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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
Tennessee Corporation
(State or other jurisdiction of incorporation or organization) |
62-0211340
(I.R.S. Employer Identification No.) |
|
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Genesco Park, 1415 Murfreesboro Road
Nashville, Tennessee (Address of principal executive offices) |
37217-2895
(Zip Code) |
| Large accelerated filer o | Accelerated filer þ |
Non-accelerated filer
o
(Do not check if smaller reporting company) |
Smaller reporting company o |
| October 30, | January 30, | October 31, | ||||||||||
| Assets | 2010 | 2010 | 2009 | |||||||||
|
Current Assets
|
||||||||||||
|
Cash and cash equivalents
|
$ | 24,574 | $ | 82,148 | $ | 23,620 | ||||||
|
Accounts receivable, net of allowances of
$3,701 at October 30, 2010, $3,232 at January 30, 2010
and $2,996 at October 31, 2009
|
47,923 | 27,217 | 33,425 | |||||||||
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Inventories
|
450,902 | 290,974 | 359,684 | |||||||||
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Deferred income taxes
|
15,094 | 17,314 | 15,848 | |||||||||
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Prepaids and other current assets
|
37,061 | 32,419 | 41,007 | |||||||||
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Total current assets
|
575,554 | 450,072 | 473,584 | |||||||||
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Property and equipment:
|
||||||||||||
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Land
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4,863 | 4,863 | 4,863 | |||||||||
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Buildings and building equipment
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17,992 | 17,992 | 17,957 | |||||||||
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Computer hardware, software and equipment
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91,496 | 86,239 | 82,811 | |||||||||
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Furniture and fixtures
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102,852 | 101,923 | 100,356 | |||||||||
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Construction in progress
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6,446 | 3,196 | 6,600 | |||||||||
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Improvements to leased property
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278,855 | 277,624 | 274,754 | |||||||||
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Property and equipment, at cost
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502,504 | 491,837 | 487,341 | |||||||||
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Accumulated depreciation
|
(302,009 | ) | (275,544 | ) | (266,077 | ) | ||||||
|
Property and equipment, net
|
200,495 | 216,293 | 221,264 | |||||||||
|
Deferred income taxes
|
17,110 | 13,545 | 7,603 | |||||||||
|
Goodwill
|
150,311 | 118,995 | 112,759 | |||||||||
|
Trademarks, net of accumulated amortization of
$879 at October 30, 2010, $418 at January 30, 2010 and
$342 at October 31, 2009
|
52,753 | 52,799 | 51,460 | |||||||||
|
Other intangibles, net of accumulated amortization of
$9,984 at October 30, 2010, $8,795 at January 30, 2010 and
$8,557 at October 31, 2009
|
13,179 | 3,670 | 3,378 | |||||||||
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Other noncurrent assets
|
8,568 | 8,278 | 8,231 | |||||||||
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Total Assets
|
$ | 1,017,970 | $ | 863,652 | $ | 878,279 | ||||||
3
| October 30, | January 30, | October 31, | ||||||||||
| Liabilities and Shareholders’ Equity | 2010 | 2010 | 2009 | |||||||||
|
Current Liabilities
|
||||||||||||
|
Accounts payable
|
$ | 199,299 | $ | 92,699 | $ | 152,273 | ||||||
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Accrued employee compensation
|
28,921 | 15,043 | 13,613 | |||||||||
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Accrued other taxes
|
13,865 | 11,570 | 10,590 | |||||||||
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Other accrued liabilities
|
40,788 | 40,979 | 29,019 | |||||||||
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Provision for discontinued operations
|
11,642 | 9,366 | 9,472 | |||||||||
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Total current liabilities
|
294,515 | 169,657 | 214,967 | |||||||||
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Long-term debt
|
30,400 | -0- | 29,042 | |||||||||
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Pension liability
|
18,030 | 20,402 | 22,281 | |||||||||
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Deferred rent and other long-term liabilities
|
85,657 | 85,232 | 83,883 | |||||||||
|
Provision for discontinued operations
|
4,594 | 6,048 | 6,115 | |||||||||
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Total liabilities
|
433,196 | 281,339 | 356,288 | |||||||||
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Commitments and contingent liabilities
|
||||||||||||
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Shareholders’ Equity
|
||||||||||||
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Non-redeemable preferred stock
|
5,193 | 5,220 | 5,235 | |||||||||
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Common shareholders’ equity:
|
||||||||||||
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Common stock, $1 par value:
|
||||||||||||
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Authorized: 80,000,000 shares
Issued/Outstanding:
|
||||||||||||
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October 30, 2010 — 24,083,115/23,594,651
|
||||||||||||
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January 30, 2010 — 24,562,693/24,074,229
|
||||||||||||
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October 31, 2009 —23,158,918/22,670,454
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24,083 | 24,563 | 23,159 | |||||||||
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Additional paid-in capital
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127,193 | 146,981 | 115,088 | |||||||||
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Retained earnings
|
474,412 | 452,210 | 426,406 | |||||||||
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Accumulated other comprehensive loss
|
(28,250 | ) | (28,804 | ) | (30,040 | ) | ||||||
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Treasury shares, at cost
|
(17,857 | ) | (17,857 | ) | (17,857 | ) | ||||||
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Total shareholders’ equity
|
584,774 | 582,313 | 521,991 | |||||||||
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Total Liabilities and Shareholders’ Equity
|
$ | 1,017,970 | $ | 863,652 | $ | 878,279 | ||||||
4
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 30, | October 31, | October 30, | October 31, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
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Net sales
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$ | 464,838 | $ | 390,302 | $ | 1,229,345 | $ | 1,095,326 | ||||||||
