-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KymaqlSKCzWI0jo27x4Ll5Gy0XKPHj7KMiaC4beb/Z4gw3doWxPokZRaE5wg8n7I +gW6m2CZVEEm4OQsKnQ6Yg== 0000786877-97-000007.txt : 19970325 0000786877-97-000007.hdr.sgml : 19970325 ACCESSION NUMBER: 0000786877-97-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970113 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970324 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLS STORES CO /DE/ CENTRAL INDEX KEY: 0000786877 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 311153510 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09505 FILM NUMBER: 97561143 BUSINESS ADDRESS: STREET 1: 15 DAN RD CITY: CANTON STATE: MA ZIP: 02021 BUSINESS PHONE: 6178211000 MAIL ADDRESS: STREET 1: 15 DAN ROAD CITY: CANTON STATE: MA ZIP: 02021 FORMER COMPANY: FORMER CONFORMED NAME: HILLS STORES CO /NEW/ DATE OF NAME CHANGE: 19931103 FORMER COMPANY: FORMER CONFORMED NAME: HILLS STORES CO /NEW/ DATE OF NAME CHANGE: 19931015 FORMER COMPANY: FORMER CONFORMED NAME: THL HOLDINGS INC DATE OF NAME CHANGE: 19870506 8-K 1 1 _______________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 12, 1997 HILLS STORES COMPANY (Exact name of registrant as specified in its charter) Delaware 1-9505 31-1153510 (State or other juris- (Commission (I.R.S. employer diction of incorporation) file number) identification number)
15 Dan Road 02021 Canton, Massachusetts (Zip Code) (Address of principal executive office) Registrant's telephone number, including area code: (617) 821-1000 _______________________________________________________________________________ 2 Item 5. Other Events ------------ On March 12, 1997, Hills Stores Company (the "Company") issued a press release reporting its fourth quarter and annual financial results for fiscal 1996. A copy of the Company's press release is filed as an Exhibit to this Report and incorporated by reference herein. Item 7. Exhibits -------- The following Exhibit is filed as part of this Report: Exhibit Number Title - ------ ----- 99.1 Press Release dated March 12, 1997. 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. HILLS STORES COMPANY By: /s/ C. Scott Litten ------------------------------ Name: C. Scott Litten Title: Executive Vice President - Chief Financial Officer Dated: March 20, 1997 3 EXHIBIT INDEX Pursuant to Item 601 of Regulation S-K Exhibit Number Title - ------ ----- 99.1 Press Release dated March 12, 1997. EX-99.1 2 1 EXHIBIT 99.1 [HILLS STORES COMPANY LETTERHEAD] FINANCIAL PRESS RELEASE FOR IMMEDIATE RELEASE: Investor Inquiries, Contact: - ---------------------- John Doyle Vice President-Treasurer Hills Stores Company (617) 821-1000 ext. 1694 Media Inquiries, Contact: Kathleen A. Obert Senior Vice President Edward Howard & Co. (216) 781-2400 HILLS STORES REPORTS YEAR-END AND FOURTH QUARTER FINANCIAL RESULTS CANTON, MASSACHUSETTS, March 12, 1997 -- Hills Stores Company (NYSE: HDS) announced its fourth quarter and annual financial results for the period ended February 1, 1997. Fiscal year 1996 was a 52-week year for Hills, compared with a 53-week year for fiscal year 1995. The fourth quarter of last year contained an extra fourteenth week. The Company reported a net loss for its fourth fiscal quarter ended February 1, 1997 of $2.9 million, or $0.28 per share on a fully diluted basis, compared with a net profit of $10.4 million, or $0.93 per share, in the fourth quarter last year. This year's fourth quarter included a pretax charge of $22 million ($13.5 million after tax, or $1.31 per fully diluted share) related to the estimated cost of impairment of long-lived assets and the closing of ten stores which the Company announced in January 1997. Fourth quarter earnings before interest, taxes, depreciation, amortization, and other non-cash items (EBITDA) decreased to $58.1 million from $76.7 million last year. (more) 2 HILLS STORES REPORTS ITS ANNUAL FINANCIAL RESULTS/p.2 Total sales for this year's 13-week fiscal quarter were $658.6 million compared with $699.8 million during the 14-week fiscal quarter last year, the decrease primarily related to last year's longer fiscal quarter. Compared with the equivalent 13-week calendar quarter last year, total sales increased by $5.2 million, and comparable store sales increased by 0.9%. Gross profit decreased to $168.3 million from $188.9 million and declined as a percentage of sales to 25.6% from 27.0% last year. Selling and administrative expenses decreased by $2.0 million to $110.5 million from $112.5 million in the fourth quarter of prior year and rose as a percentage of sales to 16.8% from 16.1%. Interest expense declined to $11.1 million from $12.5 million in the fourth quarter of 