SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File Number 1-12381
Linens 'n Things, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 22-3463939
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6 Brighton Road, Clifton, New Jersey 07015
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(973) 778-1300
--------------
(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
----- -----
Number of shares outstanding of the issuer's Common Stock:
Class Outstanding at November 6, 2000
----- -------------------------------
Common Stock, $0.01 par value 40,005,834
<PAGE>
<TABLE>
<CAPTION>
INDEX
Part I. Financial Information Page No.
--------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Operations for the
Thirteen and Thirty-Nine Weeks Ended September 30, 2000
(Unaudited) and October 2, 1999 (Unaudited) 3
Consolidated Balance Sheets as of September 30, 2000 (Unaudited),
January 1, 2000 and October 2, 1999 (Unaudited) 4
Consolidated Statements of Cash Flows for the
Thirty-Nine Weeks Ended September 30, 2000 (Unaudited) and
October 2, 1999 (Unaudited) 5
Notes to Consolidated Financial Statements 6-7
Independent Auditors' Review Report 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Part II. Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
(a) Exhibit Index 13
(b) Reports on Form 8-K 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------------------- --------------------------------
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
--------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 410,371 $341,122 $1,077,002 $886,290
Cost of sales, including buying and warehousing costs
244,285 203,886 642,932 531,467
--------------- ------------- ---------------- -------------
Gross profit 166,086 137,236 434,070 354,823
Selling, general and administrative expenses 135,576 113,361 383,546 316,858
--------------- ------------- ---------------- -------------
Operating profit 30,510 23,875 50,524 37,965
Interest expense (income), net 663 34 1,223 (21)
--------------- ------------- ---------------- -------------
Income before provision for income taxes 29,847 23,841 49,301 37,986
Provision for income taxes 11,441 9,179 18,893 14,626
--------------- ------------- ---------------- -------------
Net income $ 18,406 $ 14,662 $ 30,408 $ 23,360
=============== ============= ================ =============
Per share of common stock:
Basic
Net income per share $0.46 $0.37 $0.77 $0.59
Weighted average shares outstanding 39,965 39,395 39,706 39,305
Diluted
Net income per share $0.45 $0.36 $0.75 $0.57
Weighted average shares outstanding 40,811 40,940 40,616 40,959
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30, January 1, October 2,
2000 2000 1999
------------------ ------------------ -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 6,039 $ 45,751 $ 18,408
Accounts receivable, net 26,489 20,836 20,877
Inventories 475,224 342,681 369,255
Prepaid expenses and other current assets 23,816 21,410 21,009
------------------ ------------------ -----------------
Total current assets 531,568 430,678 429,549
Property and equipment, net 260,990 223,725 215,787
Goodwill, net 19,189 19,826 20,039
Deferred charges and other noncurrent assets, net 6,898 5,687 5,353
------------------ ------------------ -----------------
Total assets $ 818,645 $ 679,916 $ 670,728
================== ================== =================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 216,987 $ 144,884 $ 180,898
Accrued expenses and other current liabilities 109,800 104,414 95,006
Short-term borrowings 15,100 -- --
------------------ ------------------ -----------------
Total current liabilities 341,887 249,298 275,904
Deferred income taxes and other long-term liabilities 54,518 46,656 41,691
Shareholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares
authorized; none issued and outstanding -- -- --
Common stock, $0.01 par value; 135,000,000 shares authorized
at September 30, 2000, January 1, 2000 and October 2, 1999;
40,074,906 shares issued and 39,968,429 outstanding at
September 30, 2000; 39,555,259 shares issued and 39,478,782
outstanding at January 1, 2000; 39,473,234 shares issued and
39,396,757 outstanding at October 2, 1999 401 396 395
Additional paid-in capital 229,738 220,751 218,615
Retained earnings 195,657 165,249 136,557
Accumulated other comprehensive income (308) -- --
Treasury stock, at cost, 106,477 shares at September 30,
2000; 76,477 shares at January 1, 2000 and October
2, 1999 (3,248) (2,434) (2,434)
------------------ ------------------ -----------------
Total shareholders' equity 422,240 383,962 353,133
------------------ ------------------ -----------------
Total liabilities and shareholders' equity $ 818,645 $ 679,916 $670,728
================== ================== =================
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Thirty-Nine Weeks Ended
-----------------------------------------
September 30, October 2,
2000 1999
------------------- ------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 30,408 $ 23,360
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 23,816 19,851
Deferred income taxes 2,507 1,784
Loss on disposal of assets 791 553
Federal tax benefit from common stock exercised
under stock incentive plans 2,776 4,106
