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Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of The Securities Exchange
Act of 1934 for the fiscal year ended February 2, 2002 ("Fiscal 2001").
[ ] Transition Report Pursuant To Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the transition period from to .
[Commission file number 0-23874]
JOS. A. BANK CLOTHIERS, INC.
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(Exact name of registrant as specified in its character)
Delaware 36-3189198
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(State of Incorporation) (I.R.S. Employer Identification No.)
500 Hanover Pike, Hampstead, MD 21074
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(Address of principal executive offices) (zip code)
(410) 239-2700
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act: Securities registered pursuant to Section 12(b)
of the Act:
Title of each class None
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Common Stock (the "Common Stock") par value $.01 per share
Rights to purchase units of Series A Preferred Stock
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark 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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III for this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant, based upon the closing price of shares of Common Stock on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System at April 18, 2002 was approximately $94,662,015.(1)
The number of shares of Common Stock, par value $0.01 per share, outstanding on
April 18, 2002 was 6,144,547.
DOCUMENTS INCORPORATED BY REFERENCE:
The Company will disclose the information required under Part III (items 10-13)
either by (a) incorporating the information by reference from the Company's
definitive proxy statement if filed by June 3, 2002 (the first business day
following 120 days from the close of its fiscal year ended February 2, 2002) or
(b) filing an amendment to this Form 10-K which contains the required
information by June 3, 2002 (the first business day following 120 days from the
close of the Company's fiscal year ended February 2, 2002).
Index to the exhibits appears on Pages 14 and 15.
(1) As used herein, "voting stock held by non-affiliates" means shares of Common
Stock, par value $.01 per share (the "Common Stock"), of Jos. A. Bank
Clothiers, Inc. held by person other than the executive officers, directors
and persons holding in excess of 10% of the registrant's Common Stock. The
determination of market value of the Common Stock is based on the last
reported sale price as reported by the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System at April 18,
2002. The determination of the "affiliate" status for purposes of this
report on Form 10-K shall not be deemed a determination as to whether an
individual is an "affiliate" of the registrant for any other purposes.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OFF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report on Form 10-K contains certain forward-looking information
under the captions "Item 1. Business" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain
forward-looking statements so long as such information is identified as
forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in the information. When used in this Annual
Report on Form 10-K, the words "estimate," "project," "plan," "anticipate,"
"expect," "intend," "outlook," "believe," and other similar expressions are
intended to identify forward-looking statements and information. Actual results
may differ materially from anticipated results due to certain risks and
uncertainties, including without limitation: (i) risks related to the growth of
the Company's business, (ii) risks related to competition and (iii) risks
related to the Company's reliance on a limited number of key suppliers. Such
risk factors are more fully described under the caption "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company cautions that the foregoing list of important factors is not exclusive.
PART I
Item 1. BUSINESS
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General
Jos. A. Bank Clothiers, Inc., a Delaware corporation (the "Company" or
"Jos. A. Bank"), established in 1905, is a retailer and direct marketer (through
catalog and internet) of men's tailored and casual clothing and accessories. The
Company sells substantially all of its products exclusively under the Jos. A.
Bank label through its 137 retail stores (including seven outlet stores and ten
franchise stores) located throughout the Northeast, Midwest, South and
Mid-Atlantic regions of the United States, as well as through the Company's
nationwide catalog and internet (www.josbank.com) operations.
The Company's products are targeted at the male career professional, and
its marketing emphasizes the Jos. A. Bank line of very high quality tailored and
casual clothing and accessories, which is typically offered at price points
below those of its principal competitors for items of comparable quality. The
Company believes that it is able to achieve this pricing advantage primarily by
its design capability and its sourcing leverage. The Company sources all of its
products through third party vendors.
Strategy
The Company, while established in 1905, has reinvented itself in the past
two and one-half years by expanding its product assortment and developing its
multi-channel retailing concept. The Company's strategy has been to further
enhance its competitive position in men's proprietary label, updated apparel and
to capitalize on the strength of the Jos. A. Bank name and reputation by
offering its customers multiple convenient channels to purchase its broad
product assortment, including its 137 retail stores, internet site and catalog.
Multi-Channel Retailing. The Company's strategy is to operate its
three channels of selling as an integrated business and to provide the same
personalized service to its customers regardless of whether merchandise is
purchased through its stores, the internet or catalog. The Company believes
the synergy between its stores, its internet site and its catalog offers an
important convenience to its customers and a competitive advantage to the
Company. The Company believes it has significant opportunity to leverage
the three channels of selling by promoting each channel together to create
awareness of the brand. For example, the Company promotes its internet site
in its stores, catalog and media advertising without incurring substantial
costs to create such promotions. Conversely, the internet site provides
store location listings and can be used as a promotional source for the
stores and catalog. The Company also uses its catalog to communicate the
Jos. A. Bank image, to provide customers with fashion guidance in
coordinating outfits and to generate store and internet traffic.
As a customer convenience, the Company's systems enable customers to
purchase all products that are offered in the catalog and internet while in
a store. Conversely, customers may have catalog and internet purchases
shipped to a store for pickup and alteration and can return catalog and
internet purchases to a store.
Store Growth. The Company believes that it has substantial opportunity
to increase its store base by adding stores in its existing markets and by
entering new markets. The Company opened 21 new full-line stores in fiscal
2001 as part of its plan to open approximately 75-100 new stores from
fiscal 2000 through fiscal 2003. We plan to place substantially all of the
stores to be opened in the next several years in existing markets which
will allow the Company to leverage its existing advertising, management,
distribution and sourcing infrastructure.
1
However, certain new stores may be opened in new markets such as
California, Washington, Arizona, etc., as opportunities become available.
Catalog/Internet. The Company's success as a cataloger facilitated the
development of on-line selling capabilities in August 1998, providing a
worldwide clientele. The catalog/internet segment accounted for
approximately 12% of sales in fiscal 2001.
Sales Channels
Stores. The Company has focused on three key factors that it believes
will contribute to even greater success in its stores. The Company has
targeted specialty retail centers with certain co-tenancy for new store
locations, has developed and implemented a new store prototype for all
stores opened in fiscal 2001 and beyond to attract customers and has
broadened its product mix to include a greater component of corporate
casual (sport coats and slacks) and sportswear to compliment its strong
suit sales.
At April 18, 2002, the Company operated 137 retail stores, (including
seven outlet stores and ten franchise stores) in 29 states and the District
of Columbia. The following table sets forth the region and market of the
stores that were open at such date.
JOS. A. BANK STORES
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Total # Total #
State Of Stores State Of Stores
- ----- --------- ----- ---------
Alabama 2 (a) Mississippi 1 (a)
Colorado 4 Missouri 2
Connecticut 5 New Jersey 11
Delaware 1 New York 9
Florida 4 North Carolina 6 (a)
Georgia 9 (a)(b) Ohio 7
Illinois 7 (a) Pennsylvania 8 (b)
Indiana 1 Rhode Island 1
Kansas 2 South Carolina 1
Kentucky 2 Tennessee 4 (a)
Louisiana 3 (a) Texas 13
Maryland 9 (b) Virginia 11 (b)
Massachusetts 3 Washington, D.C. 2
Michigan 4 Wisconsin 1
Minnesota 2 Utah 2
---
Total 137
===
(a) Indicates one or more franchise stores
(b) Indicates one or more outlet stores
The Company expects to open at least 20 stores in 2002 and accelerate the
pace of store openings in subsequent years, including plans to open at least 30
stores in fiscal 2003. The Company's real estate strategy focuses on stores
located in high-end, specialty retail centers with the proper co-tenancy that
attracts customers meeting the Company's demographics. These specialty centers
include current store sites such as Reston, VA, Annapolis, MD and East Cobb, GA.
The Company has identified approximately 200 sites that fit the Company's
profile of specialty retail centers and expects many more to be developed over
the next three years. Jos. A. Bank is aggressively pursuing the top 100 sites.
The Company expects to open between 75-100 stores from 2000 through 2003,
including the 21 stores opened in fiscal 2001 and the expected minimum 20 stores
in fiscal 2002 and 30 stores in fiscal 2003.
The Company's new store prototype was designed in the second half of 2000
and was introduced in March 2001 as its first new store of fiscal year 2001 in
Charlottesville, VA. The design emphasizes an open shopping experience that
coordinates its successful Corporate Casual and Sportswear with its other
products. The store design is based on the use of wooden fixtures with glass
shelving, numerous tables to feature fashion merchandise, carpet and abundant
accent lighting and is intended to promote a pleasant and comfortable shopping
environment. In the stores that have been opened in the last four years,
approximately 80% of a store's space is dedicated to selling activities, with
the remainder allocated to stockroom, tailoring and other support areas. This
compares favorably to other Company stores where approximately 65% is dedicated
to selling activities. The Company expects that future stores will vary in size
from
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approximately 4,500 to 5,500 square feet depending on the market. The
full-line stores averaged approximately 8,200 square feet at the beginning of
fiscal 1997 and averaged approximately 6,000 square feet at the end of fiscal
2001.
Substantially all full-line stores have a tailor shop which provides a
range of tailoring services as a convenience to its customers. The stores are
designed to utilize Company-owned regional overflow tailor shops which allows
the use of smaller tailor shops within each store. Operating the regional tailor
shops has allowed the Company to reduce the number of tailors in the stores by
sending all overflow work to regional tailor shops. These overflow shops
experience higher productivity as the tailors are not interrupted by store
personnel during the course of the day. In every store, the store manager and
certain additional staff have been trained to fit tailored clothing for
alterations. The Company guarantees all the tailoring work.
The Company has ten franchise locations. Generally, a franchise agreement
between the Company and the franchisee provides for a ten-year term with an
option, exercisable by the franchisee under certain circumstances, to extend the
term for an additional ten-year period. Franchisees pay the Company an initial
fixed franchise fee and then a percentage of sales. Franchisees are required to
maintain and protect the Company's reputation for high quality, classic clothing
and customer service. Franchisees purchase substantially all merchandise offered
for sale in their stores from the Company at an amount above cost.
The Company has seven outlet stores which are used to liquidate excess
merchandise and offer certain first quality products at a reduced price. Because
of the classic character of the Company's merchandise and aggressive store
clearance promotions, historically, the Company has not had significant
quantities of merchandise to sell through its outlet stores.
Catalog/Internet
The Company's catalogs offer potential and existing customers convenience
in ordering the Company's merchandise. In fiscal 2001 and 2000, the Company
distributed approximately 7.0 and 8.0 million catalogs, respectively, excluding
catalogs sent to stores for display and general distribution. In fiscal 2001 and
2000, combined catalog/internet sales represented approximately 12% of net
sales. The Company divides the year into two merchandise seasons, Spring and
Fall, and mails its catalog to active customers as often as every four weeks.
Internet follows a similar promotional pattern, but is able to alter its offers
more frequently.
The catalog mailings and internet site offer potential and existing
customers an easy way to order the full range of Jos. A. Bank products. They are
important tools in communicating our high-quality image, providing customers
with guidance in coordinating outfits, generating store traffic and providing
useful market data on customers. The Company believes customers increasingly are
becoming more comfortable purchasing traditional business attire through the
catalog and internet.
To make catalog shopping as convenient as possible, the Company maintains a
toll-free telephone number accessible 24 hours a day, seven days a week. The
Company utilizes on-line computer terminals to enter customer orders and to
retrieve information about merchandise and its availability. Catalog sales
associates are generally able to help select merchandise and can provide
detailed information regarding size, color, fit and other merchandise features.
In most cases, sample merchandise is available for catalog sales associates to
view, thereby allowing them to better assist customers. Clothing purchased from
the catalog may be returned to any Company store or to the Company by mail.