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Cost of sales
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228,097 | 190,136 | 600,489 | 535,993 | ||||||||||||
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Selling and administrative expenses
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207,942 | 179,271 | 584,484 | 531,071 | ||||||||||||
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Restructuring and other, net
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2,120 | 2,571 | 6,564 | 10,864 | ||||||||||||
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Earnings from operations
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26,679 | 18,324 | 37,808 | 17,398 | ||||||||||||
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Loss on early retirement of debt
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-0- | -0- | -0- | 5,119 | ||||||||||||
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Interest expense, net
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||||||||||||||||
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Interest expense
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306 | 922 | 773 | 4,046 | ||||||||||||
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Interest income
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-0- | (1 | ) | (5 | ) | (13 | ) | |||||||||
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Total interest expense, net
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306 | 921 | 768 | 4,033 | ||||||||||||
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Earnings from continuing operations
before income taxes
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26,373 | 17,403 | 37,040 | 8,246 | ||||||||||||
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Income tax expense
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9,406 | 5,880 | 13,906 | 4,989 | ||||||||||||
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Earnings from continuing operations
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16,967 | 11,523 | 23,134 | 3,257 | ||||||||||||
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Provision for discontinued operations, net
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(50 | ) | (80 | ) | (784 | ) | (298 | ) | ||||||||
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Net Earnings
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$ | 16,917 | $ | 11,443 | $ | 22,350 | $ | 2,959 | ||||||||
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Basic earnings per common share:
|
||||||||||||||||
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Continuing operations
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$ | .73 | $ | .52 | $ | .98 | $ | .15 | ||||||||
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Discontinued operations
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$ | .00 | $ | .00 | $ | (.03 | ) | $ | (.02 | ) | ||||||
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Net earnings
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$ | .73 | $ | .52 | $ | .95 | $ | .13 | ||||||||
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Diluted earnings per common share:
|
||||||||||||||||
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Continuing operations
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$ | .72 | $ | .50 | $ | .97 | $ | .15 | ||||||||
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Discontinued operations
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$ | .00 | $ | .00 | $ | (.04 | ) | $ | (.02 | ) | ||||||
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Net earnings
|
$ | .72 | $ | .50 | $ | .93 | $ | .13 | ||||||||
5
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 30, | October 30, | October 30, | October 31, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
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|
||||||||||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
|
Net earnings
|
$ | 16,917 | $ | 11,443 | $ | 22,350 | $ | 2,959 | ||||||||
|
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
|
||||||||||||||||
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Depreciation
|
11,265 | 11,464 | 34,078 | 35,315 | ||||||||||||
|
Amortization of deferred note expense and debt discoun
t
|
105 | 433 | 313 | 1,877 | ||||||||||||
|
Loss on early retirement of debt
|
-0- | -0- | -0- | 5,119 | ||||||||||||
|
Deferred income taxes
|
(2,595 | ) | 2,228 | (3,142 | ) | 3,774 | ||||||||||
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Provision for losses on accounts receivable
|
256 | 126 | 561 | 186 | ||||||||||||
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Impairment of long-lived assets
|
2,120 | 2,594 | 6,410 | 10,433 | ||||||||||||
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Share-based compensation and restricted stock
|
2,336 | 1,995 | 6,051 | 5,255 | ||||||||||||
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Provision for discontinued operations
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82 | 134 | 1,295 | 493 | ||||||||||||
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Other
|
786 | 508 | 2,416 | 1,591 | ||||||||||||
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Effect on cash of changes in working capital and other assets
and liabilities:
|
||||||||||||||||
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Accounts receivable
|
(12,066 | ) | (3,663 | ) | (14,783 | ) | (8,230 | ) | ||||||||
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Inventories
|
(52,344 | ) | (25,744 | ) | (136,717 | ) | (52,583 | ) | ||||||||
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Prepaids and other current assets
|
6,307 | 3,216 | (3,507 | ) | (5,439 | ) | ||||||||||
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Accounts payable
|
21,811 | 20,951 | 94,492 | 68,090 | ||||||||||||
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Other accrued liabilities
|
16,424 | 1,740 | 17,296 | (5,973 | ) | |||||||||||
|
Other assets and liabilities
|
3,249 | (176 | ) | (2,887 | ) | (2,077 | ) | |||||||||
|
Net cash provided by operating activities
|
14,653 | 27,249 | 24,226 | 60,790 | ||||||||||||
|
|
||||||||||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
|
Capital expenditures
|
(6,956 | ) | (6,893 | ) | (18,816 | ) | (27,953 | ) | ||||||||
|
Acquisitions, net of cash acquired
|
(56,719 | ) | (2,868 | ) | (71,973 | ) | (2,873 | ) | ||||||||
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Proceeds from assets sales
|
4 | -0- | 6 | 13 | ||||||||||||
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Net cash used in investing activities
|
(63,671 | ) | (9,761 | ) | (90,783 | ) | (30,813 | ) | ||||||||
|
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||||||||||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
|
Payments of capital leases
|
(30 | ) | (52 | ) | (90 | ) | (148 | ) | ||||||||
|
Payments of long-term debt
|
(900 | ) | (1,070 | ) | (1,918 | ) | (1,070 | ) | ||||||||
|
Shares repurchased
|
(14,026 | ) | -0- | (25,717 | ) | -0- | ||||||||||
|
Change in overdraft balances
|
