United States Securities and Exchange Commission
Washington, DC 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 May 5, 2001
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Or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-23874
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Jos. A. Bank Clothiers, Inc.
Delaware 5611 36-3189198
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(State incorporation) (Primary Standard (I.R.S. Employer
Industrial Classification Identification
Code Number) Number)
500 Hanover Pike, Hampstead, MD 21074-2095
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None
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(Former name or former address, if
changed since last report)
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 if 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 [_]
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of June 7, 2001
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Common Stock, $.01 par value 5,955,627
Jos. A. Bank Clothiers, Inc.
Index
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Part I. Financial Information Page No.
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Item 1. Financial Statements
Condensed Consolidated Statements 3
of Operations - Three Months ended
May 5, 2001 and April 29, 2000
Condensed Consolidated Balance 4
Sheets - as of May 5, 2001 and
February 3, 2001
Condensed Consolidated Statements 5
of Cash Flows - Three Months ended
May 5, 2001 and April 29, 2000
Notes to Condensed Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 9-12
Part II. Other Information
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Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
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2
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In Thousands except per share data)
(Unaudited)
Three Months Ended
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May 5, April 29,
2001 2000
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Net Sales $47,406 $46,408
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Costs and expenses:
Cost of goods sold 23,896 23,166
General and administrative 4,553 4,848
Sales and marketing 17,656 16,316
Store opening costs 69 13
One-time charge 210 --
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46,384 44,343
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Operating income 1,022 2,065
Interest expense, net 219 293
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Income from continuing operations
before provision for income taxes 803 1,772
Provision for income taxes 297 691
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Net income $ 506 $ 1,081
======= =======
Earnings per share:
Net income:
Basic $ 0.08 $ 0.16
Diluted $ 0.08 $ 0.16
Weighted average shares outstanding:
Basic 5,956 6,679
Diluted 6,210 6,818
See accompanying notes
3
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)
May 5, February 3,
2001 2001
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ASSETS
Current Assets:
Cash and cash equivalents $ 521 $ 3,126
Accounts receivable 3,264 2,724
Inventories:
Raw materials 4,529 3,861
Finished goods 54,373 46,588
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Total inventories 58,902 50,449
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Prepaid expenses and other current assets 5,545 5,329
Deferred income taxes 941 375
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Total current assets 69,173 62,003
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Property, plant and equipment, at cost 55,669 53,808
Accumulated depreciation and amortization (29,142) (28,176)
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Net property, plant and equipment 26,527 25,632
Deferred income taxes 1,262 1,262
Other assets 93 57
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Total assets $ 97,055 $ 88,954
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 18,524 $ 16,663
Accrued expenses 14,988 16,268
Current portion of long-term debt 717 422
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Total current liabilities 34,229 33,353
Noncurrent Liabilities:
Long-term debt 13,176 6,447
Deferred Rent 3,436 3,446
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Total liabilities 50,841 43,246
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Shareholders' equity:
Common stock 71 71
Additional paid-in capital 56,535 56,535
Accumulated deficit (5,334) (5,840)
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51,272 50,766
Less: treasury stock (5,058) (5,058)
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Total shareholders' equity 46,214 45,708
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Total liabilities and shareholders' equity $ 97,055 $ 88,954
======== ========
See accompanying notes
4
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In Thousands) (Unaudited)
Three Months Ended
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May 5, April 29,
2001 2000
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Cash flows from operating activities:
Net income $ 506 $ 1,081
Adjustments to reconcile net income
Net cash used in operating activities:
Increase in deferred taxes (566) --
Depreciation and amortization 1,089 1,015
Net decrease in operating working capital (8,674) 584
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Net cash provided by (used in)
operating activities (7,645) 2,680
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Cash flows from investing activities:
Additions to property, plant and equipment (1,984) (821)
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Net cash used in investing activities
of continuing operations (1,984) (821)
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Cash flows from financing activities:
Borrowings under long-term Credit Agreement 17,136 16,224
Repayment under long-term Credit Agreement (15,482) (14,028)
Borrowing of other long-term debt 5,500 --
Repayment of other long-term debt (130) (121)
Repurchase of Common Stock -- (3,138)
Net proceeds from Issuance of Common Stock -- 35
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Net cash provided by (used in) financing
activities of continuing operations 7,024 (1,028)
Net cash used in discontinued operations -- (136)
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Net increase (decrease) in cash and cash equivalents (2,605) 695
Cash and cash equivalents - beginning of period 3,126 1,087
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Cash and cash equivalents - end of period $ 521 $ 1,782
======== ========
See accompanying notes
5
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. BASIS OF PRESENTATION
Jos. A. Bank Clothiers, Inc. (the "Company") is a nationwide retailer of
classic men's clothing through conventional retail stores and catalog and
internet direct marketing. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. These adjustments are of a
normal recurring nature.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-
Q. Therefore, these financial statements should be read in conjunction with
the Company's February 3, 2001 Annual Report on Form 10-K.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories are stated at the lower of first-in, first-out, cost or market.
