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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. [NO FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 1-12381
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
DEFERRED COMPENSATION PLAN OF LINENS 'N THINGS, INC.
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
<PAGE>
DEFERRED COMPENSATION PLAN OF
LINENS 'N THINGS, INC.
REQUIRED INFORMATION
Page No.
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A. FINANCIAL STATEMENTS
Independent Auditors' Report 3
Statements of Financial Condition
as of December 31, 1998 and 1997 4
Statements of Income and Changes in Plan Equity
for the Years Ended December 31, 1998 and 1997 5-6
Notes to Financial Statements 7-10
B. EXHIBITS
23. Independent Accountants' Consent 12
<PAGE>
Independent Auditors' Report
Compensation Committee
Linens 'n Things, Inc.
Deferred Compensation Plan of
Linens 'n Things, Inc.:
We have audited the accompanying statements of financial condition of the
Deferred Compensation Plan of Linens 'n Things, Inc. (the "Plan") as of December
31, 1998 and 1997 and the related statements of income and changes in plan
equity for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition as of December 31, 1998 and 1997,
and the income and changes in plan equity for the years then ended in conformity
with generally accepted accounting principles.
KPMG LLP
New York, New York
May 28, 1999
<PAGE>
<TABLE>
<CAPTION>
Linens 'n Things, Inc.
Deferred Compensation Plan
Statements of Financial Condition
December 31, 1998 December 31, 1997
---------------------------- -----------------------------
<S> <C> <C>
Assets:
Linens 'n Things, Inc. Common Stock Fund $ 19 $1,449,397
(cost $19 and $963,497 in 1998 and 1997, respectively)
T. Rowe Price Blue Chip Growth Fund 2,162,648 1,232,554
(cost $2,162,648 and $1,046,326 in 1998 and 1997, respectively)
Scudder Value Fund 1,240,677 1,032,128
(cost $1,240,677 and $1,102,427 in 1998 and 1997, respectively)
Neuberger & Berman Genesis Fund 1,153,484 1,022,229
(cost $1,153,484 and $815,937 in 1998 and 1997, respectively)
Warburg Pincus Emerging Growth Fund 431,042 413,454
(cost $431,042 and $459,577 in 1998 and 1997, respectively)
Strong Government Securities Fund 42,918 70,124
(cost $42,918 and $68,383 in 1998 and 1997, respectively)
Money Market Fund 27,087 --
(cost $27,087 and $0 in 1998 and 1997, respectively)
Contributions receivable - participants 10,531 --
---------------------------- -----------------------------
Total plan equity $5,068,406 $5,219,886
============================ =============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC.
DEFERRED COMPENSATION PLAN
Statement of Income and Changes in Plan Equity
Year ended December 31, 1998
Neuberger
Linens 'n &
Things, Inc. T. Rowe Price Scudder Berman Warburg Pincus
Common Stock Blue Chip Value Genesis Emerging
Fund Growth Fund Fund Fund Growth Fund
------------ ------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Additions to plan equity attributed to:
Investment income:
Dividend income ..................... $ -- $ 7,916 $ 9,668 $ 9,628 $ 44
Net realized gain (loss) ............ 464,610 622,209 38,450 70,451 (37,438)
Net unrealized (depreciation)
appreciation in fair value of
investments ....................... (485,901) (186,228) 70,300 (206,292) 46,123
Contributions ......................... 1,979,735 -- -- -- --
Transfers among funds ................. 22,774 525,775 98,932 296,648 8,859
---------- ------------ ------------ ------------ ----------
Total additions ................ 1,981,218 969,672 217,350 170,435 17,588
Deductions from plan equity attributed to:
Distributions ......................... (1,733,699) -- -- -- --
Transfers among funds ................. (1,696,897) (39,578) (8,801) (39,180) --
----------- ------------ ------------ ------------ ----------
Total deductions ................ (3,430,596) (39,578) (8,801) (39,180) --
----------- ------------ ------------ ------------ ----------
Net (decrease) increase in plan equity.... (1,449,378) 930,094 208,549 131,255 17,588
Plan equity at beginning of year ......... 1,449,397 1,232,554 1,032,128 1,022,229 413,454
----------- ------------ ------------ ------------ ----------
Plan equity at end of year ............... $ 19 $ 2,162,648 $ 1,240,677 $ 1,153,484 $ 431,042
============ ============ =========== ============ ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<CAPTION>
Strong
