-----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, E7PGRf3bArwyol7HJcaZiwOukJ5mi1/Xv5RJ78nfoHflfwG18+YP9oYM/lQJeow6 6ZeJqp0ZkFv1Nh255P1i/g== 0000786877-97-000019.txt : 19970912 0000786877-97-000019.hdr.sgml : 19970912 ACCESSION NUMBER: 0000786877-97-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970802 FILED AS OF DATE: 19970910 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-09505 FILM NUMBER: 97678032 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 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE - ----- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 2, 1997 - ----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------- COMMISSION FILE NUMBER 1-9505 ----------------------------- HILLS STORES COMPANY --------------------- (Exact name of registrant as specified in its charter) DELAWARE 31-1153510 -------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 15 DAN ROAD, CANTON, MASSACHUSETTS 02021 ---------------------------------- ----- (Address of principal executive offices) (Zip Code) 617-821-1000 ------------- (Registrant's telephone number, including area code) 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 -------- -------- Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES X NO -------- -------- The number of shares of common stock outstanding as of August 31, 1997 was 10,350,237 shares. HILLS STORES COMPANY AND SUBSIDIARIES TABLE OF CONTENTS ----------------- PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of August 2, 1997, February 1, 1997, and August 3, 1996 3 Condensed Consolidated Statements of Operations for the Thirteen and Twenty-six Weeks Ended August 2, 1997 and August 3, 1996 4 Condensed Consolidated Statements of Cash Flows for the Twenty-six Weeks Ended August 2, 1997 and August 3, 1996 5 Notes to Condensed Consolidated Financial Statements 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 PART II - OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS 12 ITEM 2: CHANGES IN SECURITIES 12 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 13
2 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS
August 2, February 1, August 3, (in thousands) 1997 1997 1996 - ------------------------------------------------------------------------------- (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 17,183 $ 66,163 $ 23,374 Accounts receivable, net 31,986 24,346 50,077 Inventories 426,658 341,477 458,094 Deferred and interim tax assets 55,072 46,491 63,918 Other current assets 5,140 5,115 6,318 -------- -------- ---------- Total current assets 536,039 483,592 601,781 Property and equipment, net 174,639 173,701 184,439 Property under capital leases, net 107,231 112,201 109,619 Beneficial lease rights, net 6,465 6,848 7,581 Deferred tax asset 13,289 8,085 8,233 Reorganization value in excess of amounts allocable to identifiable assets, net 94,573 97,508 103,648 Other assets, net 27,173 18,418 19,691 -------- -------- ---------- $959,409 $900,353 $1,034,992 ======== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 7,430 $ 7,255 $ 6,428 Borrowings under revolving credit facility 55,000 - 95,000 Accounts payable, trade 152,253 111,064 150,459 Other accounts payable and accrued expenses 174,066 182,018 175,969 -------- -------- ---------- Total current liabilities 388,749 300,337 427,856 Senior Notes 195,000 195,000 195,000 Capital lease and other financing obligations 151,340 154,639 152,428 Other liabilities 5,356 5,651 7,304 Preferred stock, at mandatory redemption value (Note 2) 18,429 19,942 21,421 Common shareholders' equity 200,535 224,784 230,983 -------- -------- ---------- $959,409 $900,353 $1,034,992 ======== ======== ==========
See Notes to Condensed Consolidated Financial Statements 3
HILLS STORES COMPANY AND SUBSIDIARIES - ----------------------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Thirteen Weeks Ended Twenty-six Weeks Ended -------------------- ---------------------- (unaudited) August 2, August 3, August 2, August 3, (in thousands, except per 1997 1996 1997 1996 share amounts) - ----------------------------------------------------------------------------------------- Net sales $349,269 $388,600 $702,773 $758,848 Cost of sales 263,121 290,909 519,841 561,894 Selling and administrative expenses 98,344 103,767 197,524 206,477 Amortization of reorganization value in excess of amounts allocable to identifiable assets 1,463 1,510 2,925 3,031 Impairment of long-lived assets - - - 11,706 (Note 6) -------- -------- -------- -------- Operating loss ( 13,659) ( 7,586) ( 17,517) ( 24,260) Interest expense, net ( 12,060) ( 15,466) ( 23,322) ( 28,732) -------- -------- -------- -------- Loss before income taxes ( 25,719) ( 23,052) ( 40,839) ( 52,992) Income tax benefit (Note 4) 9,600 12,731 14,900 27,933 -------- -------- -------- -------- Loss before extraordinary loss ( 16,119) ( 10,321) ( 25,939) ( 25,059) Extraordinary loss on extinguishment - ( 2,046) - ( 2,046) of debt, net (Note 7) -------- -------- -------- -------- Net loss ($ 16,119) ($ 12,367) ($ 25,939) ($ 27,105) ======== ======== ======== ======== Primary loss per share (Note 3): Before extraordinary loss ($ 1.56) ($ 1.01) ($ 2.51) ($ 2.45) Extraordinary loss - ( .20) - ( .20) -------- -------- -------- -------- Net loss per share ($ 1.56) ($ 1.21) ($ 2.51) ($ 2.65) ======== ======== ======== ======== Fully-diluted loss per share (Note 3): Before extraordinary loss ($ 1.55) ($ 1.01) ($ 2.49) ($ 2.45) Extraordinary loss ( -) ( .20) ( -) ( .20) -------- -------- -------- -------- Net loss per share ($ 1.55) ($ 1.21) ($ 2.49) ($ 2.65) ======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements 4 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty-Six Weeks Ended -------------------------- (unaudited) August 2, August 3, (in thousands) 1997 1996 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($ 25,939) ($ 27,105) Adjustments to reconcile net loss to net cash used for operating activities before reorganization items: Depreciation and amortization 18,204 17,616 Amortization of deferred financing costs 1,252 3,812 Amortization of reorganization value in excess of amounts allocable to identifiable assets 2,925 3,031 Loss on disposal of fixed assets 28 797 Extraordinary loss on extinguishment of Debt - 2,046 Impairment of long-lived assets - 11,706 Increase in accounts receivable and other current assets ( 7,665) ( 25,856) Increase in inventories ( 85,181) ( 126,397) Increase in accounts payable and accrued expenses 33,133 60,652 Increase in income taxes ( 14,900) ( 28,456) Decrease in deferred tax asset 1,115 - Other, net 187 ( 