951,202 14,875,434
----------- -----------
$342,021,033 $335,067,412
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 2,073,091 $ 2,060,387
Accounts payable 48,554,703 52,108,352
Accrued expenses 13,540,290 14,176,048
Income taxes payable 929,365 979,560
------------ -----------
Total current liabilities 65,097,449 69,324,347
----------- -----------
Other liabilities 4,081,060 4,229,800
Long-term debt, net of current portion 126,663,893 114,407,640
Senior subordinated debt - 1,490,111
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 75,825,631 75,262,514
----------- -----------
$342,021,033 $335,067,412
=========== ===========
See accompanying notes to consolidated financial statements.
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the quarters ended May 2, 1998 and May 3, 1997
(Unaudited)
Quarter Quarter
Ended Ended
May 2, 1998 May 3, 1997
----------- -----------
Net sales $126,636,564 $137,350,261
Cost of sales 68,312,559 75,352,452
----------- -----------
Gross profit 58,324,005 61,997,809
Selling, administrative and general expenses 50,782,456 55,694,829
Depreciation and amortization 3,098,046 2,653,393
---------- ----------
Operating income 4,443,503 3,649,587
Net interest expense 3,597,160 3,207,576
----------- -----------
Earnings before income taxes 846,343 442,011
Income tax expense 330,000 173,000
----------- -----------
Net earnings $ 516,343 $ 269,011
=========== ===========
Net earnings per common share:
Basic $ 0.04 $ 0.02
=========== ============
Diluted $ 0.04 $ 0.02
=========== ============
Number of shares used to compute net earnings per common share:
Basic 13,920,294 13,892,969
=========== ===========
Diluted 14,064,373 13,931,335
=========== ===========
Dividends declared per share $ 0.015 $ 0.015
=========== ============
See accompanying notes to consolidated financial statements.
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the quarters ended May 2, 1998 and May 3, 1997
(Unaudited)
May 2, 1998 May 3, 1997
----------- -----------
Cash flows from operating activities:
Net earnings $ 516,343 $ 269,011
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization:
Fixed assets 2,670,162 2,459,480
Deferred charges, intangible assets and
deferred financing costs 429,853 203,588
Deferred income taxes, net 1,025,620 -
Grants of performance share awards 255,563 -
Change in:
Accounts receivable 2,337,747 (3,889,958)
Merchandise inventories (12,786,580) (26,620,927)
Prepaid expenses (2,393,160) (2,070,170)
Accounts payable (3,553,649) 1,115,605
Accrued expenses (635,758) (12,844,928)
Income taxes payable/receivable (50,195) 85,233
Other liabilities (110,913) 143,424
------------ -----------
Net cash used in operating activities (12,294,967) (41,149,642)
------------ -----------
Cash flows from investing activities: Capital expenditures for:
Property, plant and equipment (3,512,446) (2,829,111)
Other assets (486,017) (148,464)
Payments received on notes receivable - 725,000
Proceeds from sales of footwear businesses 2,902,335 58,630,247
----------- ----------
Net cash provided by (used in) investing activities (1,096,128) 56,377,672
----------- -----------
Cash flows from financing activities:
Repayment of senior debt (1,500,000) (1,500,000)
Proceeds from (repayment of) other long-term debt 12,404,379 (15,100,000)
Repayment of mortgage payable (135,422) (123,808)
Payment of mortgage escrow, net (78,912) (78,912)
Proceeds from issuance of common stock, net of retirements - 11,856
Payment of dividends (208,789) (208,398)
----------- ----------
Net cash provided by (used in) financing activities 10,481,256 (16,999,262)
----------- ------------
Net decrease in cash (2,909,839) (1,771,232)
Cash and cash equivalents at beginning of year 3,995,995 3,969,116
----------- -----------
Cash and cash equivalents at end of period $ 1,086,156 $ 2,197,884
=========== ===========
Supplemental disclosure of cash flow information Cash paid for:
Interest $ 2,398,464 $ 2,032,569
Income taxes 50,195 87,767
Income taxes refunded (876,349) -
========== ============
Schedule of non-cash financing activity:
Common stock issued for performance share awards 255,563 -
=========== ============
See accompanying notes to consolidated financial statements
J. BAKER, INC. AND SUBSIDIARIES
NOTES
1] The accompanying unaudited consolidated financial statements, in the opinion
of management, include all adjustments necessary for a fair presentation of the
Company's financial position and results of operations. The results for the
interim periods are not necessarily indicative of results that may be expected
for the entire fiscal year.
