SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 28, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No.: 1-5767
CIRCUIT CITY STORES, INC.
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0493875
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9950 MAYLAND DRIVE
RICHMOND, VA 23233
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 527-4000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, Par Value $.50 New York Stock Exchange
Rights to Purchase Preferred Stock,
Series E, Par Value $20.00 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K [X].
On May 6, 1994, the Company had 96,068,810 common shares outstanding.
The aggregate market value of the common shares held by non-affiliates
(without admitting that any person whose shares are not included in
determining such value is an affiliate) was $1,743,560,880 based upon the
closing price of these shares as reported by the New York Stock Exchange on
May 6, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in
Parts II, III, and IV of this Form 10-K Report: (1) Pages 17 through 31 of
the Company's Annual Report to Shareholders for the fiscal year ended
February 28, 1994 (Parts II and IV) and (2) "Election of Directors,"
"Beneficial Ownership of Securities," "Executive Compensation, "Employment
Agreements and Change-in-Control Arrangements," and "Compensation of
Directors" in the May 13, 1994 Proxy Statement, furnished to shareholders of
the Company in connection with the 1994 Annual Meeting of such shareholders
(Part III). TABLE OF CONTENTS
ITEM PAGE
PART I
1. Business 3
2. Properties 9
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 10
PART II
5. Market for Company's Common Equity and Related
Stockholder Matters 12
6. Selected Financial Data 12
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 12
8. Financial Statements and Supplementary Data 12
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 12
PART III
10. Directors and Executive Officers of the Company 11-13
11. Executive Compensation 13
12. Security Ownership of Certain Beneficial Owners
and Management 13
13. Certain Relationships and Related Transactions 13
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 14PART I
ITEM 1. BUSINESS.
Circuit City Stores, Inc. (the Company) was incorporated under the laws
of Virginia in 1949. Its corporate headquarters is located at 9950 Mayland
Drive, Richmond, Va. The Company's retail operations consist of Circuit City
Superstores, Circuit City stores, Circuit City electronics-only stores and
mall stores. Effective May 1, 1994, all Western region Superstore locations
were transferred to and will operate as part of a wholly owned subsidiary
called Circuit City Stores West Coast, Inc. The Company has a wholly owned
credit card bank subsidiary, First North American National Bank, that extends
consumer credit. In fiscal 1995, the Company will continue to test CARmax,
a retail concept selling used cars.
GENERAL.
The Company is the nation's largest retailer of brand-name consumer
electronics and major appliances. It sells video equipment, including
televisions, video cassette recorders and camcorders; audio equipment,
including home and car stereo systems, tape recorders, tape players and
compact disc players; home office products, including personal computers,
peripheral equipment and facsimile machines; other consumer electronics
products, including telephones, portable radios and entertainment software;
and microwave ovens. Most stores sell major appliances, including washers,
dryers, refrigerators and ranges. Music software, which was introduced on a
limited basis in fiscal 1993, was carried in approximately 145 stores at
April 30, 1994.
At April 30, 1994, the Company's retail operations were conducted in 293
locations nationwide. The Company's 252 Circuit City Superstores (ranging in
size from approximately 15,000 square feet to 44,000 square feet, but
predominantly between 27,000 and 32,000 square feet) sell a full line of
consumer Circuit City electronics, personal computers and major appliances.
The Company's seven Circuit City electronics-only stores (ranging in size
from 4,000 square feet to 15,000 square feet) offer the Company's full line
of consumer electronics and a limited selection of major appliances. In
fiscal 1994, the Company also introduced a new store prototype (approximately
15,000 square feet) designed to serve smaller trade areas. These stores,
which are called Circuit City, are approximately half the size of a
Superstore but carry extensive product selections in all major categories.
The Company's 32 mall stores (ranging in size from 2,000 to 4,000 square
feet) are located in shopping malls and primarily carry small gift-oriented
consumer electronics products. The mall stores operate predominately under
the Circuit City Express name.
Each of the Company's store locations follows detailed operating
procedures and merchandising programs. Included are procedures for inventory
maintenance, advertising, customer relations, store administration, display
of merchandise, security and demonstration and sale of products. Each store
carries a standard line of products selected at the corporate level and
supplied directly to the stores by the Company's regional warehouse
distribution facilities.
RETAIL.
EXPANSION. The Company's expansion strategy is based on two principles:
regional concentration and clear market leadership. The Company attempts to
minimize the expense and effort of growth by concentrating its resources in
compact areas of substantial opportunity.
The Company's three-year expansion plan for fiscal 1995 through 1997
includes approximately 180 Superstores and will move Circuit City into every
major metropolitan market in the United States except New York. The Company
also expects to open approximately 20 Circuit City stores designed to serve
smaller trade areas.
In fiscal 1995, the Company plans to open approximately 60 Superstores
in new and existing markets. In the first quarter of fiscal 1995, the
Company entered the Minneapolis, Minn. market. The Company also expects to
enter the following markets: Kansas City, Kan.; New Orleans, La.; Little
Rock, Ark.; Seattle, Wash.; Portland, Ore.; and Cleveland, Ohio. In each
regional area, stores are typically clustered within approximately 500 miles
of an automated electronics distribution center. The Company currently
operates seven automated electronics distribution centers. Smaller appliance
warehouses are located closer to certain stores to facilitate replenishment
of merchandise and to minimize freight costs. In fiscal 1995, the Company
plans to open an additional automated electronics distribution center in
Chehalis, Wash., (Western region).
The Company's goal is to secure the leading market share in each market
it serves. The benefits of this approach include improving competitive
position, maximizing sales and improving net profit margins since costs,
especially advertising, are reduced as a percentage of sales. THE CENTRAL
REGION. During fiscal 1992, the Company opened one Superstore in the
Charlotte, N.C., market; one in the Philadelphia, Penn., market; and another
in the Cincinnati, Ohio, market. A Superstore was replaced in the Norfolk,
Va., market. Also, a Superstore replaced an electronics-only store in the
Roanoke, Va., and Washington, D.C., markets.
During fiscal 1993, the Company replaced electronics-only stores with
Superstores in the Washington, D.C., and Norfolk, Va., markets; and added one
Superstore each in the Philadelphia, Penn., and Richmond, Va., markets.
During fiscal 1994, the Company entered the Chicago, Ill., market by
opening 18 Superstores. It also opened 13 Superstores in the Boston, Mass.,
market. One Superstore was replaced in the Richmond, Va., market and one new
Superstore was opened in the Philadelphia, Penn., market. In addition, the
Company's first two prototype stores for smaller trade areas were opened in
Fredericksburg and Harrisonburg, Va.
THE SOUTHERN REGION. During fiscal 1992, the Company opened one
Superstore in the St. Louis, Mo., market and one in the Tampa, Fla., market.
Another Superstore replaced an electronics-only store in the Savannah, Ga.,
market. Also, during fiscal 1992, the Company entered three new Texas
markets. Six Superstores opened in the Houston market, seven in the
Dallas/Fort Worth market and two in the Austin market.
During fiscal 1993, the Company opened one Superstore each in the
Gainesville, Orlando, Tampa, and Pensacola, Fla., markets. It replaced
electronics-only stores in the Macon and Columbus, Ga., markets with one
Superstore each. One Superstore each opened in the Baton Rouge, La., and
Tulsa, Okla., markets, and three Superstores opened in the Oklahoma City,
Okla., market. The Company expanded its presence in Texas by opening two
Superstores in the Dallas/Fort Worth market, two Superstores in the San
Antonio market, and one each in the Corpus Christi and McAllen markets.
No additional stores opened in fiscal 1994.
THE WESTERN REGION. During fiscal 1992, the Company opened two
Superstores in the Los Angeles, Calif., market. The Company also opened one
Superstore in the San Diego, Calif., market.
During fiscal 1993, the Company opened one Superstore each in the
Tucson, Ariz.; San Diego, Palm Springs, Fresno, Salinas, and San Francisco,
Calif., markets; and three in Los Angeles, Calif., market.
During fiscal 1994, the Company opened one Superstore each in the
Tucson, Ariz.; San Diego, and Los Angeles, Calif., markets; and two in the
San Francisco, Calif., market.
MALL STORES. During fiscal 1992, the Company opened 21 mall stores
under the name Impulse, including one replacement store in Richmond, Va. The
remaining new locations were in shopping malls in California (five stores),
Maryland (three stores), Illinois (two stores), New York (two stores), New
Jersey, Virginia, Pennsylvania, New Hampshire, Missouri, Arizona, Ohio and
the District of Columbia (one store each).
During fiscal 1993, the Company opened five mall stores under the name
Impulse. The new stores were located in shopping malls in California (two
stores), New York, Massachusetts and New Jersey (one store each).
During fiscal 1994, the Company closed five stores that were located in
underperforming malls -- one each in Maryland, Florida and New Jersey and two
in California. It also changed the name of most remaining stores to Circuit
City Express. The change will allow the stores to benefit from consumer
recognition of the Circuit City name.
In fiscal 1995, the Company plans to close several more mall locations
but may also open new stores, depending upon the availability of appropriate
real estate.
MERCHANDISING. Because the Company believes that local markets have
individual characteristics which vary greatly by the advertising,
merchandising and pricing strategies of competitors, it has organized its
merchandising function to focus upon markets with similar competitive
conditions. The Company's operating regions benefit from a centralized
buying organization. The central buying reduces costs by purchasing in large
volumes, structures a sound basic merchandising program, and is supported by
advanced management information and distribution systems.
The Company's merchandising strategy emphasizes a broad selection of
products, price ranges and new products. Merchandise mix and displays are
controlled centrally in an effort to insure a high level of consistency from
store to store within each market. Merchandise pricing and selling
strategies vary by market to reflect competitive conditions.
Although suggested retail prices are established by the Company's
central merchandising departments, each store manager is responsible for
shopping the local competition on a regular basis and has the authority to
adjust retail prices to meet market conditions. As part of its competitive
strategy, the Company advertises low prices and provides each customer with
a low-price guarantee. The Company will beat any legitimate price from a
local competitor stocking the same new item in a factory-sealed box. If a
customer finds a lower price, including the Company's own sales price, within
30 days, the Company will refund 110 percent of the difference to the
customer.
The Company staffs its stores with commissioned sales counselors,
support personnel (cashiers and stockmen), a store manager, one or more sales
managers and, in larger stores, an operations manager. Extensive internal
education programs are conducted at its Richmond, Chicago, Atlanta, Miami,
Dallas, Los Angeles, and San Francisco regional training centers. These
programs train sales counselors in the Company's operations and enable them
to demonstrate superior product knowledge as well as develop good
salesmanship practices. The programs are continually updated. They include
videotapes made in the Company's own studios and for all new sales counselors
a week of classroom training sessions at its regional training centers.
Including in-store training, the counselors' initial training program lasts
up to five weeks in new markets and approximately two weeks in existing
markets. In addition, on-going training and informational classes, some of
which include visits by manufacturers' representatives to explain new
products, are generally held once or twice a week at each store. The Company
also uses flyers and other written materials to provide ongoing information
to its sales force on products and marketing techniques.
To measure the Company's customer service record and ultimately the
strength of its customer relationships, over 25,000 telephone surveys are
conducted every month. These surveys cover all aspects of the Circuit City
experience including product selection and purchase, home delivery,
automotive installation centers and product repair. The surveys track the
quality of service delivered at each location and enable the Company to
quickly address any identified issues. Equally important, the survey process
helps discover opportunities for improvement and rapidly test and refine
changes before rolling them out to all locations.
The table below shows the percentage of merchandise sales for each major
product group for each of the last five fiscal years. The percentage of
sales contributed by each product group is affected by store type,
promotional activities, consumer trends and the development of new products.
Because these percentages change continually, historical percentages may not
be indicative of future results.
SALES BY MERCHANDISE CATEGORY
FISCAL YEARS ENDED FEBRUARY 28 OR 29
CATEGORY: 1994 1993 1992 1991 1990
Television 20% 23% 23% 24% 24%
VCR/Camcorders 17 19 20 22 23
Audio 21 20 21 22 22
Home Office* 12 7 5 N/A N/A
Appliances 18 19 19 18 19
Other Electronics** 12 12 12 14 12
Total 100% 100% 100% 100% 100%
* Home Office electronics are included in "other electronics" in fiscal
1990 and 1991.
** Other electronics include such products as telephones, portable radios,
portable tape players and entertainment software.
Computerized point-of-sale (POS) registers in each store communicate
data to host computers, where the information is used to manage inventory
investment and to restock distribution centers and store inventories. The
POS system automatically notifies the merchandising department when inventory
of specific products needs to be replenished without individual stores having
to place reorders. Additionally, the POS system provides store personnel
with automatic price verification, inventory status and charge card and check
verification. The system provides the regional and corporate headquarters'
staff with extensive management reports, sales accounting information,
perpetual inventory record keeping, payroll and cash management data. By
the end of fiscal 1993, the Company's new proprietary Customer Service
Information System (CSIS) had been installed in all of the Company's stores.
This system maintains an on-line history of customer purchases and enables
the Company to better assist individuals with future purchases by ensuring
that new products can be integrated with existing products in the home. It
also facilitates product returns and product repair. In addition, this
system supports Answer CitySM, a toll-free phone service introduced in fiscal
1993. Answer CitySM provides the Company's customers with access to skilled
product specialists. From their homes, customers can receive immediate
answers to basic questions regarding product usage and installation. This
service is only available to Circuit City customers.
In fiscal 1994, store systems and procedures were modified to provide
"one-stop shopping." One-stop shopping enables the customer to complete the
entire transaction with his or her sales counselor. One-stop simplifies the
buying experience for the customer and generates considerable labor savings
through reduced support staff requirements in the stores. At year-end, one-
stop was available in approximately 75 percent of the Company's stores. It
will be available in over 95 percent of the stores by the end of fiscal 1995.
In fiscal 1995, the Company's new store design features a more open
floor plan and higher ceilings that emphasize the Company's merchandise
selection. These design changes highlight the vast assortment that the
Company carries in all product categories.
ADVERTISING. The Company relies on considerable amounts of advertising
and promotion to stimulate Superstore, Circuit City store, and electronics-
only store sales. Expenditures for these items were 5.1 percent of sales in
fiscal 1994 (5.3 percent and 6.1 percent in fiscal 1993 and 1992,
respectively). The improvement in advertising as a percent to sales was
largely due to efficiencies achieved through in-house production, creative
development and media buying. Automated production equipment and
computerized data bases facilitate these processes. Also, as the Company's
market share expands in existing markets, the sales from these new stores
improve the efficiency of existing advertising expenditures. These same
efficiencies will be evidenced in the Company's expansion into smaller
trading areas, as existing television advertising in neighboring markets
already reaches many of these areas. The Company primarily uses print
advertising, including multi-page vehicles and run-of-press newspaper ads,
for Superstore, Circuit City and electronics-only store advertising. The
Company emphasizes the use of multi-page vehicles to allow a more extensive
presentation of the broad selection of products and price ranges it carries.
These multi-page vehicles are generally distributed in newspapers but are, in
some cases, mailed directly to residences outside the newspapers' area of
circulation. Print advertising is supplemented in varying degrees in local
markets by radio and television commercials.
DISTRIBUTION. The Company currently operates automated electronics
distribution centers in Doswell, Va.; and Louisville, Ky. (Central region);
Atlanta, Ga.; Orlando, Fla.; and Dallas, Texas (Southern region); City of
Industry and San Francisco, Calif. (Western region). These centers are
designed to serve stores within a 500-mile range and utilize conveyor systems
with laser barcode scanners to reduce labor requirements, prevent inventory
damage and maintain tight inventory control. The Company also operates
smaller distribution centers handling primarily appliances and larger
electronics products. The Company believes that the use of the distribution
centers enables it to efficiently distribute a broad selection of merchandise
to its stores, reduce inventory requirements at individual stores, benefit
from volume purchasing and maintain accounting control. Virtually all of the
Company's Superstore, Circuit City store, and electronics-only store
merchandise is distributed through its distribution centers.
SERVICE. The Company offers service and repair for nearly all of the
products it sells. For an additional charge, customers are offered extended
warranty plans on the merchandise it sells.
The Company has 23 regional, factory-authorized repair facilities. The
Company opened three service centers in fiscal 1994 -- one each in Chicago,
Ill.; Boston, Mass.; and Tampa, Fla. In addition, a regional service center
opened in Minneapolis, Minn., in the first quarter of fiscal 1995. To meet
customer needs, merchandise needing service or repair usually is moved by
truck from the stores to the Company's nearest regional service facility and
is returned to the customer at the store after repair. The Company also has
in-home technicians who service large items not conveniently carried to a
store.
Extended warranty plans extend coverage beyond the normal manufacturer's
warranty period, usually with terms of coverage (including the manufacturer's
warranty period) between 12 and 60 months. In fiscal 1994, the Company
introduced two third-party extended warranty plans. The first of these
programs provides in-home service, rather than the in-shop service commonly
available in the marketplace, for most personal computer products, including
peripheral equipment. This program is provided by General Electric Company,
which has a large-scale operation in place to honor these commitments, and is
available in virtually all markets. The second third-party program covers
consumer electronics and major appliances and offers extended service
programs backed by insurance from Virginia Surety Company, Inc., a subsidiary
of AON Corporation. Virginia Surety carries an A.M. Best Company rating of
superior (A+). This program is being introduced in highly competitive
markets.