321) -------- --------- Net cash used for operating activities ( 76,841) ( 108,475) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 13,337) ( 17,667) Deferred software expenditures ( 10,183) - -------- --------- Net cash used for investing activities ( 23,520) ( 17,667) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit facility 55,000 95,000 Principal payments under capital lease obligations ( 3,124) ( 3,460) Proceeds from issuance of 12 1/2% Senior Notes - 195,000 Payment of debt premium - ( 1,749) Fees incurred with the issuance of 12 1/2% Senior Notes - ( 8,100) Redemption of 10.25% Senior Notes - ( 160,000) Fixture and equipment financing - 12,639 Cash distributions pursuant to the Plan of Reorganization ( 84) ( 1,620) Other ( 411) ( 1,092) -------- --------- Net cash provided by financing activities 51,381 126,618 -------- --------- Net increase (decrease) in cash and cash equivalents ( 48,980) 476 Cash and cash equivalents at beginning of period 66,163 22,898 -------- --------- Cash and cash equivalents at end of period $ 17,183 $ 23,374 ======== =========
See Notes to Condensed Consolidated Financial Statements 5 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION --------------------- The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary to present a fair statement of the results for the interim period. The accompanying unaudited condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all the disclosures normally required by generally accepted accounting principles nor those normally made in the Company's annual Form 10-K filing. Reference should be made to the Company's Annual Report on Form 10-K for additional disclosures, including a summary of the Company's accounting policies. The Company's business is seasonal in nature and the results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full fiscal year. The fourth quarter of each fiscal year provides the most significant portion of the Company's annual sales and most of its operating earnings, with operating earnings particularly concentrated in the Christmas selling season. 2. HILLS STORES SERIES A CONVERTIBLE PREFERRED STOCK ------------------------------------------------- During the twenty-six weeks ended August 2, 1997, 75,640 shares of the Company's Series A Convertible Preferred Stock ($20 par value) were converted to the Company's Common Stock on a share for share basis. 3. EARNINGS PER SHARE ------------------ Primary loss per share for the thirteen week periods ended August 2, 1997 and August 3, 1996 was computed based on the weighted average number of common shares assumed to be outstanding during the period of 10,358,807 and 10,263,118 shares, respectively. Fully diluted loss per share for the thirteen week periods ended August 2, 1997 and August 3, 1996 was computed based on the weighted average number of common shares assumed to be outstanding during the period of 10,413,400 and 10,263,118 shares, respectively. Primary loss per share for the twenty-six week periods ended August 2, 1997 and August 3, 1996 was computed based on the weighted average number of common shares assumed to be outstanding during the period of 10,353,394 and 10,214,414 shares, respectively. Fully-diluted loss per share for the twenty-six week periods ended August 2, 1997 and August 3, 1996 was computed based on the weighted average number of common shares assumed to be outstanding during the period of 10,412,985 and 10,214,414 shares, respectively. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS 128 is effective for financial statements, for both interim and annual periods, ending after December 15, 1997. FAS 128 would have no impact on the 6 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. EARNINGS PER SHARE (CONTINUED) ------------------------------ Company's earnings per share calculations for the quarters and six month periods ended August 2, 1997 and August 3, 1996. 4. INCOME TAX BENEFIT ------------------ The Company calculates its provision for interim income taxes in accordance with Accounting Principles Board Opinion No. 28. This usually calls for the application of the estimated full year tax rate to interim pretax accounting income, which practice the Company followed through 1996. In circumstances when the usual approach would cause an unrealistically high interim tax benefit rate or other unreasonable tax results (which the Company is experiencing in 1997), the interim tax provision is calculated by applying the appropriate Federal and state statutory tax rates to taxable book income. Had the 1997 approach been used in 1996, the income tax benefit for the second quarter and six-month period ended August 3, 1996 would have been reduced, and the net loss increased, by approximately $3.8 million and $8.0 million, respectively. The Company expects to continue to employ the 1997 approach until it is no longer reasonably possible that an unreasonably large interim tax benefit rate would occur. The approach to interim income taxes will have no effect on the amount of income tax expense or benefit for the full year. 5. COMMITMENTS AND CONTINGENCIES ----------------------------- In September 1995, the Company filed a suit in the Court of Chancery of the State of Delaware against the former members of the Board of Directors (the "Former Directors") of the Company. That action seeks, among other things, recovery of damages caused by the breach by the Former Directors of their fiduciary duties to shareholders arising from the refusal of the Former Directors to approve the change in control which took place on July 5, 1995 (the "1995 Change of Control") following the election of seven replacement directors by the shareholders of the Company. In October 1995, the defendants filed a motion to dismiss the suit. In March 1997, the court denied that motion. On or about April 25, 1997, the defendants filed an answer and three of the defendants asserted a counterclaim against the Company and certain members of the Company's Board of Directors. In the counterclaim, these defendants allege that, following the 1995 Change of Control, the Company improperly refused to allow them to exercise options to purchase shares of Hills Stores Company common stock. They seek damages of $2.5 million for lost profits plus consequential damages. The Company has replied to the counterclaim, denying its material allegations. Discovery is ongoing in the case. In August 1995, in the Court of Chancery of the State of Delaware, three shareholders of the Company, Gayle Dolowich, Ivan J. Dolowich and Joseph Weiss, filed a class action lawsuit against the seven new directors of the Company elected at the 1995 annual meeting, Dickstein Partners Inc. ("Dickstein Partners") and the Company. In November 1995, the plaintiffs amended their complaint to include a shareholder's derivative cause of action against the Former Directors for breach of their fiduciary duties to the Company and its shareholders. In the amended complaint, the plaintiffs claim (under Section 7 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5. COMMITMENTS AND CONTINGENCIES (CONTINUED) ----------------------------------------- 225 of the Delaware Corporation Code) that in connection with Dickstein Partners effort to solicit proxies in support of the election of its nominees for directors of the Company, Dickstein Partners issued a number of false and misleading statements regarding its offer to acquire all of the Company's shares it did not already own. On the Section 225 claim, the plaintiffs seek an order nullifying the election of directors and declaring there has been "no change of control" of the Company. The derivative cause of action seeks damages against the Former Directors. In January 1996, in the same Delaware Chancery Court, another shareholder, Peter M. Fusco, filed a substantially similar class action and shareholder derivative suit against the parties named in the Dolowich suit. The Former Directors filed a motion to dismiss the Dolowich and Fusco suits, and that motion was argued in October 1996. In March 1997, the court denied the Former Directors' motion to dismiss. Management does not believe that the disposition of such suits and claims will have a material adverse effect upon the continuing operations and financial position of the Company. 6. IMPAIRMENT OF LONG-LIVED ASSETS ------------------------------- Effective February 4, 1996, the Company adopted Statement of Financial Accounting Standards No. 121: "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"). FAS 121 requires that the carrying value of long-lived tangible and certain intangible assets be evaluated periodically in relation to the operating performance and estimated future cash flows of the underlying assets. In accordance with FAS 121, in the first quarter of fiscal 1996, the Company recognized a pre-tax charge of $11.7 million ($7.2 million after tax, or $0.70 per share on a fully- diluted basis) to reduce the carrying value of certain of its long-lived tangible and intangible assets to their estimated fair market value. 7. DEBT REFINANCING AND EXTRAORDINARY LOSS --------------------------------------- In the first half of fiscal year 1996, the Company refinanced $160 million of 10.25% Senior Notes with proceeds from the sale of $195 million of 12 1/2% Senior Notes. As a result of these transactions, the Company recognized an extraordinary after-tax loss for early extinguishment of debt of $2.0 million, or $0.20 per share, in the second quarter of fiscal year 1996. The extraordinary loss included the redemption premiums and the write-off of the related deferred financing costs. 8 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS QUARTER ENDED AUGUST 2, 1997 COMPARED WITH QUARTER ENDED AUGUST 3, 1996 Sales decreased by 10.1% from the previous year to $349.3 million, and comparable store sales decreased by 6.4%. The comparable store sales decrease was due to the planned elimination of a July back-to-school layaway promotion event and the loss of sales during May and early June due to unseasonably cool late-Spring weather. Sales decreases in mens and children's apparel, and in seasonal and certain other hardlines categories were partially offset by increases in sales of women's apparel, domestics and home electronics. Total sales were also impacted by the closing of 10 stores at the beginning of the fiscal year. Cost of sales as percentage of sales was 75.3% in the second quarter of 1997 compared with 74.9% in the second quarter of 1996. Gross profit decreased by $11.5 million primarily due to the sales decrease, and decreased as a percentage of sales by 0.4%, as increased markdowns were taken to clear merchandise that was impacted by the poor Spring weather. Selling and administrative expenses, including depreciation and other occupancy expenses, decreased by $5.4 million in the second quarter due to the Company operating nine fewer stores in the quarter versus the same period in 1996, but rose as a percentage of sales to 28.2% from 26.7% last year, due to the comparable store sales decrease. Net interest expense decreased by $3.4 million, primarily due to reduced borrowings under the Company's working capital facility, reduced senior note interest related to temporarily carrying two series of notes in the second quarter of 1996 as the old series was being refinanced, and to reduced amortization costs associated with the notes that were refinanced. The effective tax rate was 37.3% in the second quarter of fiscal 1997 compared with a rate of 55.2% in the second quarter of fiscal 1996. The decreased benefit was due to a modification in the approach used to calculate interim income taxes. See Note 4 of Notes to Condensed Consolidated Financial Statements. The after-tax extraordinary loss of $2.0 million in 1996 represented the early extinguishment of debt related to the refinancing and redemption of the 10.25% Senior Notes. See Note 7 of the Notes to Condensed Consolidated Financial Statements. TWENTY-SIX WEEKS ENDED AUGUST 2, 1997 COMPARED WITH TWENTY-SIX WEEKS ENDED AUGUST 3, 1996 Sales decreased 7.4% compared with the same period in 1996. The total sales decrease was impacted by the Company operating nine fewer stores in the period. Comparable store sales decreased by 3.5%, which primarily occurred in the second quarter. 9 HILLS STORES COMPANY AND SUBSIDIARIES - ------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED) TWENTY-SIX WEEKS ENDED AUGUST 2, 1997 COMPARED WITH TWENTY-SIX WEEKS ENDED AUGUST 3, 1996 (CONTINUED) Cost of sales as a percentage of sales was 74.0% in fiscal 1997 as well as in fiscal 1996. Gross profit decreased by $14.0 million, but remained flat as a percentage of sales at 26%. An increase in initial markon was offset by increased markdowns to clear seasonal merchandise that was impacted by unfavorable weather. Selling and administrative expenses, including depreciation and other occupancy expenses, decreased by $9.0 million in the first half of 1997 due to the Company operating nine fewer stores in the period, but rose as a percentage of sales to 28.1% in the first half of 1997 compared with 27.2% in the same period of 1996, due to the comparable store sales decrease. See Note 6 of the Notes to Condensed Consolidated Financial Statements regarding the charge for the impairment of long-lived assets. Net interest expense decreased by $5.4 million, primarily due to reduced borrowings under the Company's working facility, reduced Senior Notes interest related to temporarily carrying two series of notes in the second quarter of 1996 as the old series was being refinanced and to reduced amortization costs associated with the Senior Notes that were refinanced in mid-1996. The Company's effective tax rate was 36.5% in fiscal 1997 compared with a rate of 52.7% in fiscal 1996. The decreased benefit was due to a modification in the approach used to calculate interim income taxes. See Note 4 of the Notes to Condensed Consolidated Financial Statements. The after-tax extraordinary loss of $2.0 million in 1996 represented the early extinguishment of debt related to the refinancing and redemption of the 10.25% Senior Notes. See Note 7 of the Notes to Condensed Consolidated Financial Statements. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Certain statements contained in this document (in particular, the discussion of liquidity) are forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions, consumer demand, consumer preferences and weather patterns in the Great Lakes and Ohio Valley regions of the United States; competitive factors, including continuing pressure from pricing and promotional activities of major competitors; impact of excess retail capacity and the availability of desirable store locations on suitable terms; the availability, selection and purchase of attractive merchandise on favorable terms; import risks, including potential disruptions and duties, tariffs and quotas on imported merchandise; acquisition and divestment activities; and other factors that may be described in this document. Net cash used for operating activities was $76.8 million for the twenty-six weeks ended August 2, 1997 compared with a use of $108.5 million for the same 10 HILLS STORES COMPANY AND SUBSIDIARIES - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) period last year, a decrease of $31.7 million. The decrease was the result of the run-off of excess inventories in fiscal year 1997 that was on hand at the end of fiscal year 1996, a smaller seasonal inventory buildup in the 155 stores operated this year versus the 164 stores operated last year, and a smaller investment in layaway receivables in 1997 due to the deemphasis of layaway promotions in July. Net cash used for investing activities was $23.5 million compared with $17.7 million in the first half of 1996, a $5.8 million increase. This increase was primarily the result of the Company's information technology replacement program which was partially offset by a reduction in capital expenditures related to store remodels last year. During fiscal year 1997, capital expenditures and deferred software expenditures are expected to approximate $30 million and $20 million respectively. The Company does not expect to open any new stores in 1997. Net cash provided by financing activities was $51.3 million in the first half of fiscal 1997 compared with $126.6 million in the same period a year ago, a $75.3 million decrease. The difference was due to $25 million in net proceeds received from the issuance of long-term debt in excess of the debt it refinanced in 1996, a $40.0 million decrease in borrowings under the revolving credit facility, and $12.6 million decrease due to fixture and equipment financing which occured in 1996. During the first half of fiscal 1997, average borrowings under the revolving credit facility were $12.1 million at an average interest rate of 8.3% compared to $41 million at an interest rate of 8.6% for the same period in 1996. Excess credit availability under the revolving credit facility at August 2, 1997 was approximately $111 million compared with approximately $78 million at August 3, 1996. Management believes that amounts available under the Company's borrowing agreements, together with cash from operations, will enable the Company to fund its current liquidity and capital expenditure requirements. The terms of the Company's revolving credit facility and Senior Notes limit the ability of the Company's subsidiaries to pay dividends. Any or all of the restrictions, limitations or contingencies under the revolving credit facility and the Senior Notes Indenture, as well as the Company's leverage, could adversely affect the Company's ability to obtain additional financing in the future, to make capital expenditures, to effect store expansions, to make acquisitions, to take advantage of business opportunities that may arise, and to withstand adverse general economic and retail industry conditions and increased competitive pressures. Retail suppliers and their factors monitor carefully the financial performance of retail companies such as the Company, and may reduce credit availability quickly upon learning of actual or perceived deterioration in the financial condition or results of operations of a retail company. 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- See Note 5 of the Notes to Condensed Consolidated Financial Statements. Reference is also made to the Report on Form 10-Q of the Company for the quarter ended May 3, 1997. ITEM 2. CHANGES IN SECURITIES - ------- --------------------- During the quarter ended August 2, 1997, the Company issued 68,259 shares of Common Stock, par value $.01 per share (the "Common Shares"), upon the conversion of 68,259 shares of Series A Convertible Preferred Stock, par value $.10 per share (the "Series A Preferred Shares"). The Series A Preferred Shares were issued pursuant to the exemption from registration set forth in Section 1145(a) of the Federal Bankruptcy Code, and the Common Shares were issued pursuant to the exemption contained in Section 3(a)(9) of the Securities Act of 1933, as amended. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- a) The Company held its Annual Meeting of Shareholders on June 17, 1997. At the Annual Meeting, the following directors, comprising the entire Board, were elected for one year terms:
NOMINEE VOTES FOR VOTES WITHHELD ------- --------- -------------- Chaim Y. Edelstein 7,799,522 437,075 Gregory K. Raven 7,816,238 420,359 Stanton J. Bluestone 7,795,177 441,420 John W. Burden III 7,795,677 440,920 Alan S. Cooper 7,706,697 529,900 Mark B. Dickstein 7,697,789 538,808 Samuel L. Katz 7,745,771 490,826 Richard E. Montag 7,808,156 428,441