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (5,653) 1,937
Increase in inventories (132,543) (97,866)
Decrease (increase) in prepaid expenses and
other current assets 58 (1,640)
Increase in deferred charges (1,654) (569)
Increase in accounts payable 58,871 61,941
Increase (decrease) in accrued expenses
and other liabilities 18,333 (8,841)
------------------- ------------------
Net cash (used in) provided by operating activities (2,290) 4,616
------------------- ------------------
Cash flows from investing activities:
Additions to property and equipment (60,791) (55,055)
------------------- ------------------
Cash flows from financing activities:
Proceeds from common stock exercised under
stock incentive plans 6,216 3,135
Purchase of treasury stock (814) (1,044)
Increase in book overdrafts 2,867 24,118
Increase in short-term borrowings 15,100 --
------------------- -----------------
Net cash provided by financing activities 23,369 26,209
------------------- -----------------
Net decrease in cash and cash equivalents (39,712) (24,230)
Cash and cash equivalents at beginning of year 45,751 42,638
------------------- -----------------
Cash and cash equivalents at end of period $ 6,039 $ 18,408
=================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LINENS 'N THINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated financial statements, except for the January 1,
2000 consolidated balance sheet, are unaudited. In the opinion of management,
the accompanying consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position of the Company as of September 30, 2000 and the results of
operations for the respective thirteen and thirty-nine weeks then ended and cash
flows for the thirty-nine weeks then ended. Because of the seasonality of the
specialty retailing business, operating results of the Company on a quarterly
basis may not be indicative of operating results for the full year.
These consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements for the year ended January
1, 2000, included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission. All significant intercompany accounts and
transactions have been eliminated.
The January 1, 2000 consolidated balance sheet amounts have been derived from
the Company's audited consolidated balance sheet amounts.
2. Short-Term Borrowing Arrangements
The Company has available a three-year, $90 million senior revolving credit
facility agreement (the "Credit Agreement") with third party institutional
lenders which was due to expire March 31, 2001. The amount of borrowings under
that Credit Agreement could be increased up to $125 million provided certain
terms and conditions contained in the Credit Agreement were met. The Credit
Agreement contained certain financial covenants, including those relating to the
maintenance of a minimum tangible net worth, a minimum fixed charge coverage
ratio, and a maximum leverage ratio, as defined in the Credit Agreement. As of
September 30, 2000, the Company was in compliance with the terms and conditions
of the Credit Agreement. The Credit Agreement also allowed for up to $25 million
in borrowings from uncommitted lines of credit outside of the Credit Agreement.
As of September 30, 2000, the Company had no borrowings under the Credit
Agreement and had $15.1 million in borrowings against the uncommitted lines of
credit. See Note 5, "Subsequent Event", as to the $140 million replacement
credit facility entered into by the Company on October 20, 2000.
3. Recent Accounting Pronouncements
The Company is required to adopt Statement of Financial Standards ("SFAS") No.
133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). This statement is effective for fiscal years beginning after June 15,
1999. The Company has determined that the implementation of SFAS No. 133 is not
expected to have a significant effect on its results of operations or financial
position. This statement is not required to be applied retroactively to
financial statements of prior periods.
Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting
for Certain Transactions Involving Stock Compensation" ("FIN No. 44") provides
guidance for applying Accounting Pronouncements Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees". With certain exceptions, FIN No. 44
applies prospectively to new awards, exchanges of awards in a business
combination, modifications to outstanding awards and changes in grantee status
on or after July 1, 2000. The Company has determined that the implementation of
FIN No. 44 is not expected to have a significant effect on its results of
operations or financial position.
At a recent FASB Emerging Issues Task Force ("EITF") meeting, a consensus was
reached with respect to the issue of "Accounting for Certain Sales Incentives,"
including point of sale coupons, rebates and free merchandise. The consensus
included a conclusion that the value of such sales incentives that result in a
reduction of the price paid by the customer should be netted against sales and
not classified as a sales or marketing expense. The adoption of the EITF is
required in the fourth quarter of the Company's current year. The Company
already includes such sales incentives against sales and records free
merchandise in cost of goods sold as required by the new EITF consensus.