The Company sells its own extended warranty contracts in markets where
the third-party programs have not been introduced.
SUPPLIERS. During fiscal 1994, the Company's 10 largest suppliers
accounted for approximately 58 percent of merchandise purchased by the
Company. The Company's major suppliers include Sony, Thomson, JVC,
Panasonic, Whirlpool, Zenith, G.E. Appliances, Kenwood, Sanyo-Fisher, and
Hitachi. Brand-name advertised products are sold by all of the Company's
retail locations. The Company has no significant long-term contracts for the
purchase of merchandise.
In the past, the Company has not experienced any significant difficulty
obtaining satisfactory sources of supply and believes that adequate sources
of supply exist for the types of merchandise sold in its stores.
COMPETITION. The brand-name consumer electronics and major appliance
business engaged in by the Company is highly competitive. The Company's
competitors include other full-service retailers, self-service retailers,
specialty retailers with differing product selections and services, general
merchandise retailers and local independent operators. Over the past three
years, the Company's competition has shifted to include more self-service
retailers, who offer a more limited product selection but at highly
competitive prices.
The Company uses pricing, selection and service to differentiate itself
from the competition. As part of its competitive strategy, the Company
strives to maintain highly competitive prices and offers every customer the
low price guarantee previously described. The Company's Superstores offer a
broad product selection that includes 3,200 to 3,600 name-brand items,
depending on the selling square footage of the Superstore. Professionally
trained sales counselors, convenient credit options, factory-authorized
product repair, home delivery, installation centers for automotive
electronics, a toll-free product support line and a 30-day return policy
reflect the Company's strong commitment to customer service.
SEASONALITY. Like other retail businesses, the Company's sales are
greater in the fourth quarter of the fiscal year than in other periods of the
fiscal year because of holiday buying patterns. A corresponding pre-seasonal
inventory build-up is associated with this sales volume. This build-up
results in a lower ratio of fixed costs to sales and produces a higher ratio
of operating income to sales in the fourth fiscal quarter. The Company's
sales for the fourth fiscal quarter (which includes the Christmas season)
were $1,406,736,000 in fiscal 1994, $1,098,252,000 in fiscal 1993, and
$903,325,000 in fiscal 1992 and represented approximately 34 percent of sales
for fiscal 1994 and 1993, and 32 percent of sales for fiscal 1992.
CONSUMER CREDIT. Because of the relatively high cost of consumer
electronics, personal computers and major appliances, the Company's business
is affected by consumer credit availability, which varies with the state of
the economy and the location of a particular store. In fiscal 1994,
approximately 19 percent of the Company's total sales were made through its
private-label credit card and 39 percent through third-party credit sources.
FIRST NORTH AMERICAN NATIONAL BANK.
As previously discussed, credit availability is important to the
Company's business. The Company established a subsidiary in fiscal 1991 to
handle its private-label credit card business. First North American National
Bank (FNANB) received its national credit card bank charter on November 19,
1990. The credit card bank subsidiary is headquartered in Marietta, Ga.
FNANB's credit extension and collection operations are fully automated
with state-of-the-art technology. This technology aids FNANB's aggressive
collection philosophy, which is comprised of early and frequent contact with
delinquent customers.
In fiscal 1994, the Company continued to experience improved customer
credit availability while FNANB maintained prudent standards for granting
credit. The Company believes this increased credit availability contributed
to the Company's comparable stores sales growth. In addition to increased
credit availability, this credit program provides the Company with additional
marketing opportunities, including direct mail campaigns to credit card
customers and special financing programs for promotions. The new credit
program also enhances the Company's customer service philosophy. Interfacing
the credit card bank subsidiary with the Company's POS system has produced a
more rapid customer credit approval process. A customer's application can be
electronically scored and qualified customers receive approval within five
minutes of input at a store.
FNANB sells receivables generated by the private-label credit programs
to non-affiliated entities under asset securitization programs with a
capacity as of February 28, 1994, of $630 million. The Company expects that
receivables generated in the future will be financed under these or similar
securitization programs.
EMPLOYEES.
On April 30, 1994, the Company had 14,400 hourly and salaried employees
and 9,300 sales employees working on a commission basis, or on a drawing
account against which commissions are applied on a combination of commissions
and salary. Additional personnel are employed during peak selling seasons.
Management of the Company considers its relationship with its employees to be
good. None of the Company's employees is subject to a collective bargaining
agreement.ITEM 2. PROPERTIES.
At April 30, 1994, the Company operated 293 retail locations, most of
which are located in or near major shopping centers in cities with
populations in excess of 165,000 in the Central, Southern, and Western
regions. The stores are all operated as either Circuit City Superstores,
Circuit City stores, Circuit City electronics-only stores, or mall stores.
The following table summarizes the Company's stores (opened and planned)
as of April 30, 1994:
<TABLE> In Various Stages
Open for Business of Development
Circuit Circuit
<S> <S>Super- <S>City <S>Electronics<S>Mall <S>Super- <S>City <S>Electronics <S>Mall
stores Stores Only Stores stores Stores Only Stores
<C>Alabama <C>5 <C>- <C>- <C>- <C>- <C>- <C>- <C>-
Arizona 6 - - 2 2 - - -
Arkansas - - - - 2 - - -
California 64 - - 4 4 - - -
Delaware - - - 1 1 - - -
District of Columbia - - - 1 - - - -
Florida 30 - - 1 3 - - -
Georgia 11 - - - 3 - - -
Illinois 18 - - 2 4 - - -
Indiana 1 - 1 - 1 - - -
Kentucky 5 - - - - - - -
Louisiana 1 - - - 4 - - -
Massachusetts 9 - - 4 1 - - -
Maryland 10 - 3 4 1 - - -
Minnesota - - - - 7 - - -
Missouri 6 - - 1 4 - - -
Nevada 3 - - - - - - -
New Hampshire 4 - - 1 - - - -
New Jersey 4 - - 1 - - - -
New York - - - 3 - - - -
North Carolina 10 - - - - - - -
Ohio 3 - - 1 3 - - -
Oklahoma 4 - - - - - - -
Oregon - - - - 5 - - -
Pennsylvania 7 - - 1 - - - -
Rhode Island 1 - - - - - - -
South Carolina 5 - - - - - - -
Tennessee 8 - 1 - 1 - - -
Texas 21 - - 1 8 2 - -
Virginia 16 2 - 4 - 1 - -
Washington - - - - 4 - - -
West Virginia - - 2 - - - - -
252 2 7 32 58 3 - -
</TABLE>
<PAGE>
Of the stores open at April 30, 1994, the Company owns seven stores and
leases the remaining 286 stores. Four of the owned stores are financed by
Industrial Development Revenue Bonds that are collateralized by the
applicable land, building, and equipment.
For information with respect to obligations for leases, see note 7 of
the Notes to Consolidated Financial Statements, on pages 29 and 30 of the
Company's 1994 Annual Report to Stockholders, which is incorporated herein by
reference.
The following table summarizes store properties in various stages of
development at April 30, 1994:
Range of
Number of Stores Expiration Dates of
Owned Leased Initial Lease Term (a)
Superstores 16 42 2009-2016
Circuit City stores 2 1 2009
18 43
(a) Many of the leases contain renewal options.
The Company owns the land but leases the building in which its corporate
headquarters is located at 9950 Mayland Drive, Richmond, Va.
The Company owns a 388,000 square-foot consumer electronics/appliance
distribution center in Doswell, Va., and a 387,000 square-foot consumer
electronics/appliance distribution center in Atlanta, Ga. These two
distribution centers have been financed with Industrial Development Revenue
Bonds.
In addition to the aforementioned properties, the Company also owns one
location used for additional office space and one location leased to others.
In addition to the above described facilities, the Company also leases
either warehouses, offices or service facilities in Nashville, Tenn.; Miami,
Orlando and Tampa, Fla.; Atlanta, Ga.; Louisville, Ky.; Charlotte and
Greensboro, N.C.; Landover, Columbia and Frederick, Md.; Norfolk and
Richmond, Va.; Los Angeles and San Francisco, Calif.; Dallas and Houston,
Texas; Boston Mass.; Chicago, Ill.; Phoenix, Ariz.; St. Louis, Mo.; and
Philadelphia, Penn.
ITEM 3. LEGAL PROCEEDINGS.
Because of the nature of the Company's businesses, the Company is a
party to various legal proceedings that are incidental to its business.
Management believes, after consultation with legal counsel, that the outcome
of these proceedings will not have a material adverse effect upon the
financial condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year ended February 28, 1994. EXECUTIVE OFFICERS OF
THE COMPANY. The following table identifies the present executive officers
of the Company. The Company is not aware of any family relationship between
any executive officers of the Company. All executive officers are generally
elected annually and serve for one year or until their successors are elected
and qualify. The next election of officers will occur in June 1994.
NAME AGE OFFICE
Richard L. Sharp 47 President and Chief Executive Officer
Walter E. Bruckart 57 Executive Vice President
- Merchandising
Richard S. Birnbaum 41 Executive Vice President
- Operations
W. Stephen Cannon 42 Senior Vice President and
General Counsel
Michael T. Chalifoux 47 Senior Vice President,
Chief Financial Officer and
Corporate Secretary
John A. Fitzsimmons 51 Senior Vice President
- Administration
W. Austin Ligon 43 Senior Vice President - Corporate
Planning and Communications
William E. Zierden 55 Senior Vice President
- Human Resources
Raymond M. Albers 52 Vice President and
Chief Information Officer
Mr. Sharp is a director and a member of the Company's executive
committee. He joined the Company in 1982 as executive vice president and was
elected president in 1984 and chief executive officer in 1986.
Mr. Bruckart was elected executive vice president - merchandising of the
Company in May 1989. He joined the Company in 1968 and was elected assistant
vice president in 1975, vice president in 1977 and senior vice president in
1980.
Mr. Birnbaum joined the Company in 1972. He was elected vice president
in 1985, Central division president in 1986, senior vice president -
marketing in 1991, and executive vice president - operations in 1994.
Mr. Cannon joined the Company in April 1994 as senior vice president and
general counsel. He was a partner in Wunder, Diefenderfer, Cannon & Thelen,
a Washington, D.C., law firm, from 1986 until he joined the Company.
Mr. Chalifoux is a director and a member of the Company's executive
committee. He joined the Company in 1983 as corporate controller and was
elected vice president and chief financial officer in 1988. He was elected
senior vice president in 1991 and became corporate secretary in 1993. Mr.
Fitzsimmons joined the Company in 1987 as senior vice president -
administration. He was senior vice president of administration of the
Marshall's Division of Melville Corporation from 1980 to 1987.
Mr. Ligon joined the Company in 1990 as vice president - corporate
planning and communications. He was elected senior vice president -
corporate planning and communications in 1991. Prior to joining the Company,
he served in various capacities with Marriott Corporation.
Mr. Zierden joined the Company in 1984 as vice president - human
resources. He was elected senior vice president - human resources in 1989.
Mr. Albers joined the Company in 1989 as vice president and chief
information officer. He was vice president of information systems for Target
Stores, a division of Dayton Hudson Corporation, from 1982 to 1989.
PART II
With the exception of the information incorporated by reference from the
1994 Annual Report to Stockholders in Item 2, of Part I and Items 5, 6, 7 and
8 of Part II and Item 14 of Part IV of this Form 10-K, the Company's 1994
Annual Report to Stockholders is not to be deemed filed as a part of this
Report.
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Incorporated herein by reference is the information appearing under the
heading "Common Stock" on page 21 of the Company's 1994 Annual Report to
Stockholders.
As of May 6, 1994, there were 7,624 holders of the Company's common
stock.
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated herein by reference is the information appearing under the
heading "Reported Historical Information" on page 17 of the Company's 1994
Annual Report to Stockholders.
The Company adopted FASB Technical Bulletin No. 90-1, "Accounting for
Separately Priced Extended Warranty and Product Maintenance Contracts," as of
March 1, 1990. The cumulative effect of adoption was a reduction in earnings
of $53,500,000, net of tax benefit, ($0.58 per share) in fiscal 1991.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Incorporated herein by reference is the information appearing under the
heading "Management's Discussion and Analysis of Results of Operations and
Financial Condition" on pages 17 through 21 of the Company's 1994 Annual
Report to Stockholders, except for the information appearing on page 21 of
such Annual Report under the heading "Common Stock."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Incorporated herein by reference is the information appearing under the
headings "Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Cash Flows," "Consolidated Statements of
Stockholders' Equity," "Notes to Consolidated Financial Statements," and
"Independent Auditors' Report," on pages 22 through 31 of the Company's 1994
Annual Report to Stockholders. Incorporated herein by reference is the
information appearing under the heading "Note 10. Quarterly Financial Data
(Unaudited)" on page 30 of the Company's 1994 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None. PART III
Certain information required by Part III is omitted from this Report in
that the Company will file a definitive proxy statement pursuant to
Regulation 14A (the Proxy Statement) not later than 120 days after the end of
the fiscal year covered by this Report and certain information included
therein is incorporated herein by reference.
With the exception of the information incorporated by reference from the
Company's Proxy Statement in Items 10, 11 and 12 of Part III and exhibits
10(g) and 10(v) of this Form 10-K, the Company's Proxy Statement dated May
13, 1994, is not to be deemed filed as a part of this Report.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The information concerning the Company's directors required by this Item
is incorporated by reference to the section entitled "Election of Directors"
appearing at pages 1 through 3 of the Company's Proxy Statement dated May 13,
1994.
The information concerning the Company's executive officers required by
this Item is incorporated by reference to the section in Part I hereof
entitled "Executive Officers of the Company."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference to
the sections entitled "Executive Compensation," "Employment Agreements and
Change-In-Control Arrangements," and "Compensation of Directors," appearing
at pages 7 through 9 and pages 12 and 13 of the Company's Proxy Statement
dated May 13, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated by reference to
the section entitled "Beneficial Ownership of Securities" appearing at pages
4 and 5 of the Company's Proxy Statement dated May 13, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements. The following Consolidated Financial
Statements of Circuit City Stores, Inc. and subsidiaries and the
related Independent Auditors' Report are incorporated by
reference to pages 22 through 31 of the Company's 1994 Annual
Report to Shareholders:
Consolidated Statements of Earnings for the fiscal years ended
February 28, 1994, February 28, 1993 and February 29, 1992.
Consolidated Balance Sheets at February 28, 1994 and 1993.
Consolidated Statements of Cash Flows for the fiscal years ended
February 28, 1994, February 28, 1993, and February 29, 1992.
Consolidated Statements of Stockholders' Equity for the fiscal
years ended February 28, 1994, February 28, 1993, and
February 29, 1992.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
2. Financial Statement Schedules. The following financial
statement schedules of Circuit City Stores, Inc. for the fiscal
years ended February 28, 1994, February 28, 1993, and
February 29, 1992, are filed as part of this Report and should
be read in conjunction with the Consolidated Financial
Statements of Circuit City Stores, Inc.:
II Amounts Receivable from Related Parties S-1
V Property, Plant and Equipment S-2
VI Accumulated Depreciation and Amortization
of Property, Plant and Equipment S-3
VIII Valuation and Qualifying Accounts and
Reserves S-4
Independent Auditors' Report on Financial
Statement Schedules S-5
Schedules not listed above have been omitted because they
are not applicable or are not required or the information
required to be set forth therein is included in the
Consolidated Financial Statements or Notes thereto.
3. EXHIBITS. The Exhibits listed on the accompanying Index to
Exhibits immediately following the financial statement
schedules are filed as part of, or incorporated by reference
into, this Report.
(b) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the last
fiscal quarter covered by this Report.
S-1
SCHEDULE II
CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES
BALANCE AT
BALANCE AT
BEGINNING REDUCTIONS/ END
OF YEAR
NAME OF DEBTOR OF YEAR ADDITIONS PAYMENTS CURRENT
NON-CURRENT
Year Ended
February 29, 1992:
- - -None-
Year Ended
February 28, 1993:
Leonard Kaplan $ - $111,750(a) $ - $111,750
$ -
Robert Timbrook $ 45,000 $ 60,000(a) $ 79,178 $ 25,822
$ -
Year Ended
February 28, 1994:
Leonard Kaplan $111,750 $ - $111,750 $ -
$ -
Robert Timbrook $ 25,822 $ - $ 25,822 $ -
$ -
(a) This indebetdness is represented by an interest bearing
demand note.
