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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 29, 2000 Commission file number 0-11736
THE DRESS BARN, INC.
(Exact name of registrant as specified in its charter)
Connecticut 06-0812960
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 Dunnigan Drive, Suffern, New York 10901
(Address of principal executive offices) (Zip Code)
(845) 369-4500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section
12(g) of the Act:
Title of each class
Common Stock $.05 par value
Indicate 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in the definitive proxy incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [ ].
As of October 24, 2000, 18,153,888 shares of common shares were outstanding. The
aggregate market value of the common shares (based upon the October 24, 2000
closing price of $24.00 on the NASDAQ Stock Market) of The Dress Barn, Inc. held
by non-affiliates was approximately $336.9 million. For the purposes of such
calculation, all outstanding shares of Common Stock have been considered held by
non-affiliates, other than the 4,117,555 shares beneficially owned by Directors
and Executive Officers of the registrant. In making such calculation, the
registrant does not determine the affiliate or non-affiliate status of any
shares for any other purpose.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on December 11, 2000 are incorporated into Parts I and
III of this Form 10-K.
Cover Page
THE DRESS BARN, INC.
FORM 10-K
FISCAL YEAR ENDED JULY 29, 2000
TABLE OF CONTENTS
PART I PAGE
Item 1 Business
General 3
Company Strengths and Strategies 3
Merchandising 6
Buying and Distribution 7
Store Locations and Properties 8
Operations and Management 10
Management Information Systems 11
Trademarks 11
Employees 12
Seasonality 12
Forward-Looking Statement and Factors Affecting Future 12
Performance
Item 2 Properties 14
Item 3 Legal Proceedings 15
Item 4 Submission of Matters to a Vote of Security Holders 15
Item 4A Executive Officers of the Registrant 16
PART II
Item 5 Market for Registrant's Common Stock and 17
Related Security Holders Matters
Item 6 Selected Financial Data 18
Item 7 Management's Discussion and Analysis of 19
Financial Condition and Results of Operations
Item 8 Financial Statement and Supplementary Data 23
Item 9 Changes in and Disagreements with Accountants 23
on Accounting and Financial Disclosure
PART III
Item 10 Directors and Executive Officers of the Registrant 23
Item 11 Executive Compensation 23
Item 12 Security Ownership of Certain Beneficial Owners 23
and Management
Item 13 Certain Relationships and Related Transactions 23
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K 24
PART I
ITEM 1. BUSINESS
General
Dress Barn operates a national chain of specialty stores offering
in-season, moderate to better quality career and casual fashion to the working
woman at value prices. The Company differentiates itself from (i) off-price
retailers by its carefully edited selection of in-season, first-quality
merchandise, service-oriented salespeople and its comfortable shopping
environment, (ii) department stores by its value pricing and convenient
locations and (iii) other specialty apparel retailers by its continuous focus on
Dress Barn's target customer. As part of this focus, the Company has
successfully developed its own line of private brands, which constituted
approximately 75% of net sales for the fiscal year ended July 29, 2000 ("fiscal
2000").
The Company operates primarily combination Dress Barn/Dress Barn Woman
stores ("Combo Stores"), which carry both Dress Barn and larger-sized Dress Barn
Woman merchandise, as well as freestanding Dress Barn and Dress Barn Woman
stores. As of July 31, 2000, the Company operated 689 stores in 43 states and
the District of Columbia, consisting of 388 Combo Stores, 245 Dress Barn stores
and 56 Dress Barn Woman stores. The Dress Barn and Dress Barn Woman stores
average approximately 4,500 and approximately 4,000 square feet, respectively,
and the Combo Stores average approximately 9,000 square feet. During fiscal
2000, the Company launched both its mail-order catalog and its internet site's
e-commerce capability, giving the Company multiple channels of distribution,
with the opportunity to target new groups of potential customers while providing
its current customers the convenience of seeing and buying its merchandise in
new ways.
Company Strengths and Strategies
Dress Barn is one of the largest national specialty store chains
offering in-season women's career and casual fashions at value prices. Dress
Barn attributes its success to its: (i) strong name recognition and loyal
customer base; (ii) long-standing relationships with vendors of quality
merchandise; (iii) experienced management team; (iv) commitment to technology;
(v) strong, consistent customer focus; (vi) low cost operating structure; and
(vii) strong balance sheet.
Since the Company's formation in 1962, Dress Barn has established and
reinforced its image as a source of fashion and value for the working woman. The
Company's nearly 700 store locations provide it with a nationally recognized
name. In addition, the Company believes it has developed high awareness among
its target customers through on-going advertising and targeted marketing
activities.
The Company has developed and maintains strong and lasting
relationships with its domestic and offshore vendors, including its buying
agents, often being one of their largest accounts. These relationships, along
with the Company's buying power and strong credit profile, enable the Company to
receive favorable purchase terms, exclusive merchandise and expedited delivery
times.
The four senior members of the Company's merchandising team have worked
together at Dress Barn for many years, with each also having substantial
previous fashion retailing experience. Each of the Company's executive officers
has been with Dress Barn at least 8 years. The stability of its management has
enabled the Company to develop a shared culture and vision and to maintain its
focus on growing and refining its business.
Starting in year ending July 31, 1999 ("fiscal 1999") the Company took
steps to reposition itself to appeal to a younger-feeling customer while
maintaining the Company's focus on its target customer. This repositioning
includes evolving the existing Dress Barn image, building brand awareness,
adopting a new logo and creating a "personality" for Dress Barn that is unique
and proprietary to the marketplace. This included developing Dress Barn into a
national brand, enhancing its merchandise and its stores. During fiscal 2000 the
Company undertook a national "lifestyle" marketing campaign, to further
strengthen and develop the Dress Barn brand. Also during fiscal 2000 the Company
expanded the use of its Dress Barn(R) label to approximately half of its
merchandise offerings. During the year ending July 28, 2001 ("fiscal 2001"), the
Company intends to expand its Dress Barn(R) label to virtually all of its
private brand merchandise offerings, emphasizing quality, value and fashion.
The Company's merchandise offerings reflect a focused and balanced
assortment of career and casual fashions tailored to its customers' demands. The
merchandise mix is evolving to more younger-feeling and contemporary in style.
Assortments are narrower to provide better edited, but broader, assortments for
added depth in stock and more appealing merchandise presentation. In addition,
the Company has developed a new store design prototype that features an easier
to shop layout, warmer colors and redesigned fixtures for enhanced merchandise
presentation. The Company plans to convert 100 of its store locations to the new
store design during fiscal 2001.
Dress Barn has used technology to improve merchandising and customer
service, reduce costs and enhance productivity. The Company continues to enhance
its management information systems. During fiscal 2000, the Company implemented
a field information system for all its Regional and District Sales Managers via
laptop computers, providing immediate sales, inventories and other operational
data. The Company upgraded all of its store personal computers and related
software during fiscal 2000, and is in the process of upgrading its back-office
store system software. The Company's distribution center systems continue to be
refined, further reducing per-unit distribution costs.
All aspects of Dress Barn's stores are designed to be responsive to the
Dress Barn customer. Since 1962, the Company has been consistent in targeting
price-conscious and fashion-minded working women. The convenient locations of
the Company's stores primarily in strip and outlet centers, carefully edited
merchandise arranged for ease of shopping, comfortable store environment and
friendly customer service embody Dress Barn's strong focus on its customers.
Dress Barn's training program encourages its sales associates to assist
customers in a low-key and friendly manner. The Company believes it enhances its
customers' shopping experience by avoiding aggressive sales tactics that would
result from a commission-based compensation structure.
The Company continually seeks to reduce costs in all aspects of its
operations and to create cost-consciousness at all levels. The Company believes
that its highly liquid balance sheet and internally generated funds provide a
competitive advantage that enables the Company to pursue its long-term
strategies regarding new stores, capital expenditures and acquisitions. The
Company has an ongoing strategy of supplementing the Company's growth and
enhancing shareholder value through expansion into related businesses.
In September 1999, the Company launched its mail order catalog, with
five additional mailings during fiscal 2000. Over six million catalogs were
mailed during fiscal 2000, with a larger number planned to be mailed during
fiscal 2001. In Spring 2000, the Company launched e-commerce sales on its
internet site (www.dressbarn.com). The Company has recruited a separate staff
for its catalog and e-commerce operations, including product managers, control
buyers, marketing and e-commerce executives. The Company believes these two new
sales channels will help to increase overall revenue growth, as well as drive
store traffic. The Company is currently outsourcing the call center and
fulfillment operations for the catalog and e-commerce businesses.
The Company's believes it has become the leading national chain of
value-priced specialty stores offering in-season career and casual fashions to
the moderate-income working woman. Dress Barn seeks to be the destination value
specialty retailer brand in the immediate trading area of its units for
consumers at moderate price points. The Company has developed the following
strategies: (i) utilize Dress Barn(R) as a brand, have it recognized as an
authority in its core categories with merchandise that provides shoppers desired
and value-added features at value prices; (ii) gradually evolve Dress Barn's
merchandise focus to include more fashion with a "soft separates" focus; (iii)
continue to open Combo Stores with added concentration on downtown and urban
locations; (iv) further develop customer targeted marketing, utilizing cross
marketing between its retail, catalog and e-commerce customers, and (v) further
improve customer service. In connection with its strategy, the Company recruited
a senior marketing executive, who started with the Company in August 2000.
The Company has gradually increased the percentage of merchandise
manufactured for sale under the Dress Barn(R) label as well as its other private
brands, to approximately 75% of the Company's net sales for fiscal 2000. In
fiscal 2001 the Company intends to further increase the percentage of sales from
its private brand merchandise, of which the vast majority will carry the Dress
Barn(R) label. In addition, approximately 10% of the Company's net sales are
from merchandise produced by national brand manufacturers exclusively for Dress
Barn.
The Company's stores carry a broad assortment of career wear, including
dresses, sweaters and other knitwear, separates, suits, as well as casual wear
items, that are carefully edited to suit the lifestyle needs of its target
customer. Dress Barn does not seek to dictate fashion trends; rather it offers
current styles but avoids fashion-forward merchandise that is subject to rapidly
changing trends.
Based on the success of its larger size Combo Stores, the Company
expects most fiscal 2001 store openings to be Combo Stores between 8,000 and
10,000 square feet. Future store openings will likely include expanded areas for
shoes, petites and other new merchandise categories. Combo Stores provide the
Company with greater presence in shopping centers, give the Company more
leverage in negotiating lease terms, enable the Company to achieve lower
operating cost ratios and offer increased flexibility in merchandise
presentation. Of the approximately 75 additional Combo stores that the Company
plans to open by the end of fiscal 2001, approximately 60 are expected to be new
stores and approximately 15 are expected to be conversions from existing Dress
Barn or Dress Barn Woman stores. The Company expects to continue to open stores
primarily in strip centers, as well as in downtown and urban locations.
In conjunction with its strategy of adding Combo Stores, the Company
continues to close or relocate its underperforming locations and expects to
close approximately 40 such locations during fiscal 2001, compared to 48 closed
in fiscal 2000. The Company has the option under a substantial number of its
store leases to terminate the lease at little or no cost if specified sales
volumes are not achieved, affording the Company greater flexibility to close
certain underperforming stores. The Company's continued opening of new Combo
Stores, net of store closings, resulted in an aggregate store square footage
increase of approximately 9% in fiscal 2000, and is expected to result in an 8%
increase in fiscal 2001.
The Company uses several marketing tools, such as transactional
analyses through point-of-sale systems and customer surveys, in order to
determine the preferences of its target customers, working women ages 25-55. The
Company uses data from its credit card program for its catalog and other
targeted marketing programs. During fiscal 2000, the Company instituted a store
customer tracking system to enhance its targeted marketing and advertising.
Dress Barn continually seeks to improve the customer's shopping
experience. The Company's enhanced management information systems enable store
managers and sales associates to spend more time servicing customers. The
Company utilizes an ongoing video-training program to improve customer service
and sales associates' product knowledge and selling skills.
