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 April 29, 2000
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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 Identification
Classification Number)
Code 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 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 of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of June 9, 2000
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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
April 29, 2000 and May 1, 1999
Condensed Consolidated Balance 4
Sheets - as of April 29, 2000 and
January 29, 2000
Condensed Consolidated Statements 5
of Cash Flows -Three Months
ended April 29, 2000 and May 1, 1999
Notes to Condensed Consolidated 6-9
Financial Statements
Item 2. Management's Discussion and Analysis 9-12
of Results of Operations and
Financial Condition
Part II. Other Information
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Item 6. Exhibits and Reports on Form 8-K 13
(a) Exhibits - Exhibit 27-Financial Data
Schedule (EDGAR filing only)
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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April 29, May 1,
2000 1999
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Net sales $46,408 $43,607
Costs and expenses:
Cost of goods sold 23,166 21,499
General and administrative 4,848 4,344
Sales and marketing 16,316 16,609
Store opening costs 13 53
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44,343 42,505
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Operating income 2,065 1,102
Interest expense, net 293 328
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Income from continuing operations
before provision for income taxes 1,772 774
Provision for income taxes 691 302
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Net income $ 1,081 $ 472
======= =======
Earnings per share:
Net income:
Basic $.16 $.07
Diluted $.16 $.07
Weighted average shares outstanding:
Basic 6,679 6,792
Diluted 6,818 6,971
See accompanying notes.
3
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands) (Unaudited)
April 29, January 29,
2000 2000
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ASSETS
Current Assets:
Cash and cash equivalents $ 1,782 $ 1,087
Accounts receivable 3,791 2,601
Inventories:
Raw materials 2,543 3,351
Finished goods 45,413 43,036
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Total inventories 47,956 46,387
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Prepaid expenses and other
current assets 4,971 3,178
Deferred income taxes 2,479 2,479
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Total current assets 60,979 55,732
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Property, plant and equipment,
at cost 56,479 56,140
Accumulated depreciation and
amortization (29,568) (28,893)
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Net property, plant and equipment 26,911 27,247
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Deferred income taxes 1,699 1,699
Other assets 49 73
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Total Assets $ 89,638 $ 84,751
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 16,130 $ 13,195
Accrued expenses 16,632 14,573
Current portion of long-term debt 1,198 1,218
Net current liabilities of discontinued operations 118 254
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Total current liabilities 34,078 29,240
Long-term liabilities 13,796 11,725
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Total liabilities 47,874 40,965
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Shareholders' equity:
Common stock 71 70
Additional paid-in capital 56,534 56,500
Accumulated deficit (9,783) (10,864)
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46,822 45,706
Less treasury stock (5,058) (1,920)
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Total shareholders' equity 41,764 43,786
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Total liabilities and shareholders' equity $ 89,638 $ 84,751
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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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April 29, May 1,
2000 1999
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Cash flows from operating activities:
Net income $ 1,081 $ 472
Adjustments to reconcile net income
Net cash used in operating activities:
Decrease in deferred taxes -- 191
Depreciation and amortization 1,015 937
Stock based compensation -- 21
Net (increase) decrease in operating working capital 584 (2,998)
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Net cash provided by (used in) operating
activities of continuing operations 2,680 (1,377)
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Cash flows from investing activities:
Additions to property, plant and equipment (821) (1,786)
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Net cash used in investing activities
of continuing operations (821) (1,786)
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Cash flows from financing activities:
Borrowings under long-term Credit Agreement 16,224 13,345
Repayment under long-term Credit Agreement (14,028) (10,431)
Repayment of other long-term debt (121) (81)
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 (1,028) 2,833
Net cash provided by (used in) discontinued operations (136) 397
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Net increase in cash and cash equivalents 695 67
Cash and cash equivalents - beginning of period 1,087 748
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Cash and cash equivalents - end of period $ 1,782 $ 815
======== ========
See accompanying notes.
5
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 4/29/00
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, catalog and
internet direct marketing and franchises. 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 January 29, 2000 Annual Report on Form 10-K.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories are stated at the lower of first-in, first-out, cost or market.
The Company capitalizes into inventories certain warehousing and delivery
costs associated with getting its inventory to the point of sale.
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.
Reclassifications - Certain reclassifications have been made to the May 1,
1999 financial statements in order to conform with the April 29, 2000
presentation.
