-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nwwrXoLKmnpznDj9TZiDYxmtLls11GbLuTxSP5BWk5DBGywbck0MXdCGPTKJqEnG WYo99BxCQb7ux1CiejPBNw== 0000718916-94-000022.txt : 19941110 0000718916-94-000022.hdr.sgml : 19941110 ACCESSION NUMBER: 0000718916-94-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941109 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURLINGTON COAT FACTORY WAREHOUSE CORP CENTRAL INDEX KEY: 0000718916 STANDARD INDUSTRIAL CLASSIFICATION: 5651 IRS NUMBER: 221970303 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08739 FILM NUMBER: 94558301 BUSINESS ADDRESS: STREET 1: 1830 RTE 130 CITY: BURLINGTON STATE: NJ ZIP: 08016 BUSINESS PHONE: 6093877800 10-Q 1 10-Q FORM 10-Q SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended October 1, 1994 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From ... to ... Commission File No. 1-8739 Burlington Coat Factory Warehouse Corporation ________________________________________________ (Exact name of registrant as specified in its charter) Delaware 22-1970303 - ------------------------------ ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1830 Route 130 North Burlington, New Jersey 08016 - ------------------------------ ------------------------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (609)387-7800 Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 8, 1994 - -------------------------- -------------------------------- Common stock, par value $1 41,127,980 Page 1 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES I N D E X Page Part I - Financial Information: Item 1. Financial Statements: Condensed consolidated balance sheets - October 1, 1994 3 (unaudited), July 2, 1994 and October 2, 1993 (unaudited) Condensed consolidated statements of operations - 4 Three months ended October 1, 1994 and October 2, 1993 (unaudited) Condensed consolidated statements of cash flows 5 Three months ended October 1, 1994 and October 2, 1993 (unaudited) Notes to condensed consolidated financial statements 6-7 Item 2. Management's discussion and analysis of results 8 -11 of operations and financial condition Part II - Other Information: Item 1. Legal Proceedings 12 Item 6. Exhibits and reports on Form 8-K 12 SIGNATURES 12 * * * * * * * * * * * * Page 2 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (All amounts in thousands)
October 01, July 02, October 02, 1994 1994 1993 ASSETS ----------- ----------- ----------- - ------ Current Assets: Cash and Cash Equivalents $ 4,171 $21,236 $21,201 Accounts Receivable 16,793 13,915 14,752 Merchandise Inventories 659,169 468,921 468,027 Deferred Tax Asset 11.820 6,782 4,483 Prepaid Income Taxes 614 - - Prepaid and Other Current Assets 35,461 17,968 24,082 -------- -------- -------- Total Current Assets 728,028 528,822 532,545 Property and Equipment Net of Accumulated Depreciation and Amortization 192,528 184,590 154,650 Other Assets 15,394 12,027 7,756 -------- -------- ----------- Total Assets $935,950 $725,439 $694,951 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities: Accounts Payable $290,921 $133,706 $200,487 Notes Payable 119,500 65,020 20,800 Income Taxes Payable - 454 3,064 Other Current Liabilities 57,817 50,998 47,280 Current Maturities of Long Term Debt 61 54 64 -------- -------- -------- Total Current Liabilities 468,299 250,232 271,695 Long Term Debt 91,348 91,369 91,414 Other Liabilities 7,112 7,151 5,930 Deferred Tax Liability 7,177 6,830 5,570 Stockholders' Equity: Unrealized Loss-Marketable Securities (20) (20) (11) Equity Adjustment for Foreign Currency Translation (94) 284 - Preferred Stock - - - Common Stock 41,130 41,122 41,044 Capital in Excess of Par Value 24,645 24,592 23,729 Retained Earnings 298,203 305,729 257,430 Treasury Stock at Cost; 1994 and 1993--427,387 Shares (1,850) (1,850) (1,850) -------- -------- ------- Total Stockholders' Equity 362,014 369,857 320,342 -------- -------- ------- Total Liabilities and Stockholders' Equity $935,950 $725,439 $694,951 ======== ======== ======= See notes to the condensed consolidated financial statements.
Page 3 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (All amounts in thousands except per share data)
THREE MONTHS ENDING OCTOBER 01, OCTOBER 02, 1994 1993 -------------------------- REVENUES: Net Sales $299,242 $241,215 Other Income 2,115 2,211 -------------------------- 301,357 243,426 -------------------------- COSTS AND EXPENSES: Cost of Sales (Exclusive of Depreciation and Amortization) 193,367 155,770 Selling and Administrative Expenses 110,384 83,829 Depreciation and Amortization 6,125 5,579 Interest Expense 3,682 2,516 -------------------------- 313,558 247,694 -------------------------- Loss Before Benefit for Income Taxes (12,201) (4,268) Benefit For Income Taxes (4,675) (1,352) -------------------------- Net Loss ($7,526) ($2,916) ========================== Earnings Per Share: Net Loss Per Share ($0.18) ($0.07) ========================== Weighted Average Shares Outstanding 40,698,184 40,598,603 ========================== Dividends Per Share - - ===== ===== See notes to the condensed consolidated financial statements.