Government Money Contributions
Securities Market receivable -
Fund Fund participants Total
----------- ------- ------------- ------
<S> <C> <C> <C> <C>
Additions to plan equity attributed to:
Investment income:
Dividend income ..................... $ 4,156 $ 713 $ -- $ 32,125
Net realized gain (loss) ............ 4,354 -- -- 1,162,636
Net unrealized (depreciation)
appreciation in fair value of
investments ....................... (1,741) -- -- (763,739)
Contributions ......................... -- 744,705 10,531 2,734,971
Transfers among funds ................. 22,283 1,583,774 -- 2,559,045
----------- ------------ -------- -----------
Total additions ................ 29,052 2,329,192 10,531 5,725,038
Deductions from plan equity attributed to:
Distributions ......................... -- (1,583,774) -- (3,317,473)
Transfers among funds ................. (56,258) (718,331) -- (2,559,045)
----------- ------------ -------- -----------
Total deductions ................ (56,258) (2,302,105) -- (5,876,518)
----------- ------------ -------- -----------
Net (decrease) increase in plan equity.... (27,206) 27,087 10,531 (151,480)
Plan equity at beginning of year ......... 70,124 -- -- 5,219,886
----------- ------------ -------- -----------
Plan equity at end of year ............... $ 42,918 $ 27,087 $10,531 $ 5,068,406
========== ============ ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC.
DEFERRED COMPENSATION PLAN
Statement of Income and Changes in Plan Equity
Year ended December 31, 1997
Neuberger
Linens 'n &
Things, Inc. T. Rowe Price Scudder Berman Warburg Pincus
Common Stock Blue Chip Value Genesis Emerging
Fund Growth Fund Fund Fund Growth Fund
------------ ------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Additions to plan equity attributed to:
Investment income:
Dividend income ..................... $ -- $ 6,083 $ 10,275 $ -- $ --
Net realized (loss) gain ............ (258) 168,183 70,646 60,188 24,514
Net unrealized appreciation
(depreciation) in fair value of
investments ....................... 485,900 186,228 (70,299) 206,292 (46,123)
Contributions ......................... 977,097 1,148,256 60,679 326,167 6,671
Transfers among funds ................. -- 814,450 960,827 608,014 428,392
----------- ------------- ------------ ------------ -----------
Total additions ................ 1,462,739 2,323,200 1,032,128 1,200,661 413,454
Deductions from plan equity attributed to:
Distributions ......................... (13,342) (46,044) -- (10,509) --
Transfers among funds ................. -- (1,044,602) -- (167,923) --
----------- ------------- ----------- ----------- ---------
Total deductions ................ (13,342) (1,090,646) -- (178,432) --
----------- ------------ ----------- ----------- ---------
Net increase in plan equity .............. 1,449,397 1,232,554 1,032,128 1,022,229 413,454
Plan equity at beginning of year ......... -- -- -- -- --
----------- ----------- ----------- ----------- ---------
Plan equity at end of year ............... $ 1,449,397 $ 1,232,554 $ 1,032,128 $ 1,022,229 $ 413,454
=========== =========== =========== =========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<CAPTION>
Strong
Government Money
Securities Market
Fund Fund Total
---------- ------------ ------------
<S> <C> <C> <C>
Additions to plan equity attributed to:
Investment income:
Dividend income ..................... $ 5,896 $ 30,321 $ 52,575
Net realized (loss) gain ............ 3,745 (2,496) 324,522
Net unrealized appreciation
(depreciation) in fair value of
investments ....................... 1,741 -- 763,739
Contributions ......................... 163,084 3,101,951 5,783,905
Transfers among funds ................. 69,939 1,382,681 4,264,303
----------- ----------- ----------
Total additions ................ 244,405 4,512,457 11,189,044
Deductions from plan equity attributed to:
Distributions ......................... (4,125) (1,630,835) (1,704,855)
Transfers among funds ................. (170,156) (2,881,622) (4,264,303)
----------- ----------- ----------
Total deductions ................ (174,281) (4,512,457) (5,969,158)
----------- ----------- ----------
Net increase in plan equity .............. 70,124 -- 5,219,886
Plan equity at beginning of year ......... -- -- --
----------- ----------- ----------
Plan equity at end of year ............... $ 70,124 $ -- $ 5,219,886
----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DEFERRED COMPENSATION PLAN OF
LINENS 'N THINGS, INC.
Notes to Financial Statements
1. Description of the Plan
The following brief description of the Deferred Compensation Plan of
Linens 'n Things, Inc. (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan documents for more
complete information.
General
The Plan is sponsored by Linens 'n Things, Inc. (the "Company"). The
Plan was established to enable key employees of the Company to defer
compensation, including stock and stock denominated awards, for
personal income tax purposes. The participant-directed, non-qualified
Plan was adopted on December 30, 1996 and is treated as a plan
maintained for a select group of management or highly compensated
individuals under the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan is not taxable as a separate entity under the
Internal Revenue Code.
Eligibility and Vesting
The Plan covers key employees, as designated by the Company.
Participation is voluntary and participants can elect to make
contributions to the Plan. Participants are 100% vested in their own
deferrals to the Plan at all times.
Participant Accounts
An account is maintained for each participant in the Plan which shows
the participant's separate interest in each investment fund of the
Plan. Each participant shall elect the allocation of contributions to
specific funds within the Plan. The participant's account is credited,
as of the end of each month, with the amount of deferred compensation
contributed and, the appropriate investment income of each fund.
Participants are eligible for distribution of their benefits in cash or
Company common stock (if the participant has invested in Company common
stock) upon retirement, death, termination of service, in the event of
a designated change of control of the Company, upon election subject to
penalty, and in the event of immediate unexpected financial needs of
the participant subject to approval of the Compensation Committee, as
the Plan is not subject to the hardship rules of Section 401 of the
Internal Revenue Code. In the event of a change in control, payments in
settlement of a participant's account shall be made within fifteen
business days following such change in control.
Grantor Trust
The Company established a Grantor (Rabbi) Trust (the "Trust") to hold
the assets of the Plan. The Trust shall be governed by and subject to
the terms of a trust agreement entered into between the Company, as
grantor, and the trustee, Bank of New York. Effective January 1999, the
trustee of the Plan was changed to Prudential Trust Company and the
Plan assets were transferred to Prudential Trust Company.
<PAGE>
DEFERRED COMPENSATION PLAN OF
LINENS 'N THINGS, INC.
Notes to Financial Statements, continued
2. Summary of Significant Accounting Policies
a) Basis of Presentation
The accompanying financial statements of the Plan have been
prepared on the accrual basis of accounting.
b) Investments
The Plan's investments consist of mutual funds, a money market
fund and a Company common stock fund. The Plan's investments
are presented at their fair market values based on quoted
market prices. Purchases and sales of investments are recorded
on a trade-date basis.
3. Plan Termination
Although the Company has not expressed any intent to terminate the
Plan, it may do so at any time. In the event the Plan is terminated,
all sums credited to individual accounts would be distributed to
participants.
4. Administrative Expenses
All administrative costs of the Plan are borne by the Company.
5. Use of Estimates and Concentration of Risks
In preparing the Plan's financial statements, management has made a
number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities
to present these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
The assets of the Plan are primarily financial instruments which are
monetary in nature. As a result, interest rates have a more significant
impact on the Plan's performance than the effects of general levels of
inflation. Interest rates do not necessarily move in the same direction
or in the same magnitude as the prices of goods and services as
measured by the consumer price index. Investments are subject to risk
conditions of the individual fund objectives, the stock market,
interest rates, economic conditions and world affairs.
6. A description of the Plan's investments for the years ended December
31, 1998 and 1997 are as follows:
Linens 'n Things, Inc. Common Stock Fund -- This fund consists of the
Company's common stock.
T. Rowe Price Blue Chip Growth Fund -- The fund's objective is
long-term capital growth. The fund's strategy is to invest primarily in
common stocks of large and medium-sized blue chip companies that have
the potential for above-average growth in earnings and are well
established in their respective industries.
Scudder Value Fund -- The fund seeks long-term growth of capital
through investment in equity securities that the fund considers
undervalued in the marketplace. The fund invests in common stocks,
preferred stocks, and securities convertible into common stocks. It
invests primarily in the equity securities of medium-to-large-sized
U.S. companies with annual revenues or market capitalization of at
least $600 million.