<PAGE>
4. Comprehensive Income
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" ("SFAS No. 130"), requires that items defined as other
comprehensive income, such as foreign currency translation adjustments, be
separately classified in the financial statements and that the accumulated
balance of other comprehensive income be reported separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. The components of comprehensive income for the thirteen and thirty-nine
week periods ended September 30, 2000 are as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30, 2000 September 30, 2000
----------------------- -----------------------------
<S> <C> <C>
Comprehensive Income:
Net Income $ 18,406 $ 30,408
Other comprehensive income --
Foreign currency translation adjustment (142) (308)
------------------------ -----------------------------
Comprehensive income $ 18,264 $ 30,100
======================== =============================
</TABLE>
5. Subsequent Event
On October 20, 2000, the Company entered into a $140 million Credit
Agreement with Fleet Bank and the lenders party thereto (the "Agreement").
The Agreement replaces the Credit Agreement dated as of March 31, 1998 by
and among the Company, each subsidiary party thereto, the lenders party
thereto and The Bank of New York.
The terms of the new Credit Agreement include, among other things, an
option to increase the size of the facility to $150 million if certain
conditions are met. The Agreement also allows for up to $40 million in
borrowings from uncommitted lines of credit.
<PAGE>
Independent Auditors' Review Report
The Board of Directors and Shareholders
Linens 'n Things, Inc.:
We have reviewed the consolidated balance sheets of Linens 'n Things, Inc. and
subsidiaries as of September 30, 2000 and October 2, 1999, and the related
consolidated statements of operations for the thirteen and thirty-nine week
periods then ended and the related consolidated statements of cash flows for the
thirty-nine week periods ended September 30, 2000 and October 2, 1999. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Linens 'n Things, Inc. and
subsidiaries as of January 1, 2000 and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 2, 2000 we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
January 1, 2000, is fairly presented, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
KPMG LLP
New York, New York
October 18, 2000, except as to Notes 2 and 5 which are as of October 20, 2000
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
LINENS 'N THINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto appearing
elsewhere in this document.
Results of Operations
Thirteen Weeks Ended September 30, 2000 Compared with Thirteen Weeks Ended
October 2, 1999
Net sales increased 20.3% to $410.4 million for the thirteen weeks ended
September 30, 2000, up from $341.1 million for the same period in 1999,
primarily as a result of new store openings since October 2, 1999. Net sales
were also driven by a healthy mix of core businesses, a positive response to new
fashions in the Company's textile business and growth of the Company's new
product offerings in the "things" business. The Company continues to increase
its penetration of the "things" business, which represents approximately 40% of
total net sales. Comparable store net sales for the thirteen weeks ended
September 30, 2000 increased 4.0% as compared with an increase of 5.2% for the
same period last year.
During the thirteen weeks ended September 30, 2000, the Company opened 23 stores
and closed no stores, compared with opening 15 stores and closing two stores
during the same period last year. At September 30, 2000, the Company operated
267 stores, compared with 217 stores, at October 2, 1999. Store square footage
increased 24.6% to 9,255,000 at September 30, 2000 compared with 7,425,000 at
October 2, 1999.
Gross profit for the thirteen weeks ended September 30, 2000 was $166.1 million,
or 40.5% of net sales, compared with $137.2 million, or 40.2% of net sales, for
the same period last year. The increase in gross profit was due primarily to
improved mark-on as a result of overall selling mix, increased penetration of
seasonal products and improved buying. In addition, logistics costs as a
percentage of net sales were lower than last year as the Company continues to
leverage these costs through its distribution network. Furthermore, as the
Company's logistics network continues to mature, the Company recognizes such
benefits as lower freight costs, improved store operational efficiencies and
improvements in pipeline management.
Selling, general and administrative expenses for the thirteen weeks ended
September 30, 2000 were $135.6 million, or 33.0% of net sales, compared with
$113.4 million, or 33.2% of net sales, for the same period last year. Although
the Company opened 23 stores this quarter versus 15 stores for the same quarter
last year, the pre-opening costs associated with these eight additional stores
was more than offset by the leveraging of occupancy costs, promotional
expenditures and administrative expenses.
Operating profit for the thirteen weeks ended September 30, 2000 increased to
$30.5 million, or 7.4% of net sales, compared with $23.9 million, or 7.0% of net
sales, for the same period last year.