Page 4 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (All amounts in thousands)
Three Months Ended October 1, October 2, 1993 1992 -------------------------- OPERATING ACTIVITIES Net Loss ($7,526) ($2,916) Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization 6,125 5,579 Provision for Deferred Income Taxes (4,691) 212 Gain on Disposition of Fixed Assets - (5) Rent Expense and Other 778 1,029 Changes in Operating Assets and Liabilities: Accounts Receivable (3,630) (5,444) Merchandise Inventories (190,248) (115,108) Prepaids and Other Current Assets (18,107) (7,441) Accounts Payable 157,215 84,280 Other Current Liabilities 6,365 6,686 --------------------------- Net Cash (Used) by Operating Activities (53,719) (33,128) --------------------------- INVESTING ACTIVITIES Acquisition of Property and Equipment (14,043) (17,654) Short Term Investments-Net - 16,421 Proceeds From Sale of Fixed Assets - 12 Issuance of Long Term Notes Receivable (2,087) (375) Receipts Against Long Term Notes Receivable 152 76 Acquisition of Leasehold (1,652) - Minority Interest 97 - Other (340) 84 --------------------------- Net Cash Used by Investing Activities (17,873) (1,436) --------------------------- FINANCING ACTIVITIES Principal Payments on Long Term Debt (14) (63) Issuance of Common Stock Upon Exercise of Stock Option 61 147 Net Borrowings Under Line of Credit 54,480 20,800 --------------------------- Net Cash Provided (Used) in Financing Activities 54,527 20,884 --------------------------- Decrease in Cash and Cash Equivalents (17,065) (13,680) Cash and Cash Equivalents at Beginning of Period 21,236 34,881 --------------------------- Cash and Cash Equivalents at End of Period $4,171 $21,201 =========================== Interest Paid: $1,795 $638 Income Taxes Paid: $1,084 $1,088 =========================== See notes to the condensed consolidated financial statements.
Page 5 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED OCTOBER 1, 1994 AND OCTOBER 2, 1993 1. The condensed consolidated financial statements include the accounts of the Company and all its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying financial statements are unaudited, but in the opinion of management reflect all adjustments, which include normal recurring accruals, necessary for a fair presentation of the results of operations for the interim period. Because the Company's business is seasonal in nature, the operating results for the three months ended October 1, 1994 and the corresponding period ended October 2, 1993 are not necessarily indicative of results for the fiscal year. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 30, 1994. 3. Inventories as of October 1, 1994 and October 2, 1993 are stated at the lower of FIFO cost or market, as valued by the gross profit method. Inventories as of July 2, 1994 were valued by the retail inventory method. Page 6 of 12 4. As of October 1, 1994, the Company had a deferred tax liability of $7.2 million and a current deferred tax asset of $11.8 million. As of October 2, 1993, the Company had a deferred tax liability of $5.6 million and a current deferred tax asset of $4.5 million. Valuation allowances were not required. Deferred tax assets consisted primarily of certain operating costs, provisions for uncollectible receivables, and certain inventory related costs not currently deductible for tax purposes and tax loss carryforwards. Deferred tax liabilities primarily reflected the excess of tax depreciation over book depreciation. 5. Licensee department sales, included in net sales, amounted to $4.1 million for the three months ended October 1, 1994 compared with $4.0 million for the similar period of fiscal 1994. 6. Other current liabilities primarily consisted of sales tax payable, accrued operating expenses, payroll taxes payable and other miscellaneous items. 7. Certain reclassifications have been made to the prior year's condensed consolidated financial statements to conform to the classifications used in the current year. 8. On December 6, 1993, the Company acquired 100% ownership of a Northeastern regional retail chain (Decelle, Inc.) for approximately $.2 million and at closing repaid Decelle bank debt of approximately $2.1 million. The chain is comprised of eight stores in Massachusetts and New Hampshire. Net sales for the Decelle, Inc. chain amounted to $8.3 million for the first quarter of fiscal 1995. Page 7 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Results of Operations - --------------------- The following table sets forth certain items in the condensed consolidated statements of operations as a percentage of net sales for the three month periods ended October 1, 1994 and October 2, 1993. Percentage of Net Sales Three Months Ended October 1, October 2, 1994 1993 ----------- ------------ Net Sales 100.0% 100.0% Costs and expenses: Cost of sales 64.6 64.6 Selling & administrative expenses 36.9 34.8 Depreciation & amortization 2.1 2.3 Interest expense 1.2 1.0 -------- -------- 104.8 102.7 -------- -------- Other income .7 .9 -------- -------- Loss before income taxes (4.1) (1.8) Income tax benefit 1.6 .6 ________ _________ Net loss (2.5%) (1.2%) ======== ======== Page 8 of 12 Three Months Ended October 1, 1994 and October 2, 1993 - ------------------------------------------------------------ Net sales increased by $58.0 million (24.1%) for the three month period ended October 1, 1994 compared with the similar period