2] In February, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings
Per Share" ("EPS"), which the Company adopted in fiscal 1998. Basic EPS is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the period. Diluted EPS is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding, after giving effect to all dilutive
potential common shares, that were outstanding during the period.
For the quarters ended May 2, 1998 and May 3, 1997, the calculation of
diluted earnings per common share includes the dilutive effect of outstanding
stock options and warrants. Also included in the calculation of diluted earnings
per common share is the dilutive effect of performance share awards for the
quarter ended May 2, 1998. The common stock issuable under the 7% convertible
subordinated notes due 2002 and the convertible debentures was not included in
the calculation for the quarters ended May 2, 1998 and May 3, 1997 because its
effect would be antidilutive. All net earnings per common share amounts for all
periods presented have been restated to conform to SFAS No. 128 requirements.
Net earnings and shares used to compute net earnings per common share,
basic and diluted, are reconciled below:
May 2, 1998 May 3, 1997
----------- -----------
Net earnings, basic and diluted $ 516,343 $ 269,011
========== ==========
Weighted average common shares:
Basic 13,920,294 13,892,969
Effect of dilutive securities:
Stock options and performance share awards 144,079 38,366
----------- -----------
Diluted 14,064,373 13,931,335
========== ==========
3] The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"), effective February 1, 1998.
SFAS No. 130 requires that items defined as other comprehensive income be
separately classified in the financial statements. As the Company has no other
comprehensive income in the current period, nor does it have accumulated other
comprehensive income from prior periods, adoption of SFAS No. 130 has no effect
on the Company's financial statements.
4] In June, 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS No. 131"). SFAS No. 131 establishes new standards for reporting
information about operating segments. Current financial statements are presented
substantially in accordance with SFAS No. 131.
5] In April, 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued a Statement of Position ("SOP")
98-5 entitled "Reporting on the Costs of Start-Up Activities". The SOP, which is
effective for fiscal years beginning after December 15, 1998, requires entities
to expense as incurred all start-up and pre-opening costs that are not otherwise
capitalizable as long-lived assets. Restatement of previously issued annual
financial statements is not permitted by the SOP, and entities are not permitted
to report the pro forma effects of the retroactive application of the new
accounting standard. The Company believes the adoption of this SOP will not have
a material impact on its financial statements.
6] During the fourth quarter of fiscal 1997, the Company restructured its
footwear operations. In connection with the restructuring, the Company downsized
its Licensed Discount footwear division, and in March, 1997, completed the sales
of its Shoe Corporation of America ("SCOA") and Parade of Shoes divisions.
On March 5, 1997, the Company announced it had sold its SCOA division to
an entity formed by CHB Capital Partners of Denver, Colorado along with Dennis
B. Tishkoff, President of SCOA, and certain members of SCOA management. Net cash
proceeds from the transaction of approximately $40.0 million were used to pay
down the Company's bank debt. Sales in the Company's SCOA division totaled $9.5
million for the quarter ended May 3, 1997.
On March 10, 1997, the Company completed the sale of its Parade of Shoes
division to Payless ShoeSource, Inc. of Topeka, Kansas. Net cash proceeds from
the transaction of approximately $20.0 million were used to pay down the
Company's bank debt. Sales in the Company's Parade of Shoes division totaled
$8.2 million for the quarter ended May 3, 1997.
7] On May 30, 1997, the Company replaced its $145 million credit facility by
obtaining two separate revolving credit facilities, both of which are guaranteed
by J. Baker, Inc. One facility, which finances the Company's apparel businesses,
was a $100 million revolving credit facility with Fleet National Bank,
BankBoston, N.A., The Chase Manhattan Bank, Imperial Bank, USTrust, Wainwright
Bank & Trust Company and Bank Polska Kasa Opieki S.A. (the "Apparel Credit
Facility"). The Apparel Credit Facility is secured by all of the capital stock
of The Casual Male, Inc. and three other subsidiaries of the Company. The
aggregate commitment amount under The Apparel Credit Facility was reduced from
$100 million to $90 million on December 31, 1997, by amendment was increased to
$95 million on April 3, 1998 and will automatically be reduced by $10 million on
each of December 31, 1998 and December 31, 1999. Borrowings under the Apparel
Credit Facility bear interest at variable rates and can be in the form of loans,
bankers' acceptances and letters of credit. This facility expires on May 31,
2000.