Costs related to mail order catalogs and promotional materials are included
in prepaid expenses and other current assets. These costs are amortized
over the expected periods of benefit, not to exceed six months.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes (SFAS
109). This standard requires, among other things, recognition of future tax
benefits, measured by enacted tax rates attributable to deductible
temporary differences between financial statement and income tax basis of
assets and liabilities and to tax net operating loss carryforwards, to the
extent that realization of such benefits is more likely than not.
6
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
3. WORKING CAPITAL
The net change in operating working capital is composed of the following:
Three Months Ended
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May 5, April 29,
2001 2000
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Increase in accounts receivable $ (540) $(1,190)
Increase in inventories (8,453) (1,569)
Increase in prepaids and other assets (252) (1,769)
Increase in accounts payable 1,861 2,935
Increase (decrease) in accrued expenses and
other liabilities (1,290) 2,177
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Net (increase) decrease in operating
working capital $(8,674) $ 584
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4. EARNINGS PER SHARE
Earnings Per Share (EPS) - Statement of Financial Accounting Standards
(SFAS) No. 128 requires presentation of basic earnings per share and
diluted earnings per share. The weighted average shares used to calculate
basic and diluted earnings per share in accordance with SFAS No. 128 is as
follows:
Three Months Ended
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May 5, April 29,
2001 2000
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Weighted average shares
outstanding for basic EPS 5,956 6,679
Dilutive effect of common
stock equivalents 254 139
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Weighted average shares
outstanding for diluted EPS 6,210 6,818
===== =====
Weighted average shares outstanding for calculating dilutive EPS include
basic shares outstanding, plus shares issuable upon the exercise of stock
options, using the treasury stock method.
7
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
5. STOCK REPURCHASE
On April 12, 2000, the Company announced a repurchase of approximately 13%
of its then outstanding stock. In a private transaction, the Company
purchased 896,400 shares at $3.50 per share. The purchase has been recorded
in the accompanying Condensed Consolidated Balance Sheets as treasury
stock.
6. SEGMENT REPORTING
The Company has two reportable segments: full line stores and
catalog/internet direct marketing. While each segment offers a similar mix
of men's clothing to the retail customer, the full line stores also provide
alterations.
The accounting policies of the segments are the same as those described in
the Company's February 3, 2001 Annual Report on Form 10-K. The Company
evaluates performance of the segments based on "four wall" contribution
which excludes any allocation of "management company" costs, distribution
center costs (except order fulfillment costs which are allocated to
catalog/internet), interest and income taxes. The Company's segments are
strategic business units that offer similar products to the retail customer
by two distinctively different methods. In full line stores the typical
customer travels to the store and purchases men's clothing and/or
alterations and takes their purchases with them. The catalog/internet
direct marketing customer receives a catalog in his or her home, office
and/or visits our web page via the internet and either calls, mails, faxes
or places an order on-line. The merchandise is then shipped to the
customer. The detail segment data is presented in the following table:
Quarter ended May 5, 2001 Full line Catalog/Internet
(in thousands) Stores Direct Marketing Other Total
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Net sales $40,582 $ 5,333 $ 1,491(a) $47,406
Depreciation and amortization 791 15 283 1,089
Operating income (loss) (b) 5,823 338 (5,139) 1,022
Identifiable assets (c) 59,975 11,453 25,627 97,055
Capital Expenditures (d) 777 390 817 1,984
Quarter ended April 29, 2000
(in thousands)
Net sales $39,469 $ 5,250 $ 1,689 (a) $46,408
Depreciation and amortization 772 5 238 1,015
Operating income (loss) (b) 6,564 754 (5,253) 2,065
Identifiable assets (c) 51,749 10,212 27,677 89,638
Capital Expenditures (d) 92 415 314 821
8
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
(a) Revenue from segments below the quantitative thresholds are attributable
primarily to four operating segments of the Company. Those segments
include factory stores, outlet stores, franchise and regional tailor shops.