6
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 4/29/00
3. WORKING CAPITAL
The net change in operating working capital is composed of the following:
Three Months Ended
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April 29, May 1,
2000 1999
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Increase in accounts receivable $(1,190) $(1,276)
Increase in inventories (1,569) (3,557)
Increase in prepaids and other assets (1,769) (428)
Increase in accounts payable 2,935 641
Increase in accrued expenses and
other liabilities 2,177 1,622
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Net (increase) decrease in operating working capital $ 584 $(2,998)
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4. EARNINGS PER SHARE
Earnings Per Share - 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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April 29, May 1,
2000 1999
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Weighted average shares
outstanding for basic EPS 6,679 6,792
Diluted EPS:
Dilutive effect of
common stock equivalents 139 179
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Weighted average shares
outstanding for diluted EPS 6,818 6,971
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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.
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 Consolidated Balance Sheets as treasury stock.
7
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 4/29/00
6. DISCONTINUED OPERATIONS
Summarized financial information for the discontinued operations is as
follows (in thousands):
As of As of
April 29, Jan. 29,
2000 2000
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Current assets $ 493 $ 580
Current liabilities 611 834
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Net current (liabilities) $(118) $(254)
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Net current and noncurrent assets/liabilities of discontinued operations
noted above includes deferred income taxes, pension costs, severance and
other transaction costs associated with the discontinued manufacturing
operations.
7. SUBSEQUENT EVENTS
Subsequent to the end of the first quarter, the Company canceled a source of
supply agreement through which 36% of its finished product was purchased in
fiscal 1999. The Company anticipates no significant disruption to its
purchase of product.
8. 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 January 29, 2000 Annual Report on Form 10K. 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 April 29, 2000 Full line Catalog & Internet
(in thousands) Stores direct marketing Other Total
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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
(table continued on page 9)
8
Jos. A. Bank Clothiers, Inc
S.E.C.Form 10-Q 4/29/00
Quarter ended May 1, 1999 Full line Catalog & Internet
(in thousands) Stores direct marketing Other Total
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Net sales $36,721 $5,391 $ 1,495(a) $43,607
Depreciation and amortization 741 4 192 937
Operating income (loss) (b) 5,002 748 (4,648) 1,102
Identifiable assets (c) 47,895 9,542 27,314 84,751
Capital Expenditures (d) 720 40 1,026 1,786
(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 segment.
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.
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 January 29, 2000.
Overview - Net income for the quarter ended April 29, 2000 increased 129% to
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$1.1 million or $.16 per share from $.5 million or $.07 per share for the same
period in the prior year. The improvement in net income was due primarily to
higher sales and lower marketing costs.
The Company opened two new stores during the first quarter of both fiscal 1999
and 2000 and has 112 stores open as of May 2000. The Company expects to open
four to six new stores during the remainder of fiscal 2000.
The Company has significant borrowing availability under its current borrowing
arrangements. The Company's availability under the Credit Agreement was $28
million with $9 million of debt outstanding as of April 29, 2000 compared to
availability of $29.2 million and $7.4 million outstanding at the same time last
year. The decrease in availability was due primarily to the repurchase of
approximately 13% of the Company's outstanding stock for $3.1 million during the
first quarter and capital expenditures of $5.8 million since April 1999 mostly
offset by cash generated by operations during the same period.
Results of Operations - The following table is derived from the Company's
- ---------------------
condensed consolidated statements of income and sets forth, for the periods
indicated, the items included in the condensed consolidated statements of
income, expressed as a percentage of net sales.
9
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 4/29/00
Percentage of Net Sales
Three Months Ended
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April 29, May 1,
2000 1999
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Net Sales............................. 100.0% 100.0%
Cost of goods sold.................... 49.9 49.3
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Gross profit.......................... 50.1 50.7
General and administrative expenses... 10.5 10.0
Sales and marketing expenses.......... 35.2 38.1
Store opening costs................... -- 0.1
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Operating income...................... 4.4 2.5
Interest expense, net................. 0.6 0.7
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Income from continuing operations
before income taxes.................. 3.8 1.8
Provision for income taxes............ 1.5 0.7
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Net income............................ 2.3% 1.1%
===== =====
Net Sales - Net sales increased 6.4% or $2.8 million to $46.4 million in the
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first quarter of fiscal 2000 compared to $43.6 million in 1999. This increase
was due primarily to a 5.5% increase in comparable store sales and sales in new
stores. Sales of sportcoats, slacks and sportswear increased to 37% of
merchandise sales compared to 31% in the same period last year while suits
decreased to 36% from 41% last year. This shift reflects the increased emphasis
on corporate casual business. Internet sales during the first quarter increased
600% and catalog sales decreased 14% on a planned 10% decrease in circulation.