S-2
SCHEDULE V
CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(AMOUNTS IN THOUSANDS)
BALANCE AT BALANCE AT
BEGINNING ADDITIONS RETIREMENT END OF
DESCRIPTION OF YEAR AT COST OR SALES YEAR
YEAR ENDED FEBRUARY 29, 1992:
Land & Buildings $172,158 $ 56,534 $111,042 $117,650
Furniture & Equipment 126,263 35,182 3,791 157,654
Leasehold Improvements 145,435 17,874 1,380 161,929
TOTAL $443,856 $109,590 $116,213 $437,233
YEAR ENDED FEBRUARY 28, 1993:
Land & Buildings $117,650 $98,673 $81,670 $134,653
Furniture & Equipment 157,654 53,273 12,730 198,197
Leasehold Improvements 161,929 37,703 15,949 183,683
TOTAL $437,233 $189,649 $110,349 $516,533
YEAR ENDED FEBRUARY 28, 1994:
Land & Buildings $134,653 $126,937 $128,942 $132,648
Furniture & Equipment 198,197 87,519 2,905 282,811
Leasehold Improvements 183,683 37,800 389 221,094
TOTAL $516,533 $252,256 $132,236 $636,553
S-3
SCHEDULE VI
CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Amounts in thousands)
BALANCE AT BALANCE AT
BEGINNING ADDITIONS RETIREMENT END OF
DESCRIPTION OF YEAR AT COST OR SALES YEAR
YEAR ENDED FEBRUARY 29, 1992:
Buildings $ 15,030 $ 4,001 $ 4,869 $ 14,162
Furniture & Equipment 45,397 21,094 613 65,878
Leasehold Improvements 27,977 10,625 713 37,889
TOTAL $ 88,404 $ 35,720 $ 6,195 $117,929
YEAR ENDED FEBRUARY 28, 1993:
Buildings $ 14,162 $ 3,603 $ 396 $ 17,369
Furniture & Equipment 65,878 26,765 11,896 80,747
Leasehold Improvements 37,889 11,337 1,600 47,626
TOTAL $117,929 $ 41,705 $ 13,892 $145,742
YEAR ENDED FEBRUARY 28, 1994:
Buildings $ 17,369 $ 4,221 $ 467 $ 21,123
Furniture & Equipment 80,747 37,382 1,500 116,629
Leasehold Improvements 47,626 13,409 330 60,705
TOTAL $145,742 $55,012 $ 2,297 $198,457
S-4
SCHEDULE VIII
CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in thousands)
BALANCE AT CHARGED CHANGE BALANCE AT
BEGINNING TO IN END OF
DESCRIPTION OF YEAR INCOME RESERVE YEAR
Reserves deducted from
assets to which they apply:
YEAR ENDED FEBRUARY 29, 1992:
Allowance for doubtful accounts $ 835 $3,796 $(1,300) $3,331
YEAR ENDED FEBRUARY 28, 1993:
Allowance for doubtful accounts $3,331 $2,498 $ (580) $5,249
YEAR ENDED FEBRUARY 28, 1994:
Allowance for doubtful accounts $5,249 $4,604 $(3,002) $6,851
S-5
[LETTERHEAD OF KPMG PEAT MARWICK]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Board of Directors
Circuit City Stores, Inc.:
Under date of April 4, 1994, we reported on the consolidated balance sheets
of Circuit City Stores, Inc. and subsidiaries (the Company) as of February
28, 1994 and 1993, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the fiscal years in the
three-year period ended February 28, 1994, as contained in the February 28,
1994 annual report to stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the annual report on
Form 10-K for the year ended February 28, 1994. In connection with our
audits of the aforementioned consolidated financial statements, we also have
audited the related financial statement schedules as listed in Item 14(a)2 of
this Form 10-K. These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits.
In our opinion, such schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in Note 1(G) to the consolidated financial statements, the
Company changed its method of accounting for income taxes in fiscal 1993.
s/KPMG PEAT MARWICK
Richmond, Virginia
April 4, 1994
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
CIRCUIT CITY STORES, INC.
(Registrant)
By s/Richard L. Sharp
Richard L. Sharp
President and
Chief Executive Officer
By s/Michael T. Chalifoux
Michael T. Chalifoux
Senior Vice President,
Chief Financial Officer and
Corporate Secretary
By s/Keith D. Browning
Keith D. Browning
Corporate Controller and
Chief Accounting Officer
CIRCUIT CITY STORES, INC.
ANNUAL REPORT ON FORM 10-K
INDEX TO EXHIBITS
(3) Articles of Incorporation and Bylaws EXHIBIT
(a) Amended and Restated Articles of Incorporation of
the Company, effective January 27, 1990, filed as
Exhibit 3(a) to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28,
1993, (File No. 1-5767) are expressly incorporated
herein by this reference.
(b) Articles of Amendment to the Amended and Restated
Articles of Incorporation of the Company effective
February 26, 1993, filed as Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993,
(File No. 1-5767) are expressly incorporated herein
by this reference.
(c) Bylaws of the Company, as amended and restated
April 15, 1994, are filed herewith. A
(4) Instruments Defining the Rights of Security Holders,
Including Indentures
(a) Rights Agreement dated April 29, 1988, between the
Company and Crestar Bank, as Rights Agent, filed
as Exhibit (2) to Company's Form 8-A Registration
Statement (File No. 1-5767) filed on May 23, 1988,
is expressly incorporated herein by this reference.
(b) $100,000,000 Credit Agreement dated June 30, 1992,
between the Company, Crestar Bank, NationsBank of
Virginia, N.A., Bank of America, N.T. & S.A. and
Signet Bank/Virginia. Pursuant to Item
601(b)(4)(iii) of Regulation S-K, in lieu of filing
a copy of such agreement, Registrant agrees to
furnish a copy of such agreement to the Commission
upon request.
(c) Pooling and Servicing Agreement dated as of
February 1, 1992, among the Company, First
North American National Bank and Bankers Trust
Company, as Trustee, filed as Exhibit 10(ff) to
Company's Annual Report on Form 10-K for fiscal
year ended February 29, 1992, (File No. 1-5767)
is expressly incorporated herein by this reference.
(d) Amendment No. 1 dated as of February 4, 1994, B
to Pooling and Servicing Agreement dated as of
February 1, 1992, among the Company, First
North American National Bank and Bankers Trust
Company, as Trustee, is filed herewith.
(e) Letter of Credit Reimbursement Agreement dated
as of February 18, 1992, among the Company,
First North American National Bank, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
as Agent, and the Letter of Credit Banks named
therein, filed as Exhibit 10(gg) to Company's
Annual Report on Form 10-K for fiscal year ended
February 29, 1992, (File No. 1-5767) is expressly
incorporated herein by this reference.
(f) Amendment No. 1 dated as of October 1, 1993, to C
the Letter of Credit Reimbursement Agreement
dated as of February 18, 1992, among the Company,
First North American National Bank, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
as Agent, and the Letter of Credit Banks named
therein, is filed herewith.
(g) Amendment No. 2 dated as of February 4, 1994, D
to the Letter of Credit Reimbursement Agreement
dated as of February 18, 1992, as amended, among
the Company, First North American National Bank,
Bank of America National Trust and Savings
Association, as successor Agent, and the Letter
of Credit Banks named therein, is filed herewith.
(h) Transfer and Administration Agreement dated as
of August 27, 1993, among the Company, First
North American National Bank and Freedom Asset
Funding Corporation. Pursuant to Item
601(b)(4)(iii) of Regulation S-K, in lieu of
filing a copy of such agreement, Registrant
agrees to furnish a copy of such agreement to
the Commission upon request.
(i) Amended and Restated Transfer and Administration
Agreement dated as of January 26, 1994, among
the Company, First North American National Bank
and Enterprise Funding Corporation. Pursuant
to Item 601(b)(4)(iii) of Regulation S-K, in
lieu of filing a copy of such agreement,
Registrant agrees to furnish a copy of such
agreement to the Commission upon request.
(10) Material Contracts
(a) Company's 1986 Stock Incentive Plan, as
amended, filed as Exhibit 4(g) to the
Company's Registration Statement on Form S-8
(Registration No. 33-17876) filed on
October 16, 1987, is expressly incorporated
herein by the reference.
(b) Amendments to Company's 1986 Stock Incentive
Plan filed as Exhibit 10(k) to Company's
Annual Report on Form 10-K for the fiscal year
ended February 28, 1990, (File No. 1-5767)
are expressly incorporated herein by this
reference.
(c) Company's 1988 Stock Incentive Plan, filed as
Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended
February 28, 1993, (File No. 1-5767) is
expressly incorporated herein by this reference.
(d) Amendments to the Company's 1988 Stock Incentive
Plan filed as Exhibit 10(l) to Company's Annual
Report on Form 10-K for the fiscal year ended
February 29, 1990, (File No. 1-5767) is expressly
incorporated herein by this reference.
(e) Amendment to the Company's 1988 Stock Incentive
Plan filed as Exhibit 4(h) to Company's
Registration Statement on Form S-8 (Registration
No. 33-50144) filed on July 28, 1992, is
expressly incorporated herein by this reference.
(f) Company's 1989 Non-Employee Directors' Stock
Option Plan, filed as Exhibit A to Company's
Definitive Proxy Statement dated May 21, 1990,
for the Annual Meeting of Stockholders held on
July 19, 1990, is expressly incorporated
herein by this reference.
(g) Company's 1994 Stock Incentive Plan filed as
Exhibit A to Company's Definitive Proxy
Statement dated May 14, 1994, for the Annual
Meeting of Stockholders to be held on June 14,
1994, is expressly incorporated herein by this
reference.
(h) Employment agreement dated June 21, 1983,
between the Company and Alan L. Wurtzel, filed
as Exhibit 10(w) to Company's Registration
Statement on Form S-2 (Registration No. 2-83555),
is expressly incorporated herein by this
reference.
(i) Amendment dated September 8, 1983, to employment
agreement dated June 21, 1983, between Company
and Alan L. Wurtzel, filed as Exhibit 10(h) to
the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993,
(File No. 1-5767) is expressly incorporated herein
by this reference.
(j) Amendment dated December 2, 1986, to employment
agreement dated June 21, 1983, between the Company
and Alan L. Wurtzel, filed as Exhibit 10(k) to
Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1989, (File
No. 1-5767) is expressly incorporated herein by
this reference.
(k) Amendment dated May 24, 1989, to employment
agreement dated June 21, 1983, between Company
and Alan L. Wurtzel filed as Exhibit 10(m) to
Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1990, (File
No. 1-5767) is expressly incorporated herein
by this reference.
(l) Amendment dated June 16, 1992, to employment
agreement dated June 21, 1983, between Company
and Alan L. Wurtzel, filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993,
(File No. 1-5767) is expressly incorporated
herein by this reference.
(m) Employment agreement between Company and
William Zierdan dated January 1, 1988, and
amendment dated August 1, 1989, to the
employment agreement, filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993,
(File No. 1-5767) is expressly incorporated
herein by this reference.
(n) Employment agreement between Company and
Richard L. Sharp dated October 17, 1986,
and amendment dated August 1, 1989, to the
employment agreement, filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1993,
(File No. 1-5767) is expressly incorporated
herein by this reference.
(o) Employment agreement dated June 1, 1988,
between Company and John A. Fitzsimmons,
filed as Exhibit 10(n) to Company's Annual
Report on Form 10-K for the fiscal year ended
February 28, 1989, (File No. 1-5767) is
expressly incorporated herein by this reference.
(p) Amendment dated August 1, 1989, to employment
agreement dated June 1, 1988, between Company
and John A. Fitzsimmons, filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993,
(File No. 1-5767) is expressly incorporated
herein by this reference.
(q) Employment agreement dated June 1, 1988,
between Company and Walter Bruckart, filed as
Exhibit 10(o) to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28,
1989, (File No. 1-5767) is expressly incorporated
herein by this reference.
(r) Amendment dated August 1, 1989, to employment
agreement dated June 1, 1988, between Company
and Walter Bruckart, filed as Exhibit 10(h) to
the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, (File
No. 1-5767) is expressly incorporated herein by
this reference.
(s) Employment agreement dated May 25, 1989, between
Company and Michael T. Chalifoux, filed as Exhibit
10(x) to Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1991, (File
No. 1-5767) is expressly incorporated hereby by
this reference.
(t) Employment agreement dated March 1, 1991, between
Company and Bernard W. Andrews, filed as Exhibit
10(w) to Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1991, (File
No. 1-5767) is expressly incorporated hereby by
this reference.
(u) Company's Bonus Program for Fiscal 1993, (as
applicable to executive officers) filed as Exhibit
10(t) to Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, (File
No. 1-5767) is expressly incorporated herein by
this reference.
(v) Company's Annual Performance Based Bonus Plan
filed as Exhibit B to Company's Definitive Proxy
Statement dated May 14, 1994, for the Annual
Meeting of Stockholders to be held on June 14,
1994, is expressly incorporated herein by this
reference.
(13) Annual Report to Shareholders E
(21) Subsidiaries of the Company F
(23) Consents of Experts and Counsel G
Consent of KPMG Peat Marwick to Incorporation by Reference of
Independent Auditors' Reports into Company's Registration Statements on Form
S-8.
(24) Power of Attorney
Powers of Attorney are located immediately following the signature
pages.
May 27, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
Alan L. Wurtzel* Director May 27, 1994
Alan L. Wurtzel
Michael T. Chalifoux* Director May 27, 1994
Michael T. Chalifoux
Richard N. Cooper* Director May 27, 1994
Richard N. Cooper
Douglas D. Drysdale* Director May 27, 1994
Douglas D. Drysdale
Barbara S. Feigin* Director May 27, 1994
Barbara S. Feigin
Theodore D. Nierenberg* Director May 27, 1994
Theodore D. Nierenberg
Norman Ricken* Director May 27, 1994
Norman Ricken
Walter J. Salmon* Director May 27, 1994
Walter J. Salmon
s/Richard L. Sharp Director May 27, 1994
Richard L. Sharp
Edward Villanueva* Director May 27, 1994
Edward Villanueva
*By: s/Richard L. Sharp
Richard L. Sharp,
Attorney-In-Fact
The original powers of attorney authorizing Richard L. Sharp and Michael T.
Chalifoux, or either of them, to sign this annual report on behalf of certain
directors and officers of the Company follow immediately after this page.
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below,
the Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for
its fiscal year ended February 28, 1994 and any amendment which
such attorney or attorneys-in-fact may deem appropriate or
necessary.
s/Edward Villanueva
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Walter J. Salmon
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Norman Ricken
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Theodore D. Nierenberg
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Barbara S. Feigin
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Douglas D. Drysdale
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Richard N. Cooper
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp and Michael T. Chalifoux
and each of them, my true and lawful attorney-in-fact to sign on
my behalf, as an individual and in the capacity stated below, the
Annual Report on Form 10-K of CIRCUIT CITY STORES, INC. for its
fiscal year ended February 28, 1994 and any amendment which such
attorney or attorneys-in-fact may deem appropriate or necessary.
s/Alan L. Wurtzel
Director
POWER OF ATTORNEY
I hereby appoint Richard L. Sharp my true and lawful
attorney-in-fact to sign on my behalf, as an individual and in
the capacity stated below, the annual report on Form 10-K of
Circuit City Stores, Inc. for its fiscal year ended February 28,
1994 and any amendment which such attorney-in-fact may deem
appropriate or necessary.
s/Michael T. Chalifoux
Michael T. Chalifoux,
Chief Financial Officer and
Director
POWER OF ATTORNEY
I hereby appoint Michael T. Chalifoux my true and lawful
attorney-in-fact to sign on my behalf, as an individual and in
the capacity stated below, the annual report on Form 10-K of
Circuit City Stores, Inc. for its fiscal year ended February 28,
1994 and any amendment which such attorney-in-fact may deem
appropriate or necessary.
s/Richard L. Sharp
Richard L. Sharp,
Chief Executive Officer and
Director
CIRCUIT CITY STORES, INC.
B Y - L A W S
AS AMENDED AND RESTATED AS OF APRIL 15, 1994
OFFICES RECORDS
1. Place 32. Form of Stock Certificate
33. Lost Certificates
STOCKHOLDERS MEETINGS 34. Transfer of Stock
35. Registered Stockholders
2. Place of Meeting
3. Annual Meetings OTHER MATTERS
4. Special Meetings
5. Notices 36. Notices
6. Adjourned Meetings 37. Registered Office and
7. Voting Agent
8. Stockholders Entitled 38. Corporate Records
to Vote 39. Request for Financial
9. Quorum Statement
40. Voting Stock in Other
DIRECTORS Corporations
41. Seal
10. Responsibility of Directors 42. Amendment of By-Laws
11. Number of Directors 43. Fiscal Year
12. (a) Directors' Nominations 44. General
(b) Directors' Terms
13. Directors' Meetings
14. Notice of Meetings
15. Compensation
16. Director Emeritus
17. Executive Committee
18. Audit Committee
19. Compensation and Personnel Committee
20. Nominating and Structure Committee
21. Other Committees
OFFICERS
22. Officers
23. Election of Officers
24. Chairman of the Board
(a) Vice Chairman of the Board
25. President
26. Vice Presidents
27. Secretary
28. Assistant Secretary
29. Treasurer
30. Other Officers
31. Compensation<PAGE>
CIRCUIT CITY STORES, INC.