None of these segments has ever met any of the quantitative thresholds for
determining reportable segments.
(b) Operating income represents profit before allocations of overhead from
corporate office and the distribution center, interest and income taxes.
(c) Identifiable assets include cash, accounts receivable, inventories, prepaid
expenses and fixed assets residing in or related to the reportable
segments. Assets included in Other are primarily fixed assets associated
with the corporate office and distribution center, deferred tax assets, and
inventory which has not been assigned to one of the reportable segments.
(d) Capital Expenditures include purchases of property, plant and equipment
made for the reportable segment.
7. ONE-TIME CHARGE
During the first quarter of fiscal 2001, the Company recorded a one-time
charge of $.2 million. The one-time charge primarily represents
professional fees incurred in the first quarter of 2001 in connection with
a strategic action considered by the Board of Directors.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
The following discussion should be read in conjunction with the
attached condensed consolidated financial statements and notes thereto and with
the Company's audited financial statements and notes thereto for the fiscal year
ended February 3, 2001.
Overview - The results for the first quarter of 2001 halted the Company's
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streak of five consecutive quarters of improved earnings. The Company generated
record earnings in the first quarter of 2000 and was unable to equal that
performance in the first quarter of 2001. The Company generated recurring
income of $.10 per share (excluding $.02 per share for one-time charges) in the
first quarter of 2001 compared to $.16 per share in fiscal 2000. The key
components of the first quarter 2001 results were a) an .8% decrease in
comparable store sales, b) lower gross profit due to the Company's aggressive
inventory management, c) lower general and administrative expenses, principally
travel and incentive compensation, as the Company is restricting its overhead
cost growth despite spending significant effort to support the planned opening
of 10 new stores in the first half of 2001 and d) higher sales and marketing
costs, primarily occupancy, payroll and advertising expenses for the 11 stores
opened since the end of the first quarter of 2000 and higher catalog/internet
advertising costs. The one-time charge primarily represents professional fees
incurred in the first quarter 2001 in connection with a strategic action
considered by the Company's Board of Directors.
9
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
Percentage of Net Sales
Three Months Ended
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May 5, April 29,
2001 2000
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Net Sales.................................................... 100.0% 100.0%
Cost of goods sold........................................... 50.4 49.9
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Gross profit................................................. 49.6 50.1
General and administrative expenses.......................... 9.6 10.5
Sales and marketing expenses................................. 37.2 35.2
Store opening costs.......................................... 0.1 --
One-time charge.............................................. 0.4 --
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Operating income............................................. 2.2 4.4
Interest expense, net........................................ 0.5 0.6
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Income from continuing operations before income taxes........ 1.7 3.8
Provision for income taxes................................... 0.6 1.5
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Net income................................................... 1.1% 2.3%
===== =====
Net Sales - Net sales increased 2.1% or $1.0 million to $47.4 million in the
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first quarter of fiscal 2001 compared to $46.4 million in 2000. The sales
increase was primarily related to sales from new stores, a 2% increase in
combined catalog/internet sales and a .8% decrease in comparable stores sales.
The Company's mix of sales shifted slightly as sportcoats, slacks and sportswear
increased to 40% of sales in fiscal 2001 compared to 37% in fiscal 2000.
The following table summarizes store opening and closing activity during the
respective periods.
For the Three Months Ended
May 5, April 29,
2001 2000
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Stores open at the beginning of the period 116 108
Opened 3 2
Closed 1 --
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Stores open at the end of the period 118 110
=== ===
Gross Profit - Gross profit (sales less cost of goods sold) increased only $.3
- ------------
million to $23.5 million in the first quarter of 2001 from $23.2 million in
2000, despite the $1.0 million sales increase. Gross profit as a percent of
sales decreased to 49.6% in fiscal 2001 from 50.1% in 2000 as the Company was
aggressive with its promotions in an effort to maintain appropriate inventory
levels.