To further enhance shareholder value, in October 1998, the Company's
Board of Directors authorized the Company to repurchase up to $75 million of the
Company's common stock. The Company completed this authorization during fiscal
2000, purchasing a total of 4.8 million shares at an average price of $15.62 per
share. In March 2000, the Company's Board of Directors approved an authorization
to repurchase an additional $50 million of the Company's common stock. Through
the end of fiscal 2000, the Company had repurchased 472,700 shares (or
approximately 17% of the additional authorization) at an aggregate cost of
approximately $8.5 million.
Merchandising
In addition to the Company's broad assortment of career and casual
wear, the Company offers other wardrobe items including accessories, jewelry,
hosiery and shoes. There are separate merchandising teams for Dress Barn, Dress
Barn Woman and catalog and e-commerce merchandise. The Company's catalogs and
web site offer some unique merchandise as well as some of the merchandise
available in the stores. The Company is developing cross-marketing strategies
covering store, catalog and e-commerce merchandise, utilizing channel-neutral
merchandise, pricing and return policies.
A key component of the Company's merchandising strategy is to increase
the percentage of its sales derived from its Dress Barn(R) label. The Company
strategy is to develop Dress Barn as a national brand; have it recognized as an
authority in its core categories with merchandise that provides shoppers desired
and value-added features at better prices than branded larger box retailers.
This allows the Company to differentiate itself from other retailers by
providing an assortment of merchandise that is not available elsewhere, and
value to the customer by providing department store taste and quality but at
everyday prices that equal or are below their sale prices. The use of its own
label and private brands in general improves the Company's control over the flow
of merchandise into its stores and enables the Company to better specify
quantities, styles, colors, size breaks and delivery dates. In addition, the
Company believes its private brands provide it with more flexibility in the
marketing process by allowing for higher initial mark-ons. The Company believes
it has the expertise to execute its Dress Barn brand strategy due to its
extensive experience sourcing goods (primarily overseas), its position as a
merchandiser of established fashions and its prior experience with private
brands. The percentage of the Company's sales generated from all private brand
labels has increased to approximately 75% in fiscal 2000, from 70% in fiscal
1999 and 65% in fiscal 1998.
The Company continues to expand its shoe and petite-size departments.
As of July 29, 2000, 276 stores had shoe departments and 107 stores featured
petites. The Company expects to add approximately 25 shoe departments and
approximately 15 petite departments in fiscal 2001.
Virtually all merchandising decisions affecting the Company's stores
are made centrally. Day to day store merchandising is under the direction of the
President and five merchandise managers. Catalog and e-commerce merchandising is
under the direction of the vice president of catalog operations. Store prices
and markdowns are determined centrally but may be adjusted locally in response
to competitive situations. Generally, the majority of the merchandise sold by
the Company is uniformly carried by all stores, with a percentage varied by
management according to regional or consumer tastes or the size of particular
stores. To keep merchandise seasonal and in current fashion, inventory is
reviewed weekly and markdowns are taken as appropriate to expedite selling. The
Company offers first-quality in season merchandise, with slightly more than half
of the Company's sales volume derived from sportswear, and the remainder
consisting of dresses, suits, blazers and accessories. Dress Barn Woman
merchandise features larger sizes of styles similar to Dress Barn merchandise.
Buying and Distribution
Buying is conducted on a departmental basis for Dress Barn and Dress
Barn Woman by the Company's staff of over 45 buyers and assistant buyers
supervised by the President and five merchandise managers. Buying for the
catalogs and e-commerce is currently conducted by four product managers
supervised by the vice president of catalog operations. The Company also uses
independent buying representatives in New York and overseas. The Company obtains
its nationally branded merchandise from approximately 200 vendors and its
private brand merchandise from approximately 65 vendors. Typical lead times for
the Company in making purchases from its vendors range from approximately one
month for items such as dresses, t-shirts, socks and hosiery to approximately
six months for items such as suits and sweaters. Generally, lead times do not
vary significantly between the Company's private brands and nationally branded
merchandise.
The Company has in the past always been able to purchase sufficient
quantities of first-quality imported and domestic merchandise at attractive
prices from vendors who typically sell to department and specialty stores, and
management believes that there will continue to be an adequate supply of such
merchandise available. The Company has also established strong relationships
with its private label manufacturers, and does not anticipate any difficulties
in obtaining sufficient quantities of its private label merchandise. In fiscal
2000, imports accounted for over 50% of merchandise purchases and no vendor
accounted over 5% of the Company's purchases.
All merchandise for its stores is received from vendors at the Company's
central warehouse and distribution facility in Suffern, New York, where it is
inspected, allocated and shipped to its stores. The Company uses its strong
relationships with vendors to lower its operating costs by shifting freight and
insurance costs to the vendors and typically requires them to provide ancillary
services. For example, over 90% of the Company's merchandise is pre-ticketed by
vendors and over 50% is pre-packaged for distribution to stores, which allows
cross-docking in the distribution center to the stores. In addition, over half
of the hanging garments purchased by the Company are delivered on floor-ready
hangers. Merchandise for the catalog and e-commerce operations is received at
its third-party fulfillment center, where the merchandise is stored, processed
and shipped directly to the customer.
The Company generally does not warehouse store merchandise, but
distributes it promptly to stores. Turnaround time between the receipt of
merchandise from the vendor and shipment to the stores is usually three days or
less, and shipments are made daily to most stores, maintaining the freshness of
merchandise. Because of such frequent shipments, the stores do not require
significant storage space. The Company may on occasion buy certain basic
clothing that does not change in style from year to year at attractive prices
and warehouse such items at its distribution center until needed.
Store Locations and Properties
As of July 29, 2000, the Company operated 689 stores in 43 states and
the District of Columbia. 366 of the stores were conveniently located in strip
centers and 257 stores were located in outlet centers. During fiscal 2000, no
store accounted for as much as 1% of the Company's total sales. The following
table indicates the type of shopping facility in which the stores were located:
Dress Barn
Dress Barn Woman Combo
Type of Facility Stores Stores Stores Total
Strip Shopping Centers 136 24 206 366
Outlet Malls and Outlet Strip Centers 76 28 153 257
Free Standing, Downtown and Enclosed Malls 33 4 29 66(*)
Total 245 56 388 689
--- -- --- ---
(*) Includes 23 downtown locations
The table on the following page indicates the states in which the
stores operating on July 29, 2000 were located, and the number of stores in each
state:
Location DB DBW Combos
------- ------- ------
Alabama - - 5
Arizona 5 1 5
Arkansas - - 2
California 18 3 17
Colorado 4 1 8
Connecticut 9 3 17
District of Columbia 1 - 1
Delaware 3 - 3
Florida 12 1 12
Georgia 4 2 17
Idaho - - 2
Illinois 4 - 22
Indiana 5 - 4
Iowa - - 3
Kansas - - 4
Kentucky 1 - 4
Louisiana - - 3
Maine 2 1 -
Maryland 7 2 12
Massachusetts 13 3 22
Michigan 10 1 20
Minnesota 1 - 4
Mississippi 1 - 5
Missouri 3 2 12
Nebraska - - 2
Nevada 2 - 3
New Hampshire 1 - 5
New Jersey 24 10 15
New York 28 4 33
North Carolina 10 5 16
Ohio 6 1 12
Oklahoma - - 1
Oregon 2 2 3
Pennsylvania 24 6 16
Rhode Island 2 - 2
South Carolina 12 1 5
Tennessee 7 2 11
Texas 6 1 28
Utah 2 1 3
Vermont - - 2
Virginia 14 2 17
Washington 2 1 4
West Virginia - - 1
Wisconsin - - 5
Total 245 56 388
--- -- ---
Operations and Management
In considering new store locations, the Company's focus is expanding in
its existing major trading and high-density markets, in certain cases seeking
downtowns or urban locations and/or adding to a cluster of suburban or other
locations. Downtown and urban locations are considered based on pedestrian and
mass transit traffic patterns, proximity to major corporate centers and office
towers and occupancy costs at the location, which are substantially higher than
in suburban locations. With respect to suburban and other locations the Company
considers the concentration of the Company's target customer base, the average
household income in the surrounding area and the location of the proposed store
relative to competitive retailers. Within the specific strip or outlet center,
the Company evaluates the proposed co-tenants, the traffic count of the existing
center and the location of the store within the center. The Company's real
estate committee, which includes members of senior management, must approve all
new leases. The committee also receives input from field management.
The Company's stores are designed to create a comfortable and pleasant
shopping environment for its customers. Merchandise and displays at all of the
stores are set up according to uniform guidelines and plans distributed by the
Company. The Company's merchandise is carefully arranged by lifestyle category
(e.g., career, casual and weekend wear) for ease of shopping. The stores also
have private fitting rooms, drive aisles, appealing lighting, carpeting,
background music and centralized cashier desks. Strategically located throughout
the stores are "lifestyle" posters showing the customer complete outfits
coordinated from among the stores' fashion offerings. The Company has updated
its interior signage and fixturing for a more open and easier to shop
environment and has launched a program to convert its stores to a new prototype.
All stores are directly managed and operated by the Company. Each store
is staffed by a supervisor, who may be the store manager, and at least one sales
associate during non-peak hours, with additional sales associates added as
needed at peak hours. The supervisors and sales associates perform all store
operations, from receiving and processing merchandise and arranging it for
display, to assisting customers. Each store manager reports to a District Sales
Manager who, in turn, reports to a Regional Sales Manager. Dress Barn employs 10
Regional Sales Managers and approximately 100 District Sales Managers. District
sales managers typically visit each store at least once a week to review
merchandise levels and presentation, staff training and personnel performance,
expense control, security, cleanliness and adherence to Company operating
procedures.
The Company motivates its sales associates through promotion from
within, creative incentive programs, competitive wages and the opportunity for
bonuses. Sales associates compete in a broad variety of Company-wide contests
involving sales goals and other measures of performance. The contests are
designed to boost store profitability, create a friendly competitive atmosphere
among associates and offer opportunities for additional compensation. Management
believes that Dress Barn's creative incentive programs provide an important tool
for building cohesive and motivated sales teams. The Company utilizes
comprehensive training programs at the store level in order to ensure that the
customer will receive friendly and helpful service, which include (i) on-going
video training, (ii) workbooks and manuals and (iii) one-on-one training of
sales associates by store managers.
Approximately 61% of the Company's sales in fiscal 2000, versus 59% in
fiscal 1999, were paid for by credit card, with the remainder being by cash or
check. This increase was partially due to the catalog and e-commerce sales,
which are virtually all credit card sales. The Company utilizes its own Dress
Barn credit card. Consistent with the other credit cards it accepts, the Company
assumes no credit risk with respect to the Dress Barn card but pays a percentage
of sales as a service charge. As of July 29, 2000, the number of cardholders was
approximately 1.3 million. The average transaction on the Dress Barn credit card
during fiscal 2000 was approximately 49% greater than the average of all other
transactions and represented approximately 10% of the Company's sales.
The Company mainly uses print advertising. The Company also uses
direct mail programs, with seven mailings during fiscal 2000, each to
approximately 750,000 households including its credit card holders. In addition,
there were several smaller, more targeted mailings during fiscal 2000. In fiscal
2000, The Company conducted a national brand awareness campaign, using cable,
local television and radio to promote Dress Barn as a national brand and as a
"lifestyle" to help drive customer traffic. The Company's advertising and
marketing is shifting towards a stronger brand message delivered on a more
targeted basis; more radio, magazine and direct mail. The Company also launched
during fiscal 2000 a more sophisticated customer tracking system, which will
further enhance its targeting ability. At the store level, the store supervisors
host local marketing programs, including fashion shows and in-store events
designed to create greater awareness of Dress Barn's merchandise. The Company
uses its credit card program, its catalog and its internet site
(www.dressbarn.com) as significant components in the development of its targeted
marketing efforts, enabling it to develop segmented marketing programs.