B Y - L A W S
OFFICES
1. PLACE: The principal office of the Corporation shall be in the
County of Henrico, State of Virginia.
STOCKHOLDERS
2. PLACE OF MEETING: Meetings of the stockholders shall be held at the
principal office of the Corporation or at such other place which shall be
approved by the Board of Directors and designated in the notice of the
meeting. Meetings may be held either within or without the State of
Virginia.
3. ANNUAL MEETING: Commencing with the year 1979, the annual meeting of
the stockholders of the Corporation shall be held on the third Wednesday in
June of each year, or at such other time and place which shall be approved
by the Board of Directors and designated in the notice of meeting. Such
meetings may be held either within or without the State of Virginia. At
the annual meeting the stockholders shall elect a Board of Directors and
transact such other business as may properly be brought before them.
4. SPECIAL MEETINGS: Special meetings of the stockholders may be called
by the Board of Directors, the Chairman of the Board and the President of
the Corporation.
5. NOTICES: Written notice by mail shall be given in accordance with
Section 36, stating the place, date and hour of a meeting of stockholders
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be given to each stockholder of record entitled to
vote at the meeting not less than ten (10) nor more than fifty (50) days
before the date of the meeting, by or at the direction of the President,
the Secretary, or the officer or persons calling the meeting. The notice
shall be deemed to be given when it is deposited with postage prepaid in
the United States mail addressed to the stockholder at the address as it
appears on the stock transfer books of the Corporation. Notice of a
meeting to act on an amendment of the Articles of Incorporation or on
reduction of stated capital or on a plan of merger, consolidation or
exchange shall be given in the manner provided above not less than twenty-
five (25) nor more than fifty (50) days before the date of the meeting.
Such notice shall be accompanied by a copy of the proposed amendment or
plan of reduction or merger, consolidation or exchange.
6. ADJOURNED MEETINGS: If a meeting is adjourned for lack of a quorum,
any matter which might have properly come before the original meeting may
came before the adjourned meeting when reconvened.
7. VOTING: Each share of stock shall have one vote on all matters on
which stockholders are entitled to vote. A stockholder may vote either in
person or by proxy executed in writing by the stockholder or a duly
authorized attorney-in-fact.
8. STOCKHOLDERS ENTITLED TO VOTE: In lieu of closing the stock transfer
books, the Board of Directors shall fix a date which is not more than fifty
(50) days in advance of the date on which the particular action is to be
taken as the record date for any such determination of stockholders.
9. QUORUM: A majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders.
Treasury shares and shares held by a corporation of which the Corporation
owns a majority of the shares entitled to vote for the directors thereof
shall not be entitled to vote or to be counted in determining the total
number of outstanding shares entitled to vote. If a quorum is present,
action on a matter, other than the election of directors, is approved if
the votes cast favoring the action exceed the votes cast opposing the
action. In the election of directors, those receiving the greatest number
of votes shall be deemed elected even though not receiving a majority. At
each election for directors, every stockholder entitled to vote shall have
the right to vote the number of shares owned by him for as many persons as
there are directors to be elected at that time and for whose election he
has a right to vote.
DIRECTORS
10. RESPONSIBILITY OF DIRECTORS: The affairs and business of the
Corporation shall be under the management of its Board of Directors and
such officers and agents as the Board of Directors may elect and employ.
11. NUMBER OF DIRECTORS: The number of directors shall be ten (10) and
they shall be elected at the annual meeting of the stockholders or at a
special meeting of the stockholders called for such a purpose. This number
may be increased or decreased from time to time by amendment to these by-
laws to the extent permitted by law and by the Corporation's Articles of
Incorporation. They shall be elected by the stockholders for terms of
three (3) years in the manner set forth in the Articles of Incorporation
and shall serve until the election of their successors.
12. (a) DIRECTORS' NOMINATIONS: Nominations for the election of
directors may be made by the Board of Directors or by any stockholder
entitled to vote in the election of directors generally. However, any
stockholder entitled to vote in the election of directors generally may
nominate one or more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation not later than
(i) with respect to an election to be held at an annual meeting of
stockholders (other than the 1986 annual meeting), 120 days in advance of
such meeting, (ii) with respect to an election to be held at the 1986
annual meeting, March 1, 1986 and (iii) with respect to a special meeting
of stockholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first
given to stockholders.
Each such notice shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such stockholder
as would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission, had the nominee
been nominated, or intended to be nominated, by the Board of Directors; and
(e) the consent of each nominee to serve as a director of the Corporation
if so elected. The Chairman may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
12. (b) DIRECTORS' TERM: No decrease in the number of directors shall
have the effect of changing the term of any incumbent director. Unless a
director resigns or is removed by the majority vote of the stockholders,
every director shall hold office for the term elected or until a successor
shall have been elected. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors; provided,
however, that the aggregate number of vacancies resulting from increases in
the number of directors which may be created and filled by action of the
Board of Directors between annual meetings of stockholders shall be limited
to two. The act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
13. DIRECTORS' MEETING: The annual meeting of the directors shall be held
immediately after the annual meeting of the stockholders. The Board of
Directors, as soon as may be convenient after the annual meeting of the
stockholders at which such directors are elected, shall elect from their
number a Chief Executive Officer (CEO) who shall be the Chairman of the
Board or the President, as the Board shall designate. Special meetings may
be called by the CEO, the Board of Directors or any two directors by giving
notice of the time and place in accordance with Section 14. Special
meetings of the Board of Directors (or any committee of the Board) may be
held by telephone or similar communication equipment whereby all persons
participating in the meeting can hear each other, at such time as my be
prescribed, upon call of the CEO or any two members of the Board. A quorum
shall be a majority of the directors. Action may be taken by the directors
or a committee of the Board of Directors without a meeting if a written
consent, setting forth the action, shall be signed by all of the directors
or committee members either before or after such action. Such consent
shall have the same force and effect as a unanimous vote.
14. NOTICE OF MEETING: At the annual meeting of the Board of Directors
each year and at any meeting thereafter, the Board shall designate the
dates, times and places of regular meetings of the Board for the ensuing
calendar year, and no notice of any kind need be given thereafter with
respect to such regular meetings. Notice of any special meeting of the
Board shall be by oral, telegraphic or written notice duly given to each
director not less than five (5) days before the date of the proposed
meeting, but a waiver of notice of such meeting in writing, signed by a
director of the Corporation before or after the time stated in such notice,
shall be equivalent to the giving of such notice. Attendance at a meeting
shall be deemed a waiver of notice of such meeting, unless the sole purpose
of attending the meeting shall be to object to the transaction of any
business.
15. COMPENSATION: Directors shall not receive a stated salary for their
services, but directors may be paid a fixed sum and expenses for attendance
at any regular or special meeting of the Board of Directors or any meeting
of any Committee and such other compensation as the Board of Directors
shall determine. A director may serve or be employed by the Corporation in
any other capacity and receive compensation thereafter.
16. DIRECTOR EMERITUS: The Board may appoint to the position of Director
Emeritus any retiring director who has served not less than three years as
a director of the Corporation. Such person so appointed shall have the
title of "Director Emeritus" and shall be entitled to receive notice of,
and to attend all meetings of the Board, but shall not in fact be a
director, shall not be entitled to vote, shall not be counted in
determining a quorum of the Board and shall not have any of the duties or
liabilities of a director under law.
17. EXECUTIVE COMMITTEE: With the approval of a majority of the whole
Board of Directors, two or more directors may be designated to constitute
an Executive Committee. The Executive Committee may exercise all corporate
powers of the Corporation and manage its business and affairs to the same
extent as the Board of Directors, subject to the limitations set forth in
Section 13.1-689 of the Virginia Stock Corporation Act and any successor
legislation thereto. The Board of Directors may at any time, by
resolution, limit the powers of the Executive Committee. The Executive
Committee may meet at scheduled times or, upon notice to each member, hold
a special meeting. The Executive Committee shall keep minutes of its
meetings. Vacancies in the membership of the Executive Committee shall be
filled by the Board of Directors.
18. AUDIT COMMITTEE: The Board of Directors shall appoint each year an
Audit Committee, composed exclusively of outside directors, which shall
perform such duties as they consider necessary and desirable to properly
evaluate and generally supervise the Corporation's accounting procedures
including but not limited to the following:
1. Recommend outside auditors to the Board.
2. Determine that the scope of the audit is adequate and
approve the audit fee.
3. Review audit results with the outside auditors.
4. Review and approve the retention of the outside
auditors to perform non-audit services and approve the
fee therefor.
5. Recommend policy for the scope, frequency, and method
of internal audit reports and review the results
thereof. Develop a direct line of communication with
internal auditors, if and when such are employed.
6. Review all filings with the Securities and Exchange
Commission.
7. Review pending lawsuits.
8. Review insurance coverage.
The Audit Committee should develop and follow a comprehensive checklist so
as to ensure that the Committee's inquiries of the outside auditors and
management are systematic in scope. This Committee shall have free access
to the outside auditors and to the Corporation's general counsel. Meetings
of the Committee should be scheduled not less than three times each year,
with a portion of each meeting being held without management
representatives present. Minutes of such meetings should be kept and
reports made to the entire Board of Directors.
19. COMPENSATION AND PERSONNEL COMMITTEE: The Board of Directors shall
appoint each year a Compensation and Personnel Committee, which shall be
composed of three outside directors, and shall have the following duties:
1. Review and recommend to the Board current management compensation
programs including salaries, bonuses and fringe benefits and the creation
of new officerships.
2. Review and report to the Board on the funding and adequacy of
existing retirement programs, and recommend new programs, if appropriate.
(This responsibility does not include investment policy and other
responsibilities of the Trustees of the Profit Sharing Fund.)
3. Award and administer pursuant to existing authority, the
Corporation's Stock Option and Performance Share Programs and review and
recommend similar future programs, if any.
4. Review top management organization, assist the CEO in determining
that the Corporation has adequate depth and breadth of management to carry
out its expansion programs and to provide for succession in the event of
retirement or the unanticipated departure of a key executive.
5. Review the Corporation's programs for attracting, developing and
compensating management personnel at lower and middle levels.
20. NOMINATING AND STRUCTURE COMMITTEE: The Board of Directors shall
appoint each year a Nominating and Structure Committee, which shall be
composed of the Chairman of the Board and two outside directors. The
functions of this Committee shall include the following:
1. Review the performance and contribution of existing directors for
the purpose of recommending whether they be nominated for a successive
term.
2. Recommend policies with regard to the size, composition and
function of the Board.
3. Suggest persons to fill vacancies on the Board and maintain files
on names submitted.
4. Assist the Chairman of the Board in carrying out an orientation
program for new directors.
5. Review and recommend to the Board changes and improvements in the
functioning of the Board.
6. Review and recommend compensation levels for outside directors.
21. OTHER COMMITTEES: The Board of Directors may designate such other
committees as it deems advisable. Each committee shall consist of at least
two (2) directors and, to the extent provided by the resolution of the
Board of Directors, shall have and exercise such powers of the Board of
Directors in the management of the business and affairs of the Corporation
as may be lawfully delegated.
OFFICERS
22. OFFICERS: The officers of the Corporation shall be a President, a
Secretary and a Treasure, each of whom shall be elected by the Board of
Directors. In addition, the Board of Directors may elect or the President,
if so authorized by the Board of Directors, may appoint one or more Vice
Presidents and other officers or assistant officers as may be deemed
necessary or advisable to carry on the business of the Corporation. The
President shall be a member of the Board of Directors. Any two offices may
be combined in the same person except the offices of President and
Secretary.
23. ELECTION AND REMOVAL OF OFFICERS, TERM: Officers shall be elected at
the annual meeting of the Board of Directors immediately following the
annual meeting of stockholders or appointed at the time thereof, and may be
elected or appointed at such other time or times as the Board of Directors
or the persons authorized to make appointments shall determine. All
officers shall hold office, unless removed, until the time of the next
annual meeting of the Board of Directors or until their successors are
elected. Any officer may resign at any time upon written notice to the
President or the Board of Directors, and such resignation shall be
effective when notice is delivered unless the notice specifies a later
effective date. Elected officers may be removed, with or without cause, at
any time by the Board of Directors. Appointed officers may be similarly
removed by the persons having the authority to appoint them or by the Board
of Directors.
24. CHAIRMAN OF THE BOARD: The Chairman of the Board, if one is
designated by the Board of Directors, shall preside at all meetings of the
Board and of stockholders and perform such other duties as the Board shall
assign from time to time.
(a) VICE CHAIRMAN OF THE BOARD: The Vice Chairman of the Board, if
one is designated by the Board of Directors, shall at the request of or in
the absence of the Chairman of the Board, preside at meetings of the Board
and of stockholders and, when requested to do so, by the Board, shall
perform all of the functions of the Chairman of the Board during the
absence or incapacity of the latter.
25. PRESIDENT: The President, in the absence of the Chairman of the Board
and the Vice Chairman of the Board, shall preside at all meetings of the
Board of Directors and stockholders, shall have power to call special
meetings of the stockholders and directors for any purpose; may hire,
appoint and discharge, subject to the approval of the Board of Directors,
employees and agents of the Corporation and fix their compensation; may
make and sign deeds, mortgages, deeds of trust, notes, leases, contracts
and agreements in the name and on behalf of the Corporation; shall have
power to carry into effect all directions of the Board of Directors; and
shall have general supervision of the business of the Corporation; and
shall have general supervision of the business of the Corporation, except
as may be limited by the Board of Directors, the Articles of Incorporation,
or these bylaws.
26. VICE PRESIDENT: Such Vice Presidents, in the order designated by the
Board of Directors from time to time, shall exercise all of the functions
of the President during the absence or incapacity of the latter.
27. SECRETARY: The Secretary shall be the ex-officio clerk of the Board
of Directors and shall give, or cause to be given, notices of all meetings
of stockholders and directors, and all other notices required by law or by
these by-laws. The Secretary shall record the proceedings of the meetings
of the stockholders and directors in a book kept for that purpose and shall
keep the seal of the Corporation and attach it to all documents requiring
such impression unless some other officer is designated to do so by the
Board of Directors. The Secretary shall also perform such other duties as
may be assigned by the Board of Directors.
28. ASSISTANT SECRETARY: There may be one or more Assistant Secretaries
who shall exercise all of the functions of the Secretary during the absence
or incapacity of the latter and such other duties as may be assigned from
time to time by the Board of Directors.
29. TREASURER: The Treasurer shall keep or cause to be kept full and
accurate books of account, and may make and sign deeds, mortgages, deeds of
trust, notes, leases, contracts and agreements in the name and on behalf of
the Corporation. Whenever required by the Board of Directors or the
President, the Treasurer shall render a financial statement showing all
transactions of the Treasurer and the financial condition of the
Corporation.
30. OTHER OFFICERS: There may be one or more Assistant Vice Presidents,
Assistant Treasurers, Controller or Assistant Controllers, who shall
perform such duties as may be assigned from time to time by the Board of
Directors.
31. COMPENSATION: The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.
RECORDS
32. FORM OF STOCK CERTIFICATE: The certificates of stock of the
Corporation shall be numbered and entered in the books of the Corporation
as they are issued. They shall be signed manually or by the use of a
facsimile signature, by the Chairman of the Board, by the President or a
Vice President designated by the Board of Directors and countersigned by
the Secretary or an Assistant Secretary. They shall bear the corporate
seal or a facsimile thereof. The Board of Directors of the Corporation may
issue scrip in registered or bearer form, which shall entitle the holder to
receive a certificate for a full share. Scrip shall not entitle the holder
to exercise voting rights or to receive dividends thereon or to participate
in any of the assets of the Corporation in the event of liquidation. The
Board may cause scrip to be issued subject to the condition that it shall
become void if not exchanged for certificates representing full shares
before a specified date or subject to any other conditions that it may deem
advisable. No fractional shares shall be issued.
33. LOST CERTIFICATES: The President or Secretary may direct a new
certificate or certificates to be issued in place of any lost or destroyed
certificate or certificates previously issued by the Corporation if the
person or persons who claim the certificate or certificates make an
affidavit stating the certificates of stock have been lost or destroyed.
When authorizing the issuance of a new certificate or certificates, the
Corporation may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or the legal representative, to advertise the same in such
manner as the Corporation shall require and/or to give the Corporation a
bond, in such sum as the Corporation may direct, to indemnify the
Corporation with respect to the certificate or certificates alleged to have
been lost or destroyed.
34. TRANSFER OF STOCK: Upon surrender to the Corporation, or to the
Transfer Agent of the Corporation, if any, of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
35. REGISTERED STOCKHOLDERS: The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the owner thereof
and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other
person. The Corporation shall not be liable for registering any transfer
of shares which are registered in the name of a fiduciary unless done with
actual knowledge of facts which would cause the Corporation's action in
registering the transfer to amount to bad faith.
