SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1996
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 0-21226
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SEAMAN FURNITURE COMPANY, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2751205
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
300 CROSSWAYS PARK DRIVE
WOODBURY, NEW YORK 11797
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (516) 496-9560
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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
-- --
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Class Outstanding as of September 9, 1996
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Common Stock $.01 par value 4,537,041
Page 1 of 11
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page
PART I
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Condensed Consolidated Balance Sheets -
July 31, 1996 and April 30, 1996 3
Condensed Statements of Consolidated Operations -
Three months ended July 31, 1996 and 1995 4
Condensed Statements of Consolidated Cash Flows -
Three months ended July 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
PART II
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Other Information 9
Signatures 10
Exhibits 11
Page 2 of 11
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
JULY 31, APRIL 30,
1996 1996
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash & cash equivalents $1,398 $3,436
Accounts receivable, net 64,866 65,716
Merchandise inventories 29,619 27,796
Prepaid expenses and other 641 1,921
Deferred tax asset 5,709 5,709
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Total current assets 102,233 104,578
PROPERTY AND EQUIPMENT-net 32,811 33,151
PROPERTY FINANCED BY CAPITAL
LEASES-net 5,035 5,138
OTHER ASSETS 3,195 4,449
DEFERRED TAX ASSET 11,875 11,935
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TOTAL $155,149 $159,251
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $13,386 $11,022
Accrued expenses 18,508 16,670
Customer deposits 8,430 9,266
Current portion of long-term debt 696 673
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Total current liabilities 41,020 37,631
LONG-TERM DEBT 12,149 20,085
STOCKHOLDERS' EQUITY
Common stock 50 50
Additional paid-in capital 86,817 86,817
Retained earnings 20,670 20,225
Treasury stock (5,557) (5,557)
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Stockholders' equity 101,980 101,535
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TOTAL $155,149 $159,251
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See notes to condensed consolidated financial statements.
Page 3 of 11
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
JULY 31,
1996 1995
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(UNAUDITED) (UNAUDITED)
REVENUES:
Net sales $62,659 $57,468
Net finance charge income 3,614 3,787
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Total 66,273 61,255
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OPERATING COST & EXPENSES:
Cost of sales, including
buying and occupancy costs 42,298 37,541
Selling, general and administrative 22,682 20,911
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Total 64,980 58,452
INCOME FROM OPERATIONS 1,293 2,803
INTEREST EXPENSE 538 399
INTEREST INCOME (25) (288)
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INCOME BEFORE PROVISION
FOR INCOME TAXES 780 2,692
PROVISION FOR INCOME TAXES 335 1,158
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NET INCOME $445 $1,534
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NET INCOME PER SHARE $0.09 $0.31
======== ========
See notes to condensed consolidated financial statements.
Page 4 of 11
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS OF DOLLARS)
THREE MONTHS ENDED
JULY 31,
--------
1996 1995
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(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES:
Net Income $445 $1,534
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,193 1,030
Deferred tax asset 60 145
Asset and liability management:
Accounts receivable 850 513
Merchandise inventories (1,823) (1,391)
Prepaid expenses and other assets 2,534 (495)
Accounts payable 2,364 2,241
Accrued expenses and other 1,838 (2,839)
Customer deposits (836) 1,505
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Net cash provided by operating activities 6,625 2,243
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INVESTING ACTIVITIES:
Purchase of equipment (750) (656)
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Net cash used in investing activities (750) (656)
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FINANCING ACTIVITIES:
Repayment of loans (7,913) (140)
Purchase of treasury stock - (16)
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Net cash used in financing activities (7,913) (156)
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NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,038) 1,431
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,436 20,431
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $1,398 $21,862
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See notes to condensed consolidated financial statements.
Page 5 of 11
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
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The accompanying unaudited condensed consolidated financial statements
include the accounts of Seaman Furniture Company, Inc. and its wholly-owned
subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all the adjustments necessary to
present fairly the results of consolidated operations for each of the three
month periods ended July 31, 1996 and July 31, 1995; the financial
position at July 31, 1996 and the cash flows for the three month periods
ended July 31, 1996 and July 31, 1995. Such adjustments consisted only of
normal recurring items. The condensed consolidated financial statements and
notes thereto should be read in conjunction with the consolidated financial
statements and notes for the years ended April 30, 1996 and 1995 included
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
The interim financial results are not necessarily indicative of the
results to be expected for the full year.
2. NET INCOME PER SHARE
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Net income per share is based on the weighted average number of common
and common equivalent shares outstanding. Employee and director stock
options are considered to be Common Stock equivalents and, accordingly
436,512 Common Stock equivalent shares have been included in the
computation for the three month period ended July 31, 1996 using the
treasury stock method.
Page 6 of 11
Item 2 MANAGEMENT DISCUSSION AND ANALYSIS
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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Three Months Ended July 31, 1996 compared to Three Months Ended July 31, 1995
- -----------------------------------------------------------------------------
Net sales for the three months ended July 31, 1996 of $62.5 million
increased by $5.2 million (or 9.0%) compared to net sales for the three months
ended July 31, 1995. Comparable store sales for the three months ended July 31,
1996 were $54.2 million, a decrease of $3.3 million (or 5.7%) compared to
comparable store sales of $57.5 million for the same period last year.