The Company is committed to growing its internet sales, which increased 89%
in fiscal 2001. The Company has established over 800 affiliate arrangements,
which drive a significant amount of traffic to its internet site. The Company
typically pays a fee to the affiliate based on a percentage of sales generated
through such affiliate. In 2002, the Company expects to continue pursuing
similar arrangements. The Company invested approximately $1 million in 2000 to
implement a new internet site that has many customer-friendly features such as
increased speed, real-time inventory status, order confirmation and product
search capabilities, among others. The new site also enables the Company to be
more responsive to trends to increase sales. The new site went "live" in August
2000 and replaced a site that had been hosted by a third party.
To process catalog orders, sales associates enter orders on-line into a
computerized catalog order entry system, while internet orders are placed by the
customer and are linked to the same system. After an order is placed, it
automatically updates all files, including the Company's customer mailing list,
and permits the Company to measure the response to individual catalog mailings
and internet email promotions. Sales and inventory information is available to
the Company's buyers the next day. Computer processing of orders is performed by
the warehouse management system which permits efficient picking of inventory
from the warehouse. The Company's order entry and fulfillment systems permit the
shipment of most orders by the following day. Orders are shipped primarily by
second day delivery or, if
3
requested, by expedited delivery services, such as United Parcel Service
priority. The Company replaced its catalog system in May 1999 which facilitated
easier order entry and provides greater customer data.
Merchandising
The Company believes it fills a niche of providing classic, professional
men's clothing with impeccable quality at a reasonable price. The Company's
merchandising strategy focuses on achieving an updated classic look with extreme
attention to detail in quality materials and workmanship. The Company offers a
distinctive collection of clothing and accessories necessary to dress the career
man from head to toe, including business dress and business casual, as well as
sportswear for weekends and golf apparel, all sold under the Jos. A. Bank label.
Its product offering includes suits, tuxedos, shirts, vests, ties, sport coats,
pants, sportswear, overcoats, sweaters, belts and braces, socks and underwear.
The Company also sells branded shoes from Cole Haan, Johnston & Murphy and
Allen-Edmonds.
The Company believes its merchandise offering is well positioned to meet
the changing trends of dress for its target customer. As the corporate work
environment has trended to casual wear, the Company's product offering has been
modified to meet the needs of the Jos. A. Bank customer. In 2001, casual wear
(which includes sport coats, slacks and sportswear) accounted for 46% of the
Company's sales, while suits represented 27% of sales.
The Company made several key additions and changes to its product line in
2001. It expanded the TRIO/(R)/ collection as one of its solutions to the
corporate casual trend. The TRIO/(R)/ includes a tailored jacket with
coordinating pants and a second set of pants in a coordinating pattern.
Therefore, the outfit can be worn as a suit or in a casual setting. The Company
also offers its customers its Separates line, a concept for purchasing suits
that allows customers to customize their wardrobe by selecting separate, but
perfectly matched, jackets and pants from one of three coat styles, plain front
or pleated pants, and numerous updated fabric choices including Super 100 wool
and natural stretch wool. The Business Express line allows a customer to buy a
suit with minimal alteration that will fit their unique body size, similar to a
custom-made suit. Jos. A. Bank is one of the few retailers in the country that
has successfully developed this concept which the Company believes is a
competitive advantage. During fiscal 2001, the Company also added a new line of
wrinkle resistant all cotton dress shirts that are made using a patented process
that is owned by the vendor. The Company believes it has one of the most
extensive selections of sportcoats and dress pants in the industry. Its David
Leadbetter Golf Apparel was expanded as was the offering of categories such as
sportshirts, sweaters, casual trousers and shoes.
Design and Purchasing
The Jos. A. Bank merchandise is designed through the coordinated efforts of
the Company's merchandise, buying and planning staffs working in conjunction
with finished goods suppliers and third party contract manufacturers.
Substantially all products are made to the Company's rigorous specifications,
thus ensuring consistent fit and feel for the customer. The merchandise buying
staff oversees the development of each product in terms of style, color and
fabrication. The Company's planning staff is responsible for providing each
channel of business with the correct amount of products at all times. Because
the Company's designs are focused on updated classic clothing, the Company
experiences much less fashion risk than other retailers. The process of creating
a new garment begins up to nine months before the product's expected in-stock
date.
The Company believes that it gains a distinct advantage over many of its
competitors in terms of quality and price by designing its tailored products,
sourcing piece goods and then having merchandise manufactured to its own
specifications by third party contract manufacturers, either domestically or
abroad. The Company buys its shirts from leading U.S. and overseas shirt
manufacturers who also supply shirts to many of the Company's competitors. All
products manufactured for the Company must conform to the Company's rigorous
specifications with respect to standardized sizing and quality.
The Company transacts business on an order-by-order basis and does not
maintain any long-term or exclusive contracts, commitments or arrangements to
purchase from any finished good supplier, piece goods vendor or contract
manufacturer. No finished goods supplier or contract manufacturer accounted for
more than 9% of the Company's finished goods purchased in 2001. The Company
ordinarily commits to purchases of inventory at least one to two seasons in
advance. The Company does business with all of its vendors in U.S. currency and
has not experienced any material difficulties as a result of any foreign
political, economic or social instabilities. The Company believes that it has
good relationships with its piece goods vendors, finished goods suppliers and
contract manufacturers and that there will be adequate sources to produce a
sufficient supply of quality goods in a timely manner and on satisfactory
economic terms. During fiscal 2001, three vendors accounted for over 61% of the
piece goods purchased by the Company. These piece goods were used in
approximately 24% of the finished goods purchased by the Company.
4
Marketing, Advertising and Promotion
Strategy. The Company has historically used mass media print and radio and
direct mail marketing, advertising and promoting activities in support of its
store and catalog/internet operations. Core to each marketing campaign, while
primarily promotional, is the identification of the Jos. A. Bank name as
synonymous with high quality, updated classic clothing offered at a value. The
Company has a database of over 2.3 million names of people who have previously
made a purchase from either the Company's retail store, internet site or catalog
or have requested a catalog or other information from the Company. Of these,
over 800,000 individuals have made such purchases or information requests in the
past 24 months. The Company selects names from this database based on
expectations of response to specific promotions which allows the Company to more
efficiently use its advertising dollars.
In the past two years, the Company has made significant investments in its
computer systems which has improved its ability to capture customer purchasing
data. The Company plans to increase its use of this data to improve its
marketing efficiency.
Product Specific Sales and Promotional Events. Throughout each season, the
Company promotes specific items or categories at specific prices that are below
the normal retail price. Examples are the "trade-in sale" whereby a customer
receives a fixed dollar amount off the purchase of a suit by "trading-in" an old
suit which is donated to charity and the "$199 Suit Sale". These sales are used
to complement promotional events and to meet the needs of the customers. At the
end of each season, the Company stores conduct clearance sales to promote the
sale of that season's merchandise.
Corporate Card. Certain organizations and companies can participate in our
corporate card program, through which all of their employees receive a 20%
discount off regularly-priced Jos. A. Bank merchandise. The card is honored at
all full-line stores as well as for catalog and internet purchases. Over 9,600
companies nationally, from privately-owned small companies to large public
companies, are now participating in the program. Participating companies are
able to promote the card as a free benefit to their employees and families.
Apparel Incentive Program. Jos. A. Bank Clothiers apparel incentive gift
certificates are used by various companies as a reward for achievement for their
employees. The Company also redeems proprietary gift certificates and gift cards
marketed by major premium/incentive companies through its stores and catalogs.
Distribution
The Company uses a centralized distribution system, under which all
merchandise is received, processed and distributed through the Company's
distribution facility located in Hampstead, Maryland. Merchandise received at
the distribution center is promptly inspected to insure expected quality in
workmanship and conformity to Company sizing specifications. The merchandise is
then allocated to individual stores, packed for delivery and shipped to the
stores, principally by common carrier. Each store generally receives a shipment
of merchandise twice a week from the distribution center; however, when
necessary because of a store's size or volume, a store can receive shipments
more frequently. Inventory of basic merchandise in the Company stores is
replenished regularly based on sales tracked through its point-of-sale
terminals. Shipments to catalog/internet customers are also made from the
central distribution facility.
To support the new store growth, the Company upgraded its distribution
center in fiscal 2001 at a cost of approximately $3.5 million. The system is
currently configured to support up to 200 stores, and the Company believes the
new system can be upgraded to handle up to 400 stores in the existing facility.
Management Information Systems
Many of the Company's systems have been updated in the last three years.
The Company devoted significant efforts and resources in 1998 and 1999 to ensure
that its business-critical systems were "Year 2000 compliant" at which time the
systems were either upgraded to the most recent version or replaced. In August
1998 the Company installed and implemented the latest version of its
merchandising, warehouse, sales audit, accounts payable and general ledger
system (which included many upgrades in addition to Y2K compliance). The Company
expects to again upgrade this key system in the next 12 months. In May 1999 the
Company completed the upgrade of its catalog system. To improve customer service
and customer database management, the Company replaced its Point of Sale (POS)
system in the second half of 1999. The Company invested approximately $1 million
in 2000 to design and implement a new internet site. As a result of these
efforts, the Company's systems are very efficient and capable of supporting
future growth. By using these systems, the Company is able to capture greater
customer data and has increased its marketing efficiency using such data.
5
Competition
The Company competes primarily with other specialty retailers, department
stores and other catalogers engaged in the retail sale of apparel, and to a
lesser degree with other retailers of men's apparel. The Company is one of only
a few multi-channel retailers focusing exclusively on mens apparel which the
Company believes provides a competitive edge. The Company believes that it
maintains its competitive position based not only on its ability to offer its
quality career clothing at price points typically below those of its principal
competitors for items of comparable quality, but also on greater selection of
merchandise within the Company's focus on classic career clothing, the quality,
consistency and value of the Jos. A. Bank brand and superior customer service.
Among others, the Company's store, catalog and internet operations compete with
Brooks Brothers, Nordstrom, Men's Wearhouse and Lands End, as well as
competitors in each store's market. Many of these major competitors are
considerably larger and have substantially greater financial, marketing and
other resources than the Company.
Trademarks
The Company is the owner in the United States of the trademark "Jos. A.
Bank", "The Miracle Tie Collection", "TRIO" and "Vacation In Paradise". These
trademarks are registered in the United States Patent and Trademark Office. A
federal registration is renewable indefinitely if the trademark is still in use
at the time of renewal. The Company's rights in the Jos. A. Bank trademark are a
significant part of the Company's business. Accordingly, the Company intends to
maintain its trademark and the related registration. The Company is not aware of
any claims of infringement or other challenges to the Company's right to use its
trademark in the United States.
In addition, the Company has registered "josbank.com" and various other
internet domain names. The Company intends to renew its registration of domain
names from time to time for the conduct and protection of its e-commerce
business.
Employees
As of April 18, 2002, the Company had 1,222 employees, consisting of 912
part-time employees and 310 full-time employees.
As of April 18, 2002, 124 employees worked in the tailoring and
distribution center, most of whom are represented by the Union of Needletrades
Industrial & Textile Employees. The current collective bargaining agreement
extends to April 30, 2003. The Company believes that union relations are good.
During the past 50 years, the Company has had only one work stoppage, which
occurred more than 20 years ago. The Company believes that its relations with
its non-union employees are also good. A small number of sales associates are
union members.
Item 2. DESCRIPTION OF PROPERTY
-----------------------
The Company owns its distribution and corporate office facility located in
Hampstead, Maryland, subject to certain financing liens. (See Item 7, MD&A and
"Consolidated Financial Statements -- Note 5.") The Company believes that its
existing facility is well maintained and in good operating condition. The table
below presents certain information relating to the Company's corporate property
as of April 18, 2002:
Gross Owned/
----- ------
Location Square Feet Leased Primary Function
----------- ------ ----------------
Hampstead, Maryland 290,000 Owned Corporate offices, distribution center, catalog
fulfillment and regional tailoring overflow shop
This facility was upgraded in fiscal 2001 including the addition of several
second level mezzanines, which increased the total floor space to approximately
290,000 square feet.
As of April 18, 2002, the Company had 127 Company-operated stores,
including its outlet stores, all of which were leased. The full-line stores
average approximately 6,000 square feet as of the beginning of fiscal 2002,
including selling, storage, tailor shop and service areas. The full-line stores
range in size from approximately 2,600 square feet to approximately 18,900
square feet. The leases typically provide for an initial term of between 5 and
10 years, with renewal options permitting the Company to extend the term for
between five and ten years thereafter. The Company generally has been successful
in renewing its store leases as they expire. In most cases the Company pays a
fixed annual base rent plus real estate taxes, insurance and utilities and,
other than in freestanding locations, makes contributions toward the common area
operating costs. Certain facility leases require contingent rental fees based on
sales in addition to or in the place of annual rental fees. Most of the
Company's lease arrangements provide for an increase in annual fixed rental
6
payments during the lease term and are noncancelable. These terms allow the
Company to continually review its portfolio of stores to ensure that profitable
stores are retained and unprofitable stores are closed.
Item 3. LEGAL PROCEEDINGS
-----------------
The Company has been named as a defendant in legal actions arising from its
normal business activities. Although the outcome of these lawsuits or other
proceedings against the Company cannot be accurately predicted, the Company does
not expect that any such liability will have a material adverse effect on the
business, net assets or financial position of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of the Company's security holders
during the quarter ended February 2, 2002.
PART II
Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
----------------------------------------------------------------
MATTERS
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(a) Market Information.
The Company's Common Stock is listed on The Nasdaq National Market
("NASDAQ") under the trading symbol "JOSB". The following table sets forth, for
the periods indicated, the range of high and low bid prices for the Common
Stock, as reported on NASDAQ. The approximate high and low closing prices for
the Common Stock tabulated below represent inter-dealer quotations which do not
include retail mark-ups, mark-downs or commissions. Such prices do not
necessarily represent actual transactions.
Fiscal 2000 Fiscal 2001
----------------- -------------------
High Low High Low
---- --- ---- ---
1st Quarter $ 4.88 $ 3.19 $ 7.25 $ 5.00
2nd Quarter 5.47 3.63 8.34 4.55
3rd Quarter 4.75 3.94 7.29 4.46
4th Quarter 6.38 4.00 8.79 6.25
1st Quarter (through April 18, 2002) $17.50 $ 6.93
On April 18, 2002 the closing sale price of the Common Stock was $17.50.
(b) Holders of Common Stock
-----------------------
At April 18, 2002, there were 110 holders of record of the Company's Common
Stock.
(c) Dividend Policy
---------------
The Company intends to retain its earnings to finance the development and
expansion of its business and for working capital purposes, and therefore does
not anticipate paying any cash dividends in the foreseeable future. The Company
has not declared or paid any dividends in the last two fiscal years. In
addition, the Company's Credit Agreement prohibits the Company from paying cash
dividends.
7
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
------------------------------------
The following selected consolidated financial data with respect to each of
the fiscal years in the five-year period ended February 2, 2002 have been
derived from the Company's audited Consolidated Financial Statements. Fiscal
year 2000 was a 53-week year and all other years consisted of 52 weeks, each of
which ended on the Saturday closest to the end of January of the respective
year. The information should be read in conjunction with the Consolidated
Financial Statements and Notes thereto that appear elsewhere in the 10-K and
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
Fiscal Years
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
(in thousands, except per share data)
Consolidated Statements of Income Information:
Net Sales: $ 172,174 $ 187,163 $ 193,529 $ 206,252 $ 211,029
Cost of goods sold 92,001 96,281 100,030 104,943 101,676
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Profit 80,173 90,882 93,499 101,309 109,353
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
General and administrative 17,695 18,806 18,965 20,609 21,290
Sales and marketing 55,609 62,249 67,694 71,264 75,968
Store opening costs 301 617 153 363 405
Executive payouts and other one-time charges -- -- 3,102 (c) -- 210 (d)
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 73,605 81,672 89,914 92,236 97,873
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 6,568 9,210 3,585 9,073 11,480
Interest expense, net 2,501 1,762 1,346 1,034 1,364
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 4,067 7,448 2,239 8,039 10,116
Provision for income taxes 1,590 1,539 (b) 873 3,015 3,595
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 2,477 5,909 1,366 5,024 6,521
Loss on disposal of manufacturing operations,
net of tax (a) (1,512) -- -- -- --
Loss from discontinued operations, net of tax (a) (266) (51) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 699 $ 5,858 (b) $ 1,366 $ 5,024 $ 6,521
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share Information (diluted):
Income from continuing operations $ 0.36 $ 0.85 (b) $ 0.20 $ 0.80 $ 1.05
Loss on disposal of manufacturing operations (0.22) -- -- -- --
Loss from discontinued operations (0.04) (0.01) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per share $ 0.10 $ 0.84 $ 0.20 $ 0.80 $ 1.05
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares
outstanding (diluted) 6,864 6,976 6,892 6,249 6,204
Balance Sheet Information (As of End of Fiscal Year):
Working capital $ 26,142 $ 27,062 $ 26,492 $ 28,650 $ 37,757
Total assets 77,144 82,515 84,751 88,954 108,457
Total debt 12,999 9,177 9,366 6,869 16,638
Total long-term obligations (including debt) 15,105 11,808 11,725 9,893 19,003
Shareholders' equity 36,398 42,313 43,786 45,708 52,252
Number of stores 87 103 108 116 135
(a) Represents disposal of manufacturing operations in 1997.
(b) Includes a benefit of $1,365 or $.20 per share related to the reversal
of a valuation allowance which had been recorded in 1995 related to tax
net operating losses.
(c) Represents payouts to the Company's former Chairman/CEO and President,
costs to hire and relocate successors and the costs to discontinue an
unprofitable business.
(d) Represents primarily professional fees incurred in the first quarter of
2001 in conjunction with a strategic action considered by the Board of
Directors.
8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Overview
The Company's earnings per share of $1.05 per share in fiscal 2001
increased 31% compared with earnings per share of $.80 in fiscal 2000. During
fiscal 2001, the Company continued a trend of increased earnings that began in
the fourth quarter of 1999 when the Company generated record earnings (excluding
one-time charges) for one quarter. The Company posted record earnings results in
two of its four quarters in fiscal 2001, including the setting of another record
in the fourth quarter of fiscal 2001. The record earnings per share in 2001
represented the second consecutive year of record recurring earnings per share
for the Company.
The Company generated the record earnings in fiscal 2001 in a very
difficult economic environment, especially for retailers. The improved profits
were driven by improved gross profit margins, profits from new stores and
improvement in the combined catalog/internet business. The Company opened 21 new
stores in 2001 and expects to open at least 20 new stores during 2002 and at
least 30 new stores in 2003. The new stores that have been targeted are mostly
in existing markets in specialty retail centers. The Company has determined that
its stores perform best in specialty retail centers with co-tenancy of other
high-end retailers.
The Company is also committed to growing its combined catalog/internet
sales, through increased marketing and a new enhanced website. The Company's
current internet site was implemented in August 2000 and has many features such
as real-time inventory status, order confirmation and product search
capabilities.
The Company amended its Credit Agreement with its bank through April 2005
to increase its available borrowing up to $60 million, if needed and if
supported by its borrowing base formula under the Credit Agreement. The amended
agreement increased the borrowing capacity from $50 million.
The Company's availability in excess of outstanding borrowings, as
supported by the existing borrowing base under its Credit Agreement, was $33.8
million at April 18, 2002 compared with $36.5 million at the same time in 2001.
Total bank debt outstanding under the Credit Agreement, excluding mortgages and
long-term notes was $5.1 million at April 18, 2002 compared with $2.7 million at
the same time in 2001.
Results of Operations
The following table is derived from the Company's Consolidated Statements
of Income and sets forth, for the periods indicated, the items included in the
Consolidated Statements of Income expressed as a percentage of net sales.
Percentage of Net Sales
Fiscal Year
1999 2000 2001
---- ---- ----
Net Sales 100.0% 100.0% 100.0%
Cost of goods sold 51.7 50.9 48.2
-----------------------------------------------------------------------------------
Gross profit 48.3 49.1 51.8
General and administrative expenses 9.8 10.0 10.1
Sales and marketing expenses 35.0 34.6 36.0
Store opening costs - 0.2 0.2
Executive payouts and other one-time charges 1.6 - 0.1
-----------------------------------------------------------------------------------
Operating income 1.9 4.4 5.4
Interest expense, net (0.7) (0.5) (0.6)
-----------------------------------------------------------------------------------
Income before income taxes 1.2 3.9 4.8
Income taxes (0.5) (1.5) (1.7)
-----------------------------------------------------------------------------------
Net Income 0.7% 2.4% 3.1%
-----------------------------------------------------------------------------------
9
Fiscal 2001 Compared to Fiscal 2000
Net Sales - Net sales increased 2.3% to $211.0 million in fiscal 2001 (which
---------
included 52 weeks) compared with $206.2 million in fiscal 2000 (which contained
53 weeks). On a 52 to 52 week basis, the increase would have been 4.0%. Total
full-line store sales increased 6.2% on a 52 to 52 week basis due primarily to
the opening of new stores as follows:
Fiscal Years Ended
----------------------------
Feb. 3, 2001 Feb. 2, 2002
------------ ------------
Stores opening at the beginning of the year 108 116
Stores opened 10 21
Stores closed (2) (2)
- ----------------------------------------------------------------------------
Stores open at the end of the year 116 135
- ----------------------------------------------------------------------------
On a 52 week to 52 week basis combined catalog/internet sales increased 3.5%.
Sales increases were strongest in sportswear, including leather coats and golf
wear.
Gross Profit - Gross profit increased $8.1 million or 270 basis points to
------------
$109.4 million or 51.8% of sales in fiscal 2001 from $101.3 million or 49.1% in
fiscal 2000. Approximately two thirds of the increase, as a percent of sales,
was due to improved purchasing and the remainder relates primarily to the
continued improvement in the management of markdowns at a very detailed level
and selected retail price increases. The Company is continuing its efforts to
achieve further increases in gross profit percent of sales in the future.
General and Administrative Expenses - General and administrative expenses
-----------------------------------
increased to $21.3 million or 10.1% of sales in fiscal 2001 from $20.6 million
or 10.0% in fiscal 2000. The increase was primarily due to higher distribution
center costs ($.2 million), incentive compensation ($.2 million), payroll taxes
and group insurance costs ($.1 million) and various administrative costs ($.2
million). The increase in distribution center costs resulted from temporary
inefficiencies from working around the construction of our new inventory sorting
system. The increase in administrative costs were primarily to support
expansion. Continued improvement in the Company's profitability will likely
result in significant increases in future incentive compensation.
Sales and Marketing Expenses - Sales and marketing expenses increased to $76.0
----------------------------
million or 36.0% of sales in fiscal 2001 from $71.3 million or 34.6% of sales in
fiscal 2000. This increase, as a percent of sales, is primarily due to less
leverage on the start up of new stores' payroll and rent. This occured primarily
from sales during the first full year of operation of typical new stores being
lower than the average of mature stores while the payroll and occupancy cost are
similar to the mature stores. The Company believes this is likely to continue as
the pace of store openings increases.
Store Opening Costs - Store opening costs, which include the initial
-------------------
promotional advertising costs as well as other start-up costs such as travel for
recruitment, training and setup of new stores, increased $42,000 due primarily
to the opening of 21 stores in fiscal 2001 compared with 10 stores in fiscal
2000.
Interest Expense - Interest expense increased $.3 million due primarily to
----------------
increased borrowing levels to support the store expansion strategy, which was
partially offset by lower interest rates on borrowings which are tied to the
London Interbank Offering Rate (LIBOR) and Prime rates.