8,885 | 9,863 | 5,607 | 9,472 | ||||||||||||
|
Borrowings under revolving credit facility
|
55,000 | 18,100 | 55,000 | 134,200 | ||||||||||||
|
Payments on revolving credit facility
|
(24,600 | ) | (42,400 | ) | (24,600 | ) | (166,500 | ) | ||||||||
|
Dividends paid on non-redeemable preferred stock
|
(50 | ) | (49 | ) | (148 | ) | (148 | ) | ||||||||
|
Exercise of stock options
|
276 | 283 | 849 | 455 | ||||||||||||
|
Other
|
-0- | -0- | -0- | (290 | ) | |||||||||||
|
Net cash provided by (used in) financing activities
|
24,555 | (15,325 | ) | 8,983 | (24,029 | ) | ||||||||||
|
Net (decrease) increase in cash and cash equivalents
|
(24,463 | ) | 2,163 | (57,574 | ) | 5,948 | ||||||||||
|
Cash and cash equivalents at beginning of period
|
49,037 | 21,457 | 82,148 | 17,672 | ||||||||||||
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Cash and cash equivalents at end of period
|
$ | 24,574 | $ | 23,620 | $ | 24,574 | $ | 23,620 | ||||||||
|
|
||||||||||||||||
|
Supplemental Cash Flow Information:
|
||||||||||||||||
|
Net cash paid for:
|
||||||||||||||||
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Interest
|
$ | 147 | $ | 203 | $ | 396 | $ | 1,389 | ||||||||
|
Income taxes
|
1,174 | 1,503 | 14,341 | 6,139 | ||||||||||||
6
| Total | Accumulated | Total | ||||||||||||||||||||||||||||||
| Non-Redeemable | Additional | Other | Share- | |||||||||||||||||||||||||||||
| Preferred | Common | Paid-In | Retained | Comprehensive | Treasury | Comprehensive | holders’ | |||||||||||||||||||||||||
| Stock | Stock | Capital | Earnings | Loss | Stock | Income | Equity | |||||||||||||||||||||||||
|
Balance January 31, 2009
|
$ | 5,203 | $ | 19,732 | $ | 49,780 | $ | 423,595 | $ | (30,698 | ) | $ | (17,857 | ) | $ | 449,755 | ||||||||||||||||
|
Net earnings
|
-0- | -0- | -0- | 28,813 | -0- | -0- | $ | 28,813 | 28,813 | |||||||||||||||||||||||
|
Dividends paid on non-redeemable
preferred stock
|
-0- | -0- | -0- | (198 | ) | -0- | -0- | -0- | (198 | ) | ||||||||||||||||||||||
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Exercise of stock options
|
-0- | 28 | 372 | -0- | -0- | -0- | -0- | 400 | ||||||||||||||||||||||||
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Issue shares — Employee Stock Purchase Plan
|
-0- | 4 | 95 | -0- | -0- | -0- | -0- | 99 | ||||||||||||||||||||||||
|
Employee and non-employee restricted stock
|
-0- | -0- | 6,528 | -0- | -0- | -0- | -0- | 6,528 | ||||||||||||||||||||||||
|
Share-based compensation
|
-0- | -0- | 441 | -0- | -0- | -0- | -0- | 441 | ||||||||||||||||||||||||
|
Restricted stock issuance
|
-0- | 405 | (405 | ) | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||
|
Restricted shares withheld for taxes
|
-0- | (65 | ) | (1,156 | ) | -0- | -0- | -0- | -0- | (1,221 | ) | |||||||||||||||||||||
|
Tax expense of stock options and
restricted stock exercised
|
-0- | -0- | (658 | ) | -0- | -0- | -0- | -0- | (658 | ) | ||||||||||||||||||||||
|
Shares repurchased
|
-0- | (85 | ) | (1,942 | ) | -0- | -0- | -0- | -0- | (2,027 | ) | |||||||||||||||||||||
|
Conversion of 4 1/8% debentures
|
-0- | 4,553 | 93,933 | -0- | -0- | -0- | -0- | 98,486 | ||||||||||||||||||||||||
|
Loss on foreign currency forward contracts
(net of tax benefit of $0.1 million) |
-0- | -0- | -0- | -0- | (157 | ) | -0- | (157 | ) | (157 | ) | |||||||||||||||||||||
|
Pension liability adjustment
(net of tax of $0.6 million) |
-0- | -0- | -0- | -0- | 1,151 | -0- | 1,151 | 1,151 | ||||||||||||||||||||||||
|
Postretirement liability adjustment
(net of tax of $0.0 million) |
-0- | -0- | -0- | -0- | 14 | -0- | 14 | 14 | ||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
-0- | -0- | -0- | -0- | 886 | -0- | 886 | 886 | ||||||||||||||||||||||||
|
Other
|
17 | (9 | ) | (7 | ) | -0- | -0- | -0- | -0- | 1 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
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Comprehensive income
|
$ | 30,707 | ||||||||||||||||||||||||||||||
|
Balance January 30, 2010
|
5,220 | 24,563 | 146,981 | 452,210 | (28,804 | ) | (17,857 | ) | 582,313 | |||||||||||||||||||||||
|
Net earnings
|
-0- | -0- | -0- | 22,350 | -0- | -0- | $ | 22,350 | 22,350 | |||||||||||||||||||||||
|
Dividends paid on non-redeemable
preferred stock
|
-0- | -0- | -0- | (148 | ) | -0- | -0- | -0- | (148 | ) | ||||||||||||||||||||||
|
Exercise of stock options
|
-0- | 39 | 690 | -0- | -0- | -0- | -0- | 729 | ||||||||||||||||||||||||
|
Issue shares-Employee Stock Purchase Plan
|
-0- | 4 | 116 | -0- | -0- | -0- | -0- | 120 | ||||||||||||||||||||||||
|
Employee and non-employee restricted stock
|
-0- | -0- | 5,843 | -0- | -0- | -0- | -0- | 5,843 | ||||||||||||||||||||||||
|
Share-based compensation
|
-0- | -0- | 208 | -0- | -0- | -0- | -0- | 208 | ||||||||||||||||||||||||
|
Restricted stock issuance
|
-0- | 423 | (423 | ) | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||
|
Restricted shares withheld for taxes
|
-0- | (82 | ) | (2,289 | ) | -0- | -0- | -0- | -0- | (2,371 | ) | |||||||||||||||||||||
|
Shares repurchased
|
-0- | (864 | ) | (23,961 | ) | -0- | -0- | -0- | -0- | (24,825 | ) | |||||||||||||||||||||
|
Gain on foreign currency forward contracts
(net of tax of $0.1 million) |
-0- | -0- | -0- | -0- | 193 | -0- | 193 | 193 | ||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
-0- | -0- | -0- | -0- | 361 | -0- | 361 | 361 | ||||||||||||||||||||||||
|
Other
|
(27 | ) | -0- | 28 | -0- | -0- | -0- | -0- | 1 | |||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Comprehensive income*
|
$ | 22,904 | ||||||||||||||||||||||||||||||
|
Balance October 30, 2010
|
$ | 5,193 | $ | 24,083 | $ | 127,193 | $ | 474,412 | $ | (28,250 | ) | $ | (17,857 | ) | $ | 584,774 | ||||||||||||||||
| * | Comprehensive income was $17.1 million and $11.4 million for the third quarter ended October 30, 2010 and October 31, 2009, respectively. Comprehensive income was $3.6 million for the nine months ended October 31, 2009. |
7
8
| Inventory Valuation | ||
| The Company values its inventories at the lower of cost or market. | ||
| In its footwear wholesale operations and its Lids Sports wholesale operations, except for Anaconda Sports, cost is determined using the first-in, first-out (“FIFO”) method. Market is determined using a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in future orders. The Company provides reserves when the inventory has not been marked down to market based on current selling prices or when the inventory is not turning and is not expected to turn at levels satisfactory to the Company. | ||
| In its retail operations, other than the Lids Sports segment, the Company employs the retail inventory method, applying average cost-to-retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories. | ||
| Inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on, markups, markdowns, and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, the Company employs the retail inventory method in multiple subclasses of inventory with similar gross margins, and analyzes markdown requirements at the stock number level based on factors such as inventory turn, average selling price, and inventory age. In addition, the Company accrues markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to return products to vendors and vendor agreements to provide markdown support. In addition to markdown provisions, the Company maintains provisions for shrinkage and damaged goods based on historical rates. | ||