Virtually all of the Company's stores are open seven days a week.
Stores located in strip and outlet centers conform to the hours of other stores
in the center and are open most evenings, while downtown and freestanding stores
are usually open two nights per week.
Management Information Systems
In the past several years, the Company has made a significant
investment in technology to improve customer service, gain efficiencies and
reduce operating costs. Dress Barn has a management information system which
integrates all major aspects of the Company's business, including sales,
distribution, purchasing, inventory control, merchandise planning and
replenishment, and financial systems. All stores utilize a point-of-sale system
with price look-up capabilities for both inventory and sales transactions. The
Company continues to refine its laptop system that delivers up-to-date
store-related information to its Regional and District Sales Managers and
automates many of their reporting functions.
The Company's merchandising system tracks merchandise from the
inception of the purchase order, through receipt at the distribution center,
through the distribution planning process, and ultimately to the point of sale.
To monitor the performance of various styles, management reviews sales and
inventory levels on-line, organized by department, class, vendor, style, color
and store. The system enables the Company to mark down slow-moving merchandise
or efficiently transfer it to stores selling such items more rapidly. Through
sophisticated yet inexpensive off-the-shelf systems, the Company analyzes
historical hourly and projected sales trends to efficiently schedule sales
personnel, minimizing labor costs while producing a higher level of customer
service. The Company believes that such investments in technology enhance
operating efficiencies and position Dress Barn for future growth. The catalog
and e-commerce operations utilize their third-party provider's operating system
for the call center and fulfillment operations, which tracks merchandise from
the initial purchase order to the eventual fulfillment of customer orders. The
catalog and e-commerce operations utilize a sophisticated marketing and
forecasting system, which is separately leased by the Company. The Company is in
the process of upgrading its back-office store system software and other
information systems to enhance its customer tracking capabilities and targeted
marketing efforts.
Trademarks
The Company has previously been issued U.S. Certificates of
Registration of Trademark for the operating names of its stores and its major
private label merchandise. The Company believes its Dress Barn (R) trademark is
materially important to its business. Approximately 3% of the Company's stores
currently in operation, primarily located in outlet centers, operate under the
name Westport Ltd. and Westport Woman. Subject to landlord approval and
underlying lease restrictions, if any, the Company seeks to convert as many of
these stores as possible to the Dress Barn or Dress Barn Woman name.
Employees
As of July 29, 2000, the Company had approximately 7,500 employees of
whom approximately 4,200 worked part time. A number of temporary employees are
usually added during the peak selling periods. None of the Company's employees
are covered by any collective bargaining agreement. The Company considers its
employee relations to be good.
Seasonality
The Company's sales are evenly split between its Fall and Spring
seasons. Though the Company does not consider its business seasonal, it has
historically experienced substantially lower earnings in its second fiscal
quarter ending in January than during its other three fiscal quarters,
reflecting the intense promotional atmosphere that has characterized the
Christmas shopping season in recent years. In addition, the Company's quarterly
results of operations may fluctuate materially depending on, among other things,
increases or decreases in comparable store sales, adverse weather conditions,
shifts in timing of certain holidays, the timing of new store openings, net
sales contributed by new stores, the catalog and e-commerce operations, and
changes in the Company's merchandise mix.
Forward-Looking Statements and Factors Affecting Future Performance
This Annual Report on Form 10-K contains in the "Business" section, in
the "Properties" section, in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere, forward looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These statements reflect the Company's current views with
respect to future events and financial performance. The Company's actual results
of operations and future financial condition may differ materially from those
expressed or implied in any such forward looking statements as a result of
certain factors set forth in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section below.
The women's retail apparel industry is subject to rapid change and is
highly competitive. The industry is subject to changes in the retail environment
which may be affected by overall economic conditions, women's apparel fashions,
demographics, macroeconomic factors such as consumer confidence that may affect
the level of spending for the types of merchandise sold by the Company, as well
as other factors. The Company's sales and results of operations may also be
affected by unusual weather patterns in areas where the Company has its greatest
concentration of stores. The level of occupancy costs, merchandise, labor and
other costs will affect future results of operations.
The Company competes primarily with department stores, specialty
stores, discount stores, mass merchandisers and off-price retailers, many of
which have substantially greater financial, marketing and other resources than
the Company. The Company's catalog and e-commerce operations compete with other
catalog and other multi-channel retailers. Many department stores offer a
broader selection of merchandise than the Company. In addition, many department
stores continue to be promotional and reduce their selling prices, and certain
of the Company's competitors and vendors have opened outlet stores, which offer
off-price merchandise. The Company's sales and results of operations may also be
affected by closeouts and going-out-of-business sales by other women's apparel
retailers. The Company may face periods of strong competition in the future
which could have an adverse effect on its financial results.
The growth of the Company's store operations is dependent, in large
part, upon the Company's ability to successfully execute its strategy of adding
new stores and expanding into related businesses, such as the catalog and
e-commerce. The success of the Company's growth strategy for its stores will
depend upon a number of factors, including the identification of suitable
markets and sites for new Combo Stores, negotiation of leases on acceptable
terms, construction or renovation of sites in a timely manner at acceptable
costs, and maintenance of the productivity of the existing store base. In
addition, the Company must be able to hire, train and retain competent managers
and personnel and manage the systems and operational components of its growth.
The failure of the Company to open new Combo Stores on a timely basis, attract
qualified management and personnel or appropriately adjust operational systems
and procedures would adversely affect the Company's future operating results. In
addition, there can be no assurance that the opening of new Combo Stores in
existing markets will not have an adverse effect on sales at existing stores in
these markets. There can be no assurance that the Company will be able to
successfully implement its growth strategy of continuing to introduce the Combo
Stores or to maintain its current growth levels.
As part of the Company's planned growth, it has invested significant
resources to create an infrastructure for its catalog and e-commerce operations.
Substantial sales increases for the catalog and e-commerce businesses are
necessary for those sales to be profitable. If these new businesses do not
generate such increased sales, the Company's operating results may continue to
be negatively impacted. E-commerce for specialty apparel retailers is relatively
new, with few success stories. The Company's catalog and e-commerce initiatives
are expected to continue to require significant resources.
The expansion of the Dress Barn(R) brand to the vast majority of the
Company's merchandise offerings and the marketing campaign to promote the
Company's brand and image may not generate positive reaction from its customers
and may not increase sales. Failure of the Company to maintain its existing
customer base may negatively impact sales.
The Company's success also depends in part on its ability to anticipate
and respond to changing merchandise trends and consumer preferences in a timely
manner. Accordingly, any failure by the Company to anticipate, identify and
respond to changing fashion trends could adversely affect consumer acceptance of
the merchandise in the Company's stores, which in turn could adversely affect
the Company's business and its image with its customers. If the Company
miscalculates either the market for its merchandise or its customers' purchasing
habits, it may be required to sell a significant amount of unsold inventory at
below average markups over the Company's cost, or below cost, which would have
an adverse effect on the Company's financial condition and results of
operations.
The Company's success is largely dependent on the efforts and abilities
of its executive officers. The loss of the services of any of its executive
officers could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company relies upon its existing management information systems in
operating and monitoring all major aspects of the Company's business, including
sales, warehousing, distribution, purchasing, inventory control, merchandising
planning and replenishment, as well as various financial systems. Any disruption
in the operation of the Company's management information systems, or the
Company's failure to continue to upgrade, integrate or expend capital on such
systems as its business expands, would have a material adverse effect on the
Company. In addition, any disruption in the operations of the Company's
distribution center would have a material adverse effect on the Company's
business.
The Company is committed to being leaner and more productive. The
Company is planning to continue to close or relocate underperforming stores and
maintain tight cost controls in all areas with a view to increasing shareholder
value. There can be no assurance that the Company's strategy will result in a
continuation of revenue and profit growth. Future economic and industry trends
that could impact revenue and profitability remain difficult to predict.
ITEM 2. PROPERTIES
The Company leases all its stores. Store leases generally have an
initial term ranging from 5 to 15 years with one or more 5-year options to
extend the lease. The table below, covering all stores operated by the Company
on July 29, 2000, indicates the number of leases expiring during the period
indicated and the number of expiring leases with and without renewal options:
Leases Number with Number Without
Fiscal Years Expiring Renewal Options Renewal Options
2001 101 58 43
2002 143 128 15
2003 123 106 17
2004-2006 240 201 39
2007 and thereafter 82 77 5
--- --- ---
Total 689 570 119
--- --- ---
New store leases generally provide for a base rent of between $10 and
$20 per square foot per annum. Most leases have formulas requiring the payment
of a percentage of sales as additional rent, generally when sales reach
specified levels. The Company's aggregate minimum rentals under operating leases
in effect at July 29, 2000, and excluding locations acquired after July 29,
2000, for fiscal 2001 are approximately $69.9 million. In addition, the Company
is also responsible under its store leases for its pro rata share of maintenance
expenses and common charges in strip and outlet centers.
Most of the store leases give the Company the option to terminate the
lease at little or no cost if certain specified sales volumes are not achieved.
This affords the Company greater flexibility to close underperforming stores.
Usually these provisions are operative only during the first few years of the
lease.
The Company's investment in new stores consists primarily of inventory,
leasehold improvements, fixtures and equipment. Dress Barn often receives tenant
improvement allowances from the landlords to offset these initial investments.
The Company's stores are typically profitable within the first 12 months of
operation.
The Company leases its executive offices and distribution facilities in
Suffern, New York. The Suffern facility has a total of 510,000 square feet, with
100,000 square feet of office space and the remainder for merchandise
distribution. This lease expires on April 30, 2007, with three five-year options
to extend the lease. Management believes the Suffern facility is sufficient to
meet its current needs and any foreseeable increase in the Company's store base
resulting from expansion or acquisition. The catalog and e-commerce call center
and fulfillment operations are conducted in facilities contracted from a
third-party provider. The contract expires in June 2001, with two options to
extend the contract for additional two-year periods. The contract provides
termination provisions for both parties under certain conditions. Management
believes the third-party provider has sufficient capacity to service the
Company's current needs and the planned increase in sales during the lease term.
ITEM 3. LEGAL PROCEEDINGS
On May 18, 2000, Alan M. Glazer, GLZR Acquisition Corp. and Bedford
Fair Industries, Ltd. commenced an action against the Company in the Superior
Court of Connecticut, Stamford Judicial District, seeking compensatory and
punitive damages in an unspecified amount for alleged unfair trade practices and
alleged breach of contract arising out of negotiations before Bedford Fair
Industries' Chapter 11 bankruptcy liquidation for the acquisition of the Bedford
Fair business which the Company never concluded. The Company believes that there
is no merit in any of the plaintiffs' asserted claims.
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or any of
its subsidiaries is a party or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year.
ITEM 4A. Executive Officers of the Registrant
The following table sets for the name, age and position with the
Company of the Executive Officers of the Registrant:
Name Age Positions
Elliot S. Jaffe 74 Chairman of the Board,
Chief Executive Officer and Director
Burt Steinberg 55 President, Chief Operating Officer and
Director
David R. Jaffe 41 Executive Vice President
Armand Correia 54 Senior Vice President and Chief
Financial Officer
Eric Hawn 50 Senior Vice President
Store Operations
Elise Jaffe 45 Senior Vice President
Real Estate
Mr. Elliot S. Jaffe has been Chief Executive Officer of the Company since
1966.
Mr. Steinberg has been President and Chief Operating Officer of the Company
since 1989.
Mr. David R. Jaffe has been Executive Vice President of the Company since
1996. He joined the Company in 1992 as Vice President Business Development and
became Senior Vice President in 1995. Mr. Jaffe is the son of Elliot S. and
Roslyn S. Jaffe, Secretary, Treasurer and Director of the Company.
Mr. Correia has been Senior Vice President and Chief Financial Officer of
the Company since 1991.
Mr. Hawn has been Senior Vice President of the Company since 1989.
