1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 30, 1996 COMMISSION FILE NUMBER 0-22480
DM MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 04-2973769
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
25 RECREATION PARK DRIVE, SUITE 200
HINGHAM, MA 02043
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 740-2718
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class
-----
Common stock, $0.01 par value 4,292,168 shares outstanding at May 8, 1996
Total number of pages 40
The Exhibit Index is located on Page 14
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DM MANAGEMENT COMPANY & SUBSIDIARY
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
Item 1. Consolidated Financial Statements................................................................... 3-8
Consolidated Balance Sheets at March 30, 1996, March 25, 1995 and June 24, 1995 .................... 3
Consolidated Statements of Operations for the three months and the nine months ended
March 30, 1996 and March 25, 1995 ......................................................... 4
Consolidated Statements of Cash Flows for the nine months ended March 30, 1996 and
March 25, 1995 ............................................................................ 5
Notes to Consolidated Financial Statements.......................................................... 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 9-11
PART II - OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders ................................................ 12
Item 6. Exhibits and Reports on Form 8-K.................................................................... 12
Signature.................................................................................................... 13
Exhibit Index................................................................................................ 14
2
3
DM MANAGEMENT COMPANY & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
March 30, March 25, June 24,
ASSETS: 1996 1995 1995
--------- --------- --------
Current assets:
Cash and cash equivalents ............................................ $ 166 $ 183 $ 231
Accounts receivable .................................................. 1,413 1,324 22
Marketable securities, net of unrealized depreciation of $110 at
March 30, 1996 .................................................. 3,884 -- --
Inventory ............................................................ 11,401 11,939 10,604
Prepaid catalog expenses ............................................. 4,999 4,540 4,833
Other current assets ................................................. 693 538 557
-------- -------- --------
Total current assets ............................................ 22,556 18,524 16,247
Marketable securities, net of unrealized depreciation of $124 and $51 at
March 25, 1995 and June 24, 1995, respectively ....................... -- 3,876 3,949
Property and equipment, net ............................................... 6,859 6,920 6,986
Intangible assets, net .................................................... 5,411 5,099 5,235
-------- -------- --------
Total assets ......................................................... $ 34,826 $ 34,419 $ 32,417
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable ..................................................... $ 5,696 $ 5,656 $ 6,642
Accrued expenses ..................................................... 1,798 2,262 1,736
Accrued customer returns ............................................. 2,122 1,842 1,275
Short-term borrowings ................................................ 1,475 100 --
Current portion of mortgage note and other long-term debt ............ 289 288 279
-------- -------- --------
Total current liabilities ....................................... 11,380 10,148 9,932
Mortgage note ............................................................. 1,393 1,503 1,476
Other long-term debt ...................................................... 4,055 4,232 2,158
Commitments
Stockholders' equity:
Special preferred stock (par value $0.01), 1,000,000 shares authorized -- -- --
Common stock (par value $0.01) 15,000,000 shares authorized,
4,292,168, 4,248,035 and 4,261,058 shares issued (4,292,168,
4,241,369 and 4,261,058 shares outstanding) at March 30, 1996,
March 25, 1995 and June 24, 1995, respectively .................. 43 42 42
Additional paid-in capital ........................................... 39,868 39,736 39,827
Unrealized loss on marketable securities ............................. (110) (124) (51)
Accumulated deficit .................................................. (21,803) (21,118) (20,967)
-------- -------- --------
Total stockholders' equity ...................................... 17,998 18,536 18,851
-------- -------- --------
Total liabilities and stockholders' equity ...................... $ 34,826 $ 34,419 $ 32,417
======== ======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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DM MANAGEMENT COMPANY & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------- --------------------
March 30, March 25, March 30, March 25,
1996 1995 1996 1995
-------- --------- -------- ---------
Net sales ........................................ $23,719 $21,496 $68,996 $54,922
Cost of goods sold ............................... 13,692 12,385 41,113 31,539
------- ------- ------- -------
Gross profit ................................ 10,027 9,111 27,883 23,383
Selling, general and administrative expenses ..... 9,611 8,900 28,561 22,724
------- ------- ------- -------