a year ago. Comparative store sales increased 2.6%. New Burlington Coat Factory stores opened subsequent to October 2, 1993 contributed $29.4 million to this quarter's sales increase. Stores which were in operation a year ago, but which were closed prior to this year's first quarter contributed $3.0 million to last year's first quarter sales. Specialty stores opened subsequent to last fiscal year's first quarter, including one Totally 4 Kids store, one Baby Depot store, and one Fit for Men store, contributed sales of $1.6 million to this year's first quarter. The Cohoes stores showed a comparative stores sales decrease of 11.8%, while contributing $8.5 million to this year's first quarter sales compared with $9.6 million in last year's first quarter. In addition, one new Cohoes store was opened subsequent to last year's first quarter and contributed $1.3 million to the Company's net sales total. Sales in the quarter for Decelle amounted to $8.3 million. Other income (consisting primarily of rental income from lease departments, investment income and miscellaneous items) decreased $.1 million for the three months ended October 1, 1994 compared with the three months ended October 2, 1993. The decrease is primarily due to a reduction in investment income. Last year's first quarter included a $.2 million gain from the sale of investments. Cost of sales increased by $37.6 million (24.1%) for the three month period ended October 1, 1994 compared with the similar period a year ago. The dollar increase in cost of sales is attributable to comparative store sales increases and to the sales from stores open at October 1, 1994, which were not in operation a year ago. Cost of sales, as a percentage of net sales, for the three month period ended October 1, 1994 and for the similar period of the prior year was 64.6%. Selling and administrative expenses increased by $26.6 million (31.7%) for the three month period ended October 1, 1994 compared with the similar period a year ago, primarily due to an increase in the number of stores in operation. As a percentage of sales, selling and administrative expenses increased to 36.9% for the three months ended October 1, 1994 from 34.8% for the similar period of fiscal 1994 primarily due to increases in payroll, payroll related expenses, and advertising. Interest expense increased $1.2 million to $3.7 million for the three months ended October 1, 1994 compared with the comparable period ended October 2, 1993. This increase is the result of interest charges associated with the borrowings made by the Company under its revolving credit and term loan agreements as well as uncommitted lines of credit. (see Liquidity and Capital Resources). The income tax benefit increased to $4.7 million for the three months ended October 1, 1994, from $1.4 million for the comparable period of a year ago. The effective tax benefit percentages were 38.3% for the three months ended October 1, 1994 and 31.7% for comparable period a year ago. The effective tax benefit increased from the prior year's quarter due to the federal income tax rate increase of 1% in August 1993 retroactive to January 1993 which decreased the prior year effective tax benefit. Page 9 of 12 Net loss increased to $7.5 million for the three months ended October 1, 1994 from $2.9 million for the comparable period of fiscal 1994. Loss per share increased to ($.18) per share compared with ($.07) for the comparable period of a year ago. The Company's business is seasonal, with its highest sales occurring in the months of October, November, and December of each year. The Company's net income generally reflects the same seasonal pattern as its net sales. In the past, substantially all of the Company's profits have been derived from operations during the months of October, November and December. Since mid-September through the first week of November, the weather throughout most of the country has been significantly warmer than last year. This has had an adverse effect on sales, particularly outerwear sales. If this warm trend continues, sales will continue to be affected in the second quarter. Liquidity and Capital Resources During the first quarter of fiscal 1995, the Company opened ten Burlington Coat Factory Warehouse stores. In addition, the Company opened one Specialty Men's Store, "Fit for Men" in New York. The Company estimates spending between $10 million and $17 million to open an additional ten to fifteen Burlington Coat Factory stores, three to six Luxury Linen stores, two to three Totally 4 Kids stores, and two Decelle stores during the remaining nine months of fiscal 1995. Expenditures incurred to set up and fixture new stores through the first quarter of fiscal 1995, were approximately $4.0 million. All locations opened during the period were leased, except two which were purchased for an aggregate of approximately $5.5 million. Net cash used by operating activities of $53.7 million, for the three months ended October 1, 1994, increased from $33.1 million for the comparable period of fiscal 1994. This increase is primarily the result of increases in merchandise inventories associated with the opening of new stores during the period and inventory growth at existing stores. The inventory increases were financed by cash generated from increases in amounts owed to suppliers, and short term borrowings. The Company believes that its current capital expenditure and operating requirements