OTHER MATTERS
36. NOTICES: Each stockholder, director and officer shall furnish in
writing to the Secretary of the Corporation the address to which notices of
every kind may be delivered or mailed. If such person fails to furnish an
address, and the Post Office advises the Corporation that the address
furnished is no longer the correct address, the Corporation shall not be
required to deliver or mail any notice to such person. Whenever notice is
required by applicable law, the Articles of Incorporation or these by-laws,
a written waiver of such notice signed before or after the time stated in
the waiver or, in the case of a meeting, the attendance of a stockholder or
director (except for the sole purpose of objecting) or, in the case of a
unanimous consent, the signing of the consent, shall be deemed a waiver of
notice.
37. REGISTERED OFFICE AND AGENT: The Corporation shall at all times have
a registered office and a registered agent.
38. CORPORATE RECORDS: The Corporation shall keep correct and complete
books and records of accounts and minutes of the stockholders' and
directors' meetings, and shall keep at its registered office or principal
place of business, or at the office of its transfer agent, if any, a record
of its stockholders, including the names and addresses of all stockholders
and the number, class, and series of the shares held by each. Any person
who shall have been a stockholder of record for at least six months
immediately preceding demand, or who shall be the holder of record of at
least five percent (5%) of all the outstanding shares of the Corporation,
upon written request stating the purpose therefor, shall have the right to
examine, in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, the books and records of account of the
Corporation, minutes and record of stockholders, and to make copies or
extracts therefrom.
39. REQUEST FOR FINANCIAL STATEMENT: Upon the written request of any
stockholder, the Corporation shall mail to the stockholder its most recent
published financial statement.
40. VOTING STOCK IN OTHER CORPORATIONS: Unless otherwise provided by the
Board of Directors, the President, in the name and on behalf of the
Corporation, may appoint from time to time himself or any other person (or
persons) proxy, attorney or agent for the Corporation to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise
in any other corporation, domestic or foreign, whose stock or securities
are held by the Corporation, or to consent in writing to any action by such
other corporation, or to exercise any or all other powers of this
Corporation as the holder of the stock or other securities of such other
corporation. The President may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent and may
execute or cause to be executed on behalf of the Corporation and under its
corporate seal such written proxies, consents, waivers, or other
instruments as may be deemed necessary or proper. The President may attend
any meeting of the holders of stock or other securities of any such other
corporation and vote or exercise any or all other powers of this
corporation as the holder of the stock or other securities of such other
corporation.
41. SEAL: The seal of the Corporation shall be a flat faced circular die
containing the word "SEAL" in the center and the name of the Corporation
around the circumference.
42. AMENDMENT OF BY-LAWS: The power to alter, amend or repeal the by-laws
or adopt new by-laws shall be vested in the Board of Directors unless
otherwise provided in the Articles of Incorporation. By-laws adopted by
the Board of Directors may be repealed or changed or new by-laws adopted by
the stockholders, and the stockholders may prescribe that any by-law
adopted by them may not be altered, amended or repealed by the Board of
Directors.
43. FISCAL YEAR: The fiscal year of the Corporation shall end on the last
day of February in each year.
44. GENERAL: Any matters not specifically covered by these by-laws shall
be governed by the applicable provisions of the Code of Virginia in force
at the time.
Exhibit 4(d)
[EXECUTION COPY]
AMENDMENT NO. 1 TO POOLING AND SERVICING AGREEMENT
AMENDMENT NO. 1 TO POOLING AND SERVICING AGREEMENT (this
"AMENDMENT"), dated as of February 4, 1994, by and among First North
American National Bank, a national banking association, as Transferor and
Servicer (the "TRANSFEROR"), Circuit City Stores, Inc., a Virginia
corporation ("CIRCUIT CITY"), and Bankers Trust Company, a banking
corporation organized and existing under the laws of the State of New York,
as Trustee (the "TRUSTEE").
RECITALS
WHEREAS, the parties hereto have entered into a Pooling and
Servicing Agreement dated as of February 18, 1992 (the "POOLING AND
SERVICING AGREEMENT") pursuant to which (i) the Transferor has conveyed to
the Trustee, on behalf of the Circuit City RECOP Trust, all right, title
and interest of the Transferor in, to and under certain credit card
receivables owing to the Transferor and certain related property and (ii)
the Trustee has issued, at the Transferor's request, $360,000,000 in
aggregate principal amount of remarketed certificates of participation
evidencing a fractional undivided interest in the Circuit City RECOP Trust;
and
WHEREAS, the parties hereto desire, on the terms and conditions
set forth in this Amendment, (i) to reduce the percentage applied in
calculating the amount required to be available under the letters of credit
that provide credit support for the remarketed certificates of
participation, (ii) to revise the manner in which the receivables default
rate is calculated and (iii) to revise the point at which an increase in
the receivables default rate will require amortization of the RECOP
program;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms used but not defined herein which
are defined in the Pooling and Servicing Agreement shall have for the
purposes hereof the respective meanings set forth therein.
SECTION 2. AMENDMENT TO SECTION 1.01 OF THE POOLING AND
SERVICING AGREEMENT. Section 1.01 of the Pooling and Servicing Agreement
is amended by deleting the definition of "Annualized Default Rate" and by
adding the following definition in substitution therefor:
"Annualized Default Rate" shall mean the product of (a) the
percentage equivalent of a fraction the numerator of which is the
amount of Principal Receivables in Accounts which became Defaulted
Accounts during the preceding calendar month and the denominator of
which is the amount of Aggregate Principal Receivables as of the last
day of such preceding calendar month and (b) 12.
SECTION 3. AMENDMENT TO SECTION 4.12 OF THE POOLING AND
SERVICING AGREEMENT. Section 4.12 of the Pooling and Servicing Agreement
is amended by substituting "15.75%" for "21%" in subsections (a)(i) and
(b)(i) of such section.
SECTION 4. AMENDMENT TO SECTION 6.02 OF THE POOLING AND
SERVICING AGREEMENT. Section 6.02 of the Pooling and Servicing Agreement
is amended by substituting "15.75%" for "21%" in the second paragraph of
such section.
SECTION 5. AMENDMENT TO SECTION 9.01 OF THE POOLING AND
SERVICING AGREEMENT. Section 9.01 of the Pooling and Servicing Agreement
is amended by deleting subsections (g), (k) and (p) of such section and by
adding the following subsections in substitution therefor:
(g) either (i) a demand for payment shall be made under the
Circuit City Guaranty or the Letters of Credit and, in the case of a demand
for payment under the Letters of Credit, such amount drawn is not
reinstated to the Available L/C Amount prior to the close of business on
the date such payment is made or (ii) the Available L/C Amount shall be
less than 15.75% of the aggregate outstanding principal amount of Investor
Certificates;
(k) less than 36 months shall remain prior to the expiration
of any Letter of Credit necessary to maintain the Available L/C Amount at
an amount at least equal to 15.75% of the aggregate outstanding principal
amount of Investor Certificates;
(p) the Annualized Default Rate shall exceed 11% for three
consecutive Monthly Periods;
SECTION 6. AMENDMENT TO SECTION 13.02 OF THE POOLING AND
SERVICING AGREEMENT. Section 13.02 of the Pooling and Servicing Agreement
is amended by substituting "15.75%" for "21%" in subsections (a)(iii) and
(b)(iii) of such section.
SECTION 7. AMENDMENT TO FORM LETTER OF CREDIT. The form letter
of credit attached as Exhibit C to the Pooling and Servicing Agreement is
amended by deleting such exhibit in its entirety and by substituting
therefor the form letter of credit attached as Exhibit A hereto.
SECTION 8. EFFECTIVENESS. This Amendment shall become effective
as of February 15, 1994 upon receipt by each of the parties hereto of (i) a
duly executed copy of this Amendment, (ii) a duly executed copy of
Amendment No. 2 to the Letter of Credit Reimbursement Agreement, the form
of which is attached as Exhibit B hereto (the "Reimbursement Agreement
Amendment"), (iii) a duly executed copy of Amendment No. 4 to the Liquidity
Agreement, the form of which is attached as Exhibit C hereto, (iv) written
notice from each of the Letter of Credit Banks confirming the amendment of
its Letter of Credit in accordance with Section 3 of the Reimbursement
Agreement Amendment and (v) written confirmation from Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group that this Amendment will
not result in a downgrading or withdrawal of the then current outstanding
rating on the Investor Certificates. Upon the effectiveness of this
Amendment, the Pooling and Servicing Agreement shall be automatically
amended as set forth herein and the rights and obligations of the parties
hereto shall be governed by the Pooling and Servicing Agreement as amended
by this Amendment.
SECTION 9. POOLING AND SERVICING AGREEMENT IN FULL FORCE AND
EFFECT AS AMENDED. Except as specifically amended hereby, all of the terms
and conditions of the Pooling and Servicing Agreement shall remain in full
force and effect. All references to the Pooling and Servicing Agreement in
any other document or instrument shall be deemed to mean the Pooling and
Servicing Agreement as amended by this Amendment. This Amendment shall not
constitute a novation of the Pooling and Servicing Agreement, but shall
constitute merely an amendment thereof.
SECTION 10. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS OF SUCH LAWS.
SECTION 11. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
BANKERS TRUST COMPANY,
as Trustee and Paying Agent
By s/James C. McDonough, Jr.
Title: Assistant Treasurer
FIRST NORTH AMERICAN NATIONAL
BANK, as Transferor
By s/William T. Higginbotham
Title: Vice President
CIRCUIT CITY STORES, INC.,
By s/Michael T. Chalifoux
Title: Senior Vice President &
Chief Financial Officer
NationsBank of North Carolina, N.A., a national banking
association, and J. P. Morgan Securities Inc., a Delaware corporation,
(together, the "Remarketing Agents") each in its capacity as remarketing
agent under the Remarketing Agreement dated as of February 18, 1992 among
the Remarketing Agents, the Trustee, the Transferor and Circuit City,
hereby consent to this Amendment pursuant to Section 13.01(i) of the
Pooling and Servicing Agreement.
NATIONSBANK OF NORTH CAROLINA,
N.A., as Remarketing Agent
By s/Richard A. Fearrington
Title: Vice President
J. P. MORGAN SECURITIES INC.,
as Remarketing Agent
By s/S. E. Christinsen
Title: Vice President
Exhibit 4(f)
[EXECUTION COPY]
AMENDMENT NO. 1
dated as of October 1, 1993
to the
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
dated as of February 18, 1992
among
CIRCUIT CITY STORES, INC.,
FIRST NORTH AMERICAN NATIONAL BANK,
as Transferor and Servicer,
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
NATIONSBANK OF NORTH CAROLINA, N.A.
and
THE BANK OF TOKYO, LTD., NEW YORK AGENCY,
as Letter of Credit Banks,
and
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
as AgentAMENDMENT NO. 1
TO
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
This AMENDMENT NO. 1 TO LETTER OF CREDIT REIMBURSEMENT AGREEMENT
(this "Amendment") is dated as of October 1, 1993 and is among CIRCUIT CITY
STORES, INC., a Virginia corporation (the "Company"), FIRST NORTH AMERICAN
NATIONAL BANK, a national banking association ("FNANB"), BANKERS TRUST
COMPANY, a New York banking corporation, as trustee (the "Trustee"), THE
LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH, a Japanese
banking corporation acting through its New York Branch ("LTCB"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association and successor-in-interest to Security Pacific National Bank
("Bank of America"), NATIONSBANK OF NORTH CAROLINA, N.A., a national
banking association ("NationsBank"), THE BANK OF TOKYO, LTD., NEW YORK
AGENCY, a Japanese banking corporation acting through its New York Agency
("Bank of Tokyo"), THE BANK OF NOVA SCOTIA, NEW YORK AGENCY, a Canadian
banking corporation acting through its New York Agency ("Scotiabank"), and
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH, a Japanese banking
corporation acting through its New York Branch ("IBJ").
RECITALS
WHEREAS, LTCB, Bank of America, NationsBank and Bank of Tokyo
(collectively, the "Original Banks"), FNANB, the Company and LTCB, as agent
for the Original Banks, have entered into a Letter of Credit Reimbursement
Agreement dated as of February 18, 1992 (the "Reimbursement Agreement")
pursuant to which, among other things, LTCB has issued, for the account of
the Company and for the benefit of the Trustee, Irrevocable Letter of
Credit No. CC-1 in the original stated amount of $21,400,000 and in the
current stated amount of $25,680,000 (the "LTCB Letter of Credit");
WHEREAS, LTCB wishes to terminate the LTCB Letter of Credit and to
be replaced as a Bank and as Agent under (and as defined in) the
Reimbursement Agreement;
WHEREAS, Scotiabank and IBJ wish to replace LTCB as a Bank under
(and as defined in) the Reimbursement Agreement and to issue separate
letters of credit (each in the original stated amount of $12,840,000) to
replace the LTCB Letter of Credit;
WHEREAS, Bank of America wishes to replace LTCB as Agent under (and
as defined in) the Reimbursement Agreement; and
WHEREAS, LTCB, Bank of America, NationsBank, Bank of Tokyo,
Scotiabank, IBJ, FNANB and the Company wish to amend the Reimbursement
Agreement as set forth in this Amendment, and the Trustee wishes to consent
to this Amendment;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms used but not defined herein which
are defined in the Reimbursement Agreement shall have for the purposes
hereof the respective meanings set forth therein.
SECTION 2. REPLACEMENT OF LTCB AS LETTER OF CREDIT BANK. LTCB
hereby resigns as a Bank under the Reimbursement Agreement effective as of
the date on which the conditions set forth in Section 13.02 of the Pooling
and Servicing Agreement shall have been satisfied (the "Effective Date").
The Company hereby appoints, and the Banks hereby approve the appointment
of, Scotiabank and IBJ (collectively, the "Replacement Banks") as successor
Banks under the Reimbursement Agreement. Scotiabank and IBJ hereby assume
all rights and obligations of a Bank under the Reimbursement Agreement and
agree to be bound by all of the terms and conditions of the Reimbursement
Agreement applicable to a Bank, in each case effective as of the Effective
Date. On and after the Effective Date, (i) all references in the
Reimbursement Agreement to a Bank shall be deemed to refer to any of Bank
of America, NationsBank, Bank of Tokyo, Scotiabank and IBJ, (ii) all
references in the Reimbursement Agreement to the Banks shall be deemed to
refer to all of Bank of America, NationsBank, Bank of Tokyo, Scotiabank and
IBJ, (iii) all references in the Reimbursement Agreement to Schedule 1
attached to the Reimbursement Agreement (or the information or parties set
forth thereon) shall be deemed to refer to Schedule 1 attached to this
Amendment (and the information or parties set forth thereon) and (iv) LTCB
shall have no further rights or obligations as a Bank under the
Reimbursement Agreement (except as set forth in Section 2.8 and Section
10.2 of the Reimbursement Agreement).
SECTION 3. REPLACEMENT OF LTCB AS AGENT. LTCB hereby resigns as
the Agent under the Reimbursement Agreement effective as of the Effective
Date. Bank of America, NationsBank, Bank of Tokyo and the Replacement
Banks hereby appoint, and the Company hereby consents to the appointment
of, Bank of America as the successor Agent under the Reimbursement
Agreement. Bank of America hereby assumes all rights and obligations of
the Agent under the Reimbursement Agreement and agrees to be bound by all
of the terms and conditions of the Reimbursement Agreement applicable to
the Agent, in each case effective as of the Effective Date; PROVIDED,
HOWEVER, that Bank of America shall have no responsibility for, and shall
incur no liability to the Original Banks, the Replacement Banks, the
Company, FNANB, the Trustee, the Certificateholders, any Liquidity Bank or
any other Person for, any action taken by LTCB, or any failure by LTCB to
take any action, during the time LTCB served as Agent under the
Reimbursement Agreement. On and after the Effective Date, all references
to the Agent in the Reimbursement Agreement or in any Letter of Credit (or
in any exhibits or attachments thereto) shall be deemed to refer to Bank of
America and LTCB shall have no further rights or obligations as the Agent
under the Reimbursement Agreement. On and after the Effective Date, LTCB
shall have no responsibility for, and shall incur no liability to the
Original Banks, the Replacement Banks, the Company, FNANB, the Trustee, the
Certificateholders, any Liquidity Bank or any other Person for, any action
taken by Bank of America, or any failure by Bank of America to take any
action, as Agent under the Reimbursement Agreement.
SECTION 4. REPLACEMENT OF LTCB LETTER OF CREDIT. Each of
Scotiabank and IBJ shall deliver to the Trustee (with a copy to Bank of
America), concurrently with the execution of this Amendment, an irrevocable
letter of credit substantially in the form of Exhibit A attached to this
Amendment (collectively, as amended, supplemented or otherwise modified
from time to time, the "Replacement Letters of Credit"). The Trustee
shall, upon its receipt of the Replacement Letters of Credit and a fully
executed counterpart of this Amendment and upon satisfaction of the
conditions set forth in Section 13.02 of the Pooling and Servicing
Agreement, deliver the LTCB Letter of Credit to LTCB for cancellation.
This Amendment constitutes the written request referred to in Section
13.02(b) of the Pooling and Servicing Agreement.