General and Administrative Expenses - General and administrative expenses were
- -----------------------------------
decreased $.3 million in the first quarter of 2001 compared to fiscal 2000 due
primarily to a decrease in accrued incentive compensation expense and decreases
in various other expenses including professional fees.
10
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
Sales and Marketing Expenses - Sales and marketing expenses increased $1.3
- ----------------------------
million to $17.6 million, or 37.2% of net sales, in the first quarter of fiscal
2001 from $16.3 million, or 38.1% in the first quarter of 2000. The increased
sales and marketing expense primarily represents occupancy, payroll and
advertising for the 11 new stores opened since the end of the first quarter of
2000 and higher catalog/internet advertising costs. The increased expense as a
percentage of sales relates to decreased leverage of store expenses on the lower
comparable store sales, lower catalog sales and the new stores that are in
various stages of meeting mature store sales levels.
Store Opening Costs - Store opening costs increased to $69 thousand during the
- -------------------
first quarter of 2001 from $13 thousand in the prior year. The Company opened
three new full-line stores in the first quarter of 2001 and opened two factory
stores in the first quarter of 2000 for which the Company does not run an
opening advertising campaign which it does for the opening of most full-line
stores.
Interest Expense - Interest expense decreased in the first quarter compared to
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the prior year due primarily to the lower average outstanding balance in the
current year.
One-Time Charge - The one-time charge primarily represents professional fees
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incurred in the first quarter of 2001 in connection with a strategic action
considered by the Board of Directors.
Income Taxes - The first quarter of fiscal 2001 effective income tax rate is
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37.0% compared to 39.0% in fiscal 2001. The decrease resulted from lower
effective state tax rates.
Liquidity and Capital Resources - The Company has significant availability under
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its current borrowing agreement. At May 5, 2001 the Company had outstanding
borrowings of $3.4 with $35.1 million of availability under its Credit Agreement
compared to borrowings of $9.0 million and availability of $28.0 million at the
end of the first quarter last year. The decrease in borrowing and increase in
availability resulted primarily from the issuance of the $5.5 million real
estate loan during the first quarter of fiscal 2001.
The following table summarizes the Company's sources and uses of funds as
reflected in the condensed consolidated statements of cash flows:
Three Months Ended
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May 5, April 29,
2001 2000
---- ----
Cash provided by (used in):
Operating activities $(7,645) $ 2,680
Investing activities (1,984) (821)
Financing activities 7,024 (1,028)
Discontinued operations -- (136)
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Net increase (decrease) in cash and cash equivalents $(2,605) $ 695
======= =======
Cash used in operating activities was primarily due to increased inventory to
support new store expansion partially offset by higher accounts payable. Cash
used in investing activities primarily relates to the opening of new stores and
upgrading the distribution center. Cash provided by financing activities is
primarily from the issuance of the $5.5 million real estate loan.
11
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
The Company expects to spend between $14 million and $17 million on capital
expenditures in fiscal 2001, primarily to open between 22 and 30 new stores, to
relocate several stores and to install a new warehouse distribution system to
accommodate future store growth. The capital expenditures will be financed
through operations, the Credit Agreement and the Term Debt. The Company believes
that its current liquidity, Credit Agreement and Term Loan will be adequate to
support its current working capital and investment needs.
The Company's plans and beliefs concerning future operations contained herein
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
forecast due to a variety of factors that can adversely affect the Company's
operating results, liquidity and financial condition such as risks associated
with economic, weather and other factors affecting consumer spending, the
ability of the Company to finance its expansion plans, mix of goods sold,
pricing, availability of lease sites for new stores and other competitive
factors. Many of the risks are described in the Company's reports filed with
the Securities and Exchange Commission, which should be carefully reviewed
before any investment decision.
12
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
PART II. OTHER INFORMATION
Item 6. Exhibit
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Exhibit 10.16b - Second Amendment to Employment Agreement dated May 25, 2001
between Robert N. Wildrick and Jos. A. Bank Clothiers, Inc.,
filed herewith
13
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/5/01
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.
Dated: June 19th, 2001 Jos. A. Bank Clothiers, Inc.
(Registrant)
/s/ David E. Ullman
__________________________________
David E. Ullman
Executive Vice President, Chief
Financial Officer
14