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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _____ to _____
Commission File No. 1-12381
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
LINENS 'N THINGS, INC. 401(k) PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
LINENS 'N THINGS, INC.
6 Brighton Road
Clifton, New Jersey 07015
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REQUIRED INFORMATION
The following financial statements of the Linens 'n Things, Inc. 401(k) Plan,
prepared in accordance with the financial reporting requirements of the Employee
Retirement Income Securities Act of 1974, as amended, are filed herewith.
<PAGE>
LINENS 'N THINGS, INC. 401(k) PLAN
Financial Statements and Schedules
December 31, 1997
(With Independent Auditors' Report Thereon)
Index
Independent Auditors' Report
Statement of Net Assets Available for Plan Benefits - December 31, 1997
Statement of Changes in Net Assets Available for Plan Benefits - Year ended
December 31, 1997
Notes to Financial Statements
Schedule
Item 27(a) - Schedule of Assets Held for Investment Purposes -
December 31, 1997 1
Item 27(d) - Schedule of Reportable Transactions - Year ended
December 31, 1997 2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Plan Administrator and Trustee
Linens 'n Things, Inc. 401(k) Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Linens 'n Things, Inc. 401(k) Plan as of December 31, 1997, and
the related statement of changes in net assets available for plan benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1997 and the changes in net assets available for plan benefits for year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
KPMG LLP
August 31, 1998
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. 401(K) PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1997
<S> <C>
Assets:
Investments managed by the Bank of New York -
mutual funds at fair value (note 4):
Principle Protection Fund $ 523,302
Intermediate Return Fund 1,446,141
Maximum Appreciation Fund 1,494,365
Fidelity Growth & Income Fund 4,011,474
Retirement Preservation Trust 3,107,139
American Europacific Fund 616,100
Collective Short Term Investment Fund 33,311
---------------
Total investments 11,231,832
Loans to participants 319,316
---------------
Net assets available for plan benefits $ 11,551,148
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See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. 401(K) PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1997
Principal Maximum Fidelity Retirement
Protection Intermediate Appreciation Growth & Preservation
Fund Return Fund Fund Income Fund Fund
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest and dividends $ - - - 164,796 176,099
Net appreciation (depreciation) in
fair value of investments 40,387 146,540 200,448 476,925 -
Realized gain 5,521 17,618 45,276 28,512 -
Transfer from other plan (note 1) 389,121 1,025,275 1,160,224 2,313,482 2,876,028
Contributions:
Rollover contributions 43,659 82,461 39,639 77,810 20,097
Participants' 62,497 190,504 187,066 507,325 415,021
Employer's 51,335 163,130 157,503 390,470 346,800
------------ ------------ ------------ ------------- -------------
Total additions 592,520 1,625,528 1,790,156 3,959,320 3,834,045
------------ ------------ ------------ ------------- -------------
Deductions from net assets attributed to:
Benefits paid to participants - - - - -
Administrative expenses 5,460 14,426 15,702 - -
Withdrawals - - - - -
------------ ------------ ------------ ------------- -------------
Total deductions 5,460 14,426 15,702 - -
------------ ------------ ------------ ------------- -------------
Interfund transfers (63,758) (164,961) (280,089) 52,154 (726,906)
------------ ------------ ------------ ------------- -------------
Net increase, representing net
assets at end of period $ 523,302 1,446,141 1,494,365 4,011,474 3,107,139
============ ============ ============ ============= =============
<PAGE>
<CAPTION>
Collective
American Short Term
Europacific Investment Participant
Fund Fund loans Total
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 9,462 4,152 17,665 372,174
Net appreciation (depreciation) in
fair value of investments (27,219) - - 837,081
Realized gain 38,423 - - 135,350
Transfer from other plan (note 1) 332,503 21,464 235,847 8,353,944
Contributions:
Rollover contributions 18,384 - - 282,050
Participants' 102,400 - - 1,464,813
Employer's 73,325 145 - 1,182,708
------------ ------------ ------------ -------------
Total additions 547,278 25,761 253,512 12,628,120
------------ ------------ ------------ -------------
Deductions from net assets attributed to:
Benefits paid to participants - 779,615 - 779,615
Administrative expenses - 126,298 - 161,886
Withdrawals - 135,471 - 135,471
------------ ------------ ------------ -------------
Total deductions - 1,041,384 - 1,076,972
------------ ------------ ------------ -------------
Interfund transfers 68,822 1,048,934 65,804 -
------------ ------------ ------------ -------------
Net increase, representing net
assets at end of period $ 616,100 33,311 319,316 11,551,148
============ ============ ============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LINENS 'N THINGS, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 1997
(1) PLAN DESCRIPTION
The following description of the Linens 'n Things, Inc. 401(k) Plan
(the Plan) provides only general information. Participants should refer
to the plan document for a more complete description of the Plan's
provisions.