Ms. Elise Jaffe has been Senior Vice President of the Company since January
1, 1995. She previously was Vice President. Ms. Jaffe is the daughter of Elliot
S. and Roslyn S. Jaffe, Secretary, Treasurer and Director of the Company.
The Company's officers are elected by the Board of Directors for
one-year terms and serve at the discretion of the Board of Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
Market Prices of Common Stock
The Common Stock of The Dress Barn, Inc. is traded over-the-counter on
the NASDAQ National Market System under the symbol DBRN.
The table below sets forth the high and low bid prices as reported by
NASDAQ for the last eight fiscal quarters. These quotations represent prices
between dealers and do not include retail mark-ups, mark-downs or other fees or
commissions and may not represent actual transactions.
Fiscal 2000 Fiscal 1999
Bid Prices Bid Prices
High Low High Low
Fiscal Period
First Quarter $19.63 $14.00 $24.50 $11.25
Second Quarter $18.25 $15.06 $16.38 $13.00
Third Quarter $22.69 $13.56 $16.31 $12.38
Fourth Quarter $24.94 $16.25 $16.69 $13.13
Number of Record Holders
The number of record holders of the Company's common stock as of
October 1, 2000 was approximately 2,000.
Dividend Policy
The Company has never paid cash dividends on its common stock. Payment
of dividends is within the discretion of the Company's Board of Directors.
ITEM 6. SELECTED FINANCIAL DATA
Dollars in thousands except per share
information
Fiscal Year Ended
------------------------------------------------------------------------------------
July 29, July 31, July 25, July 26, July 27,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------
Net sales $656,174 $615,975 $598,175 $554,843 $515,522
Cost of sales, including
occupancy and buying costs 419,479 398,282 381,354 358,093 337,998
------------------------------------------------------------------------------------
Gross profit 236,695 217,693 216,821 196,750 177,524
Selling, general and
administrative expenses 165,336 150,897 142,098 135,384 132,176
Depreciation & amortization 21,164 23,104 17,758 16,139 15,828
Write-down of underperforming
and closed store assets ---- ---- ---- ---- 2,848
------------------------------------------------------------------------------------
Operating income 50,195 43,692 56,965 45,227 26,672
Interest income- net 7,667 8,787 6,385 4,800 3,343
------------------------------------------------------------------------------------
Earnings before
income taxes 57,862 52,479 63,350 50,027 30,015
Income taxes 21,120 19,155 23,123 18,260 11,106
------------------------------------------------------------------------------------
Net earnings $36,742 $33,324 $40,227 $31,767 $18,909
====================================================================================
Earnings per share - basic $1.94 $1.56 $1.75 $1.40 $0.84
====================================================================================
Earnings per share - diluted $1.89 $1.53 $1.70 $1.33 $0.84
====================================================================================
Balance sheet data:
Working capital $159,105 $159,089 $170,412 $153,579 $122,730
Total assets $374,236 $363,579 $341,154 $309,502 $265,723
Long-term debt -- -- -- $3,500 $3,500
Shareholders' equity $259,561 $253,600 $265,608 $232,822 $199,096
Percent of net sales:
Cost of sales, including
occupancy and buying costs 63.9% 64.7% 63.8% 64.5% 65.6%
Gross profit 36.1% 35.3% 36.2% 35.6% 34.4%
Selling, general and
administrative expenses 25.2% 24.5% 23.8% 24.4% 25.6%
Operating income 7.6% 7.1% 9.5% 8.2% 5.2%
Net earnings 5.6% 5.4% 6.7% 5.7% 3.7%
Certain reclassifications have been made to prior years' data to conform with
the current year's presentation
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements contained in this Annual Report are forward-looking
and involve a number of risks and uncertainties. Among the factors that could
cause actual results to differ materially are, but are not limited to, the
following: general economic conditions and consumer confidence; competitive
factors and pricing pressures, including the promotional activities of major
department stores; consumer apparel buying patterns, such as the ongoing shift
to more casual apparel; import risks, including potential disruptions, economic
and political problems in countries from which merchandise is imported, and
duties, tariffs and quotas on imported merchandise; the Company's ability to
predict fashion trends; the availability, selection and purchasing of attractive
merchandise on favorable terms; higher than anticipated costs of building the
catalog and e-commerce capabilities; inadequate growth in the sales from the
catalog and e-commerce operations; new or increased competition in the catalog
or e-commerce channels of distribution; adverse weather conditions; inventory
risks due to shifts in market demand and other factors that may be described in
the Company's filings with the Securities and Exchange Commission. The Company
does not undertake to publicly update or revise the forward-looking statements
even if experience or future changes make it clear that the projected results
expressed or implied therein will not be realized.
Results of Operations
The table below sets forth certain financial data of the Company
expressed as a percentage of net sales for the periods indicated:
Fiscal Year Ended
July 29, July 31, July 25,
2000 1999 1998
------ ------ ------
Net sales 100.0% 100.0% 100.0%
Cost of sales, including
occupancy and buying costs 63.9% 64.7% 63.8%
Selling, general and
administrative expenses 25.2% 24.5% 23.8%
Depreciation and amortization 3.2% 3.8% 3.0%
Interest income - net 1.2% 1.4% 1.1%
Earnings before income taxes 8.8% 8.5% 10.6%
Net earnings 5.6% 5.4% 6.7%
Fiscal 2000 Compared to Fiscal 1999
Net sales increased by 6.5% to $656.2 million for the 52 weeks ended
July 29, 2000 ("fiscal 2000"), from $616.0 million for the 53 weeks ended July
31, 1999 ("fiscal 1999"). On a comparable 52-week basis sales would have
increased 8.2%. The sales increase from fiscal 1999 was primarily due to a 1.8%
increase in comparable store sales and an approximately 9% increase in total
selling square footage. The Company believes the increase in comparable store
sales resulted in part from a number of its strategic initiatives, including the
development of its Dress Barn(R) brand merchandise and brand image and the
Company's ability to react to the growing customer preference for casual career
wear and adapt its merchandise offerings accordingly. The increase in store
square footage was due to the opening of new combination Dress Barn/Dress Barn
Woman stores ("combo stores"), which carry both Dress Barn and Dress Barn Woman
merchandise, and the conversion of single-format stores into combo stores,
offset in part by the square footage reduction from the closing of
underperforming stores. The number of stores in operation increased to 689
stores as of July 29, 2000, from 674 stores in operation as of July 31, 1999.
The Company's strategy for fiscal 2001 is to continue opening primarily combo
stores and converting its existing single-format stores into combo stores, while
closing its underperforming locations. Store expansion will focus on both
expanding in the Company's existing major trading markets, in certain cases
seeking a downtown location and/or adding to a cluster of suburban or other
locations, and developing new markets.
The Company mailed its first Dress Barn catalog in September 1999, with
a total of 6 million catalogs mailed during fiscal 2000. During Spring 2000, the
Company also started its e-commerce business, selling merchandise on the
internet via its web site (www.dressbarn.com). The Company's fiscal 2000
earnings per share-diluted were reduced by approximately $0.22 due to the
startup costs of launching the catalog and e-commerce operations and building
the infrastructure to support their continued expansion. The Company intends to
continue developing its catalog and e-commerce sales capabilities in fiscal
2001.
Gross profit (net sales less cost of goods sold, including occupancy
and buying costs) increased by 8.7% to $236.7 million, or 36.1% of net sales, in
fiscal 2000 from $217.7 million, or 35.3% of net sales, in fiscal 1999. The
increase in gross profit as a percentage of sales was primarily due to higher
initial margins from the continued increase in the percentage of sales from
private brands and lower markdowns as a percentage of sales. Increased store
sales more than offset higher store occupancy costs resulting from the increase
in square footage and higher rents for new stores, store expansions and lease
renewals.
Selling, general and administrative ("SG&A") expenses increased by 9.6%
to $165.3 million, or 25.2% of net sales, in fiscal 2000 from $150.9 million, or
24.5% of net sales, in fiscal 1999. Cost controls, productivity improvements and
increases in comparable store sales were not sufficient to offset increases in
store operating costs (primarily selling costs resulting from the tight labor
market) and increases in advertising and marketing expenses. In addition, SG&A
expenses included start-up costs for the Dress Barn catalog and the e-commerce
operations.
Depreciation expense decreased by 8.5% to $21.2 million for fiscal 2000
from $23.1 million for fiscal 1999. Fiscal 1999's depreciation expense included
additional provisions for future store closings and an additional charge for the
replacement of its store personal computers during fiscal 2000. Depreciation
expense for both periods also includes certain write-offs related to the closure
of 47 stores and 56 stores during fiscal 2000 and fiscal 1999, respectively.
Interest income - net decreased by 12.7% to $7.7 million for fiscal
2000 from $8.8 million for fiscal 1999. During fiscal 2000, funds available for
investment were consistent with fiscal 1999, but fiscal 1999 included $1.2
million of net capital gains from the redemption of equity funds made during the
fiscal year.
Net earnings for fiscal 2000 increased 10.3% to $36.7 million versus
$33.3 million in fiscal 1999, while diluted earnings per share increased 23.5%
to $1.89 per share versus $1.53 in fiscal 1999. The earnings per share increase
exceeded the increase in net earnings primarily due to the Company's repurchase
of 2.4 million and 3.0 million shares of its common stock in fiscal 2000 and
1999, respectively.
Fiscal 1999 Compared to Fiscal 1998
Net sales increased by 3.0% to $616.0 million for the 53 weeks ended
July 31, 1999, from $598.2 million for the 52 weeks ended July 25, 1998 ("fiscal
1998"). The sales increase was due to the extra week in fiscal 1999, which added
$9.4 million to fiscal 1999 revenues, and an approximately 8% increase in total
selling square footage. These were offset by a 3.7% decrease in comparable store
sales. The Company believes the decrease in comparable store sales resulted
primarily from the continued and growing customer preference for casual career
wear, rather than the tailored career clothing the Company is generally known
for. The increase in square footage was due to the opening of new combo stores
and the conversion of single-format stores into combo stores, offset in part the
square footage reduction from the closing of underperforming stores. The number
of stores in operation increased to 674 stores as of July 31, 1999, from 669
stores in operation as of July 25, 1998.
Gross profit (net sales less cost of goods sold, including occupancy
and buying costs) increased by 0.4% to $217.7 million, or 35.3% of net sales, in
fiscal 1999 from $216.8 million, or 36.2% of net sales, in fiscal 1998. The
decline in gross profit as a percentage of sales was primarily due to increased
store occupancy costs as a percentage of sales and slightly lower margins
resulting from increased markdowns. Store occupancy costs increased due to the
increase in square footage and higher rents for new stores, store expansions and
lease renewals that were not accompanied by a similar increase in store sales.
Selling, general and administrative ("SG&A") expenses increased by 6.2%
to $150.9 million, or 24.5% of net sales, in fiscal 1999 from $142.1 million, or
23.8% of net sales, in fiscal 1998. Cost controls and productivity improvements
were not sufficient to offset the negative leverage from the decline in
comparable store sales on relatively fixed costs.
Depreciation expense increased by 30.1% to $23.1 million for fiscal
1999 from $17.8 million for fiscal 1998. This was primarily due to $22.7 million
of fixed asset additions in fiscal 1999 and an increase in the provision for
future store closings from $3.3 million in fiscal 1998 to $6.8 million in fiscal
1999. The Company's fiscal 1999 provision for future store closings includes an
additional charge for the planned replacement of its store personal computers
during fiscal 2000. Depreciation expense for both periods also includes certain
write-offs related to the closure of 56 stores and 60 stores during fiscal 1999
and fiscal 1998, respectively.
Interest income - net increased by 37.6% to $8.8 million for fiscal
1999 from $6.4 million for fiscal 1998, due to $1.2 million of net capital gains
from the redemption of equity funds made during the fiscal year, as well as
higher rates and higher available funds for investment.
Liquidity and Capital Resources
The Company has generally funded, through internally generated cash
flow, all of its operating and capital needs. These include the opening or
acquisition of new stores, the remodeling of existing stores, the continued
expansion of its successful combination store format and the building of its
catalog and e-commerce capabilities. Total capital expenditures were $22.3
million, $22.7 million and $21.7 million in fiscal 2000, 1999 and 1998,
respectively. The Company also repurchased 2,399,400 outstanding shares of its
stock for a total cost of $33.9 million during fiscal 2000 and 3,042,300
outstanding shares for $47.3 million during fiscal 1999.
The Company funds inventory expenditures through cash flows from
operations and the favorable payment terms the Company has established with its
vendors. The Company's net cash provided by operations in fiscal 2000 decreased
to $61.5 million as compared to $84.5 million in fiscal 1999 and $62.1 million
in fiscal 1998. The large increase in fiscal 1999 versus both fiscal 2000 and
fiscal 1998 was due primarily to the $21.0 million increase in accounts payable
(while inventory increased $7.4 million) and to a decrease in taxes paid.
At July 29, 2000, the Company had $154.1 million in marketable
securities and other investments. The portfolio consists primarily of municipal
bonds that can readily be converted to cash. The Company holds no options or
other derivative instruments. Working capital was approximately $159 million at
July 29, 2000. In addition, the Company had available $100 million in unsecured
lines of credit bearing interest below the prime rate. The Company had no debt
outstanding under any of the lines at July 29, 2000. However, potential
borrowings were limited by approximately $36 million of outstanding letters of
credit primarily to vendors for import merchandise purchases.
In fiscal 2001, the Company plans to open approximately 60 additional
stores, convert approximately 15 single-format stores to its larger combination
store format and continue its store remodeling program. The Company intends to
focus on its current markets, and enter into new markets where economically
justified. The Company intends to pursue downtown locations as these stores
complement existing suburban locations in its trading markets. The Company also
intends to continue developing its catalog and e-commerce capabilities. In
addition, the Company continues to pursue acquisition opportunities. The Company
believes that its cash, cash equivalents, marketable securities and investments,
together with cash flow from operations, will be adequate to fund the Company's
proposed capital expenditures and any other operating requirements.
Seasonality
The Company has historically experienced substantially lower earnings
in its second fiscal quarter ending in January than during its other three
fiscal quarters, reflecting the intense promotional atmosphere that has
characterized the Christmas shopping season in recent years. The Company expects
this trend to continue for fiscal 2001. In addition, the Company's quarterly
results of operations may fluctuate materially depending on, among other things,
increases or decreases in comparable store sales, adverse weather conditions,
shifts in timing of certain holidays, the timing of new store openings, net
sales contributed by new stores, the catalog and e-commerce operations, and
changes in the Company's merchandise mix.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of The Dress Barn, Inc. and
subsidiaries are filed together with this report: See Index to Financial
Statements, Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information called for by Items 10, 11, 12 and 13 is incorporated
herein by reference from the definitive proxy statement to be filed by the
Company in connection with its 2000 Annual Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ITEM 14. (a) (1) FINANCIAL STATEMENTS PAGE NUMBER
- --------------------------------------- -----------
Independent Auditors' Report F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Earnings F-3
Consolidated Statements of Shareholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 to F-11
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
ITEM 14. (a) (3) LIST OF EXHIBITS
The following exhibits are filed as part of this Report and except
Exhibits 3(e), 22 and 24 are all incorporated by reference (utilizing the same
exhibit numbers) from the sources shown.
Incorporated By
Reference From
3(c) Amended and Restated Certificate of Incorporation (1)
3(e) Amended and Restated By-Laws
3(f) Amendments to Amended and Restated Certificate of Incorporation (5)
4. Specimen Common Stock Certificate (1)
10(a) 1993 Incentive Stock Option Plan (10)
10(b) Employment Agreement With Burt Steinberg (1)
10(f) Agreement terminating Agreement for Purchase of Certain Stock
from Elliot S. Jaffe upon death (6)
10(g) Agreement terminating Agreement for Purchase of Certain Stock
from Roslyn S. Jaffe upon death (6)
Incorporated By
Reference From
Leases of Company premises of which the lessor is Elliot S. Jaffe or members of
his family or related trusts:
10(l) Danbury, CT store (1)
10(m) Branford, CT store (1)
10(hh) Norwalk, CT Dress Barn/Dress Barn Woman store (8)
10(ii) Branford, CT Dress Barn Woman store (8)
10(r) Amendments to Employment Agreement with Burt Steinberg (2)
10(z) Extension of Employment Agreement with Burt Steinberg (5)
10(aa) The Dress Barn, Inc. 1987 Non-Qualified Stock Option Plan (5)
10(dd) Nonqualified Stock Option Agreement with Armand Correia (7)
10(ff) Nonqualified Stock Option Agreement with Elliot Jaffe (7)
10(gg) Nonqualified Stock Option Agreement with Burt Steinberg (7)
10(mm) Lease between Dress Barn and AT&T for (9)
Office and Distribution Space in Suffern, New York
10(nn) The Dress Barn, Inc. 1995 Stock Option Plan (11)
10(oo) Split Dollar Agreement between Dress Barn and (12)
Steinberg Family Trust f/b/o Michael Steinberg
10(pp) Split Dollar Agreement between Dress Barn and (12)
Steinberg Family Trust f/b/o Jessica Steinberg
10(qq) Split Dollar Agreement between Dress Barn and (12)
Jaffe 1996 Insurance Trust
22. Subsidiaries of the Registrant
24. Independent Auditors' Consent
- --------------------------------------------------------------------------------
(1) The Company's Registration Statement on Form S-1 under the
Securities Act of 1933 (Registration No. 2-82916) declared effective May 4,
1983.
(2) The Company's Annual Report on Form 10-K for the fiscal year ended
July 28, 1984.
(3) The Company's Annual Report on Form 10-K for the fiscal year ended
July 27, 1985.
(4) The Company's Annual Report on Form 10-K for the fiscal year ended
July 26, 1986.
(5) The Company's Annual Report on Form 10-K for the fiscal year ended
July 30, 1988.
(6) The Company's Annual Report on Form 10-K for the fiscal year ended
July 28, 1990.
(7) The Company's Annual Report on Form 10-K for the fiscal year ended
July 27, 1991.
(8) The Company's Annual Report on Form 10-K for the fiscal year ended
July 25, 1992.
(9) The Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1993.
(10) The Company's Registration Statement on Form S-8 under the
Securities Act of 1933 (Registration No. 33-60196) filed on March 29, 1993.
(11) The Company's Annual Report on Form 10-K for the fiscal year ended
July 27, 1996.
(12) The Company's Annual Report on Form 10-K for the fiscal year ended
July 25, 1998.
ITEM 14. (b) REPORT ON FORM 8-K
The Company has not filed any reports on Form 8-K during the last
quarter of the fiscal year ended July 29, 2000.
ITEM 14. (c) EXHIBITS
All exhibits are incorporated by reference as shown in Item 14(a)3,
except Exhibits 3(e), 22 and 24 which are filed as part of this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
The Dress Barn, Inc.
by /s/ ELLIOT S. JAFFE
-----------------------
Elliot S. Jaffe
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ ELLIOT S. JAFFE 10/26/00
- --------------------
Elliot S. Jaffe Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
/s/ ROSLYN S. JAFFE 10/26/00
- ---------------------
Roslyn S. Jaffe Director and Secretary and Treasurer
/s/ BURT STEINBERG 10/26/00
- ---------------------
Burt Steinberg Director and President
and Chief Operating Officer
/s/ KLAUS EPPLER 10/26/00
- -----------------------
Klaus Eppler Director
/s/ DONALD JONAS 10/26/00
- ----------------
Donald Jonas Director
/s/ MARK S. HANDLER 10/26/00
- ----------------
Mark S. Handler Director
/s/ EDWARD D. SOLOMON 10/26/00
- ---------------------
Edward D. Solomon Director
/s/ ARMAND CORREIA 10/26/00
- ---------------------
Armand Correia Chief Financial Officer (Principal
Financial and Accounting Officer)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Dress Barn, Inc.
Suffern, New York
We have audited the accompanying consolidated balance sheets of The Dress Barn,
Inc. and Subsidiaries (the "Company") as of July 29, 2000 and July 31, 1999, and
the related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended July 29, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of July 29, 2000 and
July 31, 1999, and the results of its operations and its cash flows for each of
the three years in the period ended July 29, 2000, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
September 13, 2000
The Dress Barn, Inc. and Subsidiaries
Consolidated Balance Sheets
Amounts in thousands, except share data
July 29, July 31,
ASSETS 2000 1999
------------------ ------------------
Current Assets:
Cash and cash equivalents $2,978 $17,492
Marketable securities and investments (Note 2) 154,050 139,400
Merchandise inventories 111,901 110,138
Prepaid expenses and other 4,851 2,038
------------------ ------------------
Total Current Assets 273,780 269,068
------------------ ------------------
Property and Equipment:
Leasehold improvements 54,749 55,542
Fixtures and equipment 128,300 119,723
Computer software 12,294 7,007
Automotive equipment 560 499
------------------ ------------------
195,903 182,771
Less accumulated depreciation
and amortization 109,146 101,416
------------------ ------------------
86,757 81,355
------------------ ------------------
Deferred Income Taxes (Note 4) 9,864 9,866
------------------ ------------------
Other Assets 3,835 3,290
------------------ ------------------
$374,236 $363,579
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable- trade $64,780 $62,215
Accrued expenses 39,633 38,504
Customer credits 5,255 3,364
Income taxes payable 5,007 5,896
------------------ ------------------
Total Current Liabilities 114,675 109,979
------------------ ------------------
Commitments (Note 5)
Shareholders' Equity:
Preferred stock, par value $.05 per share:
Authorized- 100,000 shares
Issued and outstanding- none -- --
Common stock, par value $.05 per share:
Authorized- 30,000,000 shares
Issued- 25,094,847 and 24,646,278
shares, and outstanding- 17,985,647 and
19,936,478 shares, respectively 1,255 1,232
Additional paid-in capital 37,083 28,797
Retained earnings 329,170 292,428
Treasury stock, at cost (107,162) (68,274)
Accumulated other comprehensive loss (785) (583)
------------------ ------------------
259,561 253,600
------------------ ------------------
$374,236 $363,579
================== ==================
See notes to consolidated financial statements
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Earnings
Amounts in thousands except per share amounts
Fiscal Year Ended
------------------------------------------------------------
July 29, July 31, July 25,
2000 1999 1998
------------------------------------------------------------
Net sales $656,174 $615,975 $598,175
Cost of sales, including
occupancy and buying costs 419,479 398,282 381,354
------------------------------------------------------------
Gross profit 236,695 217,693 216,821
Selling, general and
administrative expenses 165,336 150,897 142,098
Depreciation and amortization 21,164 23,104 17,758
------------------------------------------------------------
Operating income 50,195 43,692 56,965
Interest income- net 7,667 8,787 6,385
------------------------------------------------------------
Earnings before
income taxes 57,862 52,479 63,350
Income taxes 21,120 19,155 23,123
------------------------------------------------------------
Net earnings $36,742 $33,324 $40,227
============================================================
Earnings per share:
Basic $1.94 $1.56 $1.75
============================================================
Diluted $1.89 $1.53 $1.70
============================================================
Weighted average shares outstanding:
Basic 18,958 21,336 23,032
------------------------------------------------------------
Diluted 19,408 21,758 23,654
------------------------------------------------------------
See notes to consolidated financial statements
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
Dollars and shares in thousands
Accumulated
Additional Other Total
Common Stock Paid-In Retained Treasury Comprehensive Shareholders'
Shares Amount Capital Earnings Stock Income (Loss) Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, July 26, 1997 22,743 $1,194 $19,856 $218,877 ($8,214) $1,109 $232,822
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 40,227
-----------
Total comprehensive income 40,227
-----------
Deferred compensation 18 18
Tax benefit from exercise of stock options 404 404
Employee Stock Purchase Plan activity 5 -- 131 131
Shares issued pursuant to exercise of stock options 613 31 4,766 4,797
Purchase of treasury stock (522) (12,791) (12,791)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, July 25, 1998 22,839 1,225 25,175 259,104 (21,005) 1,109 265,608
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 33,324
Unrealized holding loss on marketable securities (1,692)
-----------
Total comprehensive income 31,632
-----------
Deferred compensation 10 -- 164 164
Tax benefit from exercise of stock options 2,431 2,431
Employee Stock Purchase Plan activity 10 -- 133 133