SECTION 5. AMENDMENTS TO THE REIMBURSEMENT AGREEMENT. Each of the
parties hereto hereby agrees that the Reimbursement Agreement is amended as
follows:
(a) Section 2.6 of the Reimbursement Agreement is amended by
adding "(with a copy to the Agent)" after "delivery of such Letter of
Credit to the Trustee" in the 21st line of the third paragraph of
subsection (b)(ii)(B) of such section.
(b) Section 3.3 of the Reimbursement Agreement is amended (i) by
substituting "Bank of America National Trust and Savings Association,
Global Agency No. 5596, 1455 Market Street, 12th Floor, San Francisco,
California 94103" for "Manufacturers Hanover Trust Company, 4 New York
Plaza, New York, New York 10004" in subsection (a) of such section and (ii)
by substituting "Account No. 12339-14218 (Reference: Global Agency Unit
5596 - Circuit City)" for "Account No. 544-7-75066 (Reference: The Long-
Term Credit Bank of Japan, Limited - Circuit City)" in subsection (a) of
such section.
(c) Section 5.4 of the Reimbursement Agreement is amended by
adding "(including, without limitation, reasonable counsel fees and
expenses and the allocated costs of in-house counsel (without
duplication))" after "reasonable expenses" in the second line of such
section.
(d) Section 10.1 of the Reimbursement Agreement is amended (i) by
adding "(but shall not be obligated to)" after "the Agent may" in the 12th
line of subsection (b) of such section, (ii) by deleting subsection (f) of
such section in its entirety and by substituting the following therefor:
"(f) With respect to the Commitment of, and any Letter of Credit issued
by, Bank of America National Trust and Savings Association in its capacity
as a Bank hereunder, Bank of America National Trust and Savings Association
shall have the same rights and powers hereunder as any other Bank as though
it were not acting as the Agent," (iii) by adding "and the allocated costs
of in-house counsel (without duplication)" after "reasonable counsel fees
and disbursements" in the seventh line of subsection (h) of such section
and (iv) by deleting subsection (k) of such section in its entirety.
(e) Section 10.2 of the Reimbursement Agreement is amended by
inserting "short-term unsecured credit" before "rating" at the end of the
fourth line of such section.
(f) Section 11.5 of the Reimbursement Agreement is amended by
adding "and the allocated costs of in-house counsel (without duplication"
after "expenses of counsel" in the ninth line of such section and after
"reasonable counsel fees and expenses" in the twenty-seventh line of such
section.
(g) Section 11.8 of the Reimbursement Agreement is amended by
deleting such section in its entirety and by substituting the following
section therefor:
SECTION 11.8. SHARING OF SETOFFS AND OTHER PAYMENTS. Each Bank
agrees that if it shall, whether through the exercise of a right of
banker's lien, setoff or counterclaim against the Company or otherwise,
obtain payment (except as expressly permitted by the terms of this
Agreement) of a proportion of the aggregate indebtedness of the Company to
it hereunder which exceeds the proportion of the aggregate indebtedness of
the Company hereunder to any other Bank being paid simultaneously to such
other Bank, it shall promptly notify the Agent of the amount of such excess
payments and shall promptly deliver such excess payments in immediately
available funds to the account of the Agent specified in Section 3.3(a)
(after deducting its PRO RATA share of such excess payments as calculated
by the Agent in accordance with the Banks' respective Commitment
Percentages); PROVIDED, HOWEVER, that nothing herein contained shall in any
way affect the right of any Bank to obtain payment (whether by exercise of
right of banker's lien, setoff or counterclaim or otherwise) of
indebtedness other than that incurred by the Company hereunder. The Agent
shall, promptly after it receives such excess payments from such Bank, make
such excess payments available to the other Banks PRO RATA in accordance
with their respective Commitment Percentages. The Agent shall have no
responsibility for confirming, and shall incur no liability to the Banks
for any misrepresentation by any Bank with respect to, the amount of any
excess payments subject to this Section 11.8 (although the Agent shall be
responsible for allocating and distributing such excess payments in
accordance with the preceding sentence).
(h) Article XI of the Reimbursement Agreement is amended by adding
the following section thereto:
SECTION 11.17. ADDITIONAL NOTICES TO THE AGENT. Each Bank that
delivers to the Trustee a notice in the form of Attachment 7 to such Bank's
Letter of Credit (a Notice of Extension and Amendment), an amendment to
such Bank's Letter of Credit (pursuant to Section 2.7(b)) or a new Letter
of Credit to replace such Bank's Letter of Credit (pursuant to Section
2.7(b)) shall, at the same time, deliver a copy of such notice, amendment
or replacement Letter of Credit to the Agent. FNANB shall promptly notify
the Agent of all instructions given by FNANB to the Trustee pursuant to
Section 2.6(b) (involving the termination or reduction of the Letter of
Credit of a Dissenting Bank) and any repurchase of Investor Certificates
pursuant to Section 4.13 of the Pooling and Servicing Agreement.
(i) Schedule 1 to the Reimbursement Agreement is amended and
restated in its entirety by Schedule 1 to this Amendment.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each of Scotiabank and
IBJ represents and warrants that it has, as of the date of this Amendment,
a short-term unsecured credit rating from Standard & Poor's Ratings Group
of A-l and a short-term unsecured credit rating from Moody's Investors
Service, Inc. of P-1. Each of the Company and FNANB represents and
warrants that (i) the domestic Opinions of Counsel attached as Exhibits A-1
and A-2 to this Amendment (the "Domestic Opinions of Counsel") and the
foreign Opinions of Counsel attached as Exhibits B-1 and B-2 to this
Amendment (the "Foreign Opinions of Counsel") are satisfactory to FNANB and
its counsel, (ii) the representations and warranties of the Company and
FNANB set forth in Section 7.1 of the Reimbursement Agreement are true and
correct on the date hereof as if made on and as of the date hereof and
(iii) no Default, Event of Default or Pay-Out Event has occurred and is
continuing or would result from the execution and delivery of this
Amendment or any of the transactions or events contemplated hereby. LTCB
represents and warrants that all amounts due from the Company under the
Reimbursement Agreement, including, without limitation, amounts for
outstanding Letter of Credit Disbursements (including interest thereon),
accrued and unpaid fees (including LTCB's Commitment Fee accrued through
the date of this Amendment) and any other amounts due under or with respect
to the LTCB Letter of Credit have been paid in full to the satisfaction of
LTCB. Each of the Trustee, Bank of America, NationsBank and Bank of Tokyo
represents and warrants that the Domestic Opinions of Counsel and the
Foreign Opinions of Counsel are satisfactory to it and its counsel.
SECTION 7. EFFECTIVENESS. This Amendment shall become effective
upon (i) receipt by the Trustee and Bank of America of a duly executed copy
of this Amendment signed by each of the other parties hereto, (ii) receipt
by the Trustee of the Replacement Letters of Credit (and receipt by Bank of
America of copies thereof) and (iii) satisfaction of the conditions set
forth in Section 13.02 of the Pooling and Servicing Agreement (and
confirmation by the Trustee to FNANB and Bank of America that such
conditions have been satisfied). The Trustee may conclusively rely on the
representations and warranties of Scotiabank, IBJ, the Company, FNANB and
LTCB set forth in Section 6, shall have no duty to make inquiries with
regard to the matters covered thereby and shall incur no liability in
relying thereon. Upon the effectiveness of this Amendment, the
Reimbursement Agreement shall be automatically amended as set forth herein
and the rights and obligations of the parties hereto shall be governed by
the Reimbursement Agreement as amended by this Amendment. The parties
hereto hereby waive any right to notice to which they would otherwise be
entitled pursuant to the Reimbursement Agreement or the Pooling and
Servicing Agreement in connection with the execution and delivery of this
Amendment and the consummation of the transactions contemplated by this
Amendment. The parties hereto hereby acknowledge and agree that Bank of
America has been appointed as Agent under the Reimbursement Agreement in
accordance with the Reimbursement Agreement.
SECTION 8. REIMBURSEMENT AGREEMENT IN FULL FORCE AND EFFECT AS
AMENDED. Except as specifically amended hereby, all of the terms and
conditions of the Reimbursement Agreement shall remain in full force and
effect. All references to the Reimbursement Agreement in any other
document or instrument shall be deemed to mean the Reimbursement Agreement
as amended by this Amendment. This Amendment shall not constitute a
novation of the Reimbursement Agreement, but shall constitute merely an
amendment thereof.
SECTION 9. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS OF SUCH LAWS.
SECTION 10. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
CIRCUIT CITY STORES, INC.
By s/Philip Dunn
Title: Treasurer
FIRST NORTH AMERICAN NATIONAL
BANK, as Transferor and Servicer
By s/William T. Higginbotham
Title: Vice President
BANKERS TRUST COMPANY,
as Trustee and Paying Agent
By s/James C. McDonough, Jr.
Title: Assistant Treasurer
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
NEW YORK BRANCH
By s/Philip A. Marsden
Title: Deputy General Manager
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By s/William O. Tucker
Title: Vice President
NATIONSBANK OF NORTH CAROLINA,
N.A.
By s/E. Turner Coggins
Title: Senior Vice President
THE BANK OF TOKYO, LTD.,
NEW YORK AGENCY
By s/Sachio Kohjima
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
NEW YORK BRANCH, as Agent
By s/Philip A. Marsden
Title: Deputy General Manager
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as successor Agent
By s/Kevin W. Mangan
Title: Vice President
THE BANK OF NOVA SCOTIA,
NEW YORK AGENCY
By s/J. Alan Edwards
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED,
NEW YORK BRANCH
By s/Takeshi Kawano
Title: Senior Vice President &
Senior Manager
EXHIBITS
Exhibit A-1 - Form of Domestic Opinion of Counsel (Scotiabank)
Exhibit A-2 - Form of Domestic Opinion of Counsel (IBJ)
Exhibit B-1 - Form of Foreign Opinion of Counsel (Scotiabank)
Exhibit B-2 - Form of Foreign Opinion of Counsel (IBJ)
SCHEDULE 1
COMMITMENTS
Letter of Credit Commitment
Bank Commitment Percentage
Bank of America National Trust and $ 24,720,000 32.69841%
Savings Association
Global Payments Operations
4th Floor
1850 Gateway Boulevard
Concord, California 94520
Attention: Amalia El Gohary
Telephone: (510) 675-8212
Telecopier: (510) 675-7531
(with copies of all notices to:)
Bank of America National Trust and
Savings Association
1230 Peachtree Street, N.E.
Suite 3600
Atlanta, Georgia 30309
Attention: William Tucker
Telephone: (404) 249-6927
Telecopier: (404) 249-6938
NationsBank of North Carolina, N.A. $ 14,880,000 19.68254%
One NationsBank Plaza
T19-3
Charlotte, North Carolina 28255
Attention: Richard Strasser
Telephone: (704) 386-8506
Telecopier: (704) 386-6447
The Bank of Nova Scotia, New York $ 12,840,000 16.98413%
Agency
One Liberty Plaza
New York, New York 10006
Attention: Frank Vidal
Telephone: (212) 225-5039
Telecopier: (212) 225-5090
The Industrial Bank of Japan, $ 12,840,000 16.98413%
Limited, New York Branch
245 Park Avenue
New York, New York 10167
Attention: Linda Muscarella
Telephone: (212) 309-1872
Telecopier: (212) 856-9450
The Bank of Tokyo, Ltd., New York $ 10,320,000 13.65079%
Agency
100 Broadway
New York, New York 10005
Attention: Loan Administration
Department
Telephone: (201) 413-8726
Telecopier: (201) 413-8922
(with copies of all notices to:)
BOTT Business Services, Inc.
2000 K Street, Suite 701
Washington, D.C. 20006
Attention: J. Andrew Don
Telephone: (202) 463-0477
Telecopier: (202) 293-3416
NOTICES TO THE TRUSTEE
Bankers Trust Company
Four Albany Street
New York, New York 10015
Attention: Corporate Trust and Agency
Group - Structured Finance
Telephone: (212) 250-6737
Telecopier: (212) 250-6684
NOTICES TO THE LETTER OF CREDIT BANKS' AGENT
Bank of America National Trust and
Savings Association
Global Agency No. 5596
12th Floor
1455 Market Street
San Francisco, California 94103
Attention: Ann E. Mead
Telephone: (415) 622-8722
Telecopier: (415) 622-4894
NOTICES TO THE LIQUIDITY BANKS' AGENT
National Westminster Bank PLC,
New York Branch
29th Floor
175 Water Street
New York, New York 10038
Attention: Corporate Finance Marketing
Telephone: (212) 602-4228
(212) 602-4227
Telecopier: (212) 602-4284
Exhibit 4(g)
[EXECUTION COPY]
AMENDMENT NO. 2
dated as of February 4, 1994
to the
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
dated as of February 18, 1992, as amended,
among
CIRCUIT CITY STORES, INC.,
FIRST NORTH AMERICAN NATIONAL BANK,
as Transferor and Servicer,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
NATIONSBANK OF NORTH CAROLINA, N.A.,
THE BANK OF TOKYO, LTD., NEW YORK AGENCY,
THE BANK OF NOVA SCOTIA, NEW YORK AGENCY
and
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH,
AS LETTER OF CREDIT BANKS,
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS AGENT
AMENDMENT NO. 2
TO
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
This AMENDMENT NO. 2 TO LETTER OF CREDIT REIMBURSEMENT
AGREEMENT (this "Amendment") is dated as of February 4, 1994 and
is among CIRCUIT CITY STORES, INC., a Virginia corporation (the
"Company"), FIRST NORTH AMERICAN NATIONAL BANK, a national
banking association ("FNANB"), BANKERS TRUST COMPANY, a New York
banking corporation, as trustee (the "Trustee"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, as agent bank (in such capacity, the "Agent"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association and successor-in-interest to Security Pacific
National Bank ("Bank of America"), NATIONSBANK OF NORTH CAROLINA,
N.A., a national banking association ("NationsBank"), THE BANK OF
TOKYO, LTD., NEW YORK AGENCY, a Japanese banking corporation
acting through its New York Agency ("Bank of Tokyo"), THE BANK OF
NOVA SCOTIA, NEW YORK AGENCY, a Canadian banking corporation
acting through its New York Agency ("Scotiabank"), and THE
INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH, a Japanese
banking corporation acting through its New York Branch ("IBJ").
RECITALS
WHEREAS, the Company, FNANB and the Trustee have entered
into a Pooling and Servicing Agreement dated as of February 18,
1992 (the "Pooling and Servicing Agreement") pursuant to which,
among other things, the Trustee has issued and may hereafter
issue remarketed certificates of participation evidencing a
fractional undivided interest in the Circuit City RECOP Trust;
WHEREAS, the parties hereto (other than the Trustee) have
entered into a Letter of Credit Reimbursement Agreement dated as
of February 18, 1992, as amended by Amendment No. 1 to Letter of
Credit Reimbursement Agreement dated as of October 1, 1993, (as
amended, the "Reimbursement Agreement") pursuant to which, among
other things, Bank of America, NationsBank, Bank of Tokyo,
Scotiabank and IBJ (collectively, the "Letter of Credit Banks")
have issued separate letters of credit for the account of the
Company and for the benefit of the Trustee to provide credit
support for the remarketed certificates of participation;
WHEREAS, the Company, FNANB and the Trustee propose to
amend the Pooling and Servicing Agreement to reduce the amount
required to be available under letters of credit that provide
credit support for the remarketed certificates of participation
and to make certain other changes in the Pooling and Servicing
Agreement; and
WHEREAS, the parties hereto desire, on the terms and
conditions set forth in this Amendment, to amend the
Reimbursement Agreement (i) to reflect the proposed reduction in
the amount required by the Pooling and Servicing Agreement to be
available under letters of credit that provide credit support for
the remarketed certificates of participation and (ii) to reduce
the amount of certain fees payable to the Letter of Credit Banks;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms used but not defined
herein which are defined in the Reimbursement Agreement shall
have for the purposes hereof the respective meanings set forth
therein.
SECTION 2. AMENDMENTS TO THE REIMBURSEMENT AGREEMENT.
Each of the parties hereto hereby agrees that, subject to Section
6 of this Amendment, the Reimbursement Agreement is amended as
follows:
(a) Section 1.1(a) of the Reimbursement Agreement is
amended by deleting the definition of "Aggregate Available L/C
Amount" in its entirety and by substituting the following
therefor:
"Aggregate Available L/C Amount" means the amount
available to be drawn under all Letters of Credit from time to
time, which on any date of determination prior to the Pay Out
Commencement Date shall be equal to the lesser of:
(x) the Aggregate Stated Amount on such date of
determination; and
(y) the amount that equals 15.75% of the Outstanding
Investor Certificates on such date of determination; and
on any date of determination on or after the Pay Out Commencement
Date shall be equal to the Aggregate Stated Amount on such date.
(b) Section 3.1 of the Reimbursement Agreement is
amended by deleting subsection (a) of such section in its
entirety and by substituting the following therefor:
(a) COMMITMENTS. The amount of each Bank's Commitment
initially shall be as set forth on Schedule 1 attached hereto.