The Company incurred net interest expense of approximately $663,000 (including
the amortization of commitment fees in connection with the Company's $90 million
credit agreement) for the thirteen weeks ended September 30, 2000, compared with
approximately $34,000 for the same period in 1999. The higher interest expense
is predominately due to increased average borrowings as compared to the same
period last year and increased average interest rates.
The Company's income tax expense for the thirteen weeks ended September 30, 2000
was approximately $11.4 million as compared with $9.2 million for the same
period last year. The Company's effective tax rate was 38.3% for the thirteen
weeks ending September 30, 2000 as compared with 38.5% for the same period in
1999. The decrease in tax rate is primarily attributable to an increase in
earnings before taxes while book to tax permanent differences remained constant.
<PAGE>
LINENS 'N THINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As a result of the factors described above, net income for the thirteen weeks
ended September 30, 2000 increased to $18.4 million, or $0.45 per share,
compared with $14.7 million, or $0.36 per share, for the same period last year.
Thirty-Nine Weeks Ended September 30, 2000 Compared with Thirty-Nine Weeks Ended
October 2, 1999
Net sales increased 21.5% to $1,077.0 million for the thirty-nine weeks ended
September 30, 2000, up from $886.3 million for the same period in 1999,
primarily as a result of new store openings since October 2, 1999. Comparable
store net sales for the thirty-nine weeks ended September 30, 2000 increased
4.3% as compared with an increase of 5.7% for the same period last year. The
Company continues to increase its penetration of the "things" business, which
represents approximately 40% of total net sales.
During the thirty-nine weeks ended September 30, 2000, the Company opened 40
stores and closed 3 stores, compared with opening 29 stores and closing 8 stores
during the same period last year.
Gross profit for the thirty-nine weeks ended September 30, 2000 was $434.1
million, or 40.3% of net sales, compared with $354.8 million, or 40.0% of net
sales, for the same period last year. The increase in gross profit was due
primarily to improvements in selling mix, which included an increased
penetration of higher margin seasonal merchandise, improved buying and the
leveraging of logistics costs through the use of the Company's distribution
network.
Selling, general and administrative expenses for the thirty-nine weeks ended
September 30, 2000 were $383.5 million, or 35.6% of net sales, compared with
$316.9 million, or 35.8% of net sales, for the same period last year. This
decrease as a percentage of net sales is primarily due to the leveraging of
occupancy costs and administrative expenses, offset in part by continued
investment in store payroll in order to improve guest service levels.
Operating profit for the thirty-nine weeks ended September 30, 2000 increased to
$50.5 million, or 4.7% of net sales, compared with $38.0 million, or 4.3% of net
sales, for the same period last year.
The Company had net interest expense of approximately $1.2 million (including
the amortization of commitment fees in connection with the Company's $90 million
credit agreement) for the thirty-nine weeks ended September 30, 2000, compared
with approximately $21,000 of net interest income for the same period in 1999.
The higher interest expense is predominately due to increased average borrowings
and higher average interest rates.
The Company's income tax expense for the thirty-nine weeks ended September 30,
2000 was $18.9 million as compared with $14.6 million for the same period last
year. The Company's effective tax rate was 38.3% for the thirty-nine weeks
ending September 30, 2000 compared to 38.5% for the same period last year. The
decrease in tax rate is primarily attributable to an increase in earnings before
taxes while book to tax permanent differences remained constant.
As a result of the factors described above, net income for the thirty-nine weeks
ended September 30, 2000 increased to $30.4 million, or $0.75 per share,
compared with $23.4 million, or $0.57 per share, for the same period last year.
<PAGE>
Liquidity and Capital Resources
The Company's capital requirements are primarily investments in new stores, new
store inventory purchases and seasonal working capital. These requirements are
funded through a combination of internally generated cash from operations,
credit extended by suppliers and short-term borrowings.
On October 20, 2000, the Company entered into a $140 million Credit Agreement
with Fleet Bank and the lenders party thereto (the "Agreement"). The Agreement
replaces the Credit Agreement dated as of March 31, 1998 by and among the
Company, each subsidiary party thereto, the lenders party thereto and The Bank
of New York. The terms of the Agreement include, among other things, an option
to increase the size of the facility to $150 million if certain conditions are
met. The Agreement also allows for up to $40 million in borrowings from
uncommitted lines of credit.