Gross Profit - Gross profit (sales less cost of goods sold) increased $1.1
- ------------
million to $23.2 million in the first quarter of 2000 from $22.1 million in
1999. Gross profit as a percent of sales decreased to 50.1% from 50.7% in 1999.
The increase in gross profit dollars was the result of higher net sales while
the decrease in gross profit percent of sales was due primarily to aggressive
sales promotion in February when we achieved a 20% comparable store sales
increase.
General and Administrative Expenses - General and administrative expenses were
- -----------------------------------
$4.8 million in the first quarter of 2000 compared to $4.3 million during the
same period in 1999. This increase was due primarily to an increase in accrued
incentive compensation expense partially offset by decreases in various other
expenses including professional fees.
Sales and Marketing Expenses - Sales and marketing expenses decreased $.3 to
- ----------------------------
$16.3 million, or 35.2% of net sales, in the first quarter of fiscal 2000 from
$16.6 million, or 38.1% in the first quarter of 1999. This decrease was the
result of reduced promotional spending in 2000.
Store Opening Costs - Store opening costs decreased to $13 thousand during the
-------------------
first quarter from $53 thousand in the prior year. The Company 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 full line
stores.
10
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 4/29/00
Interest Expense - Interest expense decreased slightly in the first quarter
- ----------------
compared to the prior year due primarily to the lower average outstanding
balance in the current year being partially offset by higher interest rates.
Income Taxes - The first quarter fiscal 2000 effective income tax rate is 39%
- ------------
which is the same as 1999.
Liquidity and Capital Resources - The Company has significant availability under
- -------------------------------
its current borrowing agreement. At April 29, 2000 the Company had outstanding
borrowings of $9.0 with $28 million of availability under its Credit Agreement
compared to borrowings of $7.4 million and availability of $29.2 million. The
increase in borrowing and decrease in availability resulted primarily from the
repurchase by the Company of approximately 13% of its then outstanding common
stock for $3.1 million during the first quarter of fiscal 2000.
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
April 29, May 1,
2000 1999
--------- ------
Cash provided by (used in):
Operating activities $ 2,680 $(1,377)
Investing activities (821) (1,786)
Financing activities (1,028) 2,833
Discontinued operations (136) 397
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Net increase in cash and cash equivalents $ 695 $ 67
======= =======
Cash provided by operating activities was primarily from income generated from
operations, an increase in payables partially offset by seasonal increases in
receivables, inventories, prepaids and other assets. Cash used in investing
activities primarily relates to the purchase and installation of the Company's
new e-commerce website and the opening of two new stores. Cash used in
financing activities primarily represents the repurchase of common stock
partially offset by borrowings on the revolving portion of the Credit Agreement.
Cash used in discontinued operations was due primarily to the severance payments
and other expenses related to its former manufacturing facility.
The Company expects to spend between $3 and $4 million on capital expenditures
in fiscal 2000, primarily to open between four and eight new stores, to
relocate, downsize or renovate at least two stores and to install a new
e-commerce website to replace its existing site and to install an inventory
planning system. The capital expenditures will be financed through operations,
the Credit Agreement and possibly leasing arrangements.
The Company's Credit Agreement expires in April, 2001 based on its original
term. The Company expects to obtain extended financing prior to the end of 2000
and does not anticipate any problems obtaining its financing, however, there can
be no assurance that such financing will be obtained on acceptable terms.
11
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 4/29/00
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. These risks should be carefully reviewed before making any investment
decisions.
12
PART II. OTHER INFORMATION
Item 6. Exhibits
- -----------------
Exhibit 27.0 Financial Data Schedule.
13
Jos. A. Bank Clothiers, Inc
S.E.C. Form 10-Q, 4/29/00
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 12, 2000 Jos. A. Bank Clothiers, Inc.
(Registrant)
/s/ David E. Ullman
--------------------------------------
David E. Ullman
Executive Vice President, Chief Financial Officer
14