-----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, ekYncuaz3fhdLZdoxVyK76kvwD5aHNCIJywkPB6/PWPP5xyIDGlfNp/awhKKVHjl y2PEpPZZ/nMeo2Tftewm2A== 0000077808-94-000006.txt : 19940928 0000077808-94-000006.hdr.sgml : 19940928 ACCESSION NUMBER: 0000077808-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940730 FILED AS OF DATE: 19940913 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETRIE STORES CORP CENTRAL INDEX KEY: 0000077808 STANDARD INDUSTRIAL CLASSIFICATION: 5621 IRS NUMBER: 362137966 STATE OF INCORPORATION: NY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06166 FILM NUMBER: 94548856 BUSINESS ADDRESS: STREET 1: 70 ENTERPRISE AVE CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2018663600X1480 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended July 30, 1994 Commission File Number 1-6166 PETRIE STORES CORPORATION (Exact Name of Registrant as specified in its Charter) New York 36-2137966 (State of Incorporation) (I.R.S. Employer Identification No.) 70 Enterprise Avenue Secaucus, New Jersey 07094 (Address of principal (Zip Code) executive offices) (201) 866-3600 NONE ---- (Registrant's Telephone Number) Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO _ - Number of shares outstanding at July 30, 1994, 46,774,900 shares, $1.00 par value, common stock. 1 0f 13 PETRIE STORES CORPORATION AND SUBSIDIARIES INDEX PAGE NO. -------- Part I - Financial Information (Unaudited): Consolidated Balance Sheets July 30, 1994 and January 29, 1994 ................... 3 & 4 of 13 Consolidated Operations - Three Months and Six Months Ended July 30, 1994 and July 31, 1993................ 5 of 13 Consolidated Additional Paid-In Capital and Consolidated Retained Earnings - Six Months Ended July 30, 1994.................................. 6 of 13 Consolidated Cash Flows - Six Months Ended July 30, 1994 and July 31, 1993................ 7 of 13 Notes................................................ 8 & 9 of 13 Management's Discussion and Analysis of Financial Condition and Results of Operations.................10 & 11 of 13 Part II - Other Information................................... 12 of 13 Signature..................................................... 12 of 13 Exhibits: Exhibit A - Independent Accountants' Report - David Berdon & Co................................... 13 of 13 2 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- (In thousands of dollars) July 30, January 29, 1994 1994 ---- ---- ASSETS (Unaudited) Current Assets: Cash and short-term investments.................. $ 27,336 $ 39,290 Investments in common stock (Note 2)............. 0 35,740 Accounts receivable: Trade, less allowance for doubtful accounts of $2,450......................................... 53,194 49,999 Other........................................... 11,677 13,745 Merchandise inventories.......................... 231,762 187,627 Prepaid expenses and sundry receivables ......... 19,101 6,887 Deferred income taxes............................ 7,456 7,456 ------ ------ TOTAL CURRENT ASSETS........................ 350,526 340,744 ------- ------- Investments: Investments in common stock (Notes 2 and 3)...... 1,369,961 1,481,937 --------- --------- Property and Equipment, at Cost: Land............................................. 2,777 2,777 Buildings and improvements....................... 16,398 16,157 Leasehold costs, improvements, store fixtures and equipment....................................... 617,211 588,450 ------- ------- 636,386 607,384 Less accumulated depreciation and amortization... 366,875 339,409 ------- ------- 269,511 267,975 ------- ------- Excess of Cost Over the Fair Value of Net Assets Acquired, Less accumulated amortization of $29,646 at 7/30/94 and $28,176 at 1/29/94.................. 88,132 89,602 ------ ------ Other Assets: Debt issuance costs, less accumulated amortization of $608 at 7/30/94 and $574 at 1/29/94........... 1,121 1,155 Other............................................. 6,369 6,394 ----- ----- 7,490 7,549 ----- ----- $2,085,620 $2,187,807 ========= ========= See notes to consolidated financial statements. 3 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- (In thousands of dollars) July 30, January 29, 1994 1994 ---- ---- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings.............................. $ 46,477 $ 20,000 Accounts payable................................... 37,468 26,993 Accrued expenses and other liabilities............. 38,536 44,917 ------ ------ TOTAL CURRENT LIABILITIES 122,481 91,910 ------- ------ Long-Term Liabilities: Convertible subordinated debentures................ 