Shares issued pursuant to exercise of stock options 119 7 894 901
Purchase of treasury stock (3,042) (47,269) (47,269)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, July 31, 1999 19,936 1,232 28,797 292,428 (68,274) (583) 253,600
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net earnings 36,742
Unrealized holding loss on marketable securities (202)
-----------
Total comprehensive income 36,540
-----------
Tax benefit from exercise of stock options 4,050 4,050
Employee Stock Purchase Plan activity 7 1 109 110
Shares issued pursuant to exercise of stock options 442 22 4,127 4,149
Purchase of treasury stock (2,399) (38,888) (38,888)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, July 29, 2000 17,986 $1,255 $37,083 $329,170 ($107,162) $(785) $259,561
====================================================================================================================================
See notes to consolidated financial statements
The Dress Barn, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Dollars in thousands
Fiscal Year Ended
---------------------------------------------------
July 29, July 31, July 25,
2000 1999 1998
-------------------------------------------------
Operating Activities:
Net earnings $36,742 $33,324 $40,227
---------------------------------------------------
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization of property and
equipment (net) 16,481 16,296 14,489
Write-down of non-trading equity investment --- 3,000 7,000
Loss on disposal of closed store assets 4,683 6,808 3,269
Increase in deferred income tax assets 2 (6,790) (3,519)
Deferred compensation --- 164 18
Changes in assets and liabilities:
Increase in merchandise inventories (1,763) (7,432) (2,871)
(Increase) decrease in prepaid expenses (2,813) 2,163 (1,732)
(Increase) decrease in other assets (545) 120 (1,977)
Increase in accounts payable- trade 2,565 21,004 1,043
Increase in accrued expenses 1,129 6,996 7,669
Increase in customer credits 1,891 537 338
Increase (decrease) in income taxes payable 3,160 8,327 (1,862)
---------------------------------------------------
Total adjustments 24,790 51,193 21,865
---------------------------------------------------
Net cash provided by operating activities 61,532 84,517 62,092
---------------------------------------------------
Investing Activities:
Purchases of property and equipment - net (26,565) (22,724) (21,715)
Sales and maturities of marketable securities and investments 22,132 84,078 118,686
Purchases of marketable securities and investments (36,984) (85,176) (135,792)
Purchase of non-trading equity investment --- --- (10,000)
---------------------------------------------------
Net cash used in investing activities (41,417) (23,822) (48,821)
---------------------------------------------------
Financing Activities:
Repayment of long term debt --- --- (3,500)
Purchase of treasury stock (38,888) (47,269) (12,791)
Proceeds from Employee Stock Purchase Plan 110 133 131
Proceeds from stock options exercised 4,149 901 4,797
---------------------------------------------------
Net cash used in financing activities (34,629) (46,235) (11,363)
---------------------------------------------------
Net (decrease) increase in cash and cash equivalents (14,514) 14,460 1,908
Cash and cash equivalents- beginning of period 17,492 3,032 1,124
---------------------------------------------------
Cash and cash equivalents- end of period $2,978 $17,492 $3,032
===================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $18,047 $16,730 $28,190
===================================================
See notes to consolidated financial statements
The Dress Barn, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Years Ended July 29, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Dress Barn, Inc. (including The Dress Barn, Inc. and it's
wholly-owned subsidiaries (the "Company")) operates a chain of women's apparel
specialty stores. The stores, operating principally under the names "Dress Barn"
and "Dress Barn Woman", offer in-season, moderate to better quality fashion
apparel.
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All material intercompany balances and
transactions are eliminated. The Company reports on a 52-53 week fiscal year
ending on the last Saturday in July. The fiscal year ended July 31, 1999
consisted of 53 weeks; the other years presented consisted of 52 weeks.
Merchandise inventories
Merchandise inventories are valued at the lower of cost or market as
determined by the retail method.
Property and equipment
Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets, which range from 3 to 10 years. For income
tax purposes, accelerated methods are generally used.
Income taxes
Deferred income taxes are provided using the asset and liability
method, whereby deferred income taxes result from temporary differences between
the tax basis of assets and liabilities and their reported amounts in the
financial statements.
Store preopening costs
Expenses associated with the opening of new stores are charged to
expense as incurred.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers its
highly liquid investments with a maturity of three months or less when purchased
to be cash equivalents. These amounts are stated at cost, which approximates
market value. The majority of the Company's money market funds are maintained
with one financial institution.
Marketable securities and investments
The Company has categorized its marketable securities as available for
sale, stated at market value. The unrealized holding gains and losses are
included in shareholders' equity until realized. The amortized cost is adjusted
for amortization of premiums and discounts to maturity, with the net
amortization included in interest income.
Earnings per share (EPS)
The Company calculates EPS in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share". SFAS No. 128 requires dual presentation of basic EPS and diluted EPS on
the face of all income statements for all entities with complex capital
structures. Basic EPS is computed as net income divided by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issuable through stock
options, warrants and other convertible securities.
Recent Accounting Pronouncements
In Fiscal 1999, the Company adopted SFAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information", which establishes annual and
interim reporting standards for an enterprise's operating segments and related
disclosures about its products, services, major customers and the material
countries in which the entity holds assets and reports revenues. The Company is
a specialty retailer of women's apparel (in both regular and large sizes),
including shoes and accessories. Given the similar economic characteristics of
the Company's different store formats, the similar nature of the products sold,
gross margins, type of customer and method of distribution, the operations of
the Company are aggregated into one reportable segment.
In Fiscal 1999, the Company also adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires companies to classify items of
other comprehensive income by their nature in the financial statements and
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the equity section of a
statement of financial position. The adoption of SFAS No. 130 had no material
impact on total shareholders' equity. At present, the only two components of the
Company's comprehensive income are net earnings and unrealized holding gains
(losses) on marketable securities.
Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Valuation of long-lived assets
The Company periodically reviews its long-lived assets for potential
impairment, where events or changes in circumstances indicate that their
carrying amount may not be recoverable. In that event, a loss is recognized
based on the amount the carrying amount exceeds the fair market value of the
long-lived asset.
Stock based compensation
In October 1995, SFAS No. 123, "Accounting for Stock Based
Compensation" was issued. SFAS No. 123 required the Company elect to either
adopt a fair value based expense recognition method of accounting for
stock-based compensation plans or continue to use the intrinsic value method in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees",
with pro forma disclosure of net income and earnings per share as if the fair
value based method of accounting defined in SFAS 123 had been applied. The
Company accounts for stock-based awards to employees using the intrinsic value
method. Compensation expense, if any, is measured as the excess of the market
price of the stock over the exercise price on the measurement date.
Disclosure about fair value of financial instruments
The fair value of financial instruments classified as current assets or
liabilities approximates their carrying amount due to the short-term maturity of
the instruments.
Other assets, as of July 25, 1998, included a $3 million non-trading,
equity investment, which was net of a $7 million write-off in fiscal 1998 to
reflect its estimated net realizable value at that time. During fiscal 1999, the
investment was deemed worthless and the remaining value written off.
2. MARKETABLE SECURITIES AND INVESTMENTS
The amortized cost and estimated fair value of marketable securities
and investments consisted of the following:
July 29, 2000 July 31, 1999
------------- -------------
(In 000's) Estimated Estimated
Fair Value Cost Fair Value Cost
Money Market Funds $5,553 $5,553 $13,869 $13,869
Short Term Investments 44,975 44,975 28,384 28,384
Other Investments --- --- 2,148 2,148
Tax Free Municipal Bonds 101,896 102,429 93,346 93,689
US Govt. Securities Fund 1,626 1,878 1,653 1,893
--------- --------- --------- ---------
$154,050 $154,835 $139,400 $139,983
========= ========= ========= =========
The scheduled maturities of marketable securities and investments at
July 29, 2000 are:
Estimated
Due In Fair Value Cost
- ------------------- ----------- --------
(in 000's)
One year or less $81,980 $82,250
One year through five years 66,332 66,757
Six years through ten years 1,453 1,505
Over ten years 4,285 4,323
-------- --------
$154,050 $154,835
======== ========
Unrealized holding gains and losses at July 29, 2000 netted to an
unrealized loss of approximately $0.8 million. Proceeds and gross realized gains
(losses) from the sale of securities in fiscal 2000, 1999 and 1998 were $22.1
million and ($0.1) million, $84.1 million and $1.2 million and $118.7 million
and ($0.1) million, respectively. For the purposes of determining gross realized
gains and losses, the cost of securities is based upon specific identification.
3. EMPLOYEE BENEFIT PLANS
In August 1995, the Company established a defined contribution
retirement savings plan (401(k)) covering all eligible employees. This plan
succeeded the previous discretionary profit-sharing plan, with all prior
individual account balances and vesting terms transferred to the new plan. The
Company has also established an Executive Retirement Plan for certain officers
and key executives not participating in the 401(k) plan. Both plans allow
participants to defer a portion of their annual compensation and receive a
matching employer contribution on a portion of that deferral. During fiscal
2000, 1999 and 1998, the Company incurred expenses of $1,980,000, $1,493,000 and
$982,000, respectively, relating to the contributions to and administration of
the above plans. The Company also has an Employee Stock Purchase Plan, which
allows employees to purchase shares of Company stock during each quarterly
offering period at a 10% discount through weekly payroll deductions. The Company
does not provide any additional postretirement benefits.
4. INCOME TAXES
The components of the provision for income taxes were as follows:
Fiscal Year Ended
(In 000's) July 29, July 31, July 25,
2000 1999 1998
------- ------- -------
Federal:
Current $18,420 $21,800 $20,349
Deferred (2,128) (6,652) (2,477)
------- ------- -------
16,292 15,148 17,872
------- ------- -------
State:
Current 5,734 5,502 5,872
Deferred (906) (1,495) (621)
------- ------- -------
4,828 4,007 5,251
------- ------- -------
Provision for income taxes $21,120 $19,155 $23,123
======= ======= =======
Significant components of the Company's deferred tax assets were as
follows:
July 29, July 31,
(in 000's) 2000 1999
------ ------
Deferred tax assets:
Inventory capitalization for tax purposes $3,130 $5,695
Capital loss carryover 2,775 2,574
Employee benefits 1,973 1,564
Other items 8,808 7,510
------ ------
Total deferred tax assets 16,686 17,343
------ ------
Deferred tax liabilities:
Depreciation 3,961 4,125
Other items 2,861 3,352
------ ------
Total deferred tax liabilities 6,822 7,477
------ ------
Net deferred tax assets $9,864 $9,866
====== ======
The net deferred tax assets were comprised of approximately $1,880,000
in state deferred taxes and $7,984,000 in federal deferred taxes. Following is a
reconciliation of the statutory Federal income tax rate and the effective income
tax rate applicable to earnings before income taxes:
Fiscal Year Ended
July 29, July 31, July 25,
2000 1999 1998
------- ------- -------
Statutory tax rate 35.0 % 35.0 % 35.0 %
State taxes - net of federal
Benefit 5.4 % 5.0 % 5.8 %
Other - net,
primarily tax-free interest (3.9)% (3.5)% (4.3)%
------- ------- -------
Effective tax rate 36.5% 36.5% 36.5%
======= ======= =======
5. COMMITMENTS
Lease commitments
The Company leases all of its stores and its distribution center.
Certain leases provide for additional rents based on percentages of net sales,
charges for real estate taxes, insurance and other occupancy costs. Store leases
generally have an initial term ranging from 5 to 15 years with one or more
5-year options to extend the lease. Some of these leases have provisions for
rent escalations during the initial term. The Company leases its 510,000 square
foot office and distribution center in Suffern, New York. The lease has an
initial term expiring in 2007 with three 5-year options to extend the lease.
A summary of occupancy costs follows:
Fiscal Year Ended
(In 000's) July 29, July 31, July 25,
2000 1999 1998
------- ------- -------
Base rentals $74,450 $69,661 $62,880
Percentage rentals 842 58 378
Other occupancy costs 21,168 23,862 22,477
------- ------- -------
Total $96,460 $93,581 $85,735
======= ======= =======
The following is a schedule of future minimum rentals under
noncancellable operating leases as of July 29, 2000 (dollars in thousands):
Fiscal Year Amount
------------- --------
2001 $ 69,937
2002 61,582
2003 48,401
2004 37,173
2005 27,870
Subsequent years 56,653
--------
Total future minimum rentals $301,616
========
Although the Company has the ability to cancel certain leases if
specified sales levels are not achieved, future minimum rentals under such
leases have been included in the above table.
Leases with related parties
The Company leases four stores from its Chief Executive Officer or
related trusts. Future minimum rentals under leases with such related parties
which extend beyond July 29, 2000, included in the above schedule, are
approximately $379,000 annually and in the aggregate $1.3 million. The leases
also contain provisions for cost escalations and additional rent based on net
sales in excess of stipulated amounts. Rent expense for fiscal years 2000, 1999
and 1998 under these leases amounted to approximately $426,000, $464,000 and
$438,000, respectively.
Lines of credit
At July 29, 2000, the Company had unsecured lines of credit with three
banks totaling $100 million with interest payable at rates below prime. None of
the Company's lines of credit contain any significant covenants or commitment
fees. The Company had no debt outstanding under any of the lines at July 29,
2000. However, approximately $36 million of outstanding letters of credit
reduced the credit lines available.
Legal proceedings
The Company is involved in various routine legal proceedings incident
to the ordinary course of business. The Company believes that the outcome of all
pending and threatened legal proceedings will, on the whole, not have a material
adverse effect on its financial condition or results of operations.
6. STOCK-BASED COMPENSATION PLANS
At July 29, 2000, the Company had five stock-based compensation plans.
The Company's 1983 Incentive Stock Option Plan expired on April 4, 1993, and
accordingly, the Company can no longer grant options under such plan. The
Company's 1993 Incentive Stock Option Plan, which contains provisions similar to
the expired plan, provides for the grant of options to purchase up to 1,250,000
shares of the Company's common stock. The exercise price of the options granted
under both plans may not be less than the market price of the common stock at
the date of grant. All options granted under both plans vest over a five-year
period and generally expire after ten years from the date of grant. At July 29,
2000, there were 746,850 shares under the 1993 plan available for future grant.
The Company's 1987 Non-Qualified Stock Option Plan, which expired
December 7, 1997, provides for the granting of options to purchase up to
1,000,000 shares of common stock to key employees. The Company's 1995 Stock
Option Plan provides for the granting of either incentive or non-qualified
options to purchase up to 2,000,000 shares of common stock. As of July 29, 2000,
there were 389,700 shares under the 1995 plan available for future grant. The
Company's Employee Stock Purchase Plan allows employees to purchase shares of
the Company's common stock during each quarterly offering period at a 10%
discount through weekly payroll deductions.
The following table summarizes the activities in all Stock Option Plans
and changes during each of the fiscal years presented:
July 29, 2000 July 31, 1999 July 25, 1998
------------- ------------- -------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
----------------------------------------------------------------------------------------------
Options outstanding - beginning of
year 1,439,167 $10.37 1,275,435 $9.83 1,746,992 $8.09
Granted 884,743 14.05 319,250 11.64 167,750 19.99
Cancelled (61,231) 12.63 (36,432) 11.89 (12,769) 10.65
Exercised (442,036) 9.39 (119,086) 7.56 (626,538) 7.65
----------------------------------------------------------------------------------------------
Outstanding end of year 1,820,643 $12.31 1,439,167 $10.37 1,275,435 $9.83
==============================================================================================
Options exercisable
at year-end 319,496 $11.37 448,523 $10.36 187,209 $10.51
----------------------------------------------------------------------------------------------
Weighted-average fair
value of options granted
during the year
$6.31 $5.09 $8.53
-------------- --------------- -------------
The following table summarizes information about stock options
outstanding at July 29, 2000:
Weighted
Number Weighted Average Number Average
Outstanding as of Weighted Average Exercise Price Exercisable as Exercise Price
Range of Exercise Prices 7/29/00 Remaining Life of 7/29/00
- ----------------------------------------------------------------------------------------------------------------------------
$5.00 160,000 6.03 years $5.00 40,000 $5.00
8.25 - 9.15 326,051 5.91 years $8.72 122,584 $8.72
10.50 - 11.44 319,592 7.29 years $11.31 93,512 $11.15
14.06 - 15.63 877,200 9.05 years $14.08 --- ---
19.50 - 22.63 137,800 7.12 years $20.41 63,400 $20.82
----------------------------------------------------------------------------------------------
$5.00 - $22.63 1,820,643 7.76 years $12.31 319,496 $11.37
==============================================================================================
The Company records compensation expense for all stock-based
compensation plans using the method prescribed by Accounting Principles Board
Opinion No. 25, where compensation expense, if any, is measured as the excess of
the market price of the stock over the exercise price on the measurement date.
No compensation expense is recognized for the Company's option grants that have
an exercise price equal to the market price on the date of grant or for the
Company's Employee Stock Purchase Plan.
Had compensation cost for the Company's stock option plans been
determined based on the fair value at the option grant dates for awards in
accordance with the accounting provisions of SFAS No. 123, the Company's net
earnings and earnings per share for fiscal 2000, fiscal 1999 and fiscal 1998
would have been reduced to the pro forma amounts indicated below:
Fiscal Year Ended
July 29, July 31, July 25,
2000 1999 1998
------- ------- -------
Net earnings (in 000's):
As reported $36,742 $33,324 $40,227
Pro forma $35,082 $32,372 $39,530
Earnings per share - basic:
As reported $1.94 $1.56 $1.75
Pro forma $1.85 $1.52 $1.72
Earnings per share - diluted:
As reported $1.89 $1.53 $1.70
Pro forma $1.81 $1.49 $1.67
The fair values of the options granted under the Company's fixed stock
option plans were estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
Fiscal Year Ended
July 29, July 31, July 25,
2000 1999 1998
------- ------- -------
Weighted average risk-free
interest rate 5.9% 5.8% 4.6%
Weighted average expected
life (years) 5.0 5.0 5.0
Expected volatility 41.0% 40.9% 38.6%
These pro forma adjustments are not indicative of future period pro forma
adjustments, when the calculation will apply to all applicable stock options.
SFAS No. 123 does not apply to awards prior to fiscal 1996, and additional
awards in future years are anticipated.
QUARTERLY RESULTS OF OPERATIONS (unaudited)
(in thousands except per share amounts)
Fourth Third Second First
Quarter Quarter Quarter Quarter
Fiscal Year ended July 29, 2000
Net Sales $175,696 $162,992 $149,548 $167,938
Gross Profit,
less occupancy
and buying costs 67,351 58,114 52,296 58,934
Income Taxes 7,217 4,827 3,561 5,515
Net Earnings 12,555 8,398 6,193 9,596
Earnings Per Share(*)
Basic $0.70 $0.45 $0.32 $0.48
Diluted $0.68 $0.44 $0.31 $0.47
Fourth Third Second First
Quarter Quarter Quarter Quarter
Fiscal Year ended July 31, 1999
Net Sales $166,692 $144,341 $146,170 $158,772
Gross Profit,
less occupancy
and buying costs 62,260 51,010 48,998 55,425
Income Taxes 6,585 3,718 3,579 5,273
Net Earnings 11,454 6,469 6,227 9,174
Earnings Per Share(*)
Basic $0.58 $0.32 $0.28 $0.40
Diluted $0.56 $0.31 $0.27 $0.39
(*) Earnings per share is computed independently for each period presented. As a
result, the total of the per share earnings for the four quarters does not equal
the annual earnings per share.
EXHIBIT 3(e)
AMENDED AND RESTATED BY - LAWS OF THE DRESS BARN, INC.
(As Amended through October 12, 2000)
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be at the address of the Corporation's registered agent for service.
SECTION 2. OTHER OFFICES. The Corporation may have other offices,
either within or without the State of Connecticut, at such place or places as
the Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. An annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting pursuant to this Section 1, shall be held at
such date, time and place, either within or without the State of Connecticut, as
the Board of Directors shall determine each year.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose, unless otherwise prescribed by statute, may be called by the
Chairman of the Board or by the directors and may be held at any date, time and
place, within or without the State of Connecticut, as shall be stated in the
notice of meeting. Upon the written request of the holders of not less than
one-tenth of the voting power of all shares entitled to vote at the meeting, the
Chairman of the Board shall call a special shareholders' meeting for the
purposes specified in such request and cause notice thereof to be given.
SECTION 3. NOTICE OF MEETINGS. Written notice of each annual or special
meeting of the shareholders, stating the place, date and time of the meeting
shall be given by or at the direction of the Chairman of the Board or Secretary,
not less than ten nor more than sixty days before the date of the meeting, to
each shareholder entitled to vote at such meeting, at his address as it appears
on the records of the Corporation. The general purpose or purposes for which a
special meeting is called shall be stated in the notice thereof, and no other
business shall be transacted at the meeting.
As Amended through October 12, 2000
SECTION 4. VOTING. Each shareholder shall be entitled to one vote, in
person or by proxy, for each share of stock entitled to vote which is registered
in his name on the record date for the meeting. No proxy shall be voted after
eleven months from its date unless such proxy provides for a longer period.
Elections for directors and all other questions shall be decided by plurality
vote except as otherwise required by the certificate of incorporation or by law.
SECTION 5. QUORUM. The holders of a majority of the shares of the
corporation entitled to vote, present in person or proxy, shall constitute a
quorum at all meetings of the shareholders, except as otherwise required by law
or by the Certificate of Incorporation or any amendment thereto, or by these
by-laws. If a quorum shall not be present at any meeting, the Chairman of the
meeting or a majority of the holders of the stock of the Corporation entitled to
vote who are present at such meeting, in person or by proxy, shall have the
power to adjourn the meeting to another place, date, or time, without notice
other than announcement at the meeting; provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting. At any adjourned meeting any business may be transacted which might
have been transacted at the original meeting.
SECTION 6. SHAREHOLDERS LIST. A complete list of shareholders entitled
to vote at any meeting of shareholders, arranged in alphabetical order for each
class of stock and showing the address of each such shareholder and the number
of shares registered in his name, shall be open to the examination of any such
shareholder, for any proper purpose in the interest of the shareholders as such
or of the Corporation and not for speculative or trading purposes or any purpose
inimical to the interest of the corporation or of its shareholders, during
ordinary business hours beginning two business days after notice of the meeting
is given and continuing through the meeting at the principal office of the
Corporation. The shareholders list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the examination of
any such shareholder who is present. This list shall presumptively determine the
identity of the shareholders entitled to vote at the meeting and the number of
shares held by each of them.