1995. For the full fiscal year ended February 1, 1997, the Company reported a net loss of approximately $35.1 million, or $3.39 per fully diluted share, compared with last year's net loss of $16.7 million, or $1.66 per fully diluted share. This year's loss included pretax charges of $33.7 million ($20.7 million after tax, or $2.00 per fully diluted share) related to the estimated cost of impair- ment of long-lived assets and store closings. This year's net loss also reflected an extraordinary after-tax loss of $4.3 million, or $0.41 per fully diluted share, from early extinguishments of debt. Last year's net loss included a pretax charge of $45.5 million ($32.5 million after tax, or $3.24 per fully diluted share) for costs related to 1995's change of control. For the fiscal year 1996, EBITDA was $84.7 million compared with $119.3 million last year. Total sales for the 52-week fiscal year ended February 1, 1997, decreased to $1,878.5 million from $1,900.1 million in the 53-week fiscal year ended February 3, 1996. On an equivalent 52-week calendar basis, sales for fiscal year 1995 were $1,881.8 million, and comparable store sales decreased by 1.7%. Gross profit decreased to $486.1 million from $515.7 million and declined as a percentage of sales to 25.9% from 27.1% last year. Selling and administrative expenses increased to $403.5 million from $396.9 million last year, and rose as a percentage of sales to 21.5% from 20.9%, largely due to the full year impact of expenses associated with the mid-year opening of 10 new stores in fiscal year 1995 compared with one new store opened in fiscal year 1996. Interest expense for fiscal year 1996 increased to $53.6 million from $47.7 million in 1995, primarily reflecting 1995's capitalization changes associated with a change in control and with a buy-back of common stock, and also reflecting 1996's refinancing of the Company's long-term Senior Notes. Gregory K. Raven, President and Chief Executive Officer of Hills commented, "We were disappointed with our sales and profit performance in the fourth quarter, and for the year as a whole. While in Fall we were able to turn around a negative sales trend that had developed in the first half of the year, our holiday sales programs did not adequately compensate for the compressed calendar between Thanksgiving and Christmas, and the aggressive promotion environment that came with it. As a result, we had to aggressively markdown excess clearance merchandise at the end of the year, leading to an erosion in gross margins." (more) 3 HILLS STORES REPORTS ITS ANNUAL FINANCIAL RESULTS/p.3 Raven continued, "Despite these setbacks, I am pleased with our ability to end the quarter and year on a positive sales trend. On an equivalent calendar basis, comparable store sales still increased about 1% for the quarter. Our positive sales momentum has continued into early 1997, as evidenced by the 7% comparable store sales increase we posted for the month of February. The rate of new competitive openings affecting our stores decreased significantly as 1996 progressed, and is expected to drop even lower during 1997. In addition, our inventory content and margins entering 1997 are in better shape than they were in 1996. These trends put us in a good position to improve both sales and profit margins during 1997." C. Scott Litten, Executive Vice President and Chief Financial Officer of the Company added, "Our financial liquidity position remains much better than last year. Our year-end cash balances were $66 million, about $43 million better than last year, and this improvement remains with us as we enter March. We have not had any outstanding borrowings on our working capital facility since mid-December, and do not anticipate any borrowings until later this month. This will be over a month later than last year, when we began seasonal borrowings in mid-February." The nation's eighth largest discount retailer, Hills operates stores primarily in the Ohio Valley and Great Lakes regions, with a majority of its stores located in Ohio, Pennsylvania, New York, West Virginia, and Indiana. # # # # 4 Hills Stores Company and Subsidiaries Condensed Consolidated Operating Statements (a) (in thousands, except per share amounts)
