GENESCO INC - 10-Q Quarterly Report

(GENESCO LOGO)

Form 10-Q


(Mark One)
þ		Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
		For Quarter Ended October 30, 2004


o		Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Securities and Exchange Commission

Washington, D.C. 20549

Commission File No. 1-3083

Genesco Inc.

A Tennessee Corporation
I.R.S. No. 62-0211340
Genesco Park
1415 Murfreesboro Road
Nashville, Tennessee 37217-2895
Telephone 615/367-7000

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

Common Shares Outstanding November 26, 2004 – 22,299,364

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Genesco Inc. and Subsidiaries

Consolidated Balance Sheets

In Thousands, except share amounts


	October 30,			January 31,			November 1,
	2004			2004			2003
Assets
*Current Assets*
Cash and cash equivalents	$	15,012		$	81,549		$	44,306
Accounts receivable, net of allowances of $2,409 at October 30, 2004, $3,334 at January 31, 2004 and $2,743 at November 1, 2003		18,823			12,515			18,731
Inventories		265,733			167,234			205,918
Deferred income taxes		10,510			7,633			8,523
Prepaids and other current assets		17,706			14,835			14,004

Total current assets		327,784			283,766			291,482

Property and equipment:
Land		4,972			4,856			4,856
Buildings and building equipment		14,336			13,917			13,743
Machinery		52,790			45,174			46,339
Furniture and fixtures		56,097			45,305			45,203
Construction in progress		7,231			3,469			6,010
Improvements to leased property		126,902			104,941			103,916

Property and equipment, at cost		262,328			217,662			220,067
Accumulated depreciation		(110,203	)		(95,995	)		(93,225	)

Property and equipment, net		152,125			121,667			126,842

Deferred income taxes		-0-			18,137			20,624
Goodwill		97,430			-0-			-0-
Trademarks		47,621			-0-			-0-
Other intangibles, net of accumulated amortization of $1,350 at October 30, 2004, $-0- at January 31, 2004 and $-0- at November 1, 2003		7,236			-0-			-0-
Other noncurrent assets		9,243			6,617			6,678

Total Assets	$	641,439		$	430,187		$	445,626

Genesco Inc. and Subsidiaries
Consolidated Balance Sheets
In Thousands, except share amounts


	October 30,			January 31,			November 1,
	2004			2004			2003
Liabilities and Shareholders’ Equity
*Current Liabilities*
Accounts payable	$	93,541		$	47,921		$	78,318
Accrued employee compensation		17,411			6,284			5,916
Accrued rent		13,423			11,636			11,837
Accrued other taxes		7,471			5,055			4,577
Accrued income taxes		6,134			8,689			4,097
Other accrued liabilities		20,049			11,100			13,529
Current portion – long-term debt		17,000			-0-			-0-
Provision for discontinued operations		4,121			1,757			691

Total current liabilities		179,150			92,442			118,965

Long-term debt		175,250			86,250			86,250
Pension liability		29,180			25,617			34,907
Deferred income taxes		4,210			-0-			-0-
Other long-term liabilities		9,076			9,014			10,087
Provision for discontinued operations		1,854			1,266			833

Total liabilities		398,720			214,589			251,042

Commitments and contingent liabilities
*Shareholders’ Equity*
Non-redeemable preferred stock		7,493			7,580			7,579
Common shareholders’ equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued/Outstanding:
October 30, 2004 – 22,586,946/22,098,482
January 31, 2004 – 22,211,661/21,723,197
November 1, 2003 – 22,215,640/21,727,176		22,587			22,212			22,216
Additional paid-in capital		101,767			96,612			96,826
Retained earnings		154,663			132,215			115,416
Accumulated other comprehensive loss		(25,934	)		(25,164	)		(29,596	)
Treasury shares, at cost		(17,857	)		(17,857	)		(17,857	)

Total shareholders’ equity		242,719			215,598			194,584

Total Liabilities and Shareholders’ Equity	$	641,439		$	430,187		$	445,626

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Consolidated Statements of Earnings