124,811 124,952 Deferred income taxes (Note 2)..................... 554,708 600,678 Other.............................................. 5,384 5,704 ------- ------- 684,903 731,334 ------- ------- Commitments and Contingencies (Note 5) Shareholders' Equity: Common stock, par value $1 per share: authorized 80,000,000 shares, issued 46,776,569 shares at 7/30/94 and 46,770,202 shares at 1/29/94......... 46,777 46,770 Additional paid-in capital........................ 94,107 93,973 Retained earnings................................. 443,457 462,079 Unrealized gain on investment in common stock, net (Note 2)..................................... 693,931 761,777 ------- ------- 1,278,272 1,364,599 Less: Treasury stock - at cost (1,669 shares)........... 36 36 --------- -------- TOTAL SHAREHOLDERS' EQUITY................... 1,278,236 1,364,563 --------- --------- $2,085,620 $2,187,807 ========= ========= See notes to consolidated financial statements. 4 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED OPERATIONS (UNAUDITED) ----------- (In thousands except per share amounts) Three Months Ended Six Months Ended ------------------ ---------------- July 30, July 31, July 30, July 31, 1994 1993 1994 1993 ---- ---- ---- ---- Revenues: Net Sales.................... $360,387 $362,331 $697,912 $694,113 Other Income................. 1,168 1,576 2,446 3,492 ------- ------- ------- ------- 361,555 363,907 700,358 697,605 ------ ------- ------- ------- Cost of Goods Sold, Buying and Occupancy Costs............... 292,730 291,278 540,048 536,101 Selling, General and Administrative Expenses....... 89,104 90,571 174,575 173,770 Interest Expense............... 2,765 2,685 5,702 5,300 Nonrecurring Expenses (Note 3). 1,972 0 3,272 0 Restructuring Charge........... 0 35,000 0 35,000 ----- ------ ----- ------ 386,571 419,534 723,597 750,171 ------- ------- ------- ------- (Loss) from Investment in Common Stock.......................... 0 0 0 (13,661) ------- ------ ------- -------- (Loss) from Continuing Operations Before Income Taxes and Cumulative Effect of Accounting Change for Income Taxes........ (25,016) (55,627) (23,239) (66,227) ------- ------- ------- ------- Income Taxes: Federal....................... (6,317) (10,647) (5,697) (10,043) State and Local............... (1,530) (2,285) (1,423) (2,041) Deferred...................... (2,324) (10,300) (2,176) (15,270) ------- -------- ------- -------- (10,171) (23,232) (9,296) (27,354) -------- -------- ------- -------- (Loss) before Cumulative Effect of Accounting Change for Income Taxes.......................... (14,845) (32,395) (13,943) (38,873) Cumulative Effect of Accounting Change for Income Taxes........ 0 0 0 2,800 ------- ------- ------ ------ Net (Loss)...................... $(14,845) $(32,395) $(13,943)$(36,073) ======= ======= ====== ====== Earnings (Loss) per Share (Note 4): (Loss) before Cumulative Effect of Accounting Change for Income Taxes......................... $(.32) $(.69) $(.30) $(.83) Cumulative Effect of Accounting Change for Income Taxes....... 0 0 0 .06 ---- ---- ---- ---- Net (Loss)..................... $(.32) $(.69) $(.30) $(.77) ===== ===== ===== ===== Dividends Per Share.............. $.05 $.05 $.10 $.10 ===== ===== ===== ===== Weighted Average Number of Shares 46,774 46,768 46,772 46,768 ====== ====== ====== ======
See notes to consolidated financial statements. 5 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED ADDITIONAL PAID-IN CAPITAL (Unaudited) ----------- (In thousands of dollars) Balance January 30, 1994................................... $ 93,973 Conversion of debentures................................... 134 ------ Balance July 30, 1994...................................... $ 94,107 ====== PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED RETAINED EARNINGS (Unaudited) ----------- (In thousands of dollars) Balance January 30, 1994...................................... $ 462,079 Net (loss) for the six months ended July 30, 1994............. (13,943) Cash dividends on common stock................................ (4,679) ------- Balance July 30, 1994......................................... $ 443,457 ======= See notes to consolidated financial statements. 6 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED CASH FLOWS (Unaudited) ----------- (In thousands of dollars) Six Months Ended ---------------- July 30, July 31, 1994 1993 ---- ---- Cash flows from operating activities: Net (loss)................................. $ (13,943) $ (36,073) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Depreciation and amortization of property and equipment........................... 