To finance its Licensed Discount footwear business, the Company obtained a
$55 million revolving credit facility, secured by substantially all of the
assets of JBI, Inc. and Morse Shoe, Inc., with BankBoston Retail Finance Inc.
(formerly known as GBFC, Inc.) and Fleet National Bank (the "Footwear Credit
Facility"). The aggregate commitment amount under the Footwear Credit Facility
was reduced by $5 million on June 30, 1997. Aggregate borrowings under the
Footwear Credit Facility are limited to an amount determined by a formula based
on various percentages of eligible inventory and accounts receivable. Borrowings
under the Footwear Credit Facility bear interest at variable rates and can be in
the form of loans or letters of credit. This facility expires on May 31, 2000.
8] On June 23, 1995, Bradlees Stores, Inc. ("Bradlees"), a licensor of the
Company, filed for protection under Chapter 11 of the United States Bankruptcy
Code. At the time of the bankruptcy filing, the Company had outstanding accounts
receivable of approximately $1.8 million due from Bradlees. Under bankruptcy
law, Bradlees has the option of continuing (assuming) the existing license
agreement with the Company or terminating (rejecting) that agreement. On April
13, 1998, Bradlees filed its Joint Plan of Reorganization and Disclosure
Statement with the United States Bankruptcy Court for the Southern District of
New York. If the license agreement is assumed, Bradlees must cure all defaults
under the agreement and the Company will collect in full the outstanding past
due receivable. Although the Company believes that the rejection of the license
agreement or the cessation of Bradlees' business is not probable, in the event
that the agreement is rejected or Bradlees does not continue in business, the
Company believes it will have a substantial claim for damages. If such a claim
is necessary, the amount realized by the Company relative to the carrying values
of the Company's Bradlees-related assets will be based on the relevant facts and
circumstances. The Company does not expect this filing under the Bankruptcy Code
to have a material adverse effect on future earnings. The Company's sales in the
Bradlees chain for the quarter ended May 2, 1998 were $9.4 million.
9] On September 17, 1997, the Company settled a patent infringement lawsuit
brought against the Company and Morse Shoe, Inc., a subsidiary of the Company,
by Susan Maxwell. Pursuant to the settlement agreement, both cases were
dismissed with prejudice with no admissions of liability and the parties
executed a mutual release of all claims. Under the terms of the settlement, the
Company agreed to make payments to Ms. Maxwell of $4,137,000, in the aggregate,
over a three-year period and in connection with the settlement, recorded a
one-time charge to earnings of $3.4 million ($2.1 million on an after-tax basis)
during the third quarter of fiscal 1998 reflecting costs of the settlement not
previously accrued for.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
STATEMENTS MADE OR INCORPORATED INTO THIS QUARTERLY REPORT INCLUDE A NUMBER OF
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934.
FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS CONTAINING
THE WORDS "ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS", "FUTURE" AND WORDS OF
SIMILAR IMPORT, WHICH EXPRESS MANAGEMENT'S BELIEF, EXPECTATIONS OR INTENT
REGARDING THE COMPANY'S FUTURE PERFORMANCE. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MAY CAUSE SUCH DIFFERENCES ARE DESCRIBED IN THE SECTION ENTITLED
"CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS" FOUND ON PAGE 10 OF THIS
QUARTERLY REPORT.
All references herein to fiscal 1999 and 1998 relate to the years ending January
30, 1999 and January 31, 1998, respectively.