<PAGE>
DEFERRED COMPENSATION PLAN OF
LINENS 'N THINGS, INC.
Notes to Financial Statements, continued
Neuberger & Berman Genesis Fund -- The fund seeks undervalued companies
whose current product lines and balance sheets are strong. The fund
invests mainly in common stock of companies with market capitalizations
of up to $1.5 billion at the time of investment.
Warburg Pincus Emerging Growth Fund -- The fund seeks maximum capital
appreciation. The fund invests in U.S. equity securities of emerging
growth companies. Emerging growth companies are small or medium sized
companies that have passed their start-up phase, show positive
earnings, and offer the potential for accelerated earnings growth.
Strong Government Securities Fund -- The fund seeks total return by
investing for a high level of current income with a moderate degree of
share-price fluctuation. The fund invests primarily in higher quality
bonds issued by the U.S. government or its agencies.
At December 31, 1998, there were 13 participants in the Plan. There was
one participant in the Linens 'n Things, Inc. Common Stock Fund, eleven
participants in the T. Rowe Price Blue Chip Growth Fund, eight
participants in the Scudder Value Fund, nine participants in the
Neuberger & Berman Genesis Fund, three participants in the Warburg
Pincus Emerging Growth Fund, three participants in the Strong
Government Securities Fund and three participants in the Money Market
Fund.
<PAGE>
DEFERRED COMPENSATION PLAN OF
LINENS 'N THINGS, INC.
Notes to Financial Statements, continued
The aggregate costs, aggregate proceeds from sales and the net realized
gains (losses) by fund for the years ended December 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 Dispositions
-----------------
Net Realized
Fund Cost Proceeds Gain (Loss)
------------------- ------------------- -------------------
<S> <C> <C> <C>
Linens 'n Things, Inc. Common Stock $2,966,260 $3,430,870 $464,610
T. Rowe Price Blue Chip Growth 1,607,073 2,229,282 622,209
Scudder Value 1,256,095 1,294,545 38,450
Neuberger & Berman Genesis 1,149,039 1,219,490 70,451
Warburg Pincus Emerging Growth 468,436 430,998 (37,438)
Strong Government Securities 95,705 100,059 4,354
Money Market 27,086 27,086 -
------------------- ------------------- -------------------
$7,569,694 $8,732,330 $1,162,636
=================== =================== ===================
</TABLE>
<TABLE>
<CAPTION>
1997 Dispositions
-----------------
Net Realized
Fund Cost Proceeds Gain (Loss)
------------------- ------------------- ------------------
<S> <C> <C> <C>
Linens 'n Things, Inc. Common Stock $ 13,601 $ 13,343 $ (258)
T. Rowe Price Blue Chip Growth 923,477 1,091,660 168,183
Scudder Value - 70,646 70,646
Neuberger & Berman Genesis 130,213 190,401 60,188
Warburg Pincus Emerging Growth - 24,514 24,514
Strong Government Securities 170,534 174,279 3,745
Money Market 2,749,899 2,747,403 (2,496)
------------------- ------------------- ------------------
$3,987,724 $4,312,246 $ 324,522
=================== =================== ==================
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
members of the Deferred Compensation Committee (which is the administrative
committee for the Compensation Committee of the Board of Directors of the
Company) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Deferred Compensation Plan of
Linens 'n Things, Inc.
Deferred Compensation Committee
BRIAN D. SILVA
Dated: June 29, 1999 By:_______________________
Brian D. Silva
Senior Vice President,
Human Resources and Corporate Secretary
and Member of the Deferred Compensation
Committee
Independent Accountants' Consent
Compensation Committee
Linens 'n Things, Inc.
Deferred Compensation Plan of
Linens 'n Things, Inc.:
We consent to incorporation by reference in the Registration Statements Numbers
333-71903, 333-55803, 333-26827, and 333-26819 on Form S-8 of our report dated
May 28, 1999 relating to the statements of financial condition of the Deferred
Compensation Plan of Linens 'n Things, Inc. as of December 31, 1998 and 1997 and
the related statements of income and changes in plan equity for the years then
ended, which report appears in the December 31, 1998 Annual Report of the
Deferred Compensation Plan of Linens 'n Things, Inc. on Form 11-K.
KPMG LLP
New York, New York
June 29, 1999