Income Taxes - The effective tax rate in fiscal 2001 was 35.5% compared with
------------
37.5% in fiscal 2000. This decrease resulted primarily from certain tax credits
available to be utilized in fiscal 2001. The Company has analyzed its tax
contingencies and believes they are properly reflected in the accompanying
financial statements.
Fiscal 2000 Compared to Fiscal 1999
Net Sales - Net sales increased 6.6% in fiscal 2000, primarily from a 6.8%
---------
increase in comparable store sales, a 188% increase in internet sales and a
11.7% decrease in catalog sales from fiscal 1999. The decrease in catalog sales
was caused primarily by cannibalization from the internet. Sales were driven by
increases in Corporate Casual and Sportswear as the Company continues to address
the changing clothing needs of men in the workplace.
Gross Profit - Gross profit as a percentage of sales increased to 49.1% in
------------
fiscal 2000 from 48.3% in fiscal 1999 as the Company reduced promotional
activities for its better selling products. In addition, several categories,
including Corporate Casual, Sportswear and Ties, generated gross profit
percentage increases.
General and Administrative Expenses - General and administrative expenses
-----------------------------------
increased to 10.0% of sales from 9.8% of sales in fiscal 1999 primarily from a
$2.3 million increase in incentive compensation expense partially offset by a
decrease in professional fees and travel expenses.
10
Sales and Marketing Expenses - Sales and marketing expense (which consist
----------------------------
primarily of store occupancy, advertising and store payroll costs) decreased to
34.6% of sales in 2000 from 35.0% of sales in 1999 primarily as a result of
leverage of expenses in existing stores which had a 6.8% sales increase and
lower advertising costs. This decrease was partially offset by higher store
payroll and occupancy costs as a percent of sales in the new stores.
Store Opening Costs - Store opening costs increased $.2 million in fiscal 2000
-------------------
compared with fiscal 1999 as the Company opened 10 new stores in 2000 (including
two outlet stores) compared with five new stores in 1999.
Interest Expense - Interest expense decreased $.3 million in fiscal 2000 due
----------------
primarily to a lower average outstanding debt balance in 2000 compared to fiscal
1999. The weighted average interest rate increased in 2000 due primarily to
increases in the prime rate.
Income Taxes - The effective tax rate in fiscal 2000 was 37.5% compared to
------------
39.0% in fiscal 1999. The decrease resulted from lower effective state tax
rates.
Liquidity and Capital Resources
The Company maintains a bank credit agreement (the "Credit Agreement"),
which provides for a revolving loan whose limit is determined by a formula based
on the Company's inventories and accounts receivable. In December 2001, the
Company extended the Credit Agreement to April 2005. The amended Credit
Agreement changed the maximum revolving amount under the facility to
$60,000,000. The Credit Agreement also includes a) financial covenants
concerning minimum EBITDA, b) limitations on capital expenditures and additional
indebtedness and c) a restriction on the payment of dividends. The covenants are
in effect only if the Company's availability in excess of outstanding borrowings
is less than $5,000,000. As of February 2, 2002, the Company was in compliance
with all loan covenants. Interest rates under the amended agreement are either
at the prime rate or at LIBOR plus 1.5%. The amended agreement also includes
provisions for a seasonal over-advance.
During the years ended February 3, 2001 and February 2, 2002, borrowings
under the Credit Agreement bore interest ranging from prime to LIBOR plus 1.5%.
The Company's availability in excess of outstanding borrowings, as
supported by the existing borrowing base under its Credit Agreement, was $33.8
million at April 18, 2002 compared with $36.5 million at the same time in 2001.
In March 2001, the Company issued $5.5 million of term debt with a maturity date
of April 1, 2012 (the "Term Debt") secured by its distribution center and
corporate office to finance part of its growth.
The Company has issued notes payable in monthly installments in connection
with improvements related to leasehold interests and its POS equipment. The
aggregate maturities of the Company's long-term debt as of February 2, 2002, are
as follows: fiscal year ending 2002-$744,000, 2003-$625,000, 2004-$642,000,
2005-$9,980,000, 2006-$665,000, 2007 and thereafter-$3,982,000.
The following table summarizes the Company's sources and uses of funds as
reflected in the Condensed Consolidated Statements of Cash Flows:
Fiscal Years Ended
----------------------
Feb. 3, Feb. 2,
2001 2002
------- -------
Cash provided by (used in):
Operating activities $ 11,059 $ (1)
Investing activities (3,167) (12,090)
Financing activities (5,599) 9,792
Discontinued operations (254) --
-------------------------------------------------------------------------------
Net increase/(decreases) in cash and cash equivalents $ 2,039 $ (2,299)
-------------------------------------------------------------------------------
Cash used in the Company's operating activities (net) in fiscal 2001 was
due primarily to higher inventories to support growth which was funded by
operating results. The inventory increase of approximately $14.2 million at
February 2, 2002 compared with February 3, 2001 relates primarily to three
factors; namely a) $7.0 million to support the opening of 21 new stores, b) $1.2
million of additional piece goods as the Company increased its direct sourcing
of finished goods with contract manufacturers (which terms typically requires
the Company to purchase the piece goods) and c) $6.0 million of additional
finished goods inventory, most of which relates to a decision made by the
Company to stock additional amounts of key basic items to support sales growth.
The Company believes its inventory has low fashion risk and the aging of its
inventory is good. Cash used in investing activities in fiscal 2001 relates
primarily to leasehold
11
improvements in 21 new stores, and the purchase and installation of new
distribution center systems. The Company spent approximately $12.1 million on
capital expenditures in fiscal 2001 of which $8.0 million was primarily for the
buildout of new stores and approximately $3.5 million to install new
distribution center systems. Cash provided by financing activities in fiscal
2001 relates primarily to the new $5.5 million term debt secured by the
distribution center and borrowings of the revolving loan under the Credit
Agreement of approximately $4.8 million.
The Company expects to spend between $6 to $8 million on capital
expenditures in fiscal 2002, primarily to open at least 20 new stores and to
renovate several stores. Management believes that the Company's cash from
operations and availability under its Credit Agreement and term debt will be
sufficient to fund its planned capital expenditures and operating expenses for
fiscal 2002.
Summary Disclosures about Contractual Obligations and Commercial Commitments
The following table reflects a summary of the Company's contractual cash
obligations and other commercial commitments as of February 2, 2002:
Payments Due by Fiscal Year (in thousands)
------------------------------------------
2005 and
Total 2002 2003 2004 thereafter
----- ---- ---- ---- ----------
Contractual Obligations
Long-Term Debt 16,638 744 625 642 14,627
Operating Leases 90,797 15,974 15,147 12,796 46,880
- ------------------------------------------------------------------------------------------------------------------------------
Total Contractual Obligations 107,435 16,718 15,772 13,438 61,507
- ------------------------------------------------------------------------------------------------------------------------------
Amount of Commitment Expiration by Fiscal Year (in thousands)
-------------------------------------------------------------
2005 and
Total 2002 2003 2004 thereafter
----- ---- ---- ---- ----------
Other Commercial Commitments
Stand-by Letter-of-Credit* 400 400 -- -- --
* To secure the payment of rent at one leased location included in "Operating
Leases" above.
Risks
The Company's plans and beliefs concerning future operations contained
herein are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those forecast due to a variety of factors that can adversely affect the
Company's expansion plans, operating results, liquidity and financial condition
such as risks associated with economic, weather and other factors affecting
consumer spending, the ability of the Company to finance its expansion plans,
the mix of goods sold, pricing, availability of lease sites for new stores, the
ability to source product from its global supplier base and other competitive
factors. These risks should be carefully reviewed before making any investment
decision.
Growth Risks. A significant portion of the Company's growth has
resulted and is expected to continue to result from the opening of new
stores. While the Company believes that it will continue to be able to
obtain suitable locations for new stores, negotiate acceptable lease terms,
hire qualified personnel and open and operate new stores on a timely and
profitable basis, no such assurances can be made. As the Company continues
its expansion program, the opening of stores may adversely affect catalog
and internet sales in such markets, and the opening of additional stores in
existing markets may adversely affect sales and profits of established
stores.
Competition. The retail apparel business is highly competitive and is
expected to remain so. The Company competes primarily with other specialty
retailers, department stores and other catalogers engaged in the retail
sale of apparel, and to a lesser degree with other apparel retailers. Many
of these competitors are much larger than the Company have significantly
greater financial, marketing and other resources than the Company. The
Company believes that its emphasis on classic styles makes it less
vulnerable to changes in fashion trends than many apparel retailers;
however, the Company's sales and profitability depend upon the continued
demand for its classic styles.
Reliance on Key Suppliers. Historically, the Company has bought a
substantial portion of its products from a limited number of suppliers. The
loss of any one of these suppliers could cause a delay in the Company's
sales process. Any significant interruption in the Company's product supply
could have an adverse effect on its business due to delays in finding
alternative sources and could result in increased costs to the Company.
12
Growth by Acquisition, etc. The Company may from time to time hold
discussions and negotiations with (i) potential investors who express an
interest in making an investment in or acquiring the Company, (ii)
potential joint venture partners looking toward the formation of strategic
alliances and (iii) companies that represent potential acquisition or
investment opportunities for the Company. There can be no assurance any
definitive agreement will be reached regarding the foregoing, nor does the
Company believe that at this time any such agreement is necessary to
implement successfully its strategic plans.
Accounting Policies
The Company believes the following critical accounting policy affects
management's significant judgments and estimates used in the preparation of the
Consolidated Financial Statements. For a detailed discussion on the application
of this and other accounting policies, see Note 1 in the Consolidated Financial
Statements.
Inventory. The Company records inventory at the lower of cost or
market. The estimated market value is based on assumptions for future
demand and related pricing. If actual market conditions are less favorable
than those projected by management, reductions in the value of inventory
may be required.
Seasonality
Historically, the Company's operations had not been greatly affected by
seasonal fluctuations. Although variations in sales volumes do exist between
quarters, the Company believes the nature of its merchandise helps to stabilize
demand between the different periods of the year. However, as the Company's
merchandise continues to include more Corporate Casual and Sportswear, profits
generated during the fourth quarter have become a larger portion of annual
profits.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
At February 2, 2002, there were no derivative financial instruments. In
addition, the Company does not believe it is materially at risk for changes in
market interest rates or foreign currency fluctuations. The Company's interest
on borrowings under its Credit Agreement is at a variable rate based on the
prime rate or a spread over the LIBOR.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The financial statements listed in Item 14(a) 1 and 2 are included in the
Report beginning on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Item 10 is omitted by the Company in accordance with General Instruction G
to Form 10-K. The Company will disclose the information required under this item
either by (a) incorporating the information by reference from the Company's
definitive proxy statement if filed by June 3, 2002 (the first business day
following 120 days from the close of its fiscal year ended February 2, 2002) or
(b) filing an amendment to this Form 10-K which contains the required
information by June 3, 2002.
Item 11. EXECUTIVE COMPENSATION
----------------------
Item 11 is omitted by the Company in accordance with General Instruction G
to Form 10-K. The Company will disclose the information required under this item
either by (a) incorporating the information by reference from the Company's
definitive proxy statement if filed by June 3, 2002 (the first business day
following 120 days from the close of its fiscal year ended February 2, 2002) or
(b) filing an amendment to this Form 10-K which contains the required
information by June 3, 2002.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Item 12 is omitted by the Company in accordance with General Instruction G
to Form 10-K. The Company will disclose the information required under this item
either by (a) incorporating the information by reference from the Company's
definitive proxy statement if filed by June 3, 2002 (the first business day
following 120 days from the close of
13
its fiscal year ended February 2, 2002) or (b) filing an amendment to this Form
10-K which contains the required information by June 3, 2002.