Results of Operations
First Quarter Fiscal 1999 versus First Quarter Fiscal 1998
The Company's net sales decreased by $10.7 million to $126.7 million in
the first quarter of fiscal 1999 from $137.4 million in the first quarter of
fiscal 1998, primarily due to the disposition of the Company's SCOA and Parade
of Shoes businesses in March, 1997. Sales in the Company's apparel operations
increased by $5.9 million primarily due to an increase in the number of Casual
Male Big & Tall stores in operation during the first quarter of fiscal 1999 over
the first quarter of fiscal 1998 and a 5.1% increase in comparable apparel store
sales (Comparable apparel store sales increases/decreases are based upon
comparisons of weekly sales volume in Casual Male Big & Tall stores and Work 'n
Gear stores which were open in corresponding weeks of the two comparison
periods). Excluding net sales in the Company's SCOA and Parade of Shoes
businesses of $17.7 million for the quarter ended May 3, 1997, sales in the
Company's footwear operations increased by $1.1 million, primarily due to a 4.6%
increase in comparable retail footwear store sales (Comparable retail footwear
store sales increases/decreases are based upon comparisons of weekly sales
volume in licensed footwear departments which were open in corresponding weeks
of the two comparison periods.)
The Company's cost of sales constituted 53.9% of sales in the first
quarter of fiscal 1999 as compared to 54.9% of sales in the first quarter of
fiscal 1998. Cost of sales in the Company's apparel operations was 51.4% of
sales in the first quarter of fiscal 1999 as compared to 52.7% of sales in the
first quarter of fiscal 1998. The decrease in such percentage was primarily
attributable to lower markdowns as a percentage of sales, partially offset by a
lower initial markup on merchandise purchases. Cost of sales in the Company's
footwear operations was 57.3% of sales in the first quarter of fiscal 1999, as
compared to 56.8% of sales in the first quarter of fiscal 1998. Cost of sales in
the Company's Licensed Discount division was 57.3% of sales in the first quarter
of fiscal 1999, as compared to 57.9% of sales in the first quarter of fiscal
1998. The decrease in such percentage was primarily attributable to a higher
initial markup on merchandise purchases, partially offset by higher markdowns as
a percentage of sales.
Selling, administrative and general expenses decreased $4.9 million, or
8.8%, to $50.8 million in the first quarter of fiscal 1999 from $55.7 million in
the first quarter of fiscal 1998, primarily due to the disposition of the
Company's SCOA and Parade of Shoes businesses in March, 1997. As a percentage of
sales, selling, administrative and general expenses were 40.1% of sales in the
first quarter of fiscal 1999, as compared to 40.5% of sales in the first quarter
of fiscal 1998. Selling, administrative and general expenses in the Company's
apparel operations were 41.7% of sales in the first quarter of fiscal 1999 as
compared to 41.2% of sales in the first quarter of fiscal 1998. This increase
was primarily due to a higher corporate overhead allocation, as a portion of
these costs in the first quarter of fiscal 1998 were allocated to the divested
SCOA and Parade of Shoes divisions. Selling, administrative and general expenses
in the Company's footwear operations were 38.0% of sales in the first quarter of
fiscal 1999 as compared to 39.9% of sales in the first quarter of fiscal 1998.
This decrease was primarily due to the increased proportion of Licensed Discount
shoe department sales to total footwear sales in the first quarter of fiscal
1999 versus the first quarter of fiscal 1998. The Company's Licensed Discount
shoe division has lower selling, administrative and general expenses as a
percentage of sales than the aggregate selling, administrative and general
expenses as a percentage of sales in the divested SCOA and Parade of Shoes
divisions.
Depreciation and amortization expense increased by $445,000 to $3.1
million in the first quarter of fiscal 1999 from $2.7 million in the first
quarter of fiscal 1998, primarily due to an increase in depreciable and
amortizable assets.
As a result of the above, the Company's operating income increased to
$4.4 million in the first quarter of fiscal 1999 from $3.6 million in the first
quarter of fiscal 1998. As a percentage of sales, operating income was 3.5% in
the first quarter of fiscal 1999 as compared to 2.7% in the first quarter of
fiscal 1998.
Net interest expense increased by $390,000 to $3.6 million in the first
quarter of fiscal 1999 from $3.2 million in the first quarter of fiscal 1998,
primarily due to a change in the Company's method of financing foreign
merchandise purchases with bank borrowings for the first quarter of fiscal 1999
versus the use of bankers' acceptances in the first quarter of fiscal 1998,
partially offset by lower interest rates on bank borrowings and lower levels of
bank borrowings in the first quarter of fiscal 1999 versus the first quarter of
fiscal 1998.