b) The shareholders voted for the amendment of the Hills Stores Company 1993 Incentive and Nonqualified Stock Option Plan to qualify the Plan under Section 162(m) of the Internal Revenue Code. The votes were:
BROKER FOR AGAINST ABSTENTIONS NON-VOTES --------- ------- ----------- --------- 7,688,336 534,039 14,222 -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------ -------------------------------- a. The following documents are filed as part of this report: 1 3.1 Amended and Restated Certificate of Incorporation of the Company, as amended. 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued) - ------ -------------------------------------------- 2 3.3 Amended and Restated By-Laws of the Company. 3 4.1 Certificate of the Voting Powers, Preferences and other designated attributes of the Series A Convertible Preferred Stock of the Company. 4 4.2 Form of Series 1993 Stock Right. 5 4.3 Series 1993 Warrant Agreement dated October 4, 1993 between the Company and Chemical Bank, as Warrant Agent. 6 4.4 Rights Agreement dated as of August 16, 1994 (the "Rights Agreement") between the Company and Chemical Bank, as Rights Agent. 6 4.5 Form of Certificate of the Voting Powers, Preferences and other designated attributes of Series B Participating Cumulative Preferred Stock of the Company (which is attached as Exhibit A to the Rights Agreement incorporated by reference as Exhibit 4.4 hereto). 6 4.6 Form of Right Certificate (which is attached as Exhibit B to the Rights Agreement incorporated by reference as Exhibit 4.4 hereto). 7 4.7 Amendment dated as of October 18, 1995 to the Rights Agreement. 8 4.8 Indenture dated as of April 19, 1996 relating to the 12 1/2% Senior Notes due 2003, Series B, of the Company. 9 10.1 Loan and Security Agreement (the "Loan and Security Agreement") dated as of September 30, 1996 among the Financial Institutions named therein as the Lenders, BankAmerica Business Credit, Inc., as the Agent, Hills Department Store Company and C.R.H. International, Inc. as the Borrowers, and the other Loan Parties named therein. 10 10.2 First Amendment dated as of February 28, 1997 to the Loan and Security Agreement. 11 10.3 * Employment Agreement made as of February 7, 1996 with Gregory K. Raven. 12 10.4 * Consulting Agreement made as of February 8, 1997 with Chaim Y. Edelstein. 13 10.5 * Employment Agreement made as of November 19, 1996 with Michael R. Hamilton. 10.6 * Employment Agreement made as of July 22, 1997 with Frederick L. Angst. 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued) - ------ -------------------------------------------- 12 10.7 * Separation Agreement dated February 7, 1996 between the Company and E. Jackson Smailes. 12 10.8 * Confidential Separation Agreement, Voluntary Release and Notice dated March 6, 1997 between the Company and James E. Feldt. 14 10.9 * 1993 Incentive and Nonqualified Stock Option Plan, as amended. 11 10.10 * 1996 Directors Stock Option Plan. 15 10.11 * Hills Stores Company/Hills Department Store Company Associate Stock Purchase Plan, as amended. 11 Statements regarding computation of per share earnings. 16 16 Letters re: change in certifying accountant. 27 Financial Data Schedule. - --------------------- * Executive Compensation Plans and Arrangements. 1. Incorporated by reference from the Annual Report on Form 10-K of the Company for the fiscal year ended January 28, 1995. 2. Incorporated by reference from the Report on Form 8-K of the Company dated January 18, 1996. 3. Incorporated by reference from the Form 8-A of the Company filed on September 16, 1993. 4. Incorporated by reference from the Annual Report on Form 10-K of the Company for the fiscal year ended January 29, 1994. 5. Incorporated by reference from the Report on Form 8-K of the Company dated October 4, 1993. 6. Incorporated by reference from the Report on Form 8-K of the Company dated August 16, 1994. 7. Incorporated by reference from the Report on Form 8-K of the Company dated October 18, 1995. 8. Incorporated by reference from the Report on Form 10-Q of the Company for the quarter ended May 4, 1996. 9. Incorporated by reference from the Report on Form 8-K of the Company dated October 1, 1996. 10. Incorporated by reference from the Report on Form 8-K of the Company dated February 28, 1997. 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued) - ------ -------------------------------------------- 11. Incorporated by reference from the Annual Report on Form 10-K of the Company for the fiscal year ended February 3, 1996. 12. Incorporated by reference from the Annual Report on Form 10-K of the Company for the fiscal year ended February 1, 1997. 13. Incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended November 2, 1996. 14. Incorporated by reference from the Company's definitive proxy materials dated May 5, 1997. 15. Incorporated by reference from the Form S-8 of the Company filed on May 28, 1997. 16. Incorporated by reference from the Report on Form 8-K of the Company dated November 8, 1995. b. Reports on Form 8-K. None. 15 SIGNATURES Pursuant to the requirements of the Securities and 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 Date: September 10, 1997 /s/C. Scott Litten ------------------------- C. Scott Litten Executive Vice President- Chief Financial Officer Date: September 10, 1997 /s/Brian J. Sheehan ------------------------- Brian J. Sheehan Vice President - Controller and Principal Accounting Officer 16 EXHIBIT INDEX Pursuant to Item 601 of Regulation S-K Exhibit Title - ------- ----- 10.6 Employment Agreement made as of July 22, 1997 with Frederick L. Angst. 11 Statements regarding computations of earnings per share. 27 Financial Data Schedule. 17 EX-10 2 EXHIBIT 10.6 FREDERICK L. ANGST EMPLOYMENT AGREEMENT This will confirm our agreement under which you are to serve as Executive Vice President-Chief Merchandising Officer of Hills Department Store Company, a Delaware corporation (the "Subsidiary") and Hills Stores Company, (the "Parent"), together collectively referred to as (the "Company"). 1. TERM. The Company will employ you, and you accept employment, as provided herein, for a term beginning on the Effective Date (as defined in paragraph 6) and ending on the third anniversary of the Effective Date, unless sooner terminated as provided in paragraph 4. 2. DUTIES AND RESPONSIBILITIES. During the term of employment, you shall be Executive Vice President-Chief Merchandising Officer of the Company. Your primary responsibilities will be the senior supervision of the merchandise procurement, product development, marketing/sales promotion and merchandise presentation activities of the Company and you will report to the President and Chief Executive Officer. 3. COMPENSATION AND BENEFITS. (a) Your compensation ("Base Compensation") during the term of employment shall be at the rate of $350,000 per year. In accordance with the Company's practice for its senior executives, you will be paid twice each month. Base Compensation shall be reviewed on an annual basis (the first performance review will be April 1998) and increased if the Compensation Committee of the Board of Directors deems it appropriate. No decrease in Base Compensation will be permitted during the term of this Agreement. (b) (i) You shall be entitled to participate in any bonus, stock option or other incentive compensation plans, profit-sharing plans, retirement plans, life and health insurance plans, vacation and other benefit plans which are made generally available to executives of the Company at a level commen- surate with your position and/or years worked for the Company. You shall also be entitled to such other perquisites as the Company or the Compensation Committee of the Board of Directors deem appropriate. (ii) You will be eligible to receive a performance bonus of up to fifty percent (50%) of your Base Compensation for each full fiscal year in accordance with the terms of the Company's performance bonus plan (Level 1). Assuming you are an employee of the Company on the next bonus payment date (March/April 1998), you will receive a bonus equal to the higher of the bonus payout attributable to your new position or the bonus that would have been payable to you had you remained in the Vice President-Ladies Apparel position for the entire year. 1 (iii) You will receive on or about the Effective Date, an option grant to purchase 25,000 shares of the Common Stock of the Company pursuant to the Company's 1993 Incentive and Nonqualified Stock Option Plan. (c) You shall be entitled to reimbursement for your ordinary and necessary business expenses, travel and entertainment incurred in the performance of your services hereunder. You shall provide the Company with documentation of such expenses in accordance with the Company's normal practices. (d) You shall be entitled to use an apartment rented by the Company in the Canton, MA area. 4. TERMINATION. (a) BY THE COMPANY. Your employment hereunder shall terminate upon your death and may be terminated at the option of the Company forthwith upon delivery of Notice of Termination or upon 90 days' Notice of Termination in the case of Disability. (i) Upon termination by the Company for Cause, the Company shall have no further obligations whatsoever to you hereunder, other than for payment of any unpaid Base Compensation (as hereinafter defined) and vested benefits under any retirement plans to which you are a participant in accordance with the terms of the specific plans, accrued to the date of termination, and reimbursement of any unused vacation pay accrued to the date of termination and any reimbursable expenses incurred prior to the date of termination. (ii) Upon termination by virtue of death or Disability, your Base Compensation shall cease to accrue as of the effective date of termination, but you or your estate shall be entitled to payment of: any unpaid Base Compensation accrued to the date six (6) months following the date of termination; a pro rata portion of any bonuses or other incentive compensation payable pursuant to paragraph 3(b) with respect to the fiscal year of termination, determined on the basis of the portion of such fiscal year up to the date of termination; and vested benefits under any retirement plans to which you are a participant (in accordance with the terms of the specific plans) accrued prior to the date of termination; and reimbursement of any unused vacation pay accrued to the date of termination and any reimbursable expenses incurred prior to the date of termination. (iii) Upon termination, by the Company without Cause (other than for reasons of death or Disability) or by you, pursuant to paragraph 4(b), you shall, subject to the following sentence, continue to receive your Base Compensation twice a month in accordance with paragraph 3(a) (not a lump payout) and the Company shall maintain in full force and effect Insurance Benefits (as defined and limited below), in each case for the full term of this Agreement or the date twelve (12) months after the date (the "Notice Date") on which a Notice of Termination is given, whichever is later; and you shall be further entitled to receive: (A) vested benefits under any retirement plans to which you are a participant in accordance with the terms of the specific plans accrued prior to 2 date of termination; and (B) reimbursement of any unused vacation pay accrued to the date of termination and any reimbursable expenses incurred prior to the date of termination. Should your employment be terminated without Cause, you shall have an obligation to use reasonable efforts to seek other employment appropriate to your skill and experience, and to promptly notify the Company upon obtaining any such employment; and your Base Compensation shall be reduced by the amount of any direct compensation earned by you and paid to you. For purposes of this paragraph 4(a)(iii), "Insurance Benefits" shall mean all life and health insurance or other similar plans in which you were entitled to participate immediately prior to the date of termination. If, your continued participation in any or all such plans is not possible under the general terms and provisions thereof because you are no longer deemed to be an employee of the Company, the Company itself shall pay or provide for payment of such Insurance Benefits. As used herein - "Cause" shall mean (A) the willful failure by you to perform your functions and assume your responsibilities in accordance with the terms of this Agreement, which failure amounts to material neglect of your duties, after a written demand for substantial performance is delivered to you by the Company, (B) the willful engagement by you in conduct which is materially injurious to the Company or any of its subsidiaries or affiliates, monetarily or otherwise, (C) the misappropriation (including the unauthorized use or dis- closure of confidential or proprietary information of the Company or any of its subsidiaries or affiliates) or embezzlement with respect to the Company or any of its subsidiaries or affiliates, (D) a conviction of or guilty plea or confession by you to any fraud, conversion, misappropriation, embezzlement or felony, (E) your failure to substantially perform any material covenant to be performed by you hereunder after a written demand for substantial performance is delivered to you by the Company, or the taking of any action in the course of your employment under this Agreement that is known by you to have been pro- hibited by Company policy or by this Agreement, or (F) the failure to comply with your obligations as set forth in paragraph 5(f) herein. As used herein - "Disability" shall mean that, as a result of any physical or mental disability, you are unable to perform your major duties hereunder for a continuous period of 120 days or a total of at least 180 days in any period of 365 consecutive days. (b) BY THE EMPLOYEE FOR GOOD REASON. Subject to the conditions set forth below, if any one of the following events occurs during the term of this Agreement, it will be considered "Good Reason" for you to exercise your right to terminate your employment hereunder: (i) A material breach by the Company of any of the provisions of this Agreement; or (ii) The Company's failure to retain you as its Executive Vice President-Chief Merchandising Officer; or (iii) A significant change in the nature or scope of your responsibilities, authorities, powers, functions or duties (other than a change resulting from an effective promotion). 3 Your right to terminate your employment under paragraphs 4(b)(i), (ii), (iii) is conditioned upon your giving written notice to the President, with a copy to the Vice President-Secretary, of your decision to terminate employment not later than three months after the occurrence of the event giving rise to your right to terminate. Such termination of employment shall be effective one month after your written notice has been delivered to the Company provided the occurrence specified in the notice shall be continuing. Any purported termination of your employment shall be communicated by written Notice of Termination from one party to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. (c) In addition to the reasons set forth in paragraph 4(b), you may terminate your employment hereunder at any time, with or without Good Reason, upon 90 days' Notice of Termination to the Company. In the event of a termination by you pursuant to this paragraph 4(c), the Company shall have no further obligations whatsoever to you hereunder, other than for payment of any unpaid Base Compensation accrued to the date of termination and vested benefits under any retirement plans to which you are a participant in accordance with the terms of the specific plans in effect up to the date of termination; and reimbursement of any properly reimbursable expenses incurred prior to the date of termination. 5. COVENANTS. (a) You recognize that the knowledge, information and relationships with customers, suppliers and agents, and the knowledge of the Company's business methods, systems, plans and policies which you will establish, receive or obtain as an employee of the Company, are valuable and unique assets of the business of the Company. You will not, during or within two (2) years after the term of your employment, disclose any such knowledge or information pertaining to the Company, its customers, suppliers, agents, policies or other aspects of its business, for any reason or purpose whatsoever, except pursuant to your duties hereunder or as otherwise authorized by the Company in writing. The foregoing restriction shall not apply, following termination of your employment hereunder, to knowledge or information which (i) is in or enters the public domain without violation of this Agreement or other obligations of confiden- tiality by you or your agents or representatives, (ii) you can demonstrate was in your possession on a non-confidential basis prior to the commencement of your employment with the Company, or (iii) you can demonstrate was received or obtained by you, on a non-confidential basis from a third party who did not acquire it wrongfully or under an obligation of confidentiality, subsequent to the termination of your employment hereunder. (b) All memoranda, notes, records or other documents made or compiled by you or made available to you while employed concerning customers, suppliers, agents or personnel of the Company, or the Company's business methods, systems, plans and policies, shall be the Company's property and shall be delivered to the Company on termination of your employment or at any other time on request. 4 (c) During the term of your employment and for two (2) years there- after, you shall not, except pursuant to and in furtherance of your duties hereunder, directly or indirectly solicit or contact any employee of the Company with a view to inducing or encouraging such employee to leave the employ of the Company for the purpose of being hired by you, an employer affiliated with you or any competitor of the Company. (d) You acknowledge that the provisions of this paragraph 5 are reasonable and necessary for the protection of the Company and that the Company will be irrevocably damaged if such covenants are not specifically enforced. Accordingly, you agree that, in addition to any other relief to which the Company may be entitled in the form of actual or punitive damages, the Company shall be entitled to seek and obtain injunctive relief from a court of competent jurisdiction for the purposes of restraining you from any actual or threatened breach of such covenants. (e) In the event that, following the termination of this Agreement, you are entitled to receive any further payments other than for compensation or other amounts accrued prior to termination or expiration of this Agreement, such payments shall nonetheless cease and the Company shall no longer be obligated to make such payments if there is a material breach by you of any of the covenants in this paragraph 5 and you shall forthwith, upon demand of the Company, repay any such amounts paid to you subsequent to the date such breach occurred. (f) (i) The Company acknowledges that you are the Chief Executive Officer of "Take Care Wear", a single store retailer of uniforms located in the Philadelphia, PA area, which may expand to additional stores during the term of this Agreement, and agrees that your current level of involvement with "Take Care Wear" does not constitute a conflict of interest with your responsibilities to the Company and does not interfere with your duties and time commitments to the Company. You acknowledge that any expansion of your involvement or time commitment to "Take Care Wear" may be a conflict of interest and interfere with the performance of your responsibilities and duties to the Company. (ii) It is agreed that, should your involvement with "Take Care Wear" increase to the point where the Company determines there is a conflict with your duties or time commitments to the Company or interference with your responsibilities to the Company and such conflict or interference continues for thirty (30) days after written notice of same is provided to you by the Company, then the Company may terminate your employment for Cause as per paragraph 4(a) of this Agreement. (g) The Company acknowledges that you will not be relocating your residence or your family to the Canton, MA area and the Company has agreed to take certain steps, such as providing you with an apartment in the Canton, MA area, to accommodate you in this regard. These accommodations by the Company are based on your commitment and agreement that eighty percent (80%) of your office time (not including store visits and field travel time) will be spent in the Canton, MA office and no more than twenty percent (20%) of your office time will be spent in the New York Buying Office. (h) In the event the Company relocates its corporate offices away from the Canton/Boston, MA area, you will be expected to relocate and you will be provided the senior executive relocation package to assist in this relo- cation. This package does not include reimbursement for club memberships. 5 6. EFFECTIVE DATE OF AGREEMENT. The "Effective Date" of this Agreement is July 22, 1997. 7. MISCELLANEOUS. (a) This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter hereof, superseding all prior understandings and agreements whether written or oral. This Agreement may not be amended or revised except by a writing signed by the parties. (b) This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, but may not be assigned by either party without the prior written consent of the other. (c) Any notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly made when delivered or 2 days after being mailed by United States registered mail, return receipt requested and postage prepaid, addressed as follows (or to such other address as you or the Company may specify by notice hereunder to the other): If to you: Frederick L. Angst 4 Georgetown Circle Newtown, PA 18940 (or at such other address as you provide to the Vice President-Secretary in writing) If to the Company or the Parent: Hills Stores Company 15 Dan Road Canton, Massachusetts 02021 Attention: Vice President-Secretary (d) Captions have been inserted solely for convenience of reference and in no way define, limit or describe the scope or substance of any provisions of this Agreement. (e) The provisions of this Agreement are severable, and the invalidity of any provision shall not affect the validity of any other provision. (f) This Agreement shall be construed under and governed by the internal laws of the Commonwealth of Massachusetts. 6 (g) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. If the foregoing correctly sets forth our understanding on the subject matter hereof, kindly sign and return to the Company the enclosed copy hereof, which will thereupon become our binding agreement. Sincerely, Hills Department Store Company By:/s/ Gregory K. Raven ------------------------- Gregory K. Raven President Hills Stores Company By:/s/ William K. Friend ------------------------- William K. Friend Vice President-Secretary Agreed: Employee /s/ Frederick L. Angst - ------------------------ Frederick L. Angst August 20, 1997 - ------------------------ Date 7 EX-11 3 EXHIBIT 11 HILLS STORES COMPANY AND SUBSIDIARIES STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
Thirteen Thirteen Weeks Ended Weeks Ended August 2, August 3, 1997 1996 ---------- ----------- Weighted average primary shares outstanding - ------------------------------------------- Weighted average number of common shares assumed to be outstanding during the period 10,358,807 10,263,118 Assumed conversion of preferred stock - - Assumed exercise of stock options - - Assumed exercise of stock rights - - Assumed exercise of stock warrants - - ---------- ---------- 10,358,807 10,263,118 ========== ==========
Twenty-six Twenty-six Weeks Ended Weeks Ended August 2, August 3, 1997 1996 ---------- ----------- Weighted average primary shares outstanding - ------------------------------------------- Weighted average number of common shares assumed to be outstanding during the period 10,353,394 10,214,414 Assumed conversion of preferred stock - - Assumed exercise of stock options - - Assumed exercise of stock rights - - Assumed exercise of stock warrants - - ---------- ---------- 10,353,394 10,214,414 ========== ==========
EXHIBIT 11 HILLS STORES COMPANY AND SUBSIDIARIES STATEMENTS RE COMPUTATION OF PER SHARE EARNINGS
Thirteen Thirteen Weeks Ended Weeks Ended August 2, August 3, 1997 1996 ---------- ----------- Weighted average fully-diluted shares outstanding (1) - ----------------------------------------------------- Weighted average number of common shares assumed to be outstanding during the period 10,413,400 10,263,118 Assumed conversion of preferred stock - - Assumed exercise of stock options - - Assumed exercise of stock rights - - Assumed exercise of stock warrants - - ---------- ---------- 10,413,400 10,263,118 ========== ==========
Twenty-six Twenty-six Weeks Ended Weeks Ended August 2, August 3, 1997 1996 ---------- ----------- Weighted average fully-diluted shares outstanding (1) - ----------------------------------------------------- Weighted average number of common shares assumed to be outstanding during the period 10,412,985 10,214,414 Assumed conversion of preferred stock - - Assumed exercise of stock options - - Assumed exercise of stock rights - - Assumed exercise of stock warrants - - ---------- ---------- 10,412,985 10,214,414 ========== ==========
The calculation of the weighted average fully-diluted shares outstanding assumes that actual conversions of Preferred Stock during the thirteen and twenty-six weeks ended occurred as of the beginning of the period being reported on. The conversion of Preferred Stock, and the exercise of stock options, stock rights, and stock warrants was not assumed as the result would be anti-dilutive. (1) This calculation is presented in accordance with Item 601 of Regulation S-K although it is not required by APB Opinion No. 15. EX-27 4
5 1000 6-MOS FEB-01-1997 AUG-02-1997 17,183 0 35,112 (3,126) 426,658 536,039 245,857 (71,218) 959,409 388,749 346,340 18,429 0 104 200,431 959,409 349,269 349,269 263,121 263,121 99,807 266 12,060 (25,719) (9,600) (16,119) 0 0 0 (16,119) (1.56) (1.56)
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