| The Lids Sports retail segment and its newly acquired Anaconda Sports wholesale division employ the moving average cost method for valuing inventories and applies freight using an allocation method. The Company provides a valuation allowance for slow-moving inventory based on negative margins and estimated shrink based on historical experience and specific analysis, where appropriate. | ||
| Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions, fashion trends, and overall economic conditions. Failure to make appropriate conclusions regarding these factors may result in an overstatement or understatement of inventory value. |
9
| Impairment of Long-Lived Assets |
| The Company periodically assesses the realizability of its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived assets. See also Notes 3 and 5. |
| The goodwill impairment test involves a two-step process. The first step is a comparison of the fair value and carrying value of the reporting unit with which the goodwill is associated. The Company estimates fair value using the best information available, and computes the fair value by an equal weighting of the results arrived by a market approach and an income approach utilizing discounted cash flow projections. The income approach uses a projection of a business unit’s estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. |
| If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, the Company would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference. |
| A key assumption in the Company’s fair value estimate is the weighted average cost of capital utilized for discounting its cash flow projections in its income approach. The Company believes the rate it used in its annual test, which is completed in the fourth quarter each year, was consistent with the risks inherent in its business and with industry discount rates. |
10
| Environmental and Other Contingencies |
| The Company is subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Note 8. The Company has made pretax accruals for certain of these contingencies, including approximately $0.3 million in each of the third quarters of Fiscal 2011 and Fiscal 2010 and $1.9 million and $0.8 million for the first nine months of Fiscal 2011 and Fiscal 2010, respectively. These charges are included in provision for discontinued operations, net in the Condensed Consolidated Statements of Operations (see Note 3). The Company monitors these matters on an ongoing basis and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as management deems necessary in view of changes in available information. Changes in estimates of liability are reported in the periods when they occur. Consequently, management believes that its reserve in relation to each proceeding is a best estimate of probable loss connected to the proceeding, or in cases in which no best estimate is possible, the minimum amount in the range of estimated losses, based upon its analysis of the facts and circumstances as of the close of the most recent fiscal quarter. However, because of uncertainties and risks inherent in litigation generally and in environmental proceedings in particular, there can be no assurance that future developments will not require additional reserves to be set aside, that some or all reserves will be adequate or that the amounts of any such additional reserves or any such inadequacy will not have a material adverse effect upon the Company’s financial condition or results of operations. |
| Revenue Recognition |
| Retail sales are recorded at the point of sale and are net of estimated returns and exclude sales taxes. Catalog and internet sales are recorded at time of delivery to the customer and are net of estimated returns and exclude sales taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Shipping and handling costs charged to customers are included in net sales. Estimated returns are based on historical returns and claims. Actual amounts of markdowns have not differed materially from estimates. Actual returns and claims in any future period may differ from historical experience. |
11
| Income Taxes |
| As part of the process of preparing Condensed Consolidated Financial Statements, the Company is required to estimate its income taxes in each of the tax jurisdictions in which it operates. This process involves estimating actual current tax obligations together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities, which are included within the Condensed Consolidated Balance Sheets. The Company then assesses the likelihood that its deferred tax assets will be recovered from future taxable income. Actual results could differ from this assessment if adequate taxable income is not generated in future periods. To the extent the Company believes that recovery of an asset is at risk, valuation allowances are established. To the extent valuation allowances are established or increased in a period, the Company includes an expense within the tax provision in the Condensed Consolidated Statements of Operations. |
| Income tax reserves are determined using the methodology required by the Income Tax Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”). This methodology was adopted by the Company as of February 4, 2007, and requires companies to assess each income tax position taken using a two step process. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If the Company’s determinations and estimates prove to be inaccurate, the resulting adjustments could be material to its future financial results. |
| Postretirement Benefits Plan Accounting |
| Full-time employees who had 1,000 hours of service in calendar year 2004, except employees in the Lids Sports Segment, are covered by a defined benefit pension plan. The Company froze the defined benefit pension plan effective January 1, 2005. The Company also provides certain former employees with limited medical and life insurance benefits. The Company funds at least the minimum amount required by the Employee Retirement Income Security Act. |
12
| As required by the Compensation — Retirement Benefits Topic of the Codification, the Company is required to recognize the overfunded or underfunded status of postretirement benefit plans as an asset or liability in their Condensed Consolidated Balance Sheets and to recognize changes in that funded status in accumulated other comprehensive loss, net of tax, in the year in which the changes occur. |
| The Company accounts for the defined benefit pension plans using the Compensation-Retirement Benefits Topic of the Codification. As permitted under this topic, pension expense is recognized on an accrual basis over employees’ approximate service periods. The calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions, including the expected long-term rate of return on plan assets and the assumed discount rate, as well as the recognition of actuarial gains and losses. Changes in these assumptions can result in different expense and liability amounts, and future actual experience can differ from these assumptions. |
| Share-Based Compensation |
| The Company has share-based compensation plans covering certain members of management and non-employee directors. The Company recognizes compensation expense for share-based payments based on the fair value of the awards as required by the Compensation — Stock Compensation Topic of the Codification. For the third quarters of Fiscal 2011 and 2010, share-based compensation expense was $0.1 million and $0.2 million, respectively. For the third quarters of Fiscal 2011 and 2010, restricted stock expense was $2.2 million and $1.9 million, respectively. For the first nine months of Fiscal 2011 and 2010, share-based compensation expense was $0.2 million and $0.4 million, respectively. For the first nine months of Fiscal 2011 and 2010, restricted stock expense was $5.8 million and $4.9 million, respectively. The benefits of tax deductions in excess of recognized compensation expense are reported as a financing cash flow. |
| The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense, including expected stock price volatility. The Company bases expected volatility on historical stock prices for a period that is commensurate with the expected term estimate. The Company bases the risk free rate on an interest rate for a bond with a maturity commensurate with the expected term estimate. The Company estimates the expected term of stock options using historical exercise and employee termination experience. The Company does not currently pay a dividend on common stock. The fair value of employee restricted stock is determined based on the closing price of the Company’s stock on the date of the grant. |
13
| In addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over the vesting period. Share-based compensation expense is recorded based on a 2% expected forfeiture rate and is adjusted annually for actual forfeitures. The Company reviews the expected forfeiture rate annually to determine if that percent is still reasonable based on historical experience. The Company believes its estimates are reasonable in the context of actual (historical) experience. |
| The Company did not grant any stock options or issue employee restricted stock for the three months ended October 30, 2010 or October 31, 2009. The Company did not grant any stock options for the nine months ended October 30, 2010 or October 31, 2009. During the nine months ended October 30, 2010, the Company issued 404,995 shares of employee restricted stock at a grant date fair value of $28.41 per share which vest over a four-year term. During the nine months ended October 31, 2009, the Company issued 383,745 shares of employee restricted stock at a grant date fair value of $19.25 per share of which 359,096 shares vest over a four-year term and the remaining 24,649 shares vest over a three-year term. For the nine months ended October 30, 2010, the Company issued 17,838 shares of director restricted stock at a weighted average price of $30.27. For the nine months ended October 31, 2009, the Company issued 21,204 shares of director restricted stock at a weighted average price of $25.46. There was no director restricted stock issued for the three months ended October 30, 2010 or October 31, 2009. There was no director retainer stock issued for the three months and nine months ended October 30, 2010 or October 31, 2009. |
14
|
Buildings and building equipment
|
20-45 years | |
|
Computer hardware, software and equipment
|
3-10 years | |
|
Furniture and fixtures
|
10 years |
15
16
| October 30, | January 30, | |||||||||||||||
| In thousands | 2010 | 2010 | ||||||||||||||
| Carrying | Fair | Carrying | Fair | |||||||||||||
| Amount | Value | Amount | Value | |||||||||||||
|
Revolver Borrowings
|
$ | 30,400 | $ | 29,876 | $ | -0- | $ | -0- | ||||||||
17
18
19
20
21
22
| Non-Compete | ||||||||||||||||||||||||||||||||
| Leases | Customer Lists | Agreements/Backlog | Total | |||||||||||||||||||||||||||||
| Oct. 30, | Jan. 30, | Oct. 30, | Jan. 30, | Oct. 30, | Jan. 30, | Oct. 30, | Jan. 30, | |||||||||||||||||||||||||
| (In Thousands) | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||
|
Gross other intangibles
|
$ | 9,857 | $ | 9,267 | $ | 12,206 | $ | 2,790 | $ | 1,100 | $ | 408 | $ | 23,163 | $ | 12,465 | ||||||||||||||||
|
Accumulated amortization
|
(8,349 | ) | (8,074 | ) | (1,091 | ) | (461 | ) | (544 | ) | (260 | ) | (9,984 | ) | (8,795 | ) | ||||||||||||||||
|
Net Other Intangibles
|
$ | 1,508 | $ | 1,193 | $ | 11,115 | $ | 2,329 | $ | 556 | $ | 148 | $ | 13,179 | $ | 3,670 | ||||||||||||||||
23
| Facility | ||||
| Shutdown | ||||
| In thousands | Costs | |||
|
Balance January 31, 2009
|
$ | 15,568 | ||
|
Additional provision Fiscal 2010
|
452 | |||
|
Charges and adjustments, net
|
(606 | ) | ||
|
Balance January 30, 2010
|
15,414 | |||
|
Additional provision Fiscal 2011
|
1,295 | |||
|
Charges and adjustments, net
|
(473 | ) | ||
|
Balance October 30, 2010*
|
16,236 | |||
|
Current provision for discontinued operations
|
11,642 | |||
|
Total Noncurrent Provision for Discontinued Operations
|
$ | 4,594 | ||
| * | Includes a $16.7 million environmental provision, including $12.1 million in current provision for discontinued operations. |
| October 30, | January 30, | |||||||
| In thousands | 2010 | 2010 | ||||||
|
Raw materials
|
$ | 12,763 | $ | 5,415 | ||||
|
Wholesale finished goods
|
40,201 | 22,383 | ||||||
|
Retail merchandise
|
397,938 | 263,176 | ||||||
|
Total Inventories
|
$ | 450,902 | $ | 290,974 | ||||
24
| Long-Lived Assets | Total | |||||||||||||||||||
| Held and Used | Level 1 | Level 2 | Level 3 | Losses | ||||||||||||||||
|
Measured as of May 1, 2010
|
$ | 1,789 | $ | — | $ | — | $ | 1,789 | $ | 2,351 | ||||||||||
|
Measured as of July 31, 2010
|
$ | 999 | $ | — | $ | — | $ | 999 | $ | 1,934 | ||||||||||
|
Measured as of October 30, 2010
|
$ | 1,689 | $ | — | $ | — | $ | 1,689 | $ | 2,120 | ||||||||||
25
| Pension Benefits | Other Benefits | |||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||
| October 30, | October 31, | October 30, | October 31, | |||||||||||||
| In thousands | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
Service cost
|
$ | 62 | $ | 62 | $ | 37 | $ | 37 | ||||||||
|
Interest cost
|
1,471 | 1,642 | 41 | 44 | ||||||||||||
|
Expected return on plan assets
|
(2,021 | ) | (2,087 | ) | -0- | -0- | ||||||||||
|
Amortization:
|
||||||||||||||||
|
Prior service cost
|
1 | 1 | -0- | -0- | ||||||||||||
|
Losses
|
1,035 | 384 | 14 | 17 | ||||||||||||
|
Net amortization
|
1,036 | 385 | 14 | 17 | ||||||||||||
|
Net Periodic Benefit Cost
|
$ | 548 | $ | 2 | $ | 92 | $ | 98 | ||||||||
| Pension Benefits | Other Benefits | |||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||
| October 30, | October 31, | October 30, | October 31, | |||||||||||||
| In thousands | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
Service cost
|
$ | 187 | $ | 188 | $ | 113 | $ | 111 | ||||||||
|
Interest cost
|
4,426 | 4,920 | 121 | 132 | ||||||||||||
|
Expected return on plan assets
|
(6,067 | ) | (6,266 | ) | -0- | -0- | ||||||||||
|
Amortization:
|
||||||||||||||||
|
Prior service cost
|
3 | 3 | -0- | -0- | ||||||||||||
|
Losses
|
3,200 | 1,366 | 41 | 51 | ||||||||||||
|
Net amortization
|
3,203 | 1,369 | 41 | 51 | ||||||||||||
|
Net Periodic Benefit Cost
|
$ | 1,749 | $ | 211 | $ | 275 | $ | 294 | ||||||||
26
| For the Three Months Ended | For the Three Months Ended | |||||||||||||||||||||||
| October 30, 2010 | October 31, 2009 | |||||||||||||||||||||||
| (In thousands, except | Income | Shares | Per-Share | Income | Shares | Per-Share | ||||||||||||||||||
| per share amounts) | (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Earnings from continuing operations
|
$ | 16,967 | $ | 11,523 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Less: Preferred stock dividends
|
(49 | ) | (49 | ) | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Basic EPS from continuing operations
|
||||||||||||||||||||||||
|
Income available to
common shareholders
|
16,918 | 23,069 | $ | .73 | 11,474 | 21,952 | $ | .52 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Effect of Dilutive Securities from
continuing operations
|
||||||||||||||||||||||||
|
Options
|
389 | 252 | ||||||||||||||||||||||
|
Convertible preferred stock
(1)
|
34 | 54 | -0- | -0- | ||||||||||||||||||||
|
4 1/8% Convertible Subordinated Debentures
(2)
|
-0- | -0- | 386 | 1,486 | ||||||||||||||||||||
|
Employees’ preferred stock
(3)
|
50 | 51 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Diluted EPS
|
||||||||||||||||||||||||
|
Income available to common
shareholders plus assumed
conversions
|
$ | 16,952 | 23,562 | $ | .72 | $ | 11,860 | 23,741 | $ | .50 | ||||||||||||||
| (1) | The amount of the dividend on the convertible preferred stock per common share obtainable on conversion of the convertible preferred stock was higher than basic earnings per share for Series 4 preferred stock for the three months ended October 30, 2010 and for Series 1, 3 and 4 preferred stocks for the three months ended October 31, 2009. Therefore, conversion of these convertible preferred shares was not reflected in diluted earnings per share, because it would have been antidilutive. The amount of the dividend on the convertible preferred stock per common share obtainable on conversion of the convertible preferred stock was less than basic earnings per share for Series 1 and 3 preferred shares for the three months ended October 30, 2010. Therefore, conversion of Series 1 and 3 preferred shares was included in diluted earnings per share for the three months ended October 30, 2010. The shares convertible to common stock for Series 1, 3 and 4 preferred stock would have been 27,913, 25,606 and 5,423, respectively, as of October 30, 2010. | |
| (2) | There were no outstanding debentures for the three months ended October 30, 2010. The amount of the interest on the convertible subordinated debentures for the three months ended October 31, 2009 per common share obtainable on conversion was lower than basic earnings per share, therefore the convertible debentures are reflected in diluted earnings per share for the three months ended October 31, 2009. | |
| (3) | The Company’s Employees’ Subordinated Convertible Preferred Stock is convertible one for one to the Company’s common stock. Because there are no dividends paid on this stock, these shares are assumed to be converted for the three months ended October 30, 2010 and October 31, 2009. |
27
| For the Nine Months Ended | For the Nine Months Ended | |||||||||||||||||||||||
| October 30, 2010 | October 31, 2009 | |||||||||||||||||||||||
| (In thousands, except | Income | Shares | Per-Share | Income | Shares | Per-Share | ||||||||||||||||||
| per share amounts) | (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Earnings from continuing operations
|
$ | 23,134 | $ | 3,257 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Less: Preferred stock dividends
|
(148 | ) | (148 | ) | ||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Basic EPS from continuing operations
|
||||||||||||||||||||||||
|
Income available to
common shareholders
|
22,986 | 23,337 | $ | .98 | 3,109 | 20,868 | $ | .15 | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Effect of Dilutive Securities from
continuing operations
|
||||||||||||||||||||||||
|
Options
|
383 | 167 | ||||||||||||||||||||||
|
Convertible preferred stock
(1)
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||
|
4 1/8% Convertible Subordinated Debentures
(2)
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||
|
Employees’ preferred stock
(3)
|
50 | 51 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Diluted EPS
|
||||||||||||||||||||||||
|
Income available to common
shareholders plus assumed
conversions
|
$ | 22,986 | 23,770 | $ | .97 | $ | 3,109 | 21,086 | $ | .15 | ||||||||||||||
| (1) | The amount of the dividend on the convertible preferred stock per common share obtainable on conversion of the convertible preferred stock was higher than basic earnings per share for all periods presented. Therefore, conversion of the convertible preferred stock was not reflected in diluted earnings per share, because it would have been antidilutive. The shares convertible to common stock for Series 1, 3 and 4 preferred stock would have been 27,913, 25,606 and 5,423, respectively, as of October 30, 2010. | |
| (2) | There were no outstanding debentures for the nine months ended October 30, 2010. The amount of the interest on the convertible subordinated debentures for the nine months ended October 31, 2009 per common share obtainable on conversion is higher than basic earnings per share, therefore the convertible debentures are not reflected in diluted earnings per share for the nine months ended October 31, 2009 because it would have been antidilutive. | |
| (3) | The Company’s Employees’ Subordinated Convertible Preferred Stock is convertible one for one to the Company’s common stock. Because there are no dividends paid on this stock, these shares are assumed to be converted for the nine months ended October 30, 2010 and October 31, 2009. |
28
29
30
31
32
| Three Months Ended | Underground | Johnston | ||||||||||||||||||||||||||
| October 30, 2010 | Journeys | Station | Lids Sports | & Murphy | Licensed | Corporate | ||||||||||||||||||||||
| In thousands | Group | Group | Group | Group | Brands | & Other | Consolidated | |||||||||||||||||||||
|
Sales
|
$ | 215,976 | $ | 21,729 | $ | 152,880 | $ | 45,399 | $ | 28,712 | $ | 368 | $ | 465,064 | ||||||||||||||
|
Intercompany sales
|
-0- | -0- | (177 | ) | -0- | (49 | ) | -0- | (226 | ) | ||||||||||||||||||
|
Net sales to external customers
|
$ | 215,976 | $ | 21,729 | $ | 152,703 | $ | 45,399 | $ | 28,663 | $ | 368 | $ | 464,838 | ||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Segment operating income (loss)
|
$ | 22,316 | $ | (1,268 | ) | $ | 12,709 | $ | 1,816 | $ | 3,573 | $ | (10,347 | ) | $ | 28,799 | ||||||||||||
|
Restructuring and other*
|
-0- | -0- | -0- | -0- | -0- | (2,120 | ) | (2,120 | ) | |||||||||||||||||||
|
Earnings (loss) from operations
|
22,316 | (1,268 | ) | 12,709 | 1,816 | 3,573 | (12,467 | ) | 26,679 | |||||||||||||||||||