SECTION 7. BUSINESS PROPERLY BROUGHT BEFORE A MEETING. At any meeting
of the shareholders, only such business shall be conducted as shall have been
properly brought before such meeting. To be properly brought before a meeting,
business must be: (A) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (B) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (C) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before a meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation (a) in the case of an annual meeting of the shareholders, not less
than one hundred twenty (120) calendar days in advance of the date specified in
the Corporation's proxy statement released to shareholders in connection with
the previous year's annual meeting of shareholders; provided, however, that in
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than thirty (30) days from the date
contemplated at the time of the previous year's proxy statement, notice by the
shareholder to be timely must be so received not later than the close of
business on the later of one hundred twenty (120) calendar days in advance of
such annual meeting or ten (10) calendar days following the date on which public
announcement of the date of the meeting is first made; and (b) in the case of a
special meeting of the shareholders, not less than one hundred twenty (120) days
prior to the special meeting at which such business will be considered. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the meeting: (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business, (iii) the class
and number of shares of the Corporation which are beneficially owned by the
shareholder, (iv) any material interest of the shareholder in such business, and
(v) any other information that is required to be provided by the shareholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), in his capacity as a proponent to a shareholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a
shareholder proposal in the proxy statement and form of proxy for a shareholders
meeting, shareholders must provide notice as required by the regulations
promulgated under the 1934 Act. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at any meeting except in accordance
with the procedures set forth in this Section 7. The Chairman of the meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this Section 7, and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors shall be five until
such number is reduced or increased as hereinafter provided. The number of
directorships shall be not more than fifteen nor less than three, as fixed from
time to time by action of the shareholders or the Board of Directors or, in the
absence thereof, shall be the number of incumbent directors after the election
at the preceding annual meeting of shareholders. Commencing at the 1986 annual
meeting of shareholders, the directors of the Corporation shall be divided into
three classes, each class as nearly equal in the number of directors as
possible. The term of office of the directors elected to the first class, to be
designated as Class I, will expire at the 1987 annual meeting of shareholders.
The term of office of the directors elected to the second class, to be
designated as Class II, will expire at the 1988 annual meeting of shareholders.
The term of office of the directors elected to the third class, to be designated
as Class III, will expire at the 1989 annual meeting of shareholders. At each
annual meeting of shareholders following the 1986 annual meeting of
shareholders, directors shall be elected to succeed the directors whose terms
will then expire and shall be elected for a term of office that will expire at
the third succeeding annual meeting of shareholders after their election. The
directors shall be elected to serve until the annual meeting of the shareholders
at which their term expires and until their respective successors shall have
been elected and qualified.
SECTION 2. RESIGNATIONS. Any director, member of a committee or officer
may resign at any time. Such resignation shall be made in writing, and shall
take effect at the time specified therein, and if no time be specified, at the
time of its receipt by the Chairman of the Board or Secretary. The acceptance of
a resignation shall not be necessary to make it effective. In the case of a
resignation of a director to take effect at a date later than the receipt
thereof by the Corporation, appropriate action to elect a successor to take
office when the resignation becomes effective may be taken at any time after
such receipt in the same manner as though such resignation were effective on
receipt.
SECTION 3. VACANCIES. Any vacancies on the Board of Directors resulting
from death, resignation, retirement, disqualification, removal from office or
other cause or from newly created directorships arising from an increase in the
number of directors shall be filled by a majority vote of the remaining
directors then in office, and any directors so chosen shall hold office for the
remainder of the full term of the class of directors in which vacancy occurred
or in which the new directorship was created. No decrease in the number of
directors shall shorten the term of any incumbent director.
SECTION 4. REMOVAL. Members of the Board of Directors may be removed
from office only (1) for cause, by the remaining Directors, or (2) with or
without cause, by shareholder action, at a meeting of shareholders called for
that purpose, by vote of at least 80 per cent of the shares of capital stock
then entitled to vote at an election of directors.
SECTION 5. POWERS. The Board of Directors shall exercise all of the
powers of the Corporation except such as are by law, or by the certificate of
incorporation or by these by-laws, conferred upon or reserved to the
shareholders.
SECTION 6. MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such dates, times and places as shall be established from
time to time by the Board of Directors and publicized among all directors.
Special meetings of the Board of Directors may be called by the Chairman of the
Board or by the Secretary on the request of any director on at least twenty-four
hours' written or oral notice of the date, time and place thereof given to each
director. Unless otherwise indicated in the notice thereof, any and all business
may be transacted at a special meeting.
Members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of such Board or committee, by
means of a conference telephone or similar communications equipment that enables
all persons participating in the meeting to hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Action by a majority of the directors present at a meeting at which a
quorum is present shall constitute the act of the Board of Directors.
SECTION 7. QUORUM. A majority of the number of directorships at the
time shall constitute a quorum for the transaction of business. If a quorum
shall not be present at any meeting of the Board of Directors, a majority of
those present may adjourn the meeting to another place, date or time, without
further notice (other than announcement at the meeting) or waiver thereof.
SECTION 8. COMPENSATION. Directors may receive such compensation for
their services as directors as the Board shall from time to time determine by
resolution.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if a written consent thereto is signed by all
members of the Board of Directors, or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
SECTION 10. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of
Directors, by resolution adopted by the affirmative vote of directors holding a
majority of the directorships at a meeting at which a quorum is present, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall elect two or more or directors to serve as the members of
those committees, designating, if it desires, other directors as alternative
members who may replace any absent or disqualified member at any meeting of the
committee.
ARTICLE IV
OFFICERS
SECTION 1. GENERALLY. The officers of the Corporation shall be a
President, one or more Vice-Presidents, a Treasurer, a Secretary and one or more
Assistant Secretaries, all of whom shall be elected by the Board of Directors.
In addition, the Board of Directors may elect a Chairman of the Board of
Directors. Each officer shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. The Board of Directors
may elect such other officers and agents as it may deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of Directors.
None of the officers of the Corporation need be directors. Two or more offices
may be held by the same person, except the offices of President and Secretary.
Any officer may be removed at any time, with or without cause, by the Board of
Directors.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the Chief Executive Officer of the Corporation. He shall preside at all meetings
of the shareholders and of the Board of Directors. Subject to the provisions of
these by-laws and to the direction of the Board of Directors, he shall have the
responsibility for the general management and control of the affairs and
business of the Corporation and shall perform all duties and have all powers
which are commonly incident to the office of Chief Executive Officer or which
from time to time are delegated to him by the Board of Directors. The Chairman
of the Board shall have power to sign, in the name of the corporation, all
authorized stock certificates, contracts, documents, tax returns, instruments,
checks and bonds or other obligations of the Corporation and shall have general
supervision and direction of all of the other officers and agents of the
Corporation.
SECTION 3. PRESIDENT. The President shall be the Chief Operating
Officer of the Corporation. He shall have such powers and shall perform such
duties as shall from time to time be designated by the Board of Directors.
SECTION 4. VICE-PRESIDENTS. Each Vice-President shall have such powers
and shall perform such duties as shall from time to time be designated by the
Board of Directors.
SECTION 5. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities, shall keep full and accurate account of receipts
and disbursements in books belonging to the Corporation and shall have such
other powers and perform such other duties as shall from time to time be
designated by the Board of Directors.
SECTION 6. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and directors, and all other notices
required by law or by these by-laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board, directors, or shareholders, upon whose requisition
the meeting is called as provided in the by-laws. He shall record all the
proceedings of the meetings of the Corporation and of the directors in a book to
be kept for that purpose, and shall perform such other duties as may be assigned
to him by the directors or the Chairman of the Board. He shall have the custody
of the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the directors or the Chairman of the Board, and
attest the same.
SECTION 7. ASSISTANT SECRETARIES. Each Assistant Secretary shall have
such powers and shall perform such duties as shall from time to time be
designated by the Board of Directors.
SECTION 8. ADDITIONAL POWERS OF OFFICERS. In addition to the powers
specifically provided in these by-laws, each officer (including officers other
than those referred to in these by-laws) shall have such other or additional
authority and perform such duties as the Board of Directors may from time to
time determine.
SECTION 9. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the Chairman of the Board
shall have the power to vote and otherwise act on behalf of the Corporation, in
person or by proxy, at any meeting of shareholders of or with respect to any
action of shareholders of any other corporation in which this Corporation may
hold securities and otherwise to exercise any and all rights and powers which
this Corporation may possess by reason of its ownership of securities in such
other corporation.
ARTICLE V
STOCK
SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, signed by the
Chairman of the Board, President or a Vice-President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, shall be issued
to each shareholder, certifying the number of shares owned by him in the
Corporation. Any of or all the signatures on the certificates may be facsimiles
if such certificates are signed by a transfer agent, transfer clerk acting on
behalf of the Corporation or registrar.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. A new certificate of
stock may be issued in the place of any certificate theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, and the directors
may, in their discretion, require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond, in
such sum as they may direct, to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss, theft, or destruction of
any such certificate or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Upon surrender to the Corporation or its transfer agent of a
certificate for shares duly indorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Corporation shall issue or
cause its transfer agent to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
SECTION 4. SHAREHOLDERS RECORD DATE. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than seventy nor less than ten
days before the date of such meeting, nor more than seventy days prior to any
other action. A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholders shall apply to any adjournment of the
meeting.
ARTICLE VI
MISCELLANEOUS
SECTION 1. DIVIDENDS. Subject to the provisions of the certificate of
incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient.
SECTION 2. SEAL. The corporate seal shall be circular in form and shall
contain the name of the Corporation, the year of its creation and the words
"CORPORATE SEAL" and "CONNECTICUT". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
SECTION 4. CHECKS. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, agent or agents of the
Corporation, and in such manner as shall be determined from time to time by the
Board of Directors.
SECTION 5. NOTICE AND WAIVER OF NOTICE. Whenever any written notice is
required to be given, personal notice shall not be necessary unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, first class mail (air-mail if to
an address outside of the United States), postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
Corporation, in which case such notice shall be deemed given on the day of such
mailing, unless it is notice of a directors' meeting, in which case such notice
shall be deemed given five (5) days after the date of such mailing. Notice may
also be given personally, against receipt, or by telegram, telex or similar
communication and notice so given shall be deemed given when so delivered
personally or when delivered for transmission.
Shareholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by statute.
Whenever any notice whatsoever is required or permitted to be given
under the provisions of any law, or under the provisions of the certificate of
incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time such
notice is required to be given, shall be deemed equivalent thereto. A telegram,
telex or similar communication waiving any such notice sent by a person entitled
to notice shall be deemed equivalent to a waiver in writing signed by such
person. Neither the business nor the purpose of any meeting need be specified in
the waiver.
ARTICLE VII
AMENDMENTS
The Board of Directors shall have the power, without the assent or vote
of the shareholders, to adopt, amend or repeal the By-Laws of the Corporation by
the affirmative vote of directors holding a majority of the directorships. Those
shareholders of the Corporation entitled to vote shall also have the power to
adopt, amend or repeal By-Laws of the Corporation provided, however, that any
such action by the shareholders may be taken only at a meeting of shareholders
by the affirmative vote of the holders of at least eighty (80%) per cent of the
shares of capital stock of the Corporation entitled to vote thereon. Any By-Law
adopted by the shareholders may be amended or repealed by the Board of Directors
unless the By-Law or provision thereof specifically states that it shall not be
amended or repealed by the Board of Directors in which case such By-Law or
provision shall only be amended or repealed by action by the shareholders taken
at a meeting of shareholders by the affirmative vote of the holders of eighty
(80%) per cent of the shares of capital stock of the Corporation entitled to
vote thereon. Any notice of a meeting of shareholders of the Board of Directors
at which By-Laws are to be adopted, amended or repealed shall include notice of
such proposed action.
EXHIBIT 22
THE DRESS BARN, INC.
SUBSIDIARIES OF THE REGISTRANT
(All 100% Owned)
State of
Subsidiary Incorporation
D.B.R., Inc. Delaware
The Dress Barn, Inc. of
New Hampshire, Inc. (**) New Hampshire
Raxton Corp. (**) Massachusetts
JRL Consulting Corp. (**) New Jersey
D.B.X. Inc. New York
(**) Inactive Subsidiary
EXHIBIT 24
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Shareholders
The Dress Barn, Inc.
Suffern, New York
We consent to the incorporation by reference in Registration Statement Nos.
33-17488, 33-47415, 33-60196 and 333-18135 on Form S-8 of our report, dated
September 13, 2000, appearing in this Annual Report on Form 10-K of The Dress
Barn, Inc. and Subsidiaries for the year ended July 29, 2000.
Deloitte & Touche LLP
Stamford, Connecticut
October 25, 2000