The Commitment and Commitment Percentage of each Bank shall be
appropriately adjusted if the Commitment of any Bank is
terminated or increased or reduced by the Company pursuant to
Section 2.6, 2.7, or 5.2. At no time shall the aggregate
Commitments exceed $63,000,000 or, if the Commitments have been
increased in accordance with Section 2.7(a), the lesser of
$84,000,000 and 15.75% of the Outstanding Investor Certificates
at such time.
(c) Section 4.1 of the Reimbursement Agreement is
amended by deleting such section in its entirety and by
substituting the following therefor:
SECTION 4.1 LETTER OF CREDIT FEE. The Company agrees to
pay to the Agent for the account of each Bank for each calendar
quarter (or portion thereof), in advance, on the first day of
each calendar quarter commencing with the Effective Date and
ending on the Expiration Date, a commitment fee (the "BANKS'
COMMITMENT FEE") at the rate of 0.80% per annum (computed on the
basis of the actual number of days in such calendar quarter or
shorter period, as appropriate, over a year of 360 days), on an
amount equal to such Bank's Commitment, computed in each case on
a daily average basis for such calendar quarter. The Banks'
Commitment Fee with respect to each Bank shall be non-refundable
and shall accrue from the date of this Agreement to and including
the Expiration Date.
(d) Exhibit A to the Reimbursement Agreement is amended
by deleting such exhibit in its entirety and by substituting
therefor the form letter of credit attached as Exhibit A hereto.
SECTION 3. AMENDMENTS TO ISSUED LETTERS OF CREDIT. Each
Letter of Credit Bank hereby agrees to amend its Letter of Credit
by executing and delivering to the Trustee an Amendment
substantially in the form attached as Exhibit B hereto, which
Amendment shall be acknowledged by the Trustee and the Company.
SECTION 4. CONSENT TO POOLING AND SERVICING AGREEMENT
AMENDMENTS. Each Letter of Credit Bank hereby consents, pursuant
to Section 13.01(e) of the Pooling and Servicing Agreement, to
the amendments set forth in Amendment No. 1 to the Pooling and
Servicing Agreement, the form of which is attached as Exhibit C
hereto (the "Pooling and Servicing Agreement Amendment").
SECTION 5. WAIVER OF NOTICE. Each Letter of Credit Bank
hereby waives, pursuant to Section 13.01(f) of the Pooling and
Servicing Agreement, the notice requirement of such section with
respect to this Amendment, the Pooling and Servicing Agreement
Amendment and the amendments set forth in Amendment No. 4 to the
Liquidity Agreement, the form of which is attached as Exhibit D
hereto (the "Liquidity Agreement Amendment").
SECTION 6. EFFECTIVENESS. This Amendment shall become
effective as of February 15, 1994 upon receipt by the Trustee and
the Agent of (i) a duly executed copy of this Amendment, (ii) a
duly executed copy of the Pooling and Servicing Agreement
Amendment, (iii) a duly executed copy of the Liquidity Agreement
Amendment, (iv) written notice from each of the Letter of Credit
Banks confirming the amendment of its Letter of Credit in
accordance with Section 3 and (v) written confirmation from
Moody's Investors Service, Inc. and Standard & Poor's Ratings
Group that this Amendment will not result in a downgrading or
withdrawal of the then current outstanding rating on the Investor
Certificates. Upon the effectiveness of this Amendment, the
Reimbursement Agreement shall be automatically amended as set
forth herein and the rights and obligations of the parties hereto
shall be governed by the Reimbursement Agreement as amended by
this Amendment. The parties hereto hereby waive any right to
notice to which they would otherwise be entitled pursuant to the
Reimbursement Agreement or the Pooling and Servicing Agreement in
connection with the execution and delivery of this Amendment and
the consummation of the transactions contemplated by this
Amendment.
SECTION 7. REIMBURSEMENT AGREEMENT IN FULL FORCE AND
EFFECT AS AMENDED. Except as specifically amended hereby, all of
the terms and conditions of the Reimbursement Agreement shall
remain in full force and effect. All references to the
Reimbursement Agreement in any other document or instrument shall
be deemed to mean the Reimbursement Agreement as amended by this
Amendment. This Amendment shall not constitute a novation of the
Reimbursement Agreement, but shall constitute merely an amendment
thereof.
SECTION 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS OF SUCH LAWS.
SECTION 9. COUNTERPARTS. This Amendment may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused
a counterpart of this Amendment to be duly executed and delivered
as of the date first above written.
CIRCUIT CITY STORES, INC.
By s/Michael T. Chalifoux
Title: Senior Vice President &
Chief Financial Officer
FIRST NORTH AMERICAN NATIONAL
BANK, as Transferor and Servicer
By s/William T. Higginbotham
Title: Vice President
BANKERS TRUST COMPANY,
as Trustee and Paying Agent
By s/James C. McDonough, Jr.
Title: Assistant Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By s/Glen F. Edwards
Title: Vice President
NATIONSBANK OF NORTH CAROLINA,
N.A.
By s/William Burton
Title: Senior Vice President
THE BANK OF TOKYO, LTD.,
NEW YORK AGENCY
By s/Sachio Kohjima
Title: Senior Vice President
THE BANK OF NOVA SCOTIA,
NEW YORK AGENCY
By s/J. Alan Edwards
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED,
NEW YORK BRANCH
By s/Takeshi Kawano
Title: Senior Vice President &
Senior Manager
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By s/Laura Knight
Title: Vice President
<TABLE>
REPORTED HISTORICAL INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net sales and operating revenues $ 4,130,415 $ 3,269,769 $ 2,790,232 $ 2,366,901 $ 2,096,588
Net earnings $ 132,400 $ 110,250 $ 78,223 $ 3,151 $ 78,100
Net earnings per share $ 1.36 $ 1.15 $ 0.82 $ 0.03 $ 0.85
Total assets $ 1,554,664 $ 1,262,930 $ 999,582 $ 874,063 $ 713,655
Long-term debt, excluding current installments $ 29,648 $ 82,387 $ 85,415 $ 94,350 $ 93,882
Deferred revenue and other liabilities $ 268,360 $ 232,054 $ 187,158 $ 151,806 $ 38,244
Cash dividends per share paid on
common stock $ 0.08 $ 0.07 $ 0.05 $ 0.05 $ 0.04
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Our objective is to manage Circuit City's resources to create maximum long-term
value for the Company's shareholders. We achieve this objective by adhering to
the following policies:
(1) We manage our existing business, primarily the cur-
rent Superstore markets, to produce the highest pos-
sible long-term returns.
(2) We make new investments that we believe will
increase our earnings and produce returns above our
cost of capital.
The results generated by current operations and by the Company's fiscal 1994
investments are reviewed below.
RESULTS OF OPERATIONS
SALES GROWTH
Total sales increased 26 percent in fiscal 1994, to $4.13 billion. In fiscal
1993, total sales were $3.27 billion, a 17 percent increase from $2.79 billion
in fiscal 1992.
PERCENTAGE SALES CHANGE FROM PRIOR YEAR
Circuit City
All Comparable Industry
FISCAL Stores Stores Sales*
1994 26% 8 % 7 %
1993 17% 7 % 7 %
1992 18% 1 % 0 %
1991 14% (3)% (1)%
1990 22% 2 % (2)%
*The industry sales rates are derived from Electronic Industries Association,
Association of Home Appliance Manufacturers and Company estimates of audio,
video, home office, telecommunications and appliance product sales. Home office
and telecommunications products are not included in industry sales prior to
fiscal 1992 since in those years, Circuit City was not a significant
participant in these categories.
The continued expansion of Circuit City's Superstore base has been the primary
contributor to the Company's total sales growth for the last five years. In
fiscal 1994, the Company opened 38 Superstores, including 31 in the new
markets of Boston and Chicago, six additions in existing markets and one
replacement of an older Superstore. The Company also introduced in fiscal 1994
a new prototype designed to serve smaller trading areas. The first two of these
stores opened during the year in Harrisonburg, Va., and Fredericksburg, Va. The
stores are approximately 15,000 square feet in size and carry consumer
electronics, major appliances and home office products.
The Company also operates 34 mall-based stores. These stores are located in
regional malls, average approximately 3,000 square feet in size and sell small,
gift-oriented items. During fiscal 1994, the Company closed five stores that
were located in underperforming malls and changed the name of most remaining
stores to Circuit City Express. The change will allow the stores to benefit
from consumer recognition of the Circuit City name. In fiscal 1995, the Company
plans to close several more mall locations but may also open new stores,
depending upon the availability of appropriate real estate.
STORE MIX
Retail Units at Year End
FISCAL 1994 1993 1992 1991 1990
Superstore 251 214 183 157 125
Circuit City 2 - - - -
Electronics-Only 7 7 11 14 20
Mall Store 34 39 34 14 4
TOTAL 294 260 228 185 149
Comparable store sales growth also has been a major contributor to the
Company's total sales increase. During the last three years, Circuit City's
comparable store sales growth has met or exceeded the industry's growth,
reflecting share gains in local markets and the addition of home office
products to the Company's sales mix. In fiscal 1994, the inclusion of music
software in 144 stores also contributed to Circuit City's growth. Throughout
the three-year period, comparable store sales growth was constrained by
economic weakness in Southern California, where over 15 percent of the
Company's stores are located. Following the January 1994 earthquake in Los
Angeles, the sales pace in Southern California strengthened significantly.
Lack of industry growth from fiscal 1990 through fiscal 1992 reflects an
absence of major product introductions, a decline in major appliance sales,
generally flat or declining prices for consumer electronics and the weak
national economy. In fiscal 1991, Circuit City's comparable store sales also
declined, and the reduction exceeded the industry's decline. Circuit City's
sales in that year were affected not only by the lack of industry growth, but
also by increased competition, principally in Los Angeles; tougher credit
standards imposed by a third-party credit provider; and the effects of adding
Superstores in existing markets. These Superstore additions increase the
Company's sales volume and market shares but generally draw sales from existing
stores in the market.
Total extended warranty revenue, which is included in total sales, was 4.8
percent of sales in fiscal 1994 and 4.6 percent in fiscal years 1993 and 1992.
Extended warranty sales were relatively flat as a percentage of merchandise
sales across the period. The gross profit margins on products sold with
extended warranties are higher than the gross profit margins on products sold
without extended warranties. Historically, the Company's extended warranty
revenue has been derived solely from the Company's own extended warranty plans.
Late in fiscal 1994, the Company began selling two new extended warranty
programs on behalf of unrelated third parties that issue these plans for
merchandise sold by the Company and other retailers. The first program, which is
sold in most major markets, provides in-home service for personal computer
products. Repairs to the products covered are provided by General Electric
Company. The second program is backed by Virginia Surety Company, Inc., a
subsidiary of AON Corporation. Virginia Surety carries an A. M. Best Company
rating of superior (A+). This program covers electronics and major appliances
and is being introduced into highly competitive markets. The Company's
after-market solicitation operation also sells a Virginia Surety insured
product. Under the third-party programs, Circuit City acts as seller
for the unrelated third parties and has no contractual liability to the
customer under the extended service warranty plans nor any other material
obligation to the customer or the unrelated third parties. Commission revenue
from the third-party extended warranty plans is recognized immediately while
revenue from Circuit City extended service warranties is deferred and amortized
on a straight-line basis over the life of the contracts.
The increase in third-party warranty sales contributed to the growth in total
extended warranty revenue. Third-party extended warranty revenue was 0.7 percent
of total sales in fiscal 1994 and is expected to continue increasing in fiscal
1995.
SUPERSTORE SALES PER SELLING SQUARE FOOT
FISCAL
1994 $1,179
1993 $1,151
1992 $1,083
1991 $1,141
1990 $1,288
SALES PER SELLING SQUARE FOOT. In fiscal 1994 and 1993, comparable store sales
growth contributed to increases in sales per selling square foot. Over the past
five years, increases in sales per selling square foot have been moderated by
the Company's market storing patterns. As markets have become more competitive,
Circuit City has chosen to more completely cover the trading areas within
markets by opening a larger number of stores. Although this strategy reduces
average sales per Superstore and sales per square foot, it has helped Circuit
City to maintain positions of market leadership and supports overall market
profitability. In fiscal 1994, the grand opening of a major new market late in
the year also limited the increase in sales per selling square foot. In fiscal
1991 and 1992, the difficult economic environment also reduced store sales
volumes and thus sales per square foot. Management believes that its market
storing strategy and an increase in the percentage of new stores in the store
base could produce lower sales per square foot in fiscal 1995.
SALES BY MERCHANDISE CATEGORIES*
FISCAL 1994 1993 1992 1991 1990
TV 20% 23% 23% 24% 24%
VCR/Camcorders 17% 19% 20% 22% 23%
Audio 21% 20% 21% 22% 22%
Home Office 12% 7% 5% NA NA
Appliances 18% 19% 19% 18% 19%
Other 12% 12% 12% 14% 12%
TOTAL 100% 100% 100% 100% 100%
* "Home Office" electronics are included in the "Other" category in fiscal
years 1990 and 1991.
SALES BY MERCHANDISE CATEGORIES. At the end of fiscal 1994, approximately
two-thirds of the Company's Superstores featured dedicated square footage and
enhanced display areas for personal computers and related products. This
stronger presentation and the industry sales growth for this category have
produced an increase in the home office product category as a percentage of the
Company's sales. The increase in this category since fiscal 1992 also has
reflected the rapid growth of home office products when compared to other
products, especially video cassette recorders and camcorders. High household
penetration for home VCRs and declining camcorder prices have moderated the
sales pace in that category.
IMPACT OF INFLATION. Retail price increases have not been a significant
contributor to industry growth or to Circuit City's sales growth during the
last five years. In fact, consumer electronics have generally experienced
declining or stable retail prices, partly reflecting the competitive retail
environment. Retail prices for personal computer hardware have been
characterized by dramatic reductions over the past several years. The Company
expects that retail prices in all categories will continue to decline in fiscal
1995.
Because the Company purchases all products, including consumer electronics, in
U.S. dollars, prices are not directly impacted by the value of the dollar in
relation to other foreign currencies, including the Japanese yen. Nevertheless,
the Company anticipates that its purchase price for consumer electronics and
major appliances could rise slightly and that the purchase price for computer
hardware will remain relatively flat in fiscal 1995.
COST OF SALES, BUYING AND WAREHOUSING
The gross profit margin declined to 26.8 percent of sales in fiscal 1994
compared with 28.3 percent in fiscal 1993 and 29.0 percent in fiscal 1992. The
gross profit margin trend reflects a shift in the Company's competition to
include more low-service retailers, who offer a more limited product selection
but at highly competitive prices. As discussed below, the Company expects a
further reduction in the gross profit margin during fiscal 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's lower gross profit margin has been largely offset by improvements
in selling, general and administrative expenses as a percent of sales. The
expense ratio was 21.6 percent of sales in fiscal 1994, 22.8 percent in fiscal
1993 and 24.2 percent in fiscal 1992. The improvement in the expense ratio
reflects comparable store sales growth achieved throughout the three-year
period; productivity gains, especially in store staffing; and a net
contribution from the private-label credit card program.
Circuit City's new Superstore prototype features a more efficient configuration
for the store's support functions, including cashier, credit and warehouse
operations. In fiscal 1994, the Company introduced one-stop shopping, which
allows the sales counselor to complete the entire transaction for the customer
and further improves store operating efficiency. At fiscal year-end, one-stop
was available in approximately 75 percent of the Company's stores. Operating
profits generated by the Company's private-label credit card bank subsidiary
are recorded as a reduction to SG&A expenses. In fiscal 1994 and 1993, the
subsidiary benefited from a generally low interest rate environment and,
therefore, a lower-than-anticipated cost of funds. The Company has no
significant exposure to a rise in interest rates since the credit cards it
issues are primarily variable rate programs tied to the prime rate.
INTEREST EXPENSE
Interest expense was 0.1 percent of sales in fiscal 1994, 0.1 percent in fiscal
1993 and 0.3 percent in fiscal 1992. The interest expense level reflects the
Company's strong cash position and low short-term interest rates.
INCOME TAXES
The Company's effective income tax rate was 36.7 percent in fiscal 1994 and
37.0 percent in fiscal years 1993 and 1992. An increase in the statutory
federal income tax rate during the second quarter of fiscal 1994 produced a
rise in the Company's deferred tax asset as prescribed by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." The
increased tax benefit from the deferral reduced the Company's effective tax
rate in that quarter and for the fiscal year. During the second half of fiscal
1994, the higher federal tax rate produced an increase in the Company's
effective tax rate to 37.5 percent.
NET EARNINGS
Net earnings rose 20 percent to $132.4 million in fiscal 1994. In fiscal 1993,
net earnings were $110.3 million, a 41 percent increase from $78.2 million in
fiscal 1992. Net earnings per share rose 18 percent in fiscal 1994, to $1.36,
and 40 percent in fiscal 1993, to $1.15 from 82 cents in fiscal 1992.
RETURN ON SALES
Return on sales was 3.2 percent in fiscal 1994 compared with 3.4 percent in
fiscal 1993 and 2.8 percent in fiscal 1992.