27,466 30,549 Other amortization....................... 1,562 1,562 Loss on disposal of property and equipment 0 23,625 Compensation in connection with stock options................................. 0 339 Loss from investment in common stock..... 0 13,661 Deferred taxes........................... (2,176) (15,270) Cumulative effect of accounting change for income taxes............................ 0 (2,800) Changes in assets and liabilities: (Increase) in: Accounts receivable.................... (1,127) (8,421) Merchandise inventories................ (44,135) (59,322) Prepaid expenses and sundry receivables (12,214) (3,986) Other assets........................... (33) (3,739) Increase (decrease) in: Accounts payable....................... 10,475 15,527 Accrued expenses and other liabilities. (6,381) 2,486 Income taxes........................... 0 (9,231) Other long-term liabilities............ (320) 3,702 Proceeds from sale of investment in common stock-trading securities................. 36,076 0 ------ ----- Net cash (used in) operating activities..... (4,750) (47,391) ------ ------ Cash flows from investing activities: Additions to property and equipment........ (29,002) (35,141) Sale of investments........................ 0 5,254 ------ ------ Net cash (used in) investing activities..... (29,002) (29,887) ------- -------- Cash flows from financing activities: Net short-term borrowings.................. 26,477 15,000 Cash dividends............................. (4,679) (4,676) ------ ------ Net cash provided by financing activities... 21,798 10,324 ------ ------ Net (decrease) in cash and short-term investments................................ (11,954) (66,954) Cash and short-term investments - beginning of period.................................. 39,290 82,270 ------ ------ Cash and short-term investments - end of period..................................... $ 27,336 $ 15,316 ====== ====== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest................................... $ 5,077 $ 5,221 Income taxes............................... $ 1,158 6,010 Supplemental disclosure of noncash investing and financing activities: $141,000 of Convertible Subordinated Debentures were exchanged for 6,367 shares of the Company's common stock during the six months ended July 30, 1994. See notes to consolidated financial statements. 7 of 13 PETRIE STORES CORPORATION AND SUBSIDIARIES ------------------------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - - ----- In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of July 30, 1994 and the results of operations for the three and six months ended July 30, 1994 and July 31, 1993 and cash flows for the six months ended July 30, 1994 and July 31, 1993. The results of operations for the six months ended July 30, 1994 are not necessarily indicative of the results to be expected for the full year. Note 2 - Investments in Common Stock - - ------------------------------------ At July 30, 1994, the Company's investment in common stock consists of Toys "R" Us, Inc. ("Toys") (39,853,403 shares - 13.99%) - A chain of toy specialty retail stores. Effective January 29, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Accordingly, investments in common stock classified as available for sale securities are being carried at market value of $1,369,961,000 with the unrealized gain of $693,931,000 ($1,214,931,000 less deferred income taxes of $521,000,000) included in shareholders' equity at July 30, 1994. At January 29, 1994, the unrealized gain of $761,777,000 ($1,326,777,000 less deferred income taxes of $565,000,000) was credited to shareholders' equity. Note 3 - Nonrecurring Expenses - - ------------------------------ Nonrecurring expenses relate primarily to legal and real estate consulting expenses incurred in connection with the acquisition agreement entered into with Toys in April 1994 (See Note 5). Note 4 - Earnings (Loss) Per Share - - ---------------------------------- Primary earnings (loss) per share has been computed based on the weighted average number of shares outstanding. Fully diluted earnings per share has been computed based on the weighted average number of common and common equivalent shares outstanding assuming exercise of dilutive stock options computed by the treasury stock method and the conversion of the 8% Convertible Subordinated Debentures after elimination of interest (net of taxes) on the convertible debentures. Fully diluted earnings per share are not presented for the three months and six months ended July 30, 1994 and three months and six months ended July 31, 1993 as the effect would be anti-dilutive. Weighted