will be satisfied from internally generated funds, and from short-term borrowings under its revolving credit and term loan agreements as well as uncommitted lines of credit. The Company may, consider replacing some of its short term borrowings with long term financing. Furthermore, to the extent that the Company decides to purchase additional store locations, it may be necessary to finance such acquisitions with additional long term borrowings. Page 10 of 12 The Company has in place a committed line of credit agreement in the amount of $40 million. The Company also has uncommitted lines of credit of $140 million. During the first quarter of fiscal 1995 the Company had maximum borrowings of $173.3 million. The average borrowing during this quarter amounted to $92.4 million at an average interest rate of 5.2%. During the first quarter of fiscal 1994 the Company had maximum borrowing of $31.4 million with an average borrowing of $12.1 million at an average interest rate of $3.6%. The increase in borrowings in the first quarter fiscal 1995 over the first quarter of fiscal 1994 reflects the opening of new stores as well as inventory growth at existing stores. The Company's long-term borrowings at October 1, 1994 include $80 million of long term subordinated notes isssued by the Company to institutional investors in June 1990 (the Notes) and an industrial development bond of $10 million issued by the New Jersey Economic Development Authority. The Notes mature on June 27, 2005 and bear interest at the rate of 10.6% per annum. The Notes have an average maturity of ten years and are subject to mandatory prepayment in installments of $8 million each without premium on June 27 of each year beginning in 1996. The Notes are subordinated to senior debt, including, among others, bank debt and indebtedness for borrowed money. The interest rate on the bonds issued in connection with the Company's industrial development bond financing is fixed at 9.78% over the life of these serial and term bonds. The bonds mature at various dates commencing in September 1996 and ending in September 2010. Over the past two years, which has been a period of low inflation, the Company has been able to increase sales volume to compensate for increases in operating expenses. Historically, the Company has been able to increase its selling prices as the costs of merchandising and related operating expenses have increased and therefore, inflation has not had a significant effect on operations. On or about September 23, 1994 three separate class actions were filed against the Company (see Part II - Other Information, Item 1 Legal Proceedings). The Company is unable to determine the probability of any potential loss with respect to these class action suits or the materiality thereof at this time and accordingly has not established any reserve for this matter. New Accounting Standards In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Post Employment Benefits". This pronouncement did not have an effect on the Company's condensed consolidated financial statements as the benefits covered in the pronouncement are not provided by the Company. Page 11 of 12 BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 Legal Proceedings In late September 1994, three class action lawsuits were filed against the Company, Monroe G. Milstein, Stephen E. Milstein and Robert L. LaPenta, Jr. in the United States District Court for the District of New Jersey. Each of the Complaints filed in those lawsuits, P. Gregory Buchanan v. Monroe G. Milstein, et al., Civil Action No. 94-CV-4663, Jacob Turner v. Monroe G. Milstein, et al., Civil Action No. 94-CV-4737, and Ronald Abramoff v. Monroe G. Milstein, et al., Civil Action No. 94-CV-4751 (collectively, the "Class Actions"), seeks unspecified damages in connection with alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Class Action Complaints allege material misstatements and omissions by the Company and certain of its officers and directors that plaintiffs allege caused the Company's common stock to be artificially inflated during the so-called "Class Period," which is defined variously in the Class Action Complaints as the period from November 1, 1993 through September 21, 1994. Although the Company is unable at this time to assess the probable outcome of the Class Actions or the materiality of the risk of loss in connection therewith (given that none of the Class Action Complaints alleges damages with any particularity), the Company believes that the Class Actions are without merit and intends to vigorously defend them. Item 6 Exhibits and Reports on Form 8-K a. Exhibits - None b. No reports on Form 8-K have been filed during the quarter for which this report is filed SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BURLINGTON COAT FACTORY WAREHOUSE CORPORATION /s/ Monroe G. Milstein Monroe G. Milstein President & Chief Executive Officer /s/ Robert L. LaPenta, Jr. Robert L. LaPenta, Jr. Corporate Controller & Chief Accounting Officer Date: November 9, 1994 Page 12 of 12 EX-27 2
5 QTR-1 JUL-01-1995 OCT-01-1994 4,171,000 0 22,604,000 (5,811,000) 659,169,000 728,028,000 299,810,000 (107,282,000) 935,950,000 468,299,000 91,348,000 41,130,000 0 0 320,884,000 935,950,000 299,242,000 301,357,000 193,367,000 193,367,000 115,692,000 817,000 3,682,000 (12,201,000) (4,675,000) (7,526,000) 0 0 0 (7,526,000) (0.18) (0.18)
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