In Thousands, except per share amounts


	Three Months Ended						Nine Months Ended
	October 30,			November 1,			October 30,			November 1,
	2004			2003			2004			2003
Net sales	$	288,398		$	212,483		$	759,863		$	584,707
Cost of sales		145,030			113,355			383,928			313,998
Selling and administrative expenses		119,251			82,426			330,596			243,350
Restructuring and other, net		667			-0-			627			(139	)

Earnings from operations		23,450			16,702			44,712			27,498

Loss on early retirement of debt		-0-			-0-			-0-			2,581
Interest expense, net
Interest expense		3,204			1,590			8,138			6,162
Interest income		(66	)		(80	)		(222	)		(471	)

Total interest expense, net		3,138			1,510			7,916			5,691

Earnings before income taxes from continuing operations		20,312			15,192			36,796			19,226
Income tax expense		7,783			5,780			13,668			7,368

Earnings from continuing operations		12,529			9,412			23,128			11,858
Provision for discontinued operations, net		(440	)		-0-			(461	)		-0-

Net Earnings	$	12,089		$	9,412		$	22,667		$	11,858

Basic earnings per common share:
Continuing operations	$	.57		$	.43		$	1.05		$	.54
Discontinued operations	$	(.02	)	$	.00		$	(.03	)	$	.00
Net earnings	$	.55		$	.43		$	1.02		$	.54
Diluted earnings per common share:
Continuing operations	$	.55		$	.42		$	1.02		$	.53
Discontinued operations	$	(.01	)	$	.00		$	(.02	)	$	.00
Net earnings	$	.54		$	.42		$	1.00		$	.53

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Consolidated Statements of Cash Flows

In Thousands


	Three Months Ended						Nine Months Ended
	October 30,			November 1,			October 30,			November 1,
	2004			2003			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	12,089		$	9,412		$	22,667		$	11,858
Tax benefit of stock options exercised		97			29			1,192			45
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation		7,273			5,550			20,538			16,189
Deferred income taxes		266			-0-			(43	)		-0-
Provision for losses on accounts receivable		(12	)		37			76			329
Impairment of long-lived assets		260			-0-			535			-0-
Restructuring gain		-0-			-0-			-0-			(139	)
Loss on retirement of debt		-0-			-0-			-0-			959
Provision for discontinued operations		705			-0-			739			-0-
Other		812			387			1,747			1,059
Effect on cash of changes in working capital and other assets and liabilities net of acquisitions:
Accounts receivable		(2,441	)		(4,189	)		(5,890	)		291
Inventories		(2,356	)		7,521			(63,729	)		(37,297	)
Other current assets		(4,305	)		(184	)		(2,400	)		(2	)
Accounts payable		(2,572	)		(4,283	)		21,330			36,162
Other accrued liabilities		15,289			3,898			14,802			(2,858	)
Other assets and liabilities		2,523			(1,570	)		5,956			(69	)

Net cash provided by operating activities		27,628			16,608			17,520			26,527

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(11,559	)		(6,773	)		(27,814	)		(15,972	)
Acquisitions, net of cash acquired		1,120			-0-			(167,663	)		-0-
Proceeds from sale of property and equipment		9			12			11			638

Net cash used in investing activities		(10,430	)		(6,761	)		(195,466	)		(15,334	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital leases		(135	)		-0-			(321	)		-0-
Stock repurchases		-0-			(1,367	)		-0-			(1,398	)
Change in overdraft balances		(8,355	)		2,528			5,253			(1,504	)
Revolver borrowings, net		(10,000	)		-0-			6,000			-0-
Dividends paid		(73	)		(74	)		(219	)		(221	)
Payments of long-term debt		-0-			-0-			-0-			(103,245	)
Long-term borrowings		-0-			-0-			100,000			86,250
Deferred financing costs		-0-			-0-			(3,360	)		(3,238	)
Options exercised and shares issued in Employee Stock Purchase Plan		1,100			404			4,065			540
Other		(9	)		-0-			(9	)		-0-

Net cash provided by (used in) financing activities		(17,472	)		1,491			111,409			(22,816	)