OPERATIONS OUTLOOK
Management believes that continued investment in Superstore expansion will
maximize long-term shareholder value. Management estimates that in fiscal 1995
the remaining markets suitable for Superstore expansion will produce $20
billion of the consumer electronics, home office and major appliance industry's
total retail sales of $63 billion. Over the next three years, Circuit City
expects to expand the Superstore base into all these markets with the exception
of the New York metropolitan area and to eventually build market shares similar
to those held in current markets. The Company's management also estimates that
markets which can be served by the smaller-square-footage Circuit City format
will produce $9 billion of the industry's sales in fiscal 1995. The Company
expects eventually to open stores in most of these markets. Circuit City's
three-year store opening schedule includes approximately 180 Superstores and 20
Circuit City stores. The Company also expects to expand market share in
existing markets through market share gains for existing stores and through
store additions.
In fiscal 1995, Circuit City plans to open approximately 60 Superstores, of
which about two-thirds will be in new markets. The Company also plans to open
three Circuit City stores. Management believes that in fiscal 1995 these store
openings will contribute to total sales growth that is similar to the fiscal
1994 level. However, increased competition and continued growth in the
Company's personal computer and music software sales are expected to reduce the
gross profit margin. An expected increase in third-party extended warranty
sales and the related recognition of sales commissions at the time of sale will
contribute to the fiscal year 1995 gross profit margin. Nevertheless, the
Company expects a lower gross profit margin in fiscal 1995 than in fiscal 1994.
Management anticipates that continued improvements in store operating
efficiency will be offset by costs associated with the more rapid expansion
program and increased advertising. As a result, management expects little, if
any, improvement in the expense ratio during fiscal 1995. Although the Company
expects lower pre-tax and net profit margins and no material earnings growth in
fiscal 1995, management believes its marketing and expansion plans will
strengthen Circuit City's competitive position and increase long-term earnings
potential.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan." This standard has no impact on the Company's earnings
since the Company does not offer the loans covered by the standard. In May
1993, the FASB also issued SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The standard is effective for fiscal years
beginning after December 15, 1993. Since the Company does not have equity
securities and has no material debt securities, management does not expect the
standard to have a material impact on the Company's financial statements.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW. For the past three years, Circuit City's Superstore operations have
generated significant resources to support the Company's continued growth. Net
cash provided by operating activities in fiscal 1994 was $108.3 million,
compared with $150.0 million in fiscal 1993 and $65.9 million in fiscal 1992.
The fiscal 1994 decrease principally reflects increases in merchandise
inventory and accounts receivable that were partly offset by an increase in
accounts payable and higher net earnings. The inventory growth reflects
inventory for new stores opened in fiscal 1994 and store openings planned for
early fiscal 1995; the rise in accounts receivable principally includes credit
card receivables generated by the Company's wholly owned credit card bank
subsidiary.
The Company funded capital expenditures of $252.3 million in fiscal 1994 with
$128.0 million in proceeds from the sale of property and equipment and with
cash flows from operations or financing activities. The proceeds from the sale
of property and equipment include $88.0 million from sale-leaseback
transactions, $21.9 million related to landlord reimbursements for improvements
on leased land and $18.1 million from other proceeds. Capital expenditures in
fiscal 1994 principally reflect the 40 stores opened during the year, remodels
of existing Superstores, and a portion of the new Superstores planned for
fiscal 1995. The sale-leaseback transactions completed in fiscal 1994 are
largely related to real estate purchased in fiscal years 1994 and 1993. The
Company expects to complete additional sale-leaseback transactions in fiscal
1995. Capital expenditures of $189.6 million in fiscal 1993 and $109.6 million
in fiscal 1992 were incurred in connection with the Superstore expansion
program. The expenditures were funded primarily with net cash provided by
operating activities and sale-leaseback arrangements.
The Company's credit card bank subsidiary largely funds the private-label
credit card program by selling the receivables through several securitization
programs. Under the terms of these programs, the bank subsidiary is able to
sell the receivables it generates while retaining a small interest in the
receivables. Securitization programs in place at February 28, 1994, provide for
funding of up to $630 million of receivables. The Company expects that the
securitization programs will be expanded to accommodate future receivables
growth.
CAPITAL STRUCTURE. Total assets at February 28, 1994, were $1,554.7 million, up
$291.7 million, or 23 percent since February 28, 1993. The rise in assets
includes increases of $205.6 million in inventory, $68.5 million in
receivables, $67.3 million in net property and equipment, and $17.8 million in
deferred taxes. A $66.2 million decrease in cash and cash equivalents partly
reflects the repayment of $60.0 million in subordinated notes that matured
August 1, 1993.
The Company has funded expansion with internally generated funds,
sale-leaseback transactions and operating leases and has funded consumer
receivables through the use of securitizations. In fiscal 1994, the Company
reduced long-term debt outstanding, largely through repayment of the
subordinated notes. Average short-term debt rose in fiscal 1994 as the Company
utilized seasonal borrowing lines primarily to finance inventory needs.
During the period from fiscal year 1990 to 1994, stockholders' equity grew
substantially in both absolute dollars and as a percentage of total
capitalization. From fiscal 1993 to 1994, stockholders' equity increased 23
percent to $710.4 million. Capitalization for the past five years is
illustrated below:
<TABLE>
FISCAL 1994 1993 1992 1991 1990
(dollar amounts in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ % $ % $ % $ % $ %
Long-term debt, excluding current installments 29.6 3 82.4 9 85.4 12 94.3 15 93.8 18
Deferred revenue and otherliabilities 268.4 27 232.1 26 187.1 26 151.8 25 125.9 24
Total stockholders'equity 710.4 70 575.5 65 448.0 62 366.9 60 305.8 58
TOTAL CAPITALIZATION 1,008.4 100 890.0 100 720.5 100 613.0 100 525.5 100
</TABLE>
The fiscal 1994 increase in net earnings contributed to a return on equity of
20.6 percent, which met the Company's long-term objective of 20 percent. The
return on equity in fiscal 1993 was 21.5 percent. Although the Company expects
that the limited earnings growth in fiscal 1995 will produce a return on equity
below the 20 percent objective, management believes that the marketing programs
and expansion plans it is undertaking will reinforce Circuit City's long-term
earnings potential. The Company expects to maintain its existing long-term
capitalization strategy in fiscal 1995. Management anticipates that capital
expenditures of approximately $375 million will be funded through a combination
of internally generated
funds, sale-leaseback transactions and operating leases and that securitization
will finance the increase in credit card receivables. Management has available
alternatives and expects in fiscal 1995 to replace on a long-term basis and at
a moderately higher level the subordinated debt repaid in fiscal 1994. At the
end of fiscal 1994, the Company maintained a multi-year $100 million unsecured
revolving bank credit facility and $145 million in seasonal lines that are
renewed annually with various banks.
COMMON STOCK
The Company's common stock is traded on the New York Stock Exchange. Quarterly
market price and dividend data are shown below:
Market Price of Common Stock Dividends
FISCAL 1994 1993 1994 1993
HIGH LOW HIGH LOW
1st $ 33.88 $ 23.50 $ 17.75 $ 15.66 $.020 $.015
2nd $ 33.75 $ 24.75 $ 17.16 $ 13.75 $.020 $.015
3rd $ 29.13 $ 24.13 $ 23.09 $ 14.38 $.020 $.015
4th $ 26.00 $ 16.63 $ 27.84 $ 22.06 $.020 $.020
TOTAL $.080 $.065
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED FEBRUARY 28 OR 29
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
1994 % 1993 % 1992 %
<S> <C> <C> <C> <C> <C> <C>
NET SALES AND OPERATING REVENUES $4,130,415 100.0 $3,269,769 100.0 $2,790,232 100.0
Cost of sales, buying and warehousing 3,024,759 73.2 2,346,049 71.7 1,980,906 71.0
GROSS PROFIT 1,105,656 26.8 923,720 28.3 809,326 29.0
Selling, general and administrative
expenses [NOTE 8] 891,865 21.6 744,650 22.8 676,170 24.2
Interest expense [NOTE 3] 4,791 0.1 3,820 0.1 9,033 0.3
TOTAL EXPENSES 896,656 21.7 748,470 22.9 685,203 24.5
Earnings before income taxes 209,000 5.1 175,250 5.4 124,123 4.5
Provision for income taxes [NOTE 4] 76,600 1.9 65,000 2.0 45,900 1.7
NET EARNINGS $132,400 3.2 $110,250 3.4 $78,223 2.8
Weighted average common shares
and common share equivalents 97,391 96,140 95,000
NET EARNINGS PER SHARE $1.36 $1.15 $0.82
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
AT FEBRUARY 28
(AMOUNTS IN THOUSANDS) 1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 75,194 $ 141,412
Net accounts and notes receivable (NOTE 9) 188,990 120,448
Merchandise inventory 721,348 515,771
Prepaid expenses and other current assets 11,476 13,270
TOTAL CURRENT ASSETS 997,008 790,901
Property and equipment, net [NOTES 2 AND 3] 438,096 370,791
Deferred income taxes [NOTE 4] 105,388 87,588
Other assets 14,172 13,650
TOTAL ASSETS $ 1,554,664 $ 1,262,930
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt [NOTES 3 AND 7] $ 1,819 $ 1,828
Accounts payable 419,037 278,348
Accrued expenses and other current liabilities 86,826 66,487
Accrued income taxes 38,582 26,310
TOTAL CURRENT LIABILITIES 546,264 372,973
Long-term debt, excluding current installments [NOTES 3 AND 7] 29,648 82,387
Deferred revenue and other liabilities 268,360 232,054
TOTAL LIABILITIES 844,272 687,414
STOCKHOLDERS' EQUITY [NOTE 5]:
Common stock, $0.50 par value; 150,000,000 shares authorized;
96,080,000 shares issued and outstanding (95,670,000 in 1993) 48,040 47,835
Capital in excess of par value 64,485 54,540
Retained earnings 597,867 473,141
TOTAL STOCKHOLDERS' EQUITY 710,392 575,516
Commitments [NOTES 6, 7 AND 9]
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,554,664 $ 1,262,930
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 28 OR 29
(AMOUNTS IN THOUSANDS) 1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 132,400 $ 110,250 $ 78,223
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 55,012 41,705 35,720
Loss on sales of property and equipment 1,910 993 977
Provision for deferred income taxes (17,800) (19,478) (17,245)
Increase in deferred revenue and other liabilities 36,306 44,896 35,352
Increase in accounts and notes receivable (68,542) (26,932) (66,885)
Increase in merchandise inventory, prepaid
expenses and other current assets (203,783) (96,607) (33,896)
(Increase) decrease in other assets (522) 1,117 2,569
Increase in accounts payable, accrued
expenses and other current liabilities 173,300 94,064 31,106
NET CASH PROVIDED BY OPERATING ACTIVITIES 108,281 150,008 65,921
INVESTING ACTIVITIES:
Purchases of property and equipment (252,256) (189,649) (109,590)
Proceeds from sales of property and equipment 128,029 95,464 109,041
NET CASH USED IN INVESTING ACTIVITIES (124,227) (94,185) (549)
FINANCING ACTIVITIES:
Decrease in short-term debt - - (13,000)
Proceeds from issuance of long-term debt - - 303
Principal payments on long-term debt (52,748) (3,127) (9,376)
Proceeds from issuance of common stock, net 10,150 22,698 7,562
Dividends paid (7,674) (5,433) (4,651)
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (50,272) 14,138 (19,162)
(Decrease) increase in cash and cash equivalents (66,218) 69,961 46,210
Cash and cash equivalents at beginning of year 141,412 71,451 25,241
Cash and cash equivalents at end of year $ 75,194 $ 141,412 $ 71,451
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest $ 5,297 $ 5,526 $ 10,515
Income taxes $ 81,773 $ 70,890 $ 54,210
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON CAPITAL IN
SHARES COMMON EXCESS OF RETAINED
(AMOUNTS IN THOUSANDS) OUTSTANDING STOCK PAR VALUE EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE AT MARCH 1, 1991 92,680 $46,340 $25,775 $294,752 $366,867
Net earnings - - - 78,223 78,223
Exercise of common stock options [NOTE 5] 650 325 3,410 - 3,735
Shares issued under Employee
Stock Purchase Plan [NOTE 5] 248 124 2,973 - 3,097
Shares issued under the 1988 Stock
Incentive Plan [NOTE 5] 428 214 3,657 - 3,871
Tax benefit from stock issued - - 1,100 - 1,100
Shares cancelled upon reacquisition by Company (139) (69) (1,433) - (1,502)
Unearned compensation - restricted
stock [NOTE 5] - - (2,739) - (2,739)
Cash dividends - common stock ($.05 per share) - - - (4,651) (4,651)
BALANCE AT FEBRUARY 29, 1992 93,867 46,934 32,743 368,324 448,001
Net earnings - - - 110,250 110,250
Exercise of common stock options [NOTE 5] 1,982 991 15,031 - 16,022
Shares issued under Employee
Stock Purchase Plan [NOTE 5] 67 33 1,202 - 1,235
Shares issued under the 1988 Stock
Incentive Plan [NOTE 5] 220 110 3,350 - 3,460
Tax benefit from stock issued - - 12,700 - 12,700
Shares cancelled upon reacquisition by Company (466) (233) (9,917) - (10,150)
Unearned compensation - restricted
stock [NOTE 5] - - (569) - (569)
Cash dividends - common stock ($.065 per share) - - - (5,433) (5,433)
BALANCE AT FEBRUARY 28, 1993 95,670 47,835 54,540 473,141 575,516
Net earnings - - - 132,400 132,400
Exercise of common stock options [NOTE 5] 316 158 2,994 - 3,152
Shares issued under Employee
Stock Purchase Plan [NOTE 5] 76 38 1,895 - 1,933
Shares issued under the 1988 Stock
Incentive Plan [NOTE 5] 146 73 3,589 - 3,662
Tax benefit from stock issued - - 3,367 - 3,367
Shares cancelled upon reacquisition by Company (128) (64) (2,014) - (2,078)
Unearned compensation - restricted
stock [NOTE 5] - - 114 - 114
Cash dividends - common stock ($.08 per share) - - - (7,674) (7,674)
BALANCE AT FEBRUARY 28, 1994 96,080 $48,040 $64,485 $597,867 $710,392
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Circuit City Stores, Inc. and its subsidiaries (the Company),
all of which are wholly owned. All significant intercompany balances and
transactions have been eliminated in consolidation.
(B) CASH AND CASH EQUIVALENTS: Cash equivalents of $35,800,000 and $127,026,000
at February 28, 1994 and 1993, respectively, consist of highly liquid debt
securities with maturities of three months or less.
(C) FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying value of the Company's
financial instruments approximates fair value due to the short-term maturities
of the assets and liabilities.
(D) MERCHANDISE INVENTORY: Inventory is stated at the lower of cost or market.
Cost is determined by the average cost method.
(E) PROPERTY AND EQUIPMENT: Property and equipment is stated at cost less
accumulated depreciation. Depreciation is calculated using the straight-line
method over the assets' estimated useful lives, which range from 3 to 25 years.
Property held under capital leases is stated at the lower of the present value
of the minimum lease payments at the inception of the lease or fair market
value and is amortized straight-line over the lease term or the estimated
useful life of the asset, whichever is shorter.
(F) PRE-OPENING EXPENSES: Expenses associated with the opening of new stores
are deferred and amortized ratably over the period from the date of the store
opening to the end of the fiscal year.
(G) INCOME TAXES: The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Deferred income taxes reflect the impact of temporary
differences between the amounts of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for income tax
purposes, measured by applying currently enacted tax laws. The Company
recognizes deferred tax assets if it is more likely than not that a benefit
will be realized. In years prior to fiscal 1993, deferred taxes were accounted
for in accordance with APB Opinion No. 11.
(H) DEFERRED REVENUE: The Company sells its own extended warranty contracts and
extended warranty plans on behalf of unrelated third parties. The contracts
extend beyond the normal manufacturer's warranty period, usually with terms of
coverage (including the manufacturer's warranty period) between 12 and 60
months.
All revenue from the sale of the Company's own extended warranty contracts is
deferred and amortized on a straight-line basis over the life of the contracts.
Incremental direct contract costs related to the sale of contracts are deferred
and charged to expense in proportion to the revenue recognized. All other costs
are charged to expense as incurred. Commission revenue for the unrelated
third-party extended warranty plans is recognized at the time of sale.
(I) EARNINGS PER SHARE: Earnings per share is computed using the weighted
average number of shares of common stock and common stock equivalents
outstanding during the year.
2. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, at February 28 is summarized as follows:
(AMOUNTS IN THOUSANDS) 1994 1993
Land and buildings $ 78,426 $ 79,136
Construction in progress 40,543 50,531
Furniture, fixtures and equipment 282,811 198,197
Leasehold improvements 221,094 183,683
Capital leases (primarily buildings) 13,679 4,986
636,553 516,533
Less accumulated depreciation
and amortization 198,457 145,742
Property and equipment, net $438,096 $370,791
Accumulated amortization related to the capital leases was $1,780,600 and
$1,