Income (loss) from operations ............... 416 211 (678) 659
Interest (income) expense, net ................... 124 71 251 (32)
------- ------- ------- -------
Income (loss) before income taxes ........... 292 140 (929) 691
Provision (benefit) for income taxes ............. 29 14 (93) 69
------- ------- ------- -------
Net income (loss) ........................... $ 263 $ 126 $ (836) $ 622
======= ======= ======= =======
Net income (loss) per common and common
equivalent share ....................... $ 0.06 $ 0.03 $ (0.20) $ 0.13
======= ======= ======= =======
Weighted average common and common equivalent
shares outstanding ..................... 4,503 4,584 4,270 4,634
======= ======= ======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
------------------------------
March 30, 1996 March 25, 1995
-------------- --------------
Cash flows from operating activities:
Net income (loss) ..................................................................... $ (836) $ 622
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization ...................................................... 992 592
Changes in assets and liabilities:
Increase in accounts receivable .................................................... (1,391) (950)
Increase in inventory .............................................................. (797) (2,284)
Increase in prepaid catalog expenses ............................................... (166) (1,485)
Increase in other current assets ................................................... (136) (230)
Decrease in accounts payable and accrued expenses .................................. (492) (1,017)
Increase in accrued customer returns ............................................... 847 814
------- -------
Net cash used by operating activities .................................................. (1,979) (3,938)
Cash flows from investing activities:
Proceeds from sale of marketable securities ........................................ 6 4,130
Additions to property and equipment ................................................ (526) (2,378)
Payments for purchase of Carroll Reed .............................................. (907) (4,124)
------- -------
Net cash used by investing activities ................................................. (1,427) (2,372)
Cash flows from financing activities:
Borrowings under debt agreements ................................................... 23,785 12,445
Payments of borrowings ............................................................. (20,368) (6,731)
Principal payments on capital lease obligations .................................... (118) (121)
Proceeds from stock transactions ................................................... 42 62
------- -------
Net cash provided by financing activities ............................................. 3,341 5,655
Net decrease in cash and cash equivalents ............................................. (65) (655)
Cash and cash equivalents at:
Beginning of period ................................................................ 231 838
------- -------
End of period ...................................................................... $ 166 $ 183
======= =======
Supplemental cash flow information:
Non-cash financing activities:
Increase in capital lease obligations ........................................... $ - $ 115
The accompanying notes are an integral part of the consolidated financial
statements.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements included herein have been prepared by DM
Management Company (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and in the opinion of
management contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the interim periods presented. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and regulations. Accordingly, although the Company believes that the
disclosures are adequate to make the information presented not misleading, these
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended June 24, 1995, and the
Company's quarterly reports for the three months ended September 30, 1995 and
the three months ended December 30, 1995, on Form 10-Q.
A. DEBT
The Company's credit facilities at March 30, 1996 consisted of (i) a
$1,650,000 mortgage note, payments on which are due monthly based on a fifteen
year amortization, with the remaining balance payable in full on August 31,
1999; (ii) a $4,000,000 revolving line of credit (the "$4,000,000 Revolver")
which expires on October 31, 1996, with an option to convert to a five-year term
loan at that time; (iii) a $3,000,000 revolving line of credit (the "$3,000,000
Revolver") which expires on November 30, 1996; and, (iv) a $3,000,000 revolving
line of credit (the "Temporary $3,000,000 Revolver") which expired on April 15,
1996.
A summary of the Company's revolving lines of credit at March 30, 1996
follows:
Maximum
Available Outstanding
--------- -----------
$3,000,000 Revolver $ 3,000,000 $1,475,000
Temporary $3,000,000 Revolver 3,000,000 -
$4,000,000 Revolver 4,000,000 4,000,000
----------- ----------
Total revolving lines of credit $10,000,000 $5,475,000
=========== ==========
Currently, the Company's credit facilities are collateralized by the
Company's marketable securities. The mortgage note is also collateralized by a
first mortgage on the Company's office and distribution facility. The terms of
the Company's financing arrangements contain various lending conditions and
covenants, including restrictions on permitted liens, limitations on capital
expenditures and dividends, and compliance with certain financial coverage
ratios.