Net Cash Flow		(274	)		11,338			(66,537	)		(11,623	)
Cash and cash equivalents at beginning of period		15,286			32,968			81,549			55,929

Cash and cash equivalents at end of period	$	15,012		$	44,306		$	15,012		$	44,306

Supplemental Cash Flow Information:
Net cash paid for:
Interest	$	1,831		$	586		$	5,939		$	6,109
Income taxes		1,236			131			15,890			7,705

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

In Thousands


	Total															Accumulated						Total
	Non-Redeemable						Additional									Other						Share-
	Preferred			Common			Paid-In			Treasury			Retained			Comprehensive			Comprehensive			holders’
	Stock			Stock			Capital			Shares			Earnings			Loss			Income			Equity
Balance February 1, 2003	$	7,599		$	22,222		$	97,488		$	(17,857	)	$	103,779		$	(30,452	)				$	182,779

Net earnings		-0-			-0-			-0-			-0-			28,730			-0-		$	28,730			28,730
Dividends paid		-0-			-0-			-0-			-0-			(294	)		-0-			-0-			(294	)
Exercise of options		-0-			45			624			-0-			-0-			-0-			-0-			669
Issue shares - - Employee Stock Purchase Plan		-0-			32			327			-0-			-0-			-0-			-0-			359
Tax benefit of stock options exercised		-0-			-0-			69			-0-			-0-			-0-			-0-			69
Stock repurchases		-0-			(117	)		(1,784	)		-0-			-0-			-0-			-0-			(1,901	)
Gain on foreign currency forward contracts (net of tax of $0.6 million)		-0-			-0-			-0-			-0-			-0-			985			985			985
Minimum pension liability adjustment (net of tax of $2.8 million)		-0-			-0-			-0-			-0-			-0-			4,303			4,303			4,303
Other		(19	)		30			(112	)		-0-			-0-			-0-			-0-			(101	)

Comprehensive income																				34,018

Balance January 31, 2004		7,580			22,212			96,612			(17,857	)		132,215			(25,164	)					215,598

Net earnings		-0-			-0-			-0-			-0-			22,667			-0-			22,667			22,667
Dividends paid		-0-			-0-			-0-			-0-			(219	)		-0-			-0-			(219	)
Exercise of options		-0-			354			3,711			-0-			-0-			-0-			-0-			4,065
Tax benefit of stock options exercised		-0-			-0-			1,192			-0-			-0-			-0-			-0-			1,192
Loss on foreign currency forward contracts (net of tax benefit of $0.4 million)		-0-			-0-			-0-			-0-			-0-			(673	)		(673	)		(673	)
Loss on interest rate swaps (net of tax benefit of $0.1 million)		-0-			-0-			-0-			-0-			-0-			(233	)		(233	)		(233	)
Foreign currency translation adjustment		-0-			-0-			-0-			-0-			-0-			136			136			136
Other		(87	)		21			252			-0-			-0-			-0-			-0-			186

Comprehensive income*																			$	21,897

Balance October 30, 2004	$	7,493		$	22,587		$	101,767		$	(17,857	)	$	154,663		$	(25,934


	Page
Part I. Financial Information
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets October 30, 2004, January 31, 2004 and November 1, 2003		3
Consolidated Statements of Earnings - Three Months Ended and Nine Months Ended October 30, 2004 and November 1, 2003		5
Consolidated Statements of Cash Flows - Three Months Ended and Nine Months Ended October 30, 2004 and November 1, 2003		6
Consolidated Statements of Shareholders’ Equity - Year Ended January 31, 2004 and Nine Months Ended October 30, 2004		7
Notes to Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Item 3. Quantitative and Qualitative Disclosures About Market Risk		52
Item 4. Controls and Procedures		52
Part II. Other Information
Item 1. Legal Proceedings		54
Item 6. Exhibits		54
Signature		55
EX-10.1 TRADEMARK LICENSE AGREEMENT
EX-10.2 AMENDMENT NO. 1 TO TRADEMARK LICENSE AGREEMENT
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents