-----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, GxSTR6ivu0lsp/tfq+BQTvyqIlRXzXGYGeLbqf6wWhvP+IcLdNhBTgYBRYv8RLJG lrHaAhpmdbyaNTyAgTD4Cg== 0000950135-96-005120.txt : 19961202 0000950135-96-005120.hdr.sgml : 19961202 ACCESSION NUMBER: 0000950135-96-005120 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961121 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961126 SROS: NYSE 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: 96672606 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 HILLS STORES COMPANY 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): NOVEMBER 21, 1996 HILLS STORES COMPANY (Exact name of registrant as specified in its charter) DELAWARE 1-9505 31-1153510 (State or other jurisdiction of incorporation) (Commission file number) (I.R.S. employer 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 November 21, 1996, Hills Stores Company (the "Company") issued a press release reporting its financial results for the third fiscal quarter of 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 November 21, 1996. 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: November 26, 1996 3 EXHIBIT INDEX Pursuant to Item 601 of Regulation S-K Exhibit Number Title - ------ ----- 99.1 Press Release dated November 21, 1996. EX-99.1 2 PRESS RELEASE 1 EXHIBIT 99.1 FINANCIAL PRESS RELEASE FOR IMMEDIATE RELEASE: INVESTOR INQUIRIES, CONTACT: - ---------------------- C. SCOTT LITTEN EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER HILLS STORES COMPANY (617) 821-1000 EXT. 1691 MEDIA INQUIRIES, CONTACT: KATHLEEN A. OBERT SENIOR VICE PRESIDENT EDWARD HOWARD & CO. (216) 781-2400 HILLS STORES REPORTS ITS THIRD QUARTER FINANCIAL RESULTS CANTON, MASSACHUSETTS, NOVEMBER 21, 1996 -- Hills Stores Company (NYSE: HDS) today released its financial results for the third quarter and nine month periods ended November 2, 1996. The Company reported a net loss for its third fiscal quarter ended November 2, 1996 of $5.0 million, or $0.49 per share on a fully-diluted basis, compared with a net profit of $22.4 million, or $1.98 per share, in the third quarter last year. As was previously announced, this year's quarter included an after-tax extraordinary charge of $2.2 million, or $0.22 per share, from the early extinguishment of debt related to the refinancing of its bank credit facility. The prior year's third quarter earnings reflected a tax benefit of $20.3 million, or $1.79 per fully-diluted share, from the effect of a change in the estimated tax rate applicable to the results of previous quarters of 1995. Third quarter earnings before interest, taxes, depreciation and amortization, costs related to change in control, and other non-cash items (EBITDA) decreased to $17.6 million from $29.2 million last year. Total sales for the quarter ended November 2, 1996 increased by 2.9% from the previous year to $461.0 million, and comparable store sales increased by 1.5%. Gross profit decreased to $120.8 million from $124.7 million and declined as a percentage of sales to 26.2% from 27.8% last year. Selling and administrative expenses increased by $8.0 million to $103.7 million from $95.7 million in the third quarter of fiscal 1995 and rose as a percentage of sales to 22.5% from 21.4%. Interest expense decreased modestly to $13.7 million from approximately $14.0 million in the third quarter of 1995. MORE 2 Gregory K. Raven, President and Chief Executive Officer of Hills explained, "During back-to-school, we made a strategic decision to be more aggressive with prices in selective categories to improve our competitive position and customer traffic. Although we have been pleased with the resulting improvement in our sales trend, we were arguably more aggressive than we needed to be, which cost the Company some gross margin. In addition, markdowns this year were higher than last year due to earlier clearance of certain Fall merchandise which, last year, were delayed in an effort to pursue full-priced sales deeper into the season. Those full-priced sales did not materialize last year, resulting in higher markdowns in the fourth quarter. Raven continued, "Throughout the quarter, we refined our pricing and have seen an improvement in margin trend. We are confident that, in the fourth quarter, margins will stabilize closer to last year's rate, reversing the trends experienced in the first three quarters. Together with continuing sales improvements, our profitability trend should also turn around." Commenting on expenses, Raven added, "The increase in expenses compared with last year reflects the impact of new stores added late last year, a timing shift into the quarter of advertising and other costs, and other programs designed to improve our customer service levels and to improve our control activities. The expense levels for the quarter were less than budgeted at the start of the year. Over the past two years, except for increases in costs related to new stores, our operating expenses have decreased." C. Scott Litten, Executive Vice President and Chief Financial Officer of the Company added, "Our financial liquidity position continues to improve over the prior year. Outstanding revolver borrowings at November 2nd were $137 million, compared with $169 million at the end of last year's third quarter. Ongoing revolver availability at the end of the quarter was approximately $130 million, compared with about $60 million last year. Further, our revolver borrowings peaked this year at $142 million compared with $188 million last year." For the first nine months of fiscal year 1996, the Company reported a net loss of $32.1 million, or $3.14 per share, compared with a loss of $27.1 million, or $2.69 per share, for the same period last year. The current year net loss included the after-tax extraordinary losses of $4.2 million ($0.42 per share) from the earlier extinguishments of debt. The current year results also included a pre-tax, non-cash charge of $11.7 million ($7.2 million after tax, or $0.71 per share) for the impairment of long-lived assets. The prior year included a pre-tax charge of $43.3 million ($36.5 million after tax, or $3.62 per share) related to the July 1995, change of control. EBITDA for the first nine months was $26.5 million compared with $42.8 million for the same period last year. Hills Stores Company is a leading regional discount retailer operating 165 stores in 12 Mid-Western and Mid-Atlantic states. # # # # 3 Hills Stores Company and Subsidiaries Notes to Condensed Statements of Operations November 2, 1996 a) The condensed consolidated financial information should be read in conjunction 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. During the fourth quarter of fiscal year 1995, the company reclassified $7.2 million, before taxes, of change in control costs from its originally reported results. The effect of the change was to decrease third quarter net earnings by $3.0 million, or $0.27 per share. In addition, the presentation of prior year-end and prior year interim financial statement amounts have been reclassified to conform with current year presentation. b) 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. The after-tax impact of the charge was $36.5 million ($3.62 per share year to date). c) A charge related to the Company's adoption of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of." The after-tax impact of the charge was $7.2 million or $0.71 per share. d) Fully-diluted average shares outstanding for the thirteen and thirty-nine weeks ended November 2, 1996 and the thirty-nine weeks ended October 28, 1995 do not include 1,040,377 and 1,260,343 shares of preferred stock, respectively, as the effect would be anti-dilutive. e) Additional Information: (000's)
AS OF, OR FOR THE PERIODS ENDED --------------------------------------------------------------------- QUARTER ENDED YEAR-TO-DATE -------------------------------- -------------------------------- NOV. 2, 1996 OCT. 28, 1995 NOV. 2, 1996 OCT. 28, 1995 ------------ ------------- ------------ ------------- Capital expenditures $8,491 $14,471 $26,158 $50,551 Other non-cash items to arrive at EBITDA $ 474 $ 224 $ 1,771 $ 482 Cash Interest payments $6,848 $12,045 $32,577 $32,642 Income tax rate on pretax income (loss) 56.7% 53.1% 58.2% Percent to sales - Gross profit margin 26.2% 27.8% 26.0% 27.2% SG&A 22.5% 21.4% 24.0% 23.7% Number of stores-ending 165 164
4 CONDENSED CONSOLIDATED INCOME SUMMARY (UNAUDITED) (in thousands, except per share amount) - --------------------------------------------------------------------------------------------------------------------------
THIRD QUARTER(a) YEAR -TO-DATE(a) ----------------------- --------------------------- 1996 1995 1996 1995 ----------------------- --------------------------- Net Sales $460,983 $448,033 $1,219,831 $1,200,319 Cost of Sales 340,152 323,339 902,046 873,574 Selling and Administrative expenses 103,692 95,680 293,052 284,446 Depreciation and amortization 9,927 10,039 30,075 28,619 Costs related to change in control (b) - 43,292 Impairment of long-lived assets (c) 11,706 - -------- -------- ---------- ---------- Operating earnings (loss) 7,212 18,975 (17,048) (29,612) Interest expense, net 13,691 13,959 42,423 35,140 Income tax provision (benefit) (3,675) (17,425) (31,608) (37,686) -------- -------- ---------- ---------- Earnings (loss) before extraordinary loss (2,804) 22,441 (27,863) (27,066) Extraordinary loss on extinguishment of debt, net 2,232 - 4,278 - -------- -------- ---------- ---------- Net Loss $ (5,036) $ 22,441 $ (32,141) $ (27,066) ======== ======== ========== ========== Primary earnings (loss) per share- - ---------------------------------- Before extraordinary loss $ (0.27) $ 2.01 $ (2.72) $ (2.77) Extraordinary loss (0.22) (0.42) -------- -------- ---------- --------- Net Income (Loss), as reported $ (0.49) $ 2.01 $ (3.14) $ (2.77) ======== ======== ========== ========== Fully diluted earnings (loss) per share- - ---------------------------------------- Before extraordinary loss $ (0.27) $ 1.98 $ (2.72) $ (2.69) Extraordinary loss (0.22) (0.42) -------- -------- ---------- --------- Net Income (Loss), as reported $ (0.49) $ 1.98 $ (3.14) $ (2.69) ======== ======== ========== ========== Shares outstanding (d) - ------------------ Primary 10,273 11,164 10,234 9,755 Fully-diluted 10,273 11,346 10,234 10,058 Earnings before interest, taxes, depreciation, amortization and other non-cash charges (EBITDA) $ 17,613 $ 29,238 $ 26,504 $ 42,781
5 CONDENSED CONSOLIDATED BALANCE SHEETS(a) ================================================================================ HILLS STORES COMPANY AND SUBSIDIARIES
(unaudited) (unaudited) NOVEMBER 2, FEBRUARY 3, OCTOBER 28, (dollars in thousands) 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 25,013 $ 22,898 $ 23,159 Accounts receivable, net 72,688 25,187 62,776 Inventories 539,907 331,697 518,108 Deferred tax asset 34,011 34,011 20,923 Income taxes 33,582 - 37,686 Other current assets 6,556 5,352 4,013 ---------- -------- ---------- Total current assets 711,757 419,145 666,665 Property, equipment, capital leases, net 297,577 304,678 307,014 Beneficial lease rights, net 7,380 8,247 8,454 Other assets, net 17,573 15,746 13,501 Deferred tax asset 8,233 8,233 10,061 Goodwill, net 102,138 107,514 138,948 ---------- -------- ---------- TOTAL ASSETS $1,144,658 $863,563 $1,144,643 ========== ======== ========== LIABILITIES AND COMMON SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of capital leases $ 6,428 $ 5,732 $ 6,121 Borrowings under the revolving credit facility 137,000 - 169,000 Accounts payable, trade 211,024 87,471 199,431 Other accounts payable and accrued expenses 186,631 178,852 186,935 ---------- -------- ---------- Total current liabilities 541,083 272,055 561,487 Long-term senior notes 195,000 160,000 160,000 Capital lease and sale/leaseback financing 154,672 143,945 145,140 Other liabilities 6,434 8,264 9,118 Preferred stock, at mandatory redemption value 20,807 24,636 25,206 Common shareholders' equity 226,662 254,663 243,692 ---------- -------- ---------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,144,658 $863,563 $1,144,643 ========== ======== ==========
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