Item 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
---------------------------------------------
Item 13 is omitted by the Company in accordance with General Instruction G
to Form 10-K. The Company will disclose the information required under this item
either by (a) incorporating the information by reference from the Company's
definitive proxy statement if filed by June 3, 2002 (the first business day
following 120 days from the close of its fiscal year ended February 2, 2002) or
(b) filing an amendment to this Form 10-K which contains the required
information by June 3, 2002.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
-----------------------------------------------------------------
(a) The following Consolidated Financial Statements of Jos. A. Bank
Clothiers, Inc., the notes thereto, and the related reports thereon of the
independent public accountants are filed under Item 8 of this report:
1. Financial Statements Page
Report of Independent Public Accountants F-1
Consolidated Balance Sheets as of February 3, 2001 and
February 2, 2002 F-2
Consolidated Statements of Income for the Years Ended
January 29, 2000, February 3, 2001 and February 2, 2002 F-3
Consolidated Statements of Shareholders' Equity for the Years
Ended January 29, 2000, February 3, 2001 and February 2, 2002 F-4
Consolidated Statements of Cash Flows for the Years Ended
January 29, 2000, February 3, 2001 and February 2, 2002 F-5
Notes to Consolidated Financial Statements F-6
2. Financial Statement Schedules
All required information is included within the Consolidated Financial
Statements and the notes thereto.
(b) Reports on Forms 8-K
- None filed during the fourth quarter of fiscal 2001.
(c) Exhibits
3.1 --Restated Certificate of Incorporation of the Company.*1
3.2 --By-laws of the Company, together with all amendments thereto.*1
4.1 --Form of Common Stock certificate.*1
4.2 --Amended and Restated Stockholders Agreement, dated as of January 29,
1994, among the parties named therein.*1
4.3 --Rights Agreement dated as of September 19, 1997*5
4.4 --Certificate of Designation governing the Company's Series A Preferred
Stock*5
10.1 --1994 Incentive Plan*1
10.1(a) --Amendments to Incentive Plan dated as of October 6, 1997, *6
10.4(f) --Fourth Amended and Restated Credit Agreement, April 30, 1996, by and
among the Company, Wells Fargo Bank, N.A. *3
10.4(g) --Combined amendment number one to fourth amended and restated credit
agreement, December 18, 2000, by and between the Company and Foothill
Capital Corporation, *10
10.4(h) -- Amendment number three to fourth amended and restated credit
agreement, December 17, 2001, by and between the Company and Foothill
Capital Corporation, filed herewith
10.7(a) --Amended and Restated Employment Agreement, dated as of September 19,
1997, between Frank Tworecke and Jos. A. Bank Clothiers, Inc., *6
10.7(b) --Amendment to the Employment Agreement dated February 9, 1999 between
Frank Tworecke and Jos. A. Bank Clothiers, Inc., *7
10.8(a) --Amended and Restated Employment Agreement, dated as of September 19,
1997, between David E. Ullman and Jos. A. Bank Clothiers, Inc., *6
10.9 --Jos. A. Bank Clothiers, Inc. Retirement and Savings Plan and Trust
Agreement as amended and restated effective April 1, 1994.*4
14
10.10 --Collective Bargaining Agreement between Retail Employees Union Local
340, Amalgamated Clothing and Textile Workers Union, AFL-CIO and Jos.
A. Bank Clothiers, Inc.*4
10.12 --Employment Agreement, dated September 19, 1997, between Gary W. Cejka
and Jos. A. Bank Clothiers, Inc., *6
10.13 --Employment Agreement, dated September 19, 1997, between Charles D.
Frazer and Jos. A. Bank Clothiers, Inc., *6
10.13(a)--Amendment to the Employment Agreement dated February 14, 1999 between
Charles D. Frazer and Jos. A. Bank Clothiers, Inc., *7
10.15 --Employment Agreement dated August 31, 1998 between J.F. Timothy
Carroll and Jos. A. Bank Clothiers, Inc., *7
10.15(a)--Employment Agreement dated November 1, 1999 between Robert N. Wildrick
and Jos. A. Bank Clothiers, Inc., *8
10.16 --Amendment to Employment Agreement dated March 6, 2000 between Robert
N. Wildrick and Jos. A. Bank Clothiers, Inc.,*9
10.17 --Employment Agreement dated November 30, 1999 between Robert Hensley
and Jos. A. Bank Clothiers, Inc., *8
10.17(a)--First Amendment, dated as of January 1, 2001, to Employment Agreement
between Robert Hensley and Jos. A. Bank Clothiers, Inc., *10
10.17(b)--Second Amendment, dated as of March 16, 2001, to Employment Agreement
between Robert Hensley and Jos. A. Bank Clothiers, Inc.,*10
10.17(c)--Third Amendment, dated as of April 15, 2002, to Employment Agreement
between Robert Hensley and Jos. A. Bank Clothiers, Inc., filed
herewith
10.18 --Employment Agreement dated December 21, 1999 between R. Neal Black and
Jos. A. Bank Clothiers, Inc., *9
10.18(a)--First Amendment dated as of March 16, 2001, to Employment Agreement
between R. Neal Black and Jos. A. Bank Clothiers, Inc., *10
10.18(b)-- Second Amendment dated as of April 15, 2002, to Employment Agreement
between Neal Black and Jos. A. Bank Clothiers, Inc., filed herewith
10.19 --Collective Bargaining Agreement dated March 1, 2000 by and between
Joseph A. Bank Mfg. Co., Inc. and Baltimore Regional Joint Board,
UNITE, *10
10.20 --Employment offer letter, dated November 20, 2000, from Jos. A. Bank
Clothiers, Inc. to Jerry DeBoer, *10
21.1(b) --Company subsidiaries, *10
23 --Consent of Arthur Andersen LLP, filed herewith
99 --Arthur Andersen Representation, filed herewith
*1 Incorporated by reference to the Company's Registration Statement on
Form S-1 filed May 3, 1994.
*2 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended January 28, 1995.
*3 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended February 3, 1996.
*4 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended February 1, 1997.
*5 Incorporated by reference to the Company's Form 8-K dated September 22,
1997.
*6 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended January 31, 1998.
*7 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended January 30, 1999.
*8 Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended October 30, 1999.
*9 Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended January 29, 2000.
*10 Incorporated by reference to the Company's Annual Report on Form-10-K
for the year ended February 3, 2001.
Pursuant to the requirements Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Hampstead, State of Maryland, on April 25, 2002.
15
JOS. A. BANK CLOTHIERS, INC.
(registrant)
By: /s/: Robert N. Wildrick
-----------------------
ROBERT N. WILDRICK
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons in the capacities and on
the dates indicated.
NAME TITLE DATE
- ---- ----- ----
/s/: Robert N. Wildrick Director, Chief Executive Officer and President April 25, 2002
- --------------------------- (Principal Executive Officer)
/s/: R. Neal Black Executive Vice President, Marketing & Merchandising April 25, 2002
- ---------------------------
/s/: Robert B. Hensley Executive Vice President, Stores & Operations April 25, 2002
- ---------------------------
/s/: David E. Ullman Executive Vice President, Chief Financial Officer April 25, 2002
- ---------------------------
/s/: Richard E. Pitts Vice President - Treasurer (Principal Accounting Officer) April 25, 2002
- ---------------------------
/s/: Andrew A. Giordano Director, Chairman of the Board April 25, 2002
- ---------------------------
/s/: Gary S. Gladstein Director April 25, 2002
- ---------------------------
/s/: David A. Preiser Director April 25, 2002
- ---------------------------
16
Report of independent public accountants
To the Board of Directors and Shareholders
of Jos. A. Bank Clothiers, Inc.:
We have audited the accompanying consolidated balance sheets of Jos. A. Bank
Clothiers, Inc. (a Delaware corporation) and subsidiaries as of February 3, 2001
and February 2, 2002, and the related consolidated statements of income,
shareholders' equity and cash flows for the years ended January 29, 2000,
February 3, 2001, and February 2, 2002. 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. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Jos. A. Bank Clothiers, Inc.
and subsidiaries as of February 3, 2001, and February 2, 2002, and the results
of their operations and their cash flows for the years ended January 29, 2000,
February 3, 2001, and February 2, 2002, in conformity with accounting principles
generally accepted in the United States.
/s/ Arthur Andersen LLP
Baltimore, Maryland
March 15, 2002
F-1
JOS. A. BANK CLOTHIERS, INC.
CONSOLIDATED BALANCE SHEET
--------------------------
AS OF FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(In Thousands, Except Share Information)
Feb. 3, 2001 Feb. 2, 2002
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,126 $ 827
Accounts receivable, net 2,724 2,364
Inventories 50,449 64,642
Prepaid expenses and other current assets 5,329 6,532
Deferred income taxes 375 594
- -----------------------------------------------------------------------------------------------
Total current assets 62,003 74,959
NONCURRENT ASSETS:
Property, plant and equipment, net 25,632 32,541
Other noncurrent assets, net 57 117
Deferred income taxes 1,262 840
- -----------------------------------------------------------------------------------------------
Total assets $88,954 $108,457
- -----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $16,663 $ 16,528
Accrued expenses 16,268 19,930
Current portion of long-term debt 422 744
- -----------------------------------------------------------------------------------------------
Total current liabilities 33,353 37,202
- -----------------------------------------------------------------------------------------------
NONCURRENT LIABILITIES:
Long-term debt, net of current portion 6,447 15,894
Deferred rent 3,446 3,109
- -----------------------------------------------------------------------------------------------
Total liabilities 43,246 56,205
- -----------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par, 20,000,000 shares authorized,
7,061,442 issued and 5,955,627 outstanding as of
February 3, 2001 and 7,066,792 issued and 5,960,977
outstanding as of February 2, 2002 71 71
Preferred stock, $1.00 par, 500,000 shares authorized, none
issued or outstanding -- --
Additional paid-in capital 56,535 56,558
Retained Earnings (accumulated deficit) (5,840) 681
Less 1,105,815 shares of common stock held in treasury at
February 3, 2001 and February 2, 2002, at cost (5,058) (5,058)
- -----------------------------------------------------------------------------------------------
Total shareholders' equity 45,708 52,252
- -----------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $88,954 $108,457
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated balance sheets
F-2
JOS. A. BANK CLOTHIERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR YEARS ENDED, JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(In Thousands, Except Per Share Information)
Years Ended
-------------------------------------------
Jan. 29, 2000 Feb. 3, 2001 Feb. 2, 2002
------------- ------------ ------------
NET SALES $ 193,529 $ 206,252 $ 211,029
Cost of Goods Sold 100,030 104,943 101,676
- -------------------------------------------------------------------------------------------------
GROSS PROFIT 93,499 101,309 109,353
- -------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
General and administrative 18,965 20,609 21,290
Sales and marketing 67,694 71,264 75,968
Store opening costs 153 363 405
Executive payouts and other one-time charges 3,102 -- 210
- -------------------------------------------------------------------------------------------------
Total operating expenses 89,914 92,236 97,873
- -------------------------------------------------------------------------------------------------
OPERATING INCOME 3,585 9,073 11,480
Interest expense, net 1,346 1,034 1,364
- -------------------------------------------------------------------------------------------------
Income before provision for income taxes 2,239 8,039 10,116
Provision for income taxes 873 3,015 3,595
- -------------------------------------------------------------------------------------------------
NET INCOME $ 1,366 $ 5,024 $ 6,521
- -------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
- ------------------
Net Income:
Basic $ 0.20 $ 0.82 $ 1.09
Diluted $ 0.20 $ 0.80 $ 1.05
Weighted average shares outstanding:
Basic 6,801 6,136 5,957
Diluted 6,892 6,249 6,204
The accompanying notes are an integral part of these consolidated statements.
F-3
JOS. A. BANK CLOTHIERS, INC.