average number of shares for computing fully diluted earnings per share was as follows: Three Months Ended Six Months Ended ------------------ ----------------- July 30, 1994 July 31, 1993 July 30, 1994 July 31, 1993 ------------- ------------- ------------- ------------- 52,414,000 52,416,000 52,411,000 52,463,000 Note 5 - Commitments and Contingencies - - --------------------------------------- On August 23, 1994, the Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with an investor group ("Buyer"). Pursuant to the Stock Purchase Agreement, Buyer will purchase the shares of common stock (the "Stock Purchase") in a Delaware subsidiary of the Company ("Retail Holding Company"), to which all of the retail operations of the Company will have been transferred prior to the closing date of the Stock Purchase. The purchase price will be $190 million in cash (the "Purchase Price"). The closing of the Stock Purchase is conditioned upon, among other things, the closing of the Company's share exchange transaction with Toys "R" Us, Inc. ("Toys"), pursuant to an Acquisition Agreement between the Company and Toys, dated as of April 20, 1994 (the "Toys Agreement"). The Toys Agreement provides that the Company will transfer all of the common stock, par value $.10 per share, of Toys ("Toys Shares") held by the Company and its subsidiaries and cash to Toys in exchange for Toys Shares with an equivalent value, less approximately $115 million. The closing of the transaction with Toys is conditioned upon, among other things, the disposition of the Company's retail operations in a manner to be determined by the Company's Board of Directors and the Company receiving a private letter ruling from the Internal Revenue Service to the effect that the transactions contemplated by the Toys Agreement will not give rise to the recognition by the Company, its shareholders or Toys of a material amount of taxable income (the "IRS Ruling"). The Company does not have sufficient information available to determine if it is probable that it will receive a favorable IRS Ruling. The Company's 8 of 13 obligations under both agreements are also conditioned upon, among other things, the Company reducing its contingent liabilities, primarily retail lease guarantees, to less than $200 million and the approval of the transactions contemplated by both agreements by the holders of two-thirds of the Company's outstanding common shares. As part of the Stock Purchase, Buyer will assume a substantial portion of the Company's liabilities and the Company will retain certain contingent liabilities. Promptly after the closing of the transaction with Toys and the Stock Purchase, the Company will liquidate and distribute to its shareholders all of the Toys Shares received in the exchange, except an amount to be held in a liquidating trust to cover the Company's contingent liabilities at the closing of the Toys transaction. The Buyer's obligations to close the Stock Purchase are conditioned upon, among other things, its receipt of financing and the Company's receipt of sufficient consents from landlords. The Stock Purchase may be terminated if it is not consummated by January 31, 1995. If the above-mentioned transactions do occur, the result would be the complete liquidation and dissolution of the Company, through the establishment of the Liquidating Trust and the distribution to the Company's shareholders of Toys common stock received by the Company in the Exchange, and pro rata interests in the Liquidating Trust. These transactions will be recorded as a dividend and result in a reduction in the equity of the Company to zero. In addition, at such time, when it becomes probable that these transactions will occur, the Company would recognize a loss on the disposition of its retail operations based upon the difference between the consideration received on the sale and the carrying value of such retail operations. The loss is currently estimated to be approximately $400 million. 