B. MARKETABLE SECURITIES
During third quarter fiscal 1996, the Company determined that it may choose
not to hold its marketable securities for a period longer than one year. As a
result, the Company has reclassified its marketable securities as current in the
accompanying consolidated balance sheet at March 30, 1996. The marketable
securities continue to be categorized as available-for-sale and are carried at
fair value in the accompanying consolidated balance sheets.
C. INVENTORY
Inventory, consisting of merchandise for sale, is stated at the lower of
cost or market, with cost determined using the first-in, first-out method.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
D. NET INCOME (LOSS) PER SHARE
Net income (loss) per common and common equivalent share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock and common stock equivalents outstanding during the period. Common stock
equivalents consist of common stock issuable on the exercise of outstanding
stock options and are calculated using the treasury method. Fully diluted net
income (loss) per share has not been presented because the amount would not
differ significantly from that presented.
E. RECLASSIFICATIONS
Certain financial statement amounts have been reclassified to be consistent
with current period presentation.
F. FISCAL YEAR
The Company's fiscal year is comprised of 52-53 weeks. Fiscal 1995 ended on
June 24, 1995 and included 52 weeks. Fiscal 1996 will be a 53-week year ending
on June 29, 1996. The additional week was added in the first quarter of fiscal
1996.
G. SUPPLEMENTAL CASH FLOW INFORMATION
During fiscal 1995, the Company purchased certain assets and assumed
certain liabilities of Carroll Reed, Inc. and Carroll Reed International Limited
("CRIL"). At the time of acquisition, the Company paid $4,124,000 in connection
with the purchase of the Carroll Reed assets, inclusive of ancillary costs, and
established certain accruals totaling $1,180,000. During third quarter fiscal
1996, the Company made a final payment to CRIL equal to ten percent (10%) of the
net sales (as defined in the purchase agreement) during calendar 1995 from the
Carroll Reed catalog. This payment, totaling $907,000, increased the total
purchase price of the acquisition to $6,211,000 and was accrued and capitalized
to intangible assets as such net sales were realized.
This acquisition is being accounted for under the purchase method of
accounting. The cost of the acquisition, including ancillary costs, has been
allocated to net tangible assets acquired on the basis of the estimated fair
market value of the tangible assets acquired, approximately $257,000, and the
liabilities assumed. The excess of such costs over the fair value of the net
tangible assets acquired, approximately $5,954,000, has been allocated to the
Carroll Reed trademark, service mark and customer list.
H. SEGMENT OF BUSINESS REPORTING
The operations of the Company are divided into the following business
segments for financial reporting purposes:
HISTORIC CORE BUSINESS SEGMENT
The historic core business segment markets classic apparel
designed to appeal to the affluent, well-educated woman. This segment
is characterized by disposable income and net worth significantly
above the national average. This segment markets its products
nationally through three catalog concepts: The Very Thing!, Nicole
Summers and J. Jill, Ltd.
CARROLL REED SEGMENT
The Carroll Reed segment markets fitted apparel designed to
appeal to a younger, more price-conscious consumer. This segment
markets its products nationally through the Carroll Reed catalog
concept.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONCLUDED)
(UNAUDITED)
Net sales, income (loss) before income taxes, identifiable assets, capital
expenditures and depreciation and amortization pertaining to the business
segments in which the Company operates are presented below (in thousands):
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 30, March 25, March 30, March 25,
1996 1995 1996 1995
--------- --------- --------- ---------
Net sales
Historic core business $19,733 $19,704 $58,973 $53,130
Carroll Reed 3,986 1,792 10,023 1,792
------- ------- ------- -------
$23,719 $21,496 $68,996 $54,922
======= ======= ======= =======
Income (loss) before income taxes
Historic core business $ 1,348 $ 883 $ 2,039 $ 2,363
Carroll Reed (229) (117) (1,010) (117)
Unallocated corporate expenses (a) (703) (555) (1,707) (1,587)
Interest income (expense), net (124) (71) (251) 32
------- ------- ------- -------
$ 292 $ 140 $ (929) $ 691
======= ======= ======= =======
Identifiable assets
Historic core business $22,690 $23,950 $22,690 $23,950
Carroll Reed 8,252 6,593 8,252 6,593
General corporate assets (b) 3,884 3,876 3,884 3,876
------- ------- ------- -------
$34,826 $34,419 $34,826 $34,419
======= ======= ======= =======
Capital expenditures
Historic core business $ 408 $ 110 $ 526 $ 2,378
Carroll Reed -- -- -- --
------- ------- ------- -------
$ 408 $ 110 $ 526 $ 2,378
======= ======= ======= =======
Depreciation and amortization
Historic core business $ 221 $ 189 $ 653 $ 491
Carroll Reed 113 101 339 101
------- ------- ------- -------
$ 334 $ 290 $ 992 $ 592
======= ======= ======= =======
<FN>
(a) Unallocated corporate expenses include corporate management costs and
administrative expenses.
(b) General corporate assets are the Company's marketable securities, net of
unrealized depreciation.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED MARCH 30, 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. RESULTS OF OPERATIONS
QUARTERLY OVERVIEW
Net income for the three months ended March 30, 1996 ("third
quarter fiscal 1996") was $263,000 or $0.06 per share as compared to
net income of $126,000 or $0.03 per share for the three months ended
March 25, 1995 ("third quarter fiscal 1995"). Increased catalog
productivity and higher response rates associated with management's
revised circulation strategy were responsible for the improvement in
third quarter fiscal 1996 results as compared to the prior year.
COMPARISON OF THREE MONTHS ENDED MARCH 30, 1996 WITH THREE MONTHS
ENDED MARCH 25, 1995.
The operations of the Company are divided into two segments for
financial reporting purposes - the historic core business segment and
the Carroll Reed segment. The historic core business segment markets
classic apparel designed to appeal to the affluent, well-educated
woman. This segment is characterized by disposable income and net
worth significantly above the national average. This segment markets
its products nationally through three catalog concepts: The Very
Thing!, Nicole Summers and J. Jill, Ltd. The Carroll Reed segment
markets fitted apparel designed to appeal to a younger, more
price-conscious consumer. This segment markets its products nationally
through the Carroll Reed catalog concept.
Sales and circulation. Net sales for third quarter fiscal 1996
increased 10.3% to $23.7 million from $21.5 million for third quarter
fiscal 1995. Carroll Reed segment net sales for third quarter fiscal
1996 increased 122.4% to $4.0 million from $1.8 million for third
quarter fiscal 1995, accounting for substantially all of the increase
in total net sales between periods. The Company's third quarter fiscal
1996 circulation decreased 5.7% as compared to third quarter fiscal
1995. The decline is attributable to the Company's more targeted
circulation strategy and to later mailings of its Spring season
catalogs to better match the timing of the mailings with consumer
needs. The Company's Carroll Reed segment circulation increased 35.0%
as compared to third quarter fiscal 1995, primarily due to the
addition of a sale book and another Spring season catalog in third
quarter fiscal 1996. Circulation of the Company's historic core
business segment declined 11.2% as compared to third quarter fiscal
1995. Response rates and average revenue per order increased during
third quarter fiscal 1996 compared to third quarter fiscal 1995.
Gross profit. Gross profit as a percentage of net sales was 42.3%
in third quarter fiscal 1996, as compared to 42.4% in third quarter
fiscal 1995. The historic core business segment positively affected
the total gross profit percentage as the Company's less aggressive
inventory purchasing strategy resulted in fewer overstocks compared to
the prior year. The Carroll Reed segment's gross profit percentage for
third quarter fiscal 1996 declined compared to third quarter fiscal
1995. The Carroll Reed segment's prior year product costs were lower
due to inventory procured in connection with the Carroll Reed
acquisition.
Selling, general and administrative expenses. Selling, general
and administrative expenses were $9.6 million or 40.5% of net sales in
third quarter fiscal 1996, compared to $8.9 million or 41.4% of net
sales in third quarter fiscal 1995. Third quarter fiscal 1996 selling,
general and administrative expenses for the Carroll Reed segment
increased $0.8 million over third quarter fiscal 1995 levels.
Increased catalog productivity during third quarter fiscal 1996
resulted in decreased selling, general and administrative costs as a
percentage of net sales as compared to third quarter fiscal 1996.