CONSOLIATED STATEMENTS OF SHAREHOLDERS' EQUITY
----------------------------------------------
FOR THE YEARS ENDED JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(In Thousands)
Additional Retained Total
Common Paid-In Earnings Treasury Shareholders'
Stock Capital (Deficit) Stock Equity
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, January 30, 1999 $ 70 $ 56,393 $ (12,230) $ (1,920) $ 42,313
- ----------------------------------------------------------------------------------------------------------------------
Net income -- -- 1,366 -- 1,366
Net proceeds from issuance of
common stock (38,000 shares)
pursuant to Incentive Option Plan -- 62 -- -- 62
Stock based compensation -- 45 -- -- 45
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, January 29, 2000 70 56,500 (10,864) (1,920) 43,786
- ----------------------------------------------------------------------------------------------------------------------
Net income -- -- 5,024 -- 5,024
Net proceeds from issuance of
common stock (22,000) shares
pursuant to Incentive Option Plan 1 35 -- -- 36
Repurchase of 896,400 shares of
Common Stock at $3.50 per share -- -- -- (3,138) (3,138)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, February 3, 2001 $ 71 $ 56,535 $ (5,840) $ (5,058) $ 45,708
- ----------------------------------------------------------------------------------------------------------------------
Net income -- -- 6,521 -- 6,521
Net proceeds from issuance of shares of
common stock (5,350) pursuant
to Incentive Option Plan -- 23 -- -- 23
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, February 2, 2002 $ 71 $ 56,558 $ 681 $ (5,058) $ 52,252
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements.
F-4
JOS. A. BANK CLOTHIERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR YEARS ENDED, JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(In Thousands)
Years Ended
-----------------------------------------------
Jan. 29, 2000 Feb. 3, 2001 Feb. 2, 2002
------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,366 $ 5,024 $ 6,521
Adjustments to reconcile net income to net
cash provided by (used in) operation activities:
Deferred tax expense 705 2,541 203
Depreciation and amortization 3,973 4,195 4,941
Loss on disposition of assets 107 32 240
Stock based compensation 45 -- --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 207 (123) 360
Increase in inventories (1,559) (4,062) (14,193)
Decrease (increase) in prepaid expenses and other
current assets 1,011 (2,151) (1,203)
(Increase) decrease in other noncurrent assets 439 16 (60)
Increase (decrease) in accounts payable (817) 3,468 (135)
Decrease in long-term pension liability (80) -- --
Increase in accrued expenses 2,069 2,250 3,662
Decrease in deferred rent (85) (131) (337)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating
activities of continuing operations 7,381 11,059 (1)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,780) (3,695) (12,090)
Proceeds from disposal of assets -- 528 --
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities
of continuing operations (6,780) (3,167) (12,090)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving loan agreement 60,161 60,108 76,917
Repayment of borrowings under revolving loan
agreement (61,311) (62,178) (72,125)
Borrowing of other long-term debt 1,686 -- 5,632
Repayment of other long-term debt (347) (427) (655)
Repurchase of common stock into treasury -- (3,138) --
Net proceeds from issuance of common stock 62 36 23
- ----------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities
of continuing operations 251 (5,599) 9,792
- ----------------------------------------------------------------------------------------------------------------
Net cash used in discontinued operations (513) (254) --
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 339 2,039 (2,299)
CASH AND CASH EQUIVALENTS,
beginning of year 748 1,087 3,126
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
end of year $ 1,087 $ 3,126 $ 827
- ----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements.
F-5
JOS. A. BANKS CLOTHIERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JANUARY 29, 2000, FEBRUARY 3, 2001 and FEBRUARY 2, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Description of Business - Jos. A. Bank Clothiers, Inc. ("Clothiers") is a
nationwide retailer of classic men's clothing through conventional retail
stores, catalog and internet direct marketing and franchisees.
Fiscal Year - The Company maintains its accounts on a fifty-two/fifty-three week
fiscal year ending on the Saturday nearest to January 31. The fiscal years ended
January 29, 2000 (fiscal 1999) and February 2, 2002 (fiscal 2001), each
contained fifty-two weeks. The fiscal year ended February 3, 2001 (fiscal 2000)
contained fifty-three weeks.
Basis of Presentation - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States 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.
Principles of Consolidation - The consolidated financial statements include the
accounts of Clothiers and its wholly-owned subsidiaries (collectively referred
to as the "Company"). All significant intercompany balances and transactions
have been eliminated in consolidation.
Cash and Cash Equivalents - Cash and cash equivalents include overnight
investments. Interest expense, net, includes interest income of approximately
$1,000, $50,000 and $21,000 in fiscal 1999, 2000 and 2001, respectively.
Supplemental Cash Flow Information - Interest and income taxes paid were as
follows (in thousands):
Years Ended
--------------------------------
Jan. 29, Feb. 3, Feb. 2,
2000 2001 2002
------- ------- -------
Interest paid $ 1,162 $ 965 $ 1,240
Income taxes paid $ 163 $ 363 $ 1,595
Inventories - Inventories are stated at the lower of first-in first-out, cost or
market. The Company capitalizes into inventories certain warehousing and
delivery costs associated with shipping its merchandise to the point of sale.
Catalogs and Promotional Materials - Costs related to mail order catalogs and
promotional materials are included in prepaid expenses and other current assets.
These costs are amortized over the expected periods of benefit, not to exceed
six months. At February 3, 2001 and February 2, 2002, prepaid catalog and
promotional materials were approximately $1,696,000 and $1,268,000,
respectively, representing expenditures for the applicable subsequent spring
catalog.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. The Company depreciates and amortizes property, plant and equipment on a
straight-line basis over the following estimated useful lives:
Estimated
Asset Class Useful Lives
- --------------------------------------------------------------------------------
Buildings and improvements 25 years
Equipment 3-10 years
Furniture and fixtures 10 years
Leasehold improvements Initial term of lease, not to exceed 10 years
Other Noncurrent Assets - Other noncurrent assets includes deferred financing
costs of $57,000 and $117,000 as of February 3, 2001 and February 2, 2002,
respectively. Deferred financing costs were incurred in connection with the
Company's bank credit agreement and distribution center mortgage described in
Note 5 and are being amortized as additional interest expense over the remaining
term of the agreements using the effective interest method.
Fair Value of Financial Instruments - For cash and equivalents, the carrying
amount is a reasonable estimate of fair value. For long-term debt, rates
available for debt with similar terms and remaining maturities are used to
estimate the fair value of existing debt. As of February 2, 2002, the fair value
of the Company's debt approximated cost.
Franchise Revenue Recognition - Initial franchise fees for a store are generally
recognized as revenue when the Company has provided substantially all the
initial franchise services. Inventory sales (and cost of sales) to
the franchisees are recognized when the inventory is shipped. Monthly franchise
fees are recorded when earned under the franchise agreements.
Lease Expense - The Company records lease expense in accordance with Statement
of Financial Accounting Standards (SFAS) No. 13 -- "Accounting for Leases". As
such, rent expense on leases is recorded on a straight-line basis over the term
of the lease and the excess of expense over cash amounts paid are reflected as
"deferred rent" in the accompanying Consolidated Balance Sheets.
F-6
Store Opening Costs - Costs incurred in connection with initial promotion and
other start-up costs, such as travel for recruitment, training and setup of new
store openings are expensed as incurred.
Income Taxes - The Company accounts for income taxes in accordance with SFAS No.
109 -- "Accounting for Income Taxes". Under SFAS 109, the liability method is
used in accounting for income taxes. Deferred tax liabilities are determined
based on differences between the financial reporting and tax basis of assets and
liabilities and are measured using tax rates and laws that are expected to be in
effect when the differences are scheduled to reverse.
Earnings Per Share - During 1997, the Financial Accounting Standards Board
(FASB) issued SFAS No. 128, "Earnings Per Share," (EPS) which requires
presentation of basic earnings per share and diluted earnings per share. The
weighted average shares used to calculate basic and diluted earnings per share
in accordance with SFAS No. 128 are as follows:
1999 2000 2001
------ ------ ------
Weighted average shares
outstanding for basic EPS 6,801 6,136 5,957
- ------------------------------------------------------------
Dilutive effect of
common stock equivalents 91 113 247
- ------------------------------------------------------------
Weighted average shares
outstanding for diluted EPS 6,892 6,249 6,204
- ------------------------------------------------------------
The Company uses the treasury method for calculating the dilutive effect of
stock options.
Impact of Recently Issued Accounting Pronouncements - In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." In June 2000, SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,"
which amended SFAS No. 133, was issued. SFAS No. 133 and SFAS No. 138 establish
new accounting rules and disclosure requirements for most derivative instruments
and hedging activities. SFAS No. 133 and SFAS No. 138 require all derivatives to
be recognized as assets or liabilities at fair value. Fair value adjustments are
made either through earnings or equity, depending upon the exposure being hedged
and the effectiveness of the hedge. The Company currently does not utilize any
derivative instruments but may enter into such instruments in the future. SFAS
No. 133 and SFAS No. 138 were effective beginning on January 1, 2001.
In June 2001, the Financial Accounting Standards Board approved Statement of
Financial Accounting Standard ("SFAS") No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prospectively
prohibits the pooling of interest method of accounting for business combinations
initiated after June 30, 2001. SFAS No. 142 requires companies to cease
amortizing goodwill and certain other intangible assets. SFAS No. 142 also
established a new method of testing goodwill for impairment on an annual basis
or on an interim basis if an event occurs or circumstances change that would
reduce the fair value of a reporting unit below its carrying value. The Company
does not have any goodwill on its balance sheet. Adoption of SFAS No. 142 will
have no effect on the Company's financial statements.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121 and ABP Opinion No. 30. This statement retains the fundamental
provisions of SFAS No. 121 that requires companies to test long-lived assets for
impairment using undiscounted cash flows. The statement also requires that
long-lived assets to be disposed of by a sale must be recorded at the lower of
the carrying amount or the fair value, less the cost to sell the asset. Further,
depreciation should cease to be recorded on such assets. Any loss resulting from
the write-down of the assets shall be recognized in income from continuing
operations. Additionally, long-lived assets to be disposed of other than by sale
may no longer be classified as discontinued until they are disposed. The
provisions of this statement are effective for financial statements issued for
fiscal years beginning after December 15, 2001. The Company will apply this
guidance prospectively. Adoption of SFAS No. 144 would have had no effect on the
Company's financial statements in fiscal 2001.
2. INVENTORIES:
------------
Inventories at February 3, 2001 and February 2, 2002, consist of the following
(in thousands):
Feb. 3, 2001 Feb. 2, 2002
------------ ------------
Finished goods $ 46,588 $ 59,624
Raw materials 3,861 5,018
------------------------------------------------------
Total $ 50,449 $ 64,642
------------------------------------------------------
F-7
3. PROPERTY, PLANT AND EQUIPMENT:
-----------------------------
Property, plant and equipment at February 3, 2001, and February 2, 2002 consists
of the following (in thousands):
Feb. 3, 2001 Feb. 2, 2002
------------ ------------
Land $ 349 $ 349
Buildings and
improvements 9,693 10,561
Leasehold improvements 22,180 26,286
Equipment, furniture
and fixtures 21,586 27,363
---------------------------------------------------------
53,808 64,559
Less: Accumulated
depreciation and
amortization (28,176) (32,018)
---------------------------------------------------------
Property, plant and
equipment, net $ 25,632 $ 32,541
---------------------------------------------------------
4. ACCRUED EXPENSES:
-----------------
Accrued expenses at February 3, 2001 and February 2, 2002, consist of the
following (in thousands):
Feb. 3, 2001 Feb. 2, 2002
------------ ------------
Accrued compensation
and benefits $ 6,892 $ 8,069
Accrued advertising 2,020 3,047
Gift certificate
payable 2,618 3,008
Other accrued expenses 4,738 5,806
---------------------------------------------------------
Total $ 16,268 $ 19,930
---------------------------------------------------------
Other accrued expenses consist primarily of liabilities related to interest,
sales taxes, property taxes, customer deposits, and percentage rent.