|
Interest expense
|
-0- | -0- | -0- | -0- | -0- | (306 | ) | (306 | ) | |||||||||||||||||||
|
Earnings (loss) from continuing
operations before income taxes
|
$ | 22,316 | $ | (1,268 | ) | $ | 12,709 | $ | 1,816 | $ | 3,573 | $ | (12,773 | ) | $ | 26,373 | ||||||||||||
|
Total assets**
|
$ | 301,677 | $ | 32,352 | $ | 461,152 | $ | 76,543 | $ | 36,550 | $ | 109,696 | $ | 1,017,970 | ||||||||||||||
|
Depreciation
|
5,154 | 531 | 4,011 | 935 | 74 | 560 | 11,265 | |||||||||||||||||||||
|
Capital expenditures
|
2,306 | 97 | 3,692 | 353 | -0- | 508 | 6,956 | |||||||||||||||||||||
| * | Restructuring and other includes a $2.1 million charge for asset impairments, of which $1.6 million is in the Journeys Group, $0.4 million in the Johnston & Murphy Group and $0.1 million in the Lids Sports Group. | |
| ** | Total assets for the Lids Sports Group and Licensed Brands include $149.4 million of goodwill and $0.9 million of goodwill, respectively. |
33
| Three Months Ended | Underground | Johnston | ||||||||||||||||||||||||||
| October 31, 2009 | Journeys | Station | Lids Sports | & Murphy | Licensed | Corporate | ||||||||||||||||||||||
| In thousands | Group | Group | Group | Group | Brands | & Other | Consolidated | |||||||||||||||||||||
|
Sales
|
$ | 198,407 | $ | 21,946 | $ | 105,783 | $ | 40,361 | $ | 23,746 | $ | 148 | $ | 390,391 | ||||||||||||||
|
Intercompany sales
|
-0- | -0- | (44 | ) | -0- | (45 | ) | -0- | (89 | ) | ||||||||||||||||||
|
Net sales to external customers
|
$ | 198,407 | $ | 21,946 | $ | 105,739 | $ | 40,361 | $ | 23,701 | $ | 148 | $ | 390,302 | ||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Segment operating income (loss)
|
$ | 17,902 | $ | (1,862 | ) | $ | 7,010 | $ | 1,660 | $ | 3,921 | $ | (7,736 | ) | $ | 20,895 | ||||||||||||
|
Restructuring and other*
|
-0- | -0- | -0- | -0- | -0- | (2,571 | ) | (2,571 | ) | |||||||||||||||||||
|
Earnings (loss) from operations
|
17,902 | (1,862 | ) | 7,010 | 1,660 | 3,921 | (10,307 | ) | 18,324 | |||||||||||||||||||
|
Interest expense
|
-0- | -0- | -0- | -0- | -0- | (922 | ) | (922 | ) | |||||||||||||||||||
|
Interest income
|
-0- | -0- | -0- | -0- | -0- | 1 | 1 | |||||||||||||||||||||
|
Earnings (loss) before income taxes
from continuing operations
|
$ | 17,902 | $ | (1,862 | ) | $ | 7,010 | $ | 1,660 | $ | 3,921 | $ | (11,228 | ) | $ | 17,403 | ||||||||||||
|
Total assets**
|
$ | 288,385 | $ | 37,306 | $ | 343,454 | $ | 76,146 | $ | 26,346 | $ | 106,642 | $ | 878,279 | ||||||||||||||
|
Depreciation
|
5,783 | 669 | 3,442 | 977 | 41 | 552 | 11,464 | |||||||||||||||||||||
|
Capital expenditures
|
2,363 | 52 | 3,661 | 357 | 9 | 451 | 6,893 | |||||||||||||||||||||
| * | Restructuring and other includes a $2.6 million charge for asset impairments, of which $1.7 million is in the Journeys Group, $0.8 million in the Lids Sports Group and $0.1 million in the Johnston & Murphy Group. | |
| ** | Total assets for the Lids Sports Group include $112.8 million goodwill. |
| Nine Months Ended | Underground | Johnston | ||||||||||||||||||||||||||
| October 30, 2010 | Journeys | Station | Lids Sports | & Murphy | Licensed | Corporate | ||||||||||||||||||||||
| In thousands | Group | Group | Group | Group | Brands | & Other | Consolidated | |||||||||||||||||||||
|
Sales
|
$ | 550,834 | $ | 64,946 | $ | 405,450 | $ | 129,002 | $ | 78,461 | $ | 972 | $ | 1,229,665 | ||||||||||||||
|
Intercompany sales
|
-0- | -0- | (177 | ) | (1 | ) | (142 | ) | -0- | (320 | ) | |||||||||||||||||
|
Net sales to external customers
|
$ | 550,834 | $ | 64,946 | $ | 405,273 | $ | 129,001 | $ | 78,319 | $ | 972 | $ | 1,229,345 | ||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Segment operating income (loss)
|
$ | 26,872 | $ | (3,973 | ) | $ | 34,452 | $ | 4,194 | $ | 10,464 | $ | (27,637 | ) | $ | 44,372 | ||||||||||||
|
Restructuring and other*
|
-0- | -0- | -0- | -0- | -0- | (6,564 | ) | (6,564 | ) | |||||||||||||||||||
|
Earnings (loss) from operations
|
26,872 | (3,973 | ) | 34,452 | 4,194 | 10,464 | (34,201 | ) | 37,808 | |||||||||||||||||||
|
Interest expense
|
-0- | -0- | -0- | -0- | -0- | (773 | ) | (773 | ) | |||||||||||||||||||
|
Interest income
|
-0- | -0- | -0- | -0- | -0- | 5 | 5 | |||||||||||||||||||||
|
Earnings (loss) from continuing
operations before income taxes
|
$ | 26,872 | $ | (3,973 | ) | $ | 34,452 | $ | 4,194 | $ | 10,464 | $ | (34,969 | ) | $ | 37,040 | ||||||||||||
|
Total assets**
|
$ | 301,677 | $ | 32,352 | $ | 461,152 | $ | 76,543 | $ | 36,550 | $ | 109,696 | $ | 1,017,970 | ||||||||||||||
|
Depreciation
|
15,851 | 1,677 | 11,959 | 2,833 | 156 | 1,602 | 34,078 | |||||||||||||||||||||
|
Capital expenditures
|
5,153 | 280 | 10,980 | 1,415 | 20 | 968 | 18,816 | |||||||||||||||||||||
| * | Restructuring and other includes a $6.4 million charge for asset impairments, of which $4.2 million is in the Journeys Group, $0.9 million in the Lids Sports Group, $0.7 million in the Johnston & Murphy Group and $0.6 million in the Underground Station Group. | |
| ** | Total assets for the Lids Sports Group and Licensed Brands include $149.4 million of goodwill and $0.9 million of goodwill, respectively. |
34
| Nine Months Ended | Underground | Johnston | ||||||||||||||||||||||||||
| October 31, 2009 | Journeys | Station | Lids Sports | & Murphy | Licensed | Corporate | ||||||||||||||||||||||
| In thousands | Group | Group | Group | Group | Brands | & Other | Consolidated | |||||||||||||||||||||
|
Sales
|
$ | 523,846 | $ | 67,235 | $ | 313,467 | $ | 118,747 | $ | 71,714 | $ | 473 | $ | 1,095,482 | ||||||||||||||
|
Intercompany sales
|
-0- | -0- | (94 | ) | (2 | ) | (60 | ) | -0- | (156 | ) | |||||||||||||||||
|
Net sales to external customers
|
$ | 523,846 | $ | 67,235 | $ | 313,373 | $ | 118,745 | $ | 71,654 | $ | 473 | $ | 1,095,326 | ||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Segment operating income (loss)
|
$ | 20,256 | $ | (6,101 | ) | $ | 24,060 | $ | 1,358 | $ | 9,525 | $ | (20,836 | ) | $ | 28,262 | ||||||||||||
|
Restructuring and other*
|
-0- | -0- | -0- | -0- | -0- | (10,864 | ) | (10,864 | ) | |||||||||||||||||||
|
Earnings (loss) from operations
|
20,256 | (6,101 | ) | 24,060 | 1,358 | 9,525 | (31,700 | ) | 17,398 | |||||||||||||||||||
|
Loss on early retirement of debt
|
-0- | -0- | -0- | -0- | -0- | (5,119 | ) | (5,119 | ) | |||||||||||||||||||
|
Interest expense
|
-0- | -0- | -0- | -0- | -0- | (4,046 | ) | (4,046 | ) | |||||||||||||||||||
|
Interest income
|
-0- | -0- | -0- | -0- | -0- | 13 | 13 | |||||||||||||||||||||
|
Earnings (loss) before income taxes
from continuing operations
|
$ | 20,256 | $ | (6,101 | ) | $ | 24,060 | $ | 1,358 | $ | 9,525 | $ | (40,852 | ) | $ | 8,246 | ||||||||||||
|
Total assets
|
$ | 288,385 | $ | 37,306 | $ | 343,454 | $ | 76,146 | $ | 26,346 | $ | 106,642 | $ | 878,279 | ||||||||||||||
|
Depreciation
|
18,253 | 2,070 | 10,343 | 2,926 | 131 | 1,592 | 35,315 | |||||||||||||||||||||
|
Capital expenditures
|
13,584 | 130 | 10,148 | 3,013 | 39 | 1,039 | 27,953 | |||||||||||||||||||||