Interest (income) expense. Interest income decreased slightly to
$55,000 in third quarter fiscal 1996 as compared to $65,000 in third
quarter fiscal 1995. Interest expense increased to $179,000 in third
quarter fiscal 1996 as compared to $136,000 in third quarter fiscal
1995, due to the Company's increased use of its revolving credit
facilities.
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10
DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED MARCH 30, 1996
Income taxes. The Company's effective tax rate was 10% for third
quarter fiscal 1996 and third quarter fiscal 1995. The effective rate
reflects the full tax rate at the state level where operating loss
carryforwards have been fully utilized and are no longer available, as
well as the impact of the federal alternative minimum tax.
COMPARISON OF NINE MONTHS ENDED MARCH 30, 1996 WITH NINE MONTHS ENDED
MARCH 25, 1995.
The Company's fiscal year is comprised of 52-53 weeks. Fiscal
1996 will be a 53-week year ending June 29, 1996. The additional
week was added in the first quarter of fiscal 1996. Accordingly, all
comparisons of the nine months ended March 30, 1996 to the nine months
ended March 25, 1995 are comparisons of a 40-week period to a 39-week
period.
Sales and circulation. Net sales for the nine months ending March
30, 1996 increased 25.6% to $69.0 million from $54.9 million for the
nine months ending March 25, 1995. The Company's Carroll Reed segment
accounted for $8.2 million of the $14.1 million increase between
periods. Carroll Reed segment mailings accounted for the majority of
the 16.5% circulation increase between periods. Response rates and
average revenue per order increased during the first nine months of
fiscal 1996 compared to the first nine months of fiscal 1995.
Gross profit. Gross profit as a percentage of net sales was 40.4%
for the nine months ending March 30, 1996 as compared to 42.6% for the
nine months ending March 25, 1995. The highly competitive pricing
environment in the apparel market, an increase in the Company's off
price and Carroll Reed segment sales volume, and the corresponding
loss of operational leverage during the first nine months of fiscal
1996 as compared to the first nine months of fiscal 1995 resulted in
the decline in the gross profit percentage.
Selling, general and administrative expenses. Selling, general
and administrative expenses were $28.6 million for the nine months
ending March 30, 1996, compared to $22.7 million for the nine months
ending March 25, 1995 or 41.4% of net sales for both nine-month
periods. The Company's Carroll Reed segment accounted for $3.8 million
of the increase between periods. Paper price increases and U.S. Postal
Service rate increases announced in January 1995 dramatically
increased the cost of producing and mailing a catalog during the first
nine months of fiscal 1996 as compared to the first nine months of
fiscal 1995. Increased response rates and sales volume mitigated the
effects of these cost increases during the first nine months of fiscal
1996.
Interest (income) expense. Interest income decreased to $158,000
for the nine months ending March 30, 1996 as compared to $216,000 for
the nine months ending March 25, 1995, primarily as a result of lower
invested balances during the first nine months of fiscal 1996.
Interest expense increased to $409,000 for the nine months ending
March 30, 1996 as compared to $184,000 for the nine months ending
March 25, 1995, due to the Company's increased use of its revolving
credit facilities and the $1,650,000 mortgage loan on the Company's
office and distribution center.
Income taxes. The Company's effective tax rate was 10% for the
nine months ending March 30, 1996 and March 25, 1995. The effective
rate reflects the full tax rate at the state level where operating
loss carryforwards have been fully utilized and are no longer
available, as well as the impact of the federal alternative minimum
tax.
B. LIQUIDITY AND CAPITAL RESOURCES
The Company has two selling seasons which correspond to the
fashion seasons. The Fall season begins in July and ends in December.
The Spring season begins in January and ends in early July. In
connection with each selling season, the Company incurs significant
costs in advance of revenue generation. These expenditures consist
primarily of inventory acquisition costs and catalog development,
production and mailing costs. The Company's primary working capital
need is to support these costs. During the first nine months of 1996,
the Company satisfied its working capital requirements through funds
generated from operations and through use of its credit facilities.
10
11
DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED MARCH 30, 1996
Inventory levels at March 30, 1996 were 4.5% lower than at March
25, 1995. Inventory levels declined compared to the prior year due to
the successful implementation of a less aggressive inventory
purchasing strategy during the nine months ended March 30, 1996.