Net finance charge income of $3.6 million for the three months ended July
31, 1996 decreased by approximately $173,000 (or 4.6%) from the three months
ended July 31, 1995, primarily due to a decrease in the customer accounts
receivable. Net finance charge income for the three months ended July 31,
1995 includes an expense of $450,000 related to the costs of the Company's
securitized facility. The related expense for the three months ended July
31,1996 was $30,000 due to the Company redeeming in April 1996 certain
receivables-backed securities issued in April 1995 by a trust established by
Seamans Receivables Corporation, a wholly-owned subsidiary of the Company.
As a result of the foregoing, total revenues for the three months ended
July 31, 1996 were $66.3 million, an increase of $5.0 million (or 8.2%) over
the comparable prior year period.
Cost of sales increased by $4.8 million (or 12.8%) for the three months
ended July 31, 1996 primarily due to the additional sales, as well as the costs
associated with opening nine new stores subsequent to July 31, 1995.
Selling, general and administrative expenses increased by $1.8 million (or
8.5%) for the three months ended July 31, 1996, principally due to the
advertising and payroll costs of the nine additional stores.
As a result of the foregoing, income from operations was $1.3 million for
the three months ended July 31, 1996, a decrease of $1.5 million (or 53.9%)
compared to $2.8 million for the three months ended July 31, 1995.
Net interest expense of $513,000 for the three months ended July 31, 1996
increased by $402,000 (or 362.2%) compared to the three months ended July 31,
1995 primarily due to decreased interest income due to the Company's lower cash
balance and to a lesser degree, due to increased interest expense associated
with the revolving credit line entered into in April 1996 and increased capital
lease interest.
The provision for income taxes for the three months ended July 31, 1996 is
based upon an effective income tax rate of 43.0%.
As a result of the foregoing, the Company's net income for the three months
ended July 31, 1996 was $445,000, a decrease of $1.1 million (or 71%) compared
to $1.5 million for the three months ended July 31, 1995.
Page 7 of 11
LIQUIDITY AND CAPITAL RESOURCES
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At July 31, 1996 the Company had working capital of $61.2 million,
including cash and cash equivalents of $1.4 million. The Company's principal
sources of liquidity are earnings before income taxes, depreciation and
amortization and borrowings under the $40 million Revolving Credit and
Security Agreement (the "Loan Agreement" ) with The Bank of New York
Commercial Corporation and NatWest Bank N.A. as co-lenders . The Company's
principal uses of cash are working capital needs, capital expenditures and
debt service obligations, including capitalized lease costs.
The Company's working capital decreased from $66.9 million at April 30,
1996 to $61.2 million at July 31, 1996. Cash and cash equivalents declined
from $3.4 million at April 30, 1996 to $1.4 million at July 31, 1996. As of
July 31, 1996 the Company had stockholder's equity of $102 million. The
Company's largest asset at such date was accounts receivable of $64.9
million (net of bad debt reserves) . At July 31, 1996, $2.5 million was
outstanding under the Loan Agreement including letters of credit of
approximately $1.9 million. In addition at July 31, 1996 the Company had
$11.5 million in other long term debt, consisting of capitalized lease
obligations and an industrial revenue bond in connection with its Central
Islip, New York warehouse facility.
Capital expenditures were approximately $750,000 for the three months ended
July 31, 1996. These expenditures were primarily for the radio-frequency bar
code system which became functional in the Company's Woodbridge, New Jersey
warehouse in August 1996 and the renovation of existing stores. The Company
expects to spend approximately $4 million in capital expenditures during the
current fiscal year ending April 30, 1997. The capital expenditures planned
for fiscal 1997 are primarily for the opening of new stores and the renovation
of certain existing stores. The Company expects that the borrowings under the
Loan Agreement together with cash from operations will be sufficient to meet
the Company's planned capital expenditures.
Page 8 of 11
PART II
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OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Change in Securities
None
ITEM 3 Defaults Upon Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Information
None
ITEM 6 Exhibits and Reports on Form 8-K
(a) The exhibits listed on the Exhibit Index following the
signature page hereof are filed herewith in response to
this item.
(b) The Company filed a report on Form 8-K regarding the
Revolving Loan and Security Agreement on May 14, 1996
pursuant to Item 2.
Page 9 of 11
SIGNATURES
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.
SEAMAN FURNITURE COMPANY, INC.
Date September 12, 1996 /s/ Alan Rosenberg
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Alan Rosenberg, President &
Chief Executive Officer
/s/ Peter McGeough
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Peter McGeough, Executive Vice
President / Chief Administrative
& Financial Officer
Page 10 of 11
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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11 Statement regarding computation of per share earnings.
See Note 2 to Consolidated Financial Statements.
27 Financial Data Schedule
Page 11 of 11