| * | Restructuring and other includes a $10.5 million charge for asset impairments, of which $7.8 million is in the Journeys Group, $1.4 million in the Lids Sports Group, $0.8 million in the Underground Station Group and $0.5 million in the Johnston & Murphy Group. | |
| ** | Total assets for the Lids Sports Group include $112.8 million of goodwill. |
35
| • | Timing and amount of non-cash asset impairments. | ||
| • | Continuing weakness in the consumer economy particularly as it may affect the crucially important Holiday selling season. | ||
| • | The costs and effects of the Network Intrusion described under “Recent Developments-Network Intrusion” including any claims or litigation resulting therefrom. | ||
| • | Competition in the Company’s markets. | ||
| • | Inability of customers to obtain credit. | ||
| • | Fashion trends that affect the sales or product margins of the Company’s retail product offerings. | ||
| • | Changes in buying patterns by significant wholesale customers. | ||
| • | Bankruptcies or deterioration in the financial condition of significant wholesale customers, limiting their ability to buy or pay for merchandise offered by the Company. | ||
| • | Disruptions in product supply or distribution, including resumption of recent manufacturing and shipping delays affecting Chinese product in particular. | ||
| • | Unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs and other factors affecting the cost of products. | ||
| • | The Company’s ability to continue to complete acquisitions, expand its business and diversify its product base. | ||
| • | Changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. | ||
| • | The Company’s ability to build, open, staff and support additional retail stores and to renew leases in existing stores and maintain reductions in occupancy costs achieved in recent lease negotiations, and to conduct required remodeling or refurbishment on schedule and at acceptable expense levels. | ||
| • | Deterioration in the performance of individual businesses or of the Company’s market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences. | ||
| • | Unexpected changes to the market for the Company’s shares. | ||
| • | Variations from expected pension-related charges caused by conditions in the financial markets. | ||
| • | The outcome of litigation, investigations and environmental matters involving the Company, including but not limited to the matters discussed in Note 8 to the Condensed Consolidated Financial Statements. |
36
37
38
39
40
| Three Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 215,976 | $ | 198,407 | 8.9 | % | ||||||
|
Earnings from operations
|
$ | 22,316 | $ | 17,902 | 24.7 | % | ||||||
|
Operating margin
|
10.3 | % | 9.0 | % | ||||||||
41
| Three Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 21,729 | $ | 21,946 | (1.0 | )% | ||||||
|
Loss from operations
|
$ | (1,268 | ) | $ | (1,862 | ) | 31.9 | % | ||||
|
Operating margin
|
(5.8 | )% | (8.5 | )% | ||||||||
42
| Three Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 152,703 | $ | 105,739 | 44.4 | % | ||||||
|
Earnings from operations
|
$ | 12,709 | $ | 7,010 | 81.3 | % | ||||||
|
Operating margin
|
8.3 | % | 6.6 | % | ||||||||
| Three Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 45,399 | $ | 40,361 | 12.5 | % | ||||||
|
Earnings from operations
|
$ | 1,816 | $ | 1,660 | 9.4 | % | ||||||
|
Operating margin
|
4.0 | % | 4.1 | % | ||||||||
43
| Three Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 28,663 | $ | 23,701 | 20.9 | % | ||||||
|
Earnings from operations
|
$ | 3,573 | $ | 3,921 | (8.9 | )% | ||||||
|
Operating margin
|
12.5 | % | 16.5 | % | ||||||||
44
| Nine Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 550,834 | $ | 523,846 | 5.2 | % | ||||||
|
Earnings from operations
|
$ | 26,872 | $ | 20,256 | 32.7 | % | ||||||
|
Operating margin
|
4.9 | % | 3.9 | % | ||||||||
45
| Nine Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 64,946 | $ | 67,235 | (3.4 | )% | ||||||
|
Loss from operations
|
$ | (3,973 | ) | $ | (6,101 | ) | 34.9 | % | ||||
|
Operating margin
|
(6.1 | )% | (9.1 | )% | ||||||||
| Nine Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 405,273 | $ | 313,373 | 29.3 | % | ||||||
|
Earnings from operations
|
$ | 34,452 | $ | 24,060 | 43.2 | % | ||||||
|
Operating margin
|
8.5 | % | 7.7 | % | ||||||||
46
| Nine Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 129,001 | $ | 118,745 | 8.6 | % | ||||||
|
Earnings from operations
|
$ | 4,194 | $ | 1,358 | 208.8 | % | ||||||
|
Operating margin
|
3.3 | % | 1.1 | % | ||||||||
| Nine Months Ended | ||||||||||||
| October 30, | October 31, | % | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| (dollars in thousands) | ||||||||||||
|
Net sales
|
$ | 78,319 | $ | 71,654 | 9.3 | % | ||||||
|
Earnings from operations
|
$ | 10,464 | $ | 9,525 | 9.9 | % | ||||||
|
Operating margin
|
13.4 | % | 13.3 | % | ||||||||
47
| October 30, | January 30, | October 31, | ||||||||||
| 2010 | 2010 | 2009 | ||||||||||
| (dollars in millions) | ||||||||||||
|
Cash and cash equivalents
|
$ | 24.6 | $ | 82.1 | $ | 23.6 | ||||||
|
Working capital
|
$ | 281.0 | $ | 280.4 | $ | 258.6 | ||||||
|
Long-term debt
|
$ | 30.4 | $ | -0- | $ | 29.0 | ||||||
48
49
50
51
52
53
| (d) Maximum | ||||||||||||||||
| Number (or | ||||||||||||||||
| (c) Total | Approximate | |||||||||||||||
| Number of | Dollar Value) of | |||||||||||||||
| Shares | shares that | |||||||||||||||
| Purchased as | May Yet Be | |||||||||||||||
| (a) Total of | Part of Publicly | Purchased | ||||||||||||||
| Number of | (b) Average | Announced | Under the Plans | |||||||||||||
| Shares | Price Paid | Plans or | or Programs | |||||||||||||
| Period | Purchased | per Share | Programs | (in thousands) | ||||||||||||
|
|
||||||||||||||||
|
August 2010
|
||||||||||||||||
|
8-1-10 to 8-28-10
(1)
|
3,354 | $ | 27.29 | -0- | $ | -0- | ||||||||||
|
|
||||||||||||||||
|
September 2010
|
||||||||||||||||
|
8-29-10 to 9-25-10
(2)
|
205,240 | $ | 27.63 | 205,240 | $ | 18,170 | ||||||||||
|
|
||||||||||||||||
|
October 2010
|
||||||||||||||||
|
9-26-10 to 10-30-10
(1)
|
12,521 | $ | 32.56 | -0- | $ | -0- | ||||||||||
|
9-26-10 to 10-30-10
(2)
|
250,127 | $ | 31.96 | 250,127 | $ | 34,352 | ||||||||||
| (1) | These shares represent shares withheld from vested restricted stock to satisfy the minimum withholding requirement for federal and state taxes. | |
| (2) | During the first quarter of Fiscal 2011, the board increased the total repurchase authorization under its common stock repurchase plan to $35.0 million. During the third quarter of Fiscal 2011, the board restored the total repurchase authorization to $35.0 million. As of October 30, 2010, the Company had repurchased 864,000 shares at a cost of $24.8 million for the nine month period. |
|
(31.1)
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
|
||
|
(31.2)
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
|
||
|
(32.1)
|
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
|
|
||
|
(32.2)
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
54
|
Genesco Inc.
|
||||
| By: | /s/ James S. Gulmi | |||
| James S. Gulmi | ||||
| Senior Vice President — Finance, Chief Financial Officer and Treasurer | ||||
55
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|