9 of 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- Revenues - - ------- Net sales decreased $1,944,000 (.5%) and increased $3,799,000 (.5%) for the three-month and six-month periods ended July 30, 1994 as compared to the corresponding periods last year. The decrease for the three-month period was due to a decrease in comparable store sales of approximately $5,000,000 (1.5%) offset by an increase in non comparable store sales of approximately $3,100,000. The increase for the six-month period was due to an increase in non comparable store sales of approximately $11,300,000 offset by a decrease of $7,500,000 (1.2%) in comparable store sales. Other income decreased $408,000 and $1,046,000 for the three-month and six-month periods ended July 30, 1994 as compared to the corresponding periods last year due to a decrease in temporary investments. Cost of Goods Sold, Buying and Occupancy Costs (CGS) - - ---------------------------------------------------- As a percentage of sales, CGS increased .8% for the three-month period ended July 30, 1994 as compared to the corresponding period last year primarily due to a 1.6% decrease in gross margin, offset by a .3% decrease in occupancy costs and a .4% decrease in buying and distribution costs. As a percentage of sales, CGS increased .2% for the six-month period ended July 30, 1994 as compared to the corresponding period last year primarily due to a .7% decrease in gross margin as a result of increased markdowns, offset by a .1% decrease in occupancy costs and a .4% decrease in buying and distribution costs. Selling, General & Administrative Expenses (S,G&A) - - -------------------------------------------------- S,G&A as a percentage of sales decreased .3% for the three-month period ended July 30, 1994 as compared to the corresponding period last year primarily due to a decrease of .2% in costs associated with store closings, a decrease of .2% in depreciation, a decrease of .2% in costs associated with processing the Company's private label credit cards and a decrease of .2% in various costs in servicing the stores offset by an increase of .6% in payroll and employee related costs. S,G&A as a percentage of sales was approximately the same for the six-month period ended July 30, 1994 as compared to the corresponding period last year. An increase of .5% in payroll and employee related costs was offset by a decrease of .1% in depreciation, a decrease of .1% in costs associated with store closings and a decrease of .2% in costs associated with processing the Company's private label credit cards. Interest Expense - - ---------------- Interest expense relates primarily to the 8% Convertible Subordinated Debentures. The increase in interest expense during the three-month and six-month periods ended July 30, 1994 as compared to the corresponding periods last year is due to interest expense associated with the Company's short-term borrowings. Nonrecurring Expenses - - --------------------- Nonrecurring expenses relate primarily to legal and real estate consulting expenses in connection with the acquisition agreement with Toys (See Notes 3 and 5). Restructuring Charge - - -------------------- As part of the Company's review of its operations in fiscal 1994, management had identified approximately 290 stores it expected to close over the next few years. The restructuring charge of $35,000,000 related primarily to the write-down of fixed assets and lease settlements associated with these expected store closings over the next few years. In connection with this restructuring plan, the Company closed 41 stores during the six-month period ended July 30, 1994. Costs in connection with these stores along with severance payments made during the six months ended July 30, 1994 accounts for approximately $4,500,000 of the original $35,000,000 restructuring provision. The remaining restructuring provision for stores not yet closed and severance payments not yet due amount to approximately $18,500,000 as of July 30, 1994. The only significant cost savings due to the restructuring was a reduction in depreciation expense for the three-month and six-month periods ended July 30, 1994 of approximately $1,300,000 and $2,300,000, respectively as a result of the elimination of depreciation expense associated with the stores that have not yet been closed as of July 30, 1994. (Loss) From Investment in Common Stock - - -------------------------------------- The loss from investment in common stock represents the write-down of the Company's investment in Deb Shops, Inc. ("Debs") to market value as of May 1, 1993. Income Taxes - - ------------ The provision for income taxes as a percentage of (loss) before income taxes decreased for the three-month and six-month periods ended July 30, 1994 as compared to the corresponding periods last year primarily due to an increase in expenses producing no tax benefit. 