Taxes on earnings for the first quarter of fiscal 1999 were $330,000,
yielding an effective tax rate of 39.0%, as compared to taxes on earnings of
$173,000, yielding an effective tax rate of 39.1%, in the first quarter of
fiscal 1998.
Net earnings for the first quarter of fiscal 1999 were $516,000, as
compared to net earnings of $269,000 in the first quarter of fiscal 1998, an
increase of 91.9%.
Financial Condition
May 2, 1998 versus January 31, 1998
The decrease in accounts receivable at May 2, 1998 from January 31,
1998 was primarily due to the receipt of litigation settlement proceeds,
partially offset by an increase in trade receivables due to seasonal factors,
licensed footwear department sales in April being higher than licensed footwear
department sales in January.
The increase in merchandise inventories at May 2, 1998 from January 31,
1998 was primarily due to a seasonal increase in the average inventory level per
location.
The decrease in other assets at May 2, 1998 was primarily due to the
receipt of funds held in escrow related to the sales of the footwear businesses.
The decrease in accounts payable at May 2, 1998 from January 31, 1998
was primarily due to an increase in direct import merchandise purchases, which
are paid for sooner than domestic merchandise purchases. The ratio of accounts
payable to merchandise inventory was 28.2% at May 2, 1998, as compared to 32.7%
at January 31, 1998 and 35.1% at May 3, 1997.
The increase in long-term debt, net of current portion, at May 2, 1998
from January 31, 1998 was primarily due to additional bank borrowings to meet
seasonal working capital needs and to fund capital expenditures.
Liquidity and Capital Resources
On May 30, 1997, the Company replaced its $145 million credit facility
by obtaining two separate revolving credit facilities, both of which are
guaranteed by J. Baker, Inc. One facility, which finances the Company's apparel
businesses, was a $100 million revolving credit facility with Fleet National
Bank, BankBoston, N.A., The Chase Manhattan Bank, Imperial Bank, USTrust,
Wainwright Bank & Trust Company and Bank Polska Kasa Opieki S.A. (the "Apparel
Credit Facility"). The Apparel Credit Facility is secured by all of the capital
stock of The Casual Male, Inc. and three other subsidiaries of the Company. The
aggregate commitment under the Apparel Credit Facility was reduced from $100
million to $90 million on December 31, 1997, by amendment was increased to $95
million on April 3, 1998, and will automatically be reduced by $10 million on
each of December 31, 1998 and December 31, 1999. Borrowings under the Apparel
Credit Facility bear interest at variable rates and can be in the form of loans,
bankers' acceptances and letters of credit. This facility expires on May 31,
2000.
To finance its Licensed Discount footwear business, the Company
obtained a $55 million revolving credit facility, secured by substantially all
of the assets of JBI, Inc. and Morse Shoe, Inc., with BankBoston Retail Finance
Inc. (formerly known as GBFC, Inc.) and Fleet National Bank (the "Footwear
Credit Facility"). The aggregate commitment under the Footwear Credit Facility
was reduced by $5 million on June 30, 1997. Aggregate borrowings under the
Footwear Credit Facility are limited to an amount determined by a formula based
on various percentages of eligible inventory and accounts receivable. Borrowings
under the Footwear Credit Facility bear interest at variable rates and can be in
the form of loans or letters of credit. This facility expires on May 31, 2000.
As of May 2, 1998, the Company had aggregate borrowings outstanding
under its Apparel Credit Facility and its Footwear Credit Facility totaling
$82.8 million and $38.9 million, respectively, consisting of loans and
obligations under letters of credit.
Net cash used in operating activities for the first quarter of fiscal
1999 was $12.3 million, as compared to net cash used in operating activities of
$41.1 million in the first quarter of fiscal 1998. The $28.8 million change was
primarily due to higher expenditures for inventory and payments related to the
restructuring of the Company's footwear operations in the first quarter of
fiscal 1998 versus the first quarter of fiscal 1999.