(A) BACKGROUND
The Plan is a participant directed, defined contribution plan
established as of December 1, 1996. It is subject to the
provisions of the Employee Retirement Income Security Act of
1974 (ERISA), as amended. The general administration of the
Plan and the responsibility for carrying out the provisions of
the Plan are maintained by a committee (the Plan Committee)
appointed by Linens 'n Things, Inc. (the Company or Plan
Sponsor). In accordance with the provisions of the Plan, the
Plan Committee is also the Administrator (the Administrator)
and has appointed The Bank of New York as the Trustee (the
Trustee). The Administrator maintains participant account
records and instructs the Trustee to execute transactions such
as benefit payments to participants. The Trustee holds the
assets of the Plan and executes transactions at the direction
of the Plan Committee. The Trustee also reports to the Plan's
management regarding investments and changes in these
investments.
The Company was a wholly-owned subsidiary of CVS Corporation
(CVS) until November 26, 1996, when the Company completed an
initial public offering (IPO). Prior to the IPO, the employees
of the Company participated in CVS' 401(k) profit sharing
plan. Subsequent to the IPO, the Company established the Plan
and the net assets of its employees totaling $8,353,944, were
transferred to the Plan in 1997. As of December 31, 1996,
there were no assets held in the Plan.
(B) ELIGIBILITY
Eligible employees become a participant in the Plan at the
beginning of the first payroll period of the first month
following completion of a year of service with at least 1,000
hours worked and attaining age 21. Participants in the CVS
401(k) profit sharing plan were automatically eligible to
participate in the Plan.
(C) EMPLOYEE CONTRIBUTIONS
Each year participants may contribute up to 15% of pretax
annual compensation, not to exceed $9,500 in 1997.
Participants may also contribute amounts representing
distributions from other qualified defined benefit or
contribution plans.
(D) EMPLOYER CONTRIBUTIONS
Employer matching contributions are equal to 100% of the first
6% of the employee contributions. Matching contributions made
by the Company in 1997 were $1,182,708. Contributions are
subject to certain limitations as specified in Plan
documentation.
(E) INVESTMENT OPTIONS
Upon enrollment in the Plan or at select intervals thereafter,
a participant may elect to direct contributions or investment
balances within six investment options - three individual
funds and three lifestyle funds. Lifestyle funds are pre-mixed
investment choices that provide diversification within one
fund. The following is a brief description of each investment
option:
INTERNATIONAL EQUITY FUND
American Europacific Fund
This mutual fund invests primarily in stocks and debt
obligations of companies and governments outside the
United States, primarily Europe or the Pacific Basin.
GROWTH AND INCOME FUND
Fidelity Growth & Income Fund
This mutual fund's objective is to seek capital
appreciation and current income. The fund invests
primarily in stocks of companies that pay current
dividends and offer potential growth of earnings.
STABLE VALUE FUND
Retirement Preservation Fund
This fund seeks to preserve capital and to provide
current income at levels that are typically higher
than those provided by money market funds. Its
investments consist of guaranteed investment
contracts issued by a diversified group of banks,
insurance companies and financial services companies.
Its portfolio may also include high-quality money
market securities.
LIFESTYLE FUNDS
Aggressive Lifestyle Fund - Maximum Appreciation Fund
This lifestyle fund is a collective fund designed for
individuals with long-term goals. It invests 10% of
its money in bonds, 80% in stock and 10% in
stable-value (low-risk) investments.
Moderate Lifestyle Fund - Intermediate Return Fund
This lifestyle fund is a collective fund designed for
individuals with intermediate-term goals. It invests
20% of its money in bonds, 40% in stocks and 40% in
stable-value (low risk) investments.
Conservative Lifestyle Fund - Principal Protection
Fund
This lifestyle fund is a collective fund designed for
individuals with short-term goals. It invests 10% of
its money in bonds, 20% in stocks and 70% in
stable-value (low risk) investments.
(F) PARTICIPANTS' ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of investment income or loss. The
benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
(G) VESTING
Participants are immediately vested in their contributions
plus actual earnings or losses thereon. Vesting in the
Company's matching contribution portion of their accounts plus
actual earnings or losses thereon is based on years of
continuous service. A participant is 50% vested after 3 years
and 100% vested after five years of credited service.
(H) PAYMENT OF BENEFITS
Upon reaching normal retirement (age 65 or age 55 with 10
years of vested service) or upon permanent disability, all
amounts credited to a participant's account become
distributable. Distributions will be made as soon as
administratively feasible, following a participant's request,
and will be made in a lump-sum cash payment.
Upon a participant's death, the participant's beneficiary is
entitled to 100% of the participant's vested account balance.
Upon termination of service, the Administrator will direct the
Trustee to pay to the participant his or her benefit in an
immediate lump sum or a deferred lump sum, if certain criteria
are met.
(I) FORFEITURES
Upon a participant's termination date, and prior to the time
the participant becomes vested in his or her account, the
non-vested portion, if any, shall be forfeited. These accounts
will be used to restore amounts previously forfeited by
participants but required to be reinstated upon resumption of
employment, to pay administrative expenses, or to reduce
employer contributions.
(J) ADMINISTRATIVE EXPENSES
All administrative expenses are paid by the Plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on an
accrual basis and present the net assets available for plan
benefits of the Plan and the changes in those net assets in
conformity with generally accepted accounting principles.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of change in net assets available for
plan benefits during the reporting period. Actual results
could differ from those estimates.