5. LONG-TERM DEBT:
--------------
Long-term debt at February 3, 2001 and February 2, 2002, consists of the
following (in thousands):
Feb. 3, Feb. 2,
2001 2002
------- -------
Bank credit agreement-
Borrowings under
long-term revolving
loan agreement $ 5,096 $ 9,888
Mortgage loan at 8.15%
payable in monthly
installments through
April 1, 2013 secured
by Corporate office and
Distribution center - 5,267
Notes related to lease-
hold improvements,
interest at 9.4% and 9.9%
respectively, payable in
monthly installments
through February 1, 2003 346 171
Note related to
building improvements,
interest at 9.1% payable
in monthly installments
through November 1, 2007 660 587
Notes related to POS equipment,
interest at 9.7% payable in
monthly installment through
November 1, 2004 767 593
Note related to distribution
center improvements.
Interest at 4.38%,
payable in whole or part
through December 31, 2006 - 132
- ------------------------------------------------------------
Total debt 6,869 16,638
- ------------------------------------------------------------
Less: Current maturities 422 744
- ------------------------------------------------------------
Long-term debt $ 6,447 $15,894
- ------------------------------------------------------------
Bank Credit Agreement - The Company maintains a bank credit agreement (the
"Credit Agreement"), which provides for a revolving loan whose limit is
determined by a formula based on the Company's inventories, accounts receivable
and equipment values. In December 2001, the Company extended the Credit
Agreement to April 2005. The amended Credit Agreement changed the maximum
revolving amount under the facility to $60,000,000. The Credit Agreement also
includes a) financial covenants concerning minimum EBITDA, b) limitations on
capital expenditures and additional indebtedness and c) a restriction on the
payment of dividends. The covenants are in effect only if the Company's
availability in excess of outstanding borrowings is less than $5,000,000. As of
February 2, 2002, the Company was in compliance with all loan covenants.
Interest rates under the amended agreement are prime or LIBOR plus 1.5%. The
amended agreement also includes provisions for a seasonal over-advance.
As of February 3, 2001 and February 2, 2002, the Company's availability in
excess of outstanding borrowings under the formula was $33,079,000 and
$27,136,000, respectively. Substantially all assets of the Company with the
exception of its distribution center are collateralized under the Credit
Agreement.
F-8
During the years ended February 3, 2001 and February 2, 2002, borrowings under
the Credit Agreement bore interest ranging from prime to LIBOR plus 1.5%. As of
February 2, 2002, the borrowing rate under the Credit Agreement was 3.9%.
The average daily outstanding balances under the Credit Agreement for the fiscal
years ended February 3, 2001 and February 2, 2002 were $7,650,000 and
$13,220,000, respectively. The highest month end outstanding balances under the
Credit Agreement for the fiscal years ended February 3, 2001 and February 2,
2002 were $11,604,000 and $26,591,000, respectively. In addition to borrowings
under the Credit Agreement, the Company had a letter of credit of $400,000 at
February 3, 2001 and February 2, 2002, to secure the payment of rent at one
leased location.
The aggregate maturities of the Company's long-term debt as of February 2, 2002,
are as follows: fiscal year 2002-$744,000; 2003-$625,000, 2004-$642,000, 2005-
$9,980,000, 2006-$665,000, 2007 and thereafter-$3,982,000.
6. EXECUTIVE PAYOUTS AND OTHER ONE-TIME CHARGES:
--------------------------------------------
During the first quarter of fiscal 2001, the Company recorded a one-time charge
of $.2 million. The one-time charge primarily represents professional fees
incurred in the first quarter of 2001 in connection with a strategic action
considered by the Board of Directors.
During the second quarter of fiscal 1999, the Company's Chairman/CEO retired and
the Company recorded a one-time charge of $2.2 million associated with that
event. The one-time charge includes a payout to the former Chairman/CEO of
approximately $1.8 million and professional fees, primarily recruiting and
related expenses, that were incurred in the second quarter of fiscal 1999.
During the fourth quarter of fiscal 1999, the Company recorded an additional
one-time charge of $.9 million. This charge included a $.4 million charge
related to the departure of the Company's former President, a $.2 million charge
related to discontinuing an unprofitable business and approximately $.3 million
of costs related to the recruiting and relocation of new corporate officers that
were incurred by the end of fiscal 1999.
7. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Litigation - Lawsuits and claims are filed from time to time against the Company
in its ordinary course of business. Management, after reviewing developments to
date with legal counsel, is of the opinion that the outcome of such matters will
not have a material adverse effect on the net assets of the Company, results of
operations or the accompanying consolidated financial statements taken as a
whole.
Employment Agreements - The Company has employment agreements with certain of
its executives expiring in 2002 through 2005, aggregating base compensation of
$4,539,000 (not including annual adjustments) over the term. These executives
would also be entitled to severance ranging from $2,353,000 to $3,253,000 (not
including annual adjustments) depending on the circumstances of termination. The
contracts also provide for additional incentive payments subject to performance
standards. In addition, other employees are eligible for incentive payments
based on performance. The Company expensed approximately $250,000, $2,530,000
and $2,715,000 in incentive payments in fiscal years 1999, 2000 and 2001,
respectively.
Lease Obligations - The Company has numerous noncancelable operating leases for
retail stores, certain tailoring space and equipment. Certain facility leases
provide for annual base minimum rentals plus contingent rentals based on sales.
Renewal options are available under the majority of the leases.
Future minimum lease payments under noncancelable operating leases at February
2, 2002, were as follows (in thousands):
Fiscal Year Amount
----------- ------
2002 $ 15,974
2003 15,147
2004 12,796
2005 10,480
2006 9,265
2007 and thereafter 27,135
- ------------------------------------------------
Total $ 90,797
- ------------------------------------------------
The minimum rentals above do not include additional payments for percentage
rent, insurance, property taxes and maintenance costs that may be due as
provided for in the leases. Many of the noncancelable operating leases include
scheduled rent increases.
Total rental expense for operating leases, including contingent rentals and net
of sublease payments received, approximated $12,826,000, $13,319,000 and
$15,015,000 for the fiscal years ended January 29, 2000 February 3, 2001, and
February 2, 2002 respectively. Minimum rentals approximated $12,383,000,
$12,757,000, and $14,408,000 respectively. Contingent rentals, which are based
on a percentage of sales, approximated $462,000, $574,000 and $619,000
respectively. Additionally, sublease payments received approximated $19,000,
$12,000 and $12,000, respectively.
Inventories - The Company ordinarily commits to purchases of inventory at least
one to two seasons in advance. In fiscal 2001, the Company did not purchase more
than 9% of its finished product from any single vendor.
F-9
Other - During fiscal 2001, the Company executed a three year extension to its
agreement with David Leadbetter, a golf professional. The agreement, which
allows the Company to produce golf and other apparel under Leadbetter's name,
expires in January, 2005. The minimum annual commitment under this agreement is
$150,000, which represents the amount paid in each of the fiscal years 1999
through 2001.
8. BENEFIT PLANS:
-------------
Defined Benefit Pension & Post-Retirement Plans - In connection with the
termination of certain plans in 1994, the Company adopted a noncontributory
defined benefit pension plan and a post-retirement benefit plan to cover certain
union employees with equivalent benefits to the predecessor plans. The annual
contributions are not less than the minimum funding standards set forth in the
Employee Retirement Income Security Act of 1974, as amended. The plans provide
for eligible employees to receive benefits based principally on years of service
with the Company. The Company does not pre-fund the benefits from the
post-retirement benefit plan.
In accordance with SFAS No. 106, "Employers' Accounting for Post-Retirement
Benefits Other than Pensions", and SFAS No. 87, "Employees' Accounting for
Pensions", the Company records the expected cost of these benefits as expense
during the years that employees render service.
The following table sets forth the plan's funded status as of December 31, 2001
and 2000, the dates of the latest actuarial valuations (in thousands):
Pension Benefits Other Post-retirement Benefits
---------------- -------------------------------
2000 2001 2000 2001
---- ---- ---- ----
Change in benefit obligation:
Benefit obligation at beginning of year $ 206 $ 256 $ 338 $ 451
Service cost 18 21 34 32
Interest cost 17 18 28 26
Actuarial (gain) loss 26 3 51 (85)
Benefits paid (11) (12) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $ 256 $ 286 $ 451 $ 424
- -------------------------------------------------------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of year $ 471 $ 464 $ -- $ --
Actual return on plan assets 3 (34) -- --
Employer contribution -- -- -- --
Benefits paid (11) (12) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $ 463 418 $ -- --
- -------------------------------------------------------------------------------------------------------------------------------
Funded status $ 207 $ 131 $(451) $(424)
Unrecognized net actuarial loss (gain) 18 92 (80) (149)
Unrecognized initial net liability at transition 39 34 125 115
- -------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) benefit cost $ 264 $ 257 $(406) $(458)
- -------------------------------------------------------------------------------------------------------------------------------
Discount rate 7.25% 7.25% 7.25% 7.25%
Expected return on plan assets 8.00% 8.00% -- --
Components of net periodic benefit cost:
Service cost $ 18 $ 21 $ 34 $ 32
Interest cost 17 18 28 26
Amortization of net liability at transition 5 5 9 9
Expected return on plan assets (38) (37) -- --
Recognized net actuarial gain -- -- (6) (16)
- -------------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ 2 $ 7 $ 65 $ 51
- -------------------------------------------------------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point change in assumed
health care cost trend rates would have less than a $12,000 effect on total
service and interest costs and post-retirement benefit obligation.
Profit Sharing Plan - The Company maintains a defined contribution 401(k) profit
sharing plan for its employees. All non-union and certain union employees are
eligible to participate at the beginning of the month after 90 days of service.
Employee contributions to the plan are
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limited based on applicable sections of the Internal Revenue Code. The Company
intends to contribute to the 401(k) plan based on a previously determined
Earnings Per Share (EPS) goal. The Company also reserves the right to contribute
an additional discretionary amount to participants in the plan, if the Company
exceeds the EPS goal. Contributions by the Company to the plan were
approximately $384,000, $373,000 and $331,000 for the fiscal years ended
January 29, 2000, February 3, 2001 and February 2, 2002 respectively.
Deferred Compensation Plan - The Company also established a non-qualified,
unfunded deferred compensation plan effective October 1, 1998. This plan is
designed to provide a select group of management and highly-compensated
employees with retirement benefits. All assets of the plan are fully subject to
the Company's creditors. Contributions by the Company for the fiscal years ended
January 29, 2000, February 3, 2001 and February 2, 2002 were approximately
$41,000, $2,000 and $0, respectively.