Net cash used in investing activities for the first quarter of fiscal
1999 was $1.1 million, as compared to net cash provided by investing activities
of $56.4 million in the first quarter of fiscal 1998. The $57.5 million change
was primarily due to the receipt of $58.6 million in proceeds from the sales of
the SCOA and Parade of Shoes businesses in the first quarter of fiscal 1998.
Net cash provided by financing activities for the first quarter of
fiscal 1999 was $10.5 million, as compared to net cash used in financing
activities of $17.0 million in the first quarter of fiscal 1998. The $27.5
million change was primarily due to the borrowing of $12.4 million under the
Company's revolving lines of credit during the first quarter of fiscal 1999
versus the repayment of $15.1 million in bank borrowings during the first
quarter of fiscal 1998.
The Company invested $3.5 million and $2.8 million in capital
expenditures during the first quarters of fiscal 1999 and fiscal 1998,
respectively. The Company's capital expenditures generally relate to new store
and licensed footwear department openings and remodeling of existing stores and
departments, coupled with expenditures for general corporate purposes.
Following is a table showing actual and planned store openings by
division for fiscal 1999:
Actual Openings Planned Openings Total
First Quarter Second through Fourth Actual/Planned
Division Fiscal 1999 Quarters Fiscal 1999 Openings
-------- ----------- -------------------- --------
Casual Male 3 7 10
Work 'n Gear 1 0 1
Licensed 7 21 28
Offsetting the above actual and planned store openings, the Company
closed 3 Casual Male stores and 9 Licensed Discount footwear departments during
the first quarter of fiscal 1999. The Company has plans to close approximately
an additional 3 Casual Male stores and one Licensed Discount footwear department
during the second through fourth quarters of fiscal 1999.
The Company believes that amounts available under its revolving credit
facilities, along with other potential sources of funds and cash flows from
operations, will be sufficient to meet its operating and capital requirements
for the foreseeable future. From time to time, the Company evaluates potential
acquisition candidates in pursuit of strategic initiatives and growth goals in
niche apparel markets. Financing of potential acquisitions will be determined
based on the financial condition of the Company at the time of such
acquisitions, and may include borrowings under current or new commercial credit
facilities or the issuance of publicly issued or privately placed debt or equity
securities.
Certain Factors That May Affect Future Results
The Company cautions that any forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) contained in
this Form 10-Q or made by management of the Company involve risks and
uncertainties and are subject to change based on various important factors. The
following factors, among others, in some cases have affected and in the future
could affect the Company's financial performance and actual results, and could
cause actual results for fiscal 1999 and beyond to differ materially from those
expressed or implied in any such forward-looking statements: changes in consumer
spending patterns, consumer preferences and overall economic conditions,
availability of credit, interest rates, the impact of competition and pricing,
the weather, the financial condition of the retailers in whose stores the
Company operates licensed footwear departments, changes in existing or potential
duties, tariffs or quotas, availability of suitable store locations at
appropriate terms, ability to hire and train associates and Year 2000
conversion.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits in the Exhibit Index are filed as part of this report.
(b) No reports on Form 8-K were filed by the Registrant during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
J. BAKER, INC.
By:/s/Alan I. Weinstein
Alan I. Weinstein
President and Chief Executive Officer
Date: Canton, Massachusetts
June 2, 1998
By:/s/Philip Rosenberg
Philip Rosenberg
Executive Vice President, Chief Financial
Officer and Treasurer
Date: Canton, Massachusetts
June 2, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
EXHIBITS
Filed with
Quarterly Report on Form 10-Q
of
J. BAKER, INC.
555 Turnpike Street
Canton, MA 02021
For the Quarter ended May 2, 1998
EXHIBIT INDEX
Exhibit Page No.
10. Material Contracts
(.01) Fourth Amendment to Employment Agreement between Sherman *
N. Baker and J. Baker, Inc., dated March 31, 1998, attached.
(.02) Second Amendment to Employment Agreement between Alan *
I. Weinstein and J. Baker, Inc., dated March 31, 1998, attached.
11. Computation of Net Earnings Per Common Share, attached. *
27. Financial Data Schedule **
* Included herein
** This exhibit has been filed with the Securities and Exchange
Commission as part of J. Baker, Inc.'s electronic submission of this
Form 10-Q under EDGAR filing requirements. It has not been included
herein.