(C) INVESTMENTS
Purchases and sales of investments are recorded on a
trade-date basis. Investment income is recorded as earned on
an accrual basis. Dividend income is recorded on the
ex-dividend date. Each investment fund is stated at the market
value on the last business day of the Plan year as reported by
the Trustee, which is based on the market value of the
underlying securities based on quotations from national
security exchanges.
(3) LOANS TO PLAN PARTICIPANTS
Under the terms of the Plan, participants may obtain loans from the
Plan, utilizing funds accumulated in their accounts. The minimum amount
which may be borrowed is $1,000. Participants can borrow up to a
maximum of 50% of their vested account balance but not more than
$50,000, less their highest outstanding loan balance during the
previous 12 months.
The loans are repaid to the Plan through after-tax payroll deductions.
The term of the loan is arrived at by mutual agreement between the Plan
Committee and the participant, but may not exceed five years unless the
loan is to be used in conjunction with the purchase of the principal
residence of the participant.
(4) INVESTMENTS
At December 31, 1997, the Plan's assets were allocated among six
investment options as disclosed in note l(e). The investment options
are administered by independent investment managers. Employee asset
allocations that are awaiting processing are temporarily invested in
the Collective Short Term Investment Fund. This fund is also used to
account for and administer participants' loans. The loan repayments and
interest earned are allocated to each of the investment funds based
upon the participant's contribution election percentages.
(5) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. If the
Company were to terminate the Plan, all participants in the Plan would
become fully vested.
(6) FEDERAL INCOME TAXES
The Administrator submitted an application and plan document to the
Internal Revenue Service for a letter of determination stating that the
Plan qualifies as exempt from federal income taxes. In the opinion of
the Administrator, the Plan is qualified under Section 401(a) of the
Internal Revenue Code (the Code) and the trust is exempt from federal
income taxes under Section 501(a) of the Code.
<PAGE>
Schedule 1
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. 401(k) PLAN
Item 27(a) - Schedule of Assets held For Investment Purposes
December 31, 1997
Fair
Description Units Cost Value
----------- ----- ---- -----
<S> <C> <C> <C>
Investments - managed by the Bank of
New York - mutual funds:
Principal Protection Fund 35,916 $ 482,914 523,302
Intermediate Return Fund 88,395 1,299,601 1,446,141
Maximum Appreciation Fund 80,515 1,293,917 1,494,365
Fidelity Growth & Income Fund 105,288 3,534,549 4,011,474
Retirement Preservation Fund 3,107,139 3,107,139 3,107,139
American Europacific Fund 23,678 643,320 616,100
Collective Short Term Investment Fund 33,311 33,311 33,311
*Loans to participants -- 319,316 319,316
=========== =============== ============
$ 10,714,067 11,551,148
=============== ============
</TABLE>
*Party in interest.
See accompanying independent auditors' report.
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
LINENS 'N THINGS, INC. 401(k) PLAN
Item 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1997
Realized
Type of Gains
Transaction Units Description Cost Proceeds (losses)
----------- ----- ----------- ---- -------- --------
<S> <C> <C> <C> <C> <C>
Single transactions:
Purchase 71,302 Intermediate Return Fund $ 1,025,275 -- --
Purchase 74,240 Maximum Appreciation Fund 1,160,224 -- --
Purchase 72,873 Fidelity Growth & Income Fund 2,313,482 -- --
Purchase 2,876,028 Retirement Preservation Fund 2,876,028 -- --
Cumulative transactions:
Purchases 104,383 Intermediate Return Fund 1,531,342 -- --
Purchases 111,477 Maximum Appreciation Fund 1,777,812 -- --
Purchases 119,671 Fidelity Growth & Income Fund 3,997,300 -- --
Purchases 4,036,716 Retirement Preservation Fund 4,036,716 -- --
Purchases 28,090 American Europacific Fund 763,043 -- --
Purchases 3,880,664 Collective Short Term Investmend Fund 3,880,664 -- --
Sales 929,577 Retirement Preservation Fund 929,577 929,577 --
Sales 3,847,799 Collective Short Term Investment Fund 3,847,799 3,847,799 --
=========== ============= ======
</TABLE>
See accompanying independent auditors' report.
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
LINENS 'N THINGS, INC. 401(k) PLAN
(Name of Plan)
BRIAN D. SILVA
Date: February 5, 1999 By: ______________________________________
Brian D. Silva
Senior Vice President, Human Resources
Consent of Independent Auditors
The Plan Administrator and Trustee
Linens 'n Things, Inc.
Linens 'n Things, Inc. 401(k) Plan:
We consent to incorporation by reference in the Registration Statements Numbers
333-26819, 333-26827 and 333-55803 on Form S-8 of our report dated August 31,
1998 relating to the statement of net assets available for Plan benefits of the
Linens 'n Things, Inc. 401(k) Plan as of December 31, 1997 and the related
statement of changes in net assets available for Plan benefits for the year then
ended, which report appears in the December 31, 1997 Annual Report of the Linens
'n Things, Inc. 401(k) Plan on Form 11-K.
KPMG LLP
New York, New York
February 5, 1999