Fourth Quarter Year -------------------- ---------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales $ 658,646 $ 699,785 $1,878,477 $1,900,104 Cost of Sales 490,307 510,847 1,392,353 1,384,421 Selling and Administrative Expenses 110,470 112,466 403,522 396,915 Depreciation and amortization 10,046 10,434 40,121 39,052 Impairment of long-lived assets and store closings (b) 22,000 - 33,706 - Costs related to change in control (c) - 2,237 - 45,529 --------- --------- ---------- ---------- Operating earnings (loss) 25,823 63,801 8,775 34,187 Interest expense, net 11,132 12,528 53,555 47,666 --------- --------- ---------- ---------- Income (loss) before income taxes 14,691 51,273 (44,780) (13,479) Income tax provision (benefit) 17,608 40,873 (14,000) 3,187 --------- --------- ---------- ---------- Income (loss) before extraordinary loss (2,917) 10,400 (30,780) (16,666) Extraordinary loss on early extinguishments of debt, net - - 4,278 - --------- --------- ---------- ---------- Net Income (Loss) $ (2,917) $ 10,400 $ (35,058) $ (16,666) ========= ========= ========== ========== Earnings (loss) per share - Before extraordinary loss $ (0.28) $ 0.93 $ (2.98) $ (1.66) Extraordinary loss - - (0.41) - --------- --------- ---------- ---------- Net Income (Loss) $ (0.28) $ 0.93 $ (3.39) $ (1.66) ========= ========= ========== ========== Shares Outstanding (d) 10,388 11,221 10,336 10,029 Earnings before interest, taxes, depreciation, amortization and other non-cash charges (EBITDA) $ 58,149 $ 76,687 $ 84,653 $ 119,344
5 Hills Stores Company and Subsidiaries Condensed Consolidated Balance Sheets (a) (in thousands)
February 1, February 3, 1997 1996 ----------- ----------- ASSETS: Current Assets: Cash and cash equivalents $ 66,163 $ 22,898 Accounts receivable, net 24,346 25,187 Inventories 341,477 331,697 Deferred tax asset 46,491 34,011 Other current assets 5,115 5,352 ----------- ----------- Total current assets 483,592 419,145 Property, equipment, and capital lease assets, net 285,902 304,678 Beneficial lease rights, net 6,848 8,247 Deferred tax asset 8,085 8,233 Reorganization value in excess of amounts allocated to identifiable assets, net 97,508 107,514 Other assets, net 18,418 15,746 ----------- ----------- Total Assets $ 900,353 $ 863,563 =========== =========== LIABILITIES AND COMMON SHAREHOLDERS' EQUITY: Current liabilities: Current portion of capital leases $ 7,255 $ 5,732 Borrowings under the revolving credit facility - - Accounts payable, trade 111,064 87,471 Other accounts payable and accrued expenses 182,018 178,852 ----------- ----------- Total current liabilities 300,337 272,055 Long-term senior notes 195,000 160,000 Capital lease and sale/leaseback financing 154,639 143,945 Other liabilites 5,651 8,264 Preferred stock, at mandatory redemption value 19,942 24,636 Common shareholders' equity 224,784 254,663 ----------- ----------- Total Liabilities and Shareholders' Equity $ 900,353 $ 863,563 =========== ===========
6 Hills Stores Company and Subsidiaries Notes to Condensed Financial Statements February 1, 1997 a) The condensed consolidated financial information should be read in con- junction with the notes to the consolidated financial statements in the Company's annual report on Form 10-K and the quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. The presentation of prior year financial statement amounts have been reclassified to conform with current year presentation. b) Represents charges and costs associated with the Company's adoption in fiscal year 1996 of SFAS No. 121 "Accounting for the Impairment of Long- lived Assets and for Long-lived Assets to Be Disposed Of," and with the Company's decision in January 1997 to close 10 stores. For the fourth quarter, the after-tax impact of the charge was $13.5 million, or $1.31 per share, while for the year, the after-tax impact of the charge was $20.7 million, or $2.00 per share. c) Related to severance expenses paid to certain senior officers and employees of the Company, and legal and other expenses, associated with the July 1995 change of control. For the year, the after-tax impact of the charge was $32.5 million, or $3.24 per share. d) Earnings per share presented on a fully diluted basis only, as differences from primary earnings per share are not significant. Fully-diluted average shares outstanding for the fiscal quarter and year ended February 1, 1997 do not include 997,121 shares of preferred stock, and the fiscal year ended February 3, 1996 does not include 1,231,795 shares of preferred stock, as the effect of the inclusion of such additional shares would be anti- dilutive. e) Additional Information (in thousands): For the Fourth Quarter For the Year ---------------------- -------------------- 1996 1995 1996 1995 ------- ------- -------- -------- Capital expenditures $ 6,700 $ 6,163 $ 32,858 $ 56,714 Other non-cash items to arrive at EBITDA 280 215 2,051 576 Cash Interest payments $18,838 $ 6,064 $ 50,122 $ 38,705 Percent to sales - Gross profit margin 25.6% 27.0% 25.9% 27.1% SG&A 16.8% 16.1% 21.5% 20.9%
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