Prepaid catalog expenses at March 30, 1996 were 10.1% higher than at
March 25, 1995. Catalog costs attributable to increased Carroll Reed
catalog circulation were primarily responsible for the increase.
The Company's credit facilities at March 30, 1996 consisted of
(i) a $1,650,000 mortgage note, payments on which are due monthly
based on a fifteen year amortization, with the remaining balance
payable in full on August 31, 1999; (ii) a $4,000,000 revolving line
of credit which expires on October 31, 1996, with an option to convert
to a five-year term loan at that time; (iii) a $3,000,000 revolving
line of credit which expires on November 30, 1996; and, (iv) a
$3,000,000 revolving line of credit which expired on April 15, 1996.
Currently, the Company's credit facilities are collateralized by
the Company's marketable securities. The mortgage note is also
collateralized by a first mortgage on the Company's office and
distribution facility. The terms of the Company's financing
arrangements contain various lending conditions and covenants,
including restrictions on permitted liens, limitations on capital
expenditures and dividends, and compliance with certain financial
coverage ratios.
During third quarter fiscal 1996, the Company determined that it
may choose not to hold its marketable securities for a period longer
than one year. As a result, the Company has reclassified its
marketable securities as current in the accompanying consolidated
balance sheet at March 30, 1996.
The Company's existing credit facilities and those anticipated to
be available in the future, its marketable securities and its cash
flows from operations are expected to provide the capital resources
necessary to support the Company's operating needs for the foreseeable
future.
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DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED MARCH 30, 1996
PART II. OTHER INFORMATION.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held a Special Meeting of Stockholders on April 25, 1996. At
the Special Meeting, the stockholders of the Company voted to approve the
following actions by the following votes:
1. To increase the number of shares of common stock that may be issued
pursuant to the options granted under the 1993 Incentive and
Nonqualified Stock Option Plan from 300,000 to 700,000.
Number of Shares
----------------
For 2,333,392
Against 254,634
Abstain 3,500
Broker non-votes 501,693
2. To provide for additional formula stock option grants under the 1993
Incentive and Nonqualified Stock Option Plan to members of the
Company's Board of Directors who are not employees of the Company or
any parent or subsidiary of the Company.
Number of Shares
----------------
For 2,945,994
Against 144,046
Abstain 3,449
Broker non-votes 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
Certificate of Incorporation and By-Laws
- ----------------------------------------
3.1 Restated Certificate of Incorporation of the Company (included as Exhibit
4.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 25, 1993, File No. 0-22480, and incorporated herein by
reference)
3.2 Amended and Restated By-Laws of the Company (included as Exhibit 4.2 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 26, 1994, File No. 0-22480, and incorporated herein by reference)
Material Contracts
- ------------------
10.1 1993 Incentive and Nonqualified Stock Option Plan, as amended
27 Financial Data Schedule
Per Share Earnings
- ------------------
11.1 Statement re: computation of per share earnings
REPORTS ON 8-K
As previously reported in the Company's Form 10-Q for the quarter ended
December 30, 1995, the Company filed a report on Form 8-K dated January 3, 1996,
with the Securities and Exchange Commission in connection with the announcement
that Gordon R. Cooke had been named President, Chief Executive Officer and a
Director, and that Samuel L. Shanaman had become Chief Operating Officer and
would continue as a director.
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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.
DM MANAGEMENT COMPANY
Dated: May 13, 1996 By: /s/ Samuel L. Shanaman
----------------------
Samuel L. Shanaman
Authorized Officer
Executive Vice President, Chief Operating Officer
and Chief Financial Officer (Principal Financial
Officer)
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DM MANAGEMENT COMPANY AND SUBSIDIARY
FORM 10-Q
FOR QUARTER ENDED MARCH 30, 1996
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
3.1 Restated Certificate of Incorporation of the Company *
3.2 Amended and Restated By-Laws of the Company *
10.1 1993 Incentive and Nonqualified Stock Option Plan, as amended 15
11.1 Statement re: computation of per share earnings 37
27 Financial Data Schedule 39
* Incorporated by reference
14