10 of 13 Cumulative Effect of Accounting Change for Income Taxes - - ------------------------------------------------------- Effective January 31, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which resulted in a deferred tax benefit of $2,800,000, or $.06 per share for the six months ended July 31, 1993. Liquidity and Capital Resources - - ------------------------------- Pursuant to the acquisition agreement with Toys the Company has restricted its ability to sell shares of Toys common stock to 4,000,000 shares and has restricted its ability to pledge such shares in connection with borrowings to $175,000,000 in secured borrowings. Pursuant to the stock purchase agreement with the investor group, the Company has agreed to maximum monthly working capital borrowings under a short-term agreement with a broker. These maximum monthly borrowings range from $10,000,000 to $150,000,000. As of July 30, 1994 the Company had $46,477,000 outstanding under this short-term borrowing agreement. These borrowings were used for capital expenditures, inventory and general working capital requirements. The Company has $72,500,000 in lines of credit available, principally for establishing letters of credit with its suppliers. The Company believes that the foregoing arrangements will be adequate for the cash needs of the Company to fund operations, capital expenditures and dividends during the balance of the current fiscal year. The Company's holdings in Debs were sold in early April 1994 for approximately $16,800,000 and it also sold a small portion of its holdings in Toys during June 1994 for approximately $19,200,000 to offset the loss from the sale of Debs stock, with the proceeds from these sales used to reduce short-term borrowings. The decreases in investment in common stock classified as available for sale securities, deferred income taxes and unrealized gain on investment in common stock, net from January 29, 1994 is the result of the decrease in the market value per share of Toys. The Company's merchandise inventories are historically lower at the end of its fiscal year as compared to the end of its second quarter due to the seasonal nature of the Company's business. The Company has budgeted approximately $45,000,000 for capital expenditures during fiscal 1995 which includes approximately $13,000,000 for new Point of Sale Registers and associated technology. The funds will be provided by working capital and short-term borrowing arrangements. In connection with its Convertible Subordinated Debentures, the Company is obligated to call such debentures pursuant to the acquisition agreement with Toys. The following items measure the Company's ability to meet its short-term obligations: July 30, 1994 January 29, 1994 ------------- ---------------- Working capital* $228,045,000 $248,834,000 Current ratio 2.9 3.7 *Working capital consists of current assets less current liabilities. The Company's current ratio has decreased as a result of the Company's loss for the six months ended July 30, 1994. See the Consolidated Statements of Cash Flows for an analysis of the sources and uses of funds for the six months ended July 30, 1994 as compared to the corresponding period last year. 11 of 13 PART II - OTHER INFORMATION --------------------------- Item 6 - Exhibits and Reports on Form 8-K (b) There were no reports on Form 8-K filed during the three months ended July 30, 1994. - There was a Form 8-K filed on August 23, 1994 regarding the stock purchase agreement the Company entered into with an investment group. SIGNATURE 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. PETRIE STORES CORPORATION ------------------------- (registrant) September 12, 1994 /S/ Peter A. Left ---------------------------- BY Peter A. Left, Vice Chairman, Chief Operating Officer, Chief Financial Officer and Secretary. 12 of 13 INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- To The Board of Directors Petrie Stores Corporation We have reviewed the accompanying consolidated balance sheet of Petrie Stores Corporation and subsidiaries as of July 30, 1994 and the related consolidated statements of operations for the three-month and the six-month periods ended July 30, 1994 and July 31, 1993, and the consolidated statements of cash flows for the six month periods ended July 30, 1994 and July 31, 1993, and the consolidated statements of additional paid-in capital and retained earnings for the six months ended July 30, 1994. These financial statements are the responsibility of the company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as at January 29, 1994 (presented herein), and the related consolidated statements of earnings, shareholders' equity and cash flows for the year then ended (not presented herein), and in our report, dated March 24, 1994, we expressed an unqualified opinion on those consolidated financial statements. David Berdon & Co. Certified Public Accountants New York, New York September 9, 1994 13 of 13 -----END PRIVACY-ENHANCED MESSAGE-----