9. INCOME TAXES:
------------
The provision for income taxes was comprised of the following (in thousands):
Years Ended
------------------------------
Jan. 29, Feb 3, Feb. 2,
2000 2001 2002
---- ---- ----
Federal:
Current $ 53 $ 325 $ 2,831
Deferred 641 2,312 174
State:
Current 115 149 561
Deferred 64 229 29
- -----------------------------------------------------
Provision for
income taxes $ 873 $3,015 $ 3,595
- -----------------------------------------------------
The differences between the recorded income tax provision and the "expected" tax
provision based on the statutory federal income tax rate is as follows (in
thousands):
Years Ended
---------------------------
Jan. 29, Feb. 3, Feb. 2,
2000 2001 2002
---- ---- ----
Computed federal tax
provision at
statutory rates $ 761 $2,733 $ 3,439
State income taxes, net
of federal income
tax effect 112 282 389
Other, net -- -- (233)
- -----------------------------------------------------
Provision for
income taxes $ 873 $3,015 $ 3,595
- -----------------------------------------------------
Temporary differences between the financial reporting carrying amounts and tax
basis of assets and liabilities give rise to deferred income taxes. Total
deferred tax assets and deferred tax liabilities stated by sources of the
differences between financial accounting and tax basis of the Company's assets
and liabilities which give rise to the deferred tax assets and deferred tax
liabilities are as follows (in thousands):
Feb. 3, Feb. 2,
2001 2002
---- ----
Deferred Tax Assets:
Inventories $ 723 $ 771
Property, plant and equipment 786 1,075
Accrued liabilities and other 1,218 849
- -------------------------------------------------------
2,727 2,695
Deferred Tax Liabilities:
Prepaid expenses and other
current assets (1,090) (1,261)
- -------------------------------------------------------
Net Deferred Tax Asset $ 1,637 $ 1,434
- -------------------------------------------------------
10. INCENTIVE OPTION PLAN:
---------------------
Effective January 28, 1994, the Company adopted an Incentive Plan ("the 1994
Plan"). The 1994 Plan generally provides for the granting of stock, stock
options, stock appreciation rights, restricted shares or any combination of the
foregoing to the eligible participants, as defined. Approximately 887,000 shares
of Common Stock were reserved for issuance under the Plan as of February 2,
2002. The exercise price of an option granted under the 1994 Plan may not be
less than the fair market value of the underlying shares of Common Stock on the
date of grant and employee options expire at the earlier of termination of
employment or ten years from the date of grant. All options covered under the
1994 Plan vest in full upon a change of control of the Company.
On September 14, 1999, the Board of Directors authorized a pool of 600,000
shares of Common Stock to be available to support a grant of options to be used
to
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attract a new Chief Executive Officer (the "CEO") to the Company (the "1999
Plan"). An Option to purchase up to 600,000 shares of Common Stock under the
1999 Plan was granted to the CEO pursuant to his Employment Agreement, dated as
of November 1, 1999. Unless sooner terminated pursuant to those provisions of
the Employment Agreement dealing with exercise of the option after termination
of employment or death, and subject to acceleration of vesting as provided in
the next sentence, the Option shall vest and become exercisable in whole or in
part from time to time as to (a) 200,000 of the Option Shares on or after
November 1, 1999, (b) an additional 200,000 of the Option Shares on or after
November 1, 2000 and (c) an additional 200,000 Option Shares on and after the
earlier of September 30, 2009 or the first date after which the average closing
price of the Common Shares for any consecutive 90-day period equals or exceeds
$8.00 per share. All options expire on November 1, 2009. Upon the occurrence of
a change in control of the Company (as defined in the Optionee's Employment
Agreement), any installments of the Option not then vested shall vest and become
immediately exercisable.
The following information regarding options outstanding and exercisable is as of
February 2, 2002: Options to purchase up to 662,675 shares at exercise prices
ranging from $1.88 to $8.00 per share were outstanding under the 1994 Plan, of
which options for up to 640,152 shares were exercisable. Options to purchase up
to 600,000 shares at an exercise price of $3.41 per share were outstanding under
the 1999 Plan, of which options for up to 400,000 shares were exercisable.
Options to purchase up to 95,959 shares at an exercise price of $9.17 per shares
were outstanding and exercisable under an option agreement, effective as of
January 29, 1994, issued pursuant to an employment agreement.
The Company has computed, for pro forma disclosure purposes, the value of all
compensatory options granted during fiscal year 1999, 2000 and 2001, using the
Black-Scholes option pricing model as prescribed by SFAS No. 123. Assumptions
used for the pricing model include 4.5% to 7.9% for the risk-free interest rate,
expected stock option lives of 2-10 years, expected dividend yield of 0% each
year and expected volatility of 61.3% to 69.0%.
Options were assumed to be exercised upon vesting for the purposes of this
valuation. Adjustments are made for options forfeited prior to vesting. Had
compensation costs for compensatory options been determined consistent with SFAS
No. 123, "Accounting for Stock Based Compensation" the Company's pro forma net
income would have been $432,160 in fiscal 1999, $4,911,022, in fiscal 2000 and
$6,149,646 in fiscal 2001. Pro forma basic earnings per share would have been
$.06 in fiscal 1999, $.80 in fiscal 2000 and $1.03 in fiscal 2001. Pro forma
diluted earnings per share would have been $.06 in fiscal 1999, $.79 in fiscal
2000 and $.99 in fiscal 2001.
Transactions with respect to the plans were as follows (shares in thousands):
January 29, 2000 February 3, 2001 February 2, 2002
---------------- ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
Outstanding at
beginning of year 1,093 $ 6.48 1,307 $ 4.75 1,201 $ 4.75
Granted 739 $ 3.51 14 $ 4.44 163 $ 5.06
Exercised (38) $ 1.63 (22) $ 1.63 (5) $ 4.29
Canceled (487) $ 6.49 (98) $ 5.39 -- --
------ ------ ------
Outstanding at of year 1,307 $ 4.75 1,201 $ 4.75 1,359 $ 4.79
====== ====== ======
Exercisable at end of year 729 $ 5.31 943 $ 5.00 1,136 $ 5.01
====== ====== ======
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The following table summarizes information about stock options outstanding at
February 2, 2002: (in thousands)
Options Outstanding Options Exercisable
- --------------------- ---------------------------------------------------------- ---------------------------------------
Number Weighted Average Weighted Number Weighted
Range of Exercise Outstanding Remaining Average Exercisable at Average
Prices Feb. 2 2002 Contractual Life Exercise Price Feb. 2, 2002 Exercise Price
------ ----------- ---------------- -------------- ------------ --------------
$1.88 - $4.00 804 7.30 $ 3.45 603 $ 3.46
$4.01 - $7.38 458 5.73 6.22 436 6.24
$7.39 - $9.17 97 1.99 9.16 97 9.16
The weighted average fair value of options granted for the fiscal years ended
January 29, 2000, February 3, 2001, and February 2, 2002 was $5.06, $3.83 and
$3.30, respectively.
11. RIGHTS OFFERING:
---------------
In September 1997, the Company adopted a Stockholder Rights Plan in which
preferred stock purchase rights were distributed as a dividend at the rate of
one Right for each share of Jos. A. Bank's outstanding Common Stock held as of
the close of business on September 30, 1997. Each Right will entitle
stockholders to buy one one-hundredth of a share of the newly designated Series
A Preferred Stock of Jos. A. Bank at an exercise price of $40. The Rights will
be exercisable only if a person or group acquires beneficial ownership of 20
percent or more of the Company's outstanding Common Stock (without the approval
of the board of directors) or commences a tender or exchange offer upon
consummation of which a person or group would beneficially own 20 percent or
more of the Company's outstanding Common Stock.
If any person becomes the beneficial owner of 20 percent or more of the
Company's outstanding common stock (without the approval of the board of
directors), or if a holder of 20 percent or more of the Company's Common Stock
engaged in certain self-dealing transactions or a merger transaction in which
the Company is the surviving corporation and its Common Stock remains
outstanding, then each Right not owned by such person or certain related parties
will entitle its holder to purchase, at the Right's then-current exercise price,
units of the Company's Series A Preferred Stock (or, in certain circumstances,
Common Stock, cash, property or other securities of the Company) having a market
value equal to twice the then-current exercise price of the Rights. In addition,
if the Company is involved in a merger or other business combination transaction
with another person after which its Common Stock does not remain outstanding, or
sells 50 percent or more of its assets or earning power to another person, each
Right will entitle its holder to purchase, at the Right's then-current exercise
price, shares of common stock of such other person having a market value equal
to twice the then-current exercise price of the Rights.
The Company will generally be entitled to redeem the Rights at $.01 per Right at
any time until the tenth business day following the public announcement that a
person or group has acquired 20 percent or more of the Company's Common Stock.
12. REPURCHASE OF COMMON STOCK:
--------------------------
On April 12, 2000, the Company announced a repurchase of approximately 13% of
its outstanding common stock. In a private transaction, the Company purchased
896,400 shares at $3.50 per share.
13. SEGMENT REPORTING (Unaudited):
-----------------------------
The Company has two reportable segments: full-line stores and catalog and
internet direct marketing. While each segment offers a similar mix of men's
clothing to the retail customer, the full-line stores also provide alterations.
The accounting policies of the segments are the same as those described in the
summary of significant policies. The Company evaluates performance of the
segments based on "four wall" contribution which excludes any allocation of
"management company" costs, distribution center costs (except order fulfillment
costs which are allocated to catalog), interest and income taxes.
The Company's segments are strategic business units that offer similar products
to the retail customer by two distinctively different methods. In full-line
stores the typical customer travels to the store and purchases men's clothing
and/or alterations and takes their purchases with them. The catalog/direct
marketing customer receives a catalog in his or her home, office and/or visits
our web page via the internet and either calls, mails, faxes or places an order
online. The merchandise is then shipped to the customer.
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Segment data is presented in the following table (in thousands):
Fiscal 2001
- ----------- Full-line Catalog & Internet
(in thousands) stores direct marketing Other Total
------ ---------------- ----- -----
Net sales $ 178,330 $ 25,360 $ 7,339(a) $ 211,029
Depreciation and
amortization 3,482 61 1,398 4,941
Operating income (b) 30,943 3,487 (22,950) 11,480
Identifiable assets (c) 68,705 12,708 27,044 108,457
Capital expenditures (d) 8,008 400 3,682 12,090
Fiscal 2000
- ----------- Full-line Catalog & Internet
(in thousands) stores direct marketing Other Total
--------- ---------------- ----- ------
Net sales $ 173,762 $ 24,624 $ 7,866(a) $ 206,252
Depreciation and
amortization 3,145 25 1,025 4,195
Operating income (b) 28,806 1,845 (21,578) 9,073
Identifiable assets (c) 54,585 9,863 24,506 88,954
Capital expenditures (d) 2,192 935 568 3,695
Fiscal 1999
- ----------- Full-line Catalog & Internet
(in thousands) stores direct marketing Other Total
------ ---------------- ----- -----
Net sales $ 161,285 $ 24,602 $ 7,642(a) $ 193,529
Depreciation and
amortization 3,123 15 835 3,973
Operating income (b) 24,362 2,377 (23,154)(e) 3,585
Identifiable assets (c) 51,307 8,862 24,582 84,751
Capital expenditures (d) 4,777 97 1,906 6,780
(a) Revenue from segments below the quantitative thresholds are attributable
primarily to four operating segments of the Company. Those segments include
factory stores, outlet stores, franchise and regional tailor shops. None of
these segments has ever met any of the quantitative thresholds for
determining reportable segments.
(b) Operating income represents profit before allocations of overhead from
corporate office and the distribution center, interest and income taxes.
(c) Identifiable assets include cash, accounts receivable, inventories, prepaid
expenses and fixed assets residing in or related to the reportable segment.
Assets included in Other are primarily fixed assets associated with the
corporate office and distribution center, deferred tax assets, and
inventory, which has not been assigned to one of the reportable segments.
(d) Capital Expenditures include purchases of property, plant and equipment
made for the reportable segment.
(e) Includes one time charges of $3,102,000.
F-14
16. QUARTERLY FINANCIAL INFORMATION (Unaudited):
--------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(In Thousands, Except Per Share Amounts)
FISCAL 2001
- -----------
Net sales $ 47,406 $ 46,106 $ 50,243 $ 67,274 $ 211,029
Gross profit 23,510 22,788 27,056 35,999 109,353
Operating income 1,022 774 2,524 7,160 11,480
Net Income 506 291 1,316 4,408 6,521
Net income per share (diluted) $ 0.08 $ 0.05 $ 0.21 $ 0.70 $ 1.05
FISCAL 2000
- -----------
Net sales $ 46,408 $ 44,869 $ 43,992 $ 70,983 $ 206,252
Gross profit 23,242 21,432 22,209 34,426 101,309
Operating income 2,065 1,253 938 4,817 9,073
Net Income 1,081 611 407 2,925 5,024
Net income per share (diluted) $ 0.16 $ 0.10 $ 0.07 $ 0.48 $ 0.80
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