Net cash used in operating activities for the thirty-nine weeks ended September
30, 2000 was $2.3 million compared with net cash provided by operating
activities of $4.6 million for the same period last year. The net cash used in
operating activities was primarily attributable to an increase in inventory as a
result of an increase in the number of new store openings since October 2, 1999,
offset in part by an increase in accrued expenses due to the timing and
settlement of vendor payments.
Net cash used in investing activities during the thirty-nine weeks ended
September 30, 2000 was $60.8 million compared with $55.1 million for the same
period last year. The increase is associated with the opening of 11 more stores
this year versus the same period last year, which was offset by capital
expenditures incurred through the third quarter of 1999 for the second
distribution center.
Net cash provided by financing activities during the thirty-nine weeks ended
September 30, 2000 was $23.4 million compared with $26.2 million for the same
period last year. Net cash provided by financing activities during the
thirty-nine weeks ended September 30, 2000 was primarily the result of an
increase in short-term borrowings of $15.1 million.
Management currently believes that the Company's cash flows from operations,
credit extended by suppliers, the revolving credit facility and the uncommitted
lines of credit will be sufficient to fund anticipated capital expenditures and
working capital requirements in the foreseeable future.
<PAGE>
LINENS `N THINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Inflation
The Company does not believe that its operating results have been materially
affected by inflation during the preceding three years. There can be no
assurance, however, that the Company's operating results will not be affected by
inflation in the future.
Seasonality
The Company's business is subject to substantial seasonal variations.
Historically, the Company has realized a significant portion of its net sales
and net income for the year during the third and fourth quarters. The Company's
quarterly results of operations may also fluctuate significantly as a result of
a variety of other factors, including the timing of new store openings. The
Company believes this is the general pattern associated with its segment of the
retail industry and expects this pattern will continue in the future.
Consequently, comparisons between quarters are not necessarily meaningful and
the results for any quarter are not necessarily indicative of future results.
Forward-Looking Statements
The foregoing contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. The statements were made a
number of times and have been identified by such forward-looking terminology as
"expect," "believe," "may," "will," "intend," "plan," "target" and similar
statements or variations of such terms. Such forward-looking statements are
based on our current expectations, assumptions, estimates and projections about
our Company and involve certain significant risks and uncertainties including
levels of sales, store traffic, acceptance of product offerings and fashions,
the success of our new business concepts and seasonal concepts, competitive
pressures from other home furnishings retailers, the success of the Canadian
expansion, availability of suitable future store locations and schedule of store
expansion. These and other important factors that may cause actual results to
differ materially from such forward-looking statements are included in the "Risk
Factors" section of the Company's Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission on May 29, 1997, and may be
contained in subsequent reports filed with the Securities and Exchange
Commission. You are urged to consider all such factors. In light of the
uncertainty inherent in such forward-looking statements, you should not consider
their inclusion to be a representation that such forward-looking matters will be
achieved. The Company assumes no obligation for updating any such
forward-looking statements to reflect actual results, changes in assumptions or
changes in other factors affecting such forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
In the normal course of operations, the Company is exposed to market risk
arising from adverse changes in interest rates. The Company is exposed to
interest rate risks primarily through borrowings under the Credit Agreement. The
Company does not hedge these interest rate risks. As of September 30, 2000, the
Company had no borrowings under the Credit Agreement and had $15.1 million in
borrowings against the uncommitted lines of credit at a variable rate.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in a California state court litigation brought as a
class action on behalf of certain managers of Company stores located in
California seeking overtime pay as well as a claim for accrued vacation pay on
behalf of certain former employees. In the event such claims for overtime pay
and/or vaction pay are determined adversely to the Company, management of the
Company does not believe such claims, if so adversely determined, would have a
material adverse effect on the Company's financial position, liquidity or
results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBIT INDEX
Exhibit
Number Description
------ -----------
11 Computation of Net Income Per Common Share
15 Letter re unaudited interim financial information
27 Financial Data Schedule (filed electronically with SEC only)
(b) Reports on Form 8-K:
There were no current reports on Form 8-K filed with the Securities and
Exchange Commission during the third quarter of 2000.
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.
LINENS 'N THINGS, INC.
(Registrant)
WILLIAM T. GILES
By:
----------------------------------
William T. Giles
Senior Vice President,
Chief Financial Officer
(Duly authorized officer
and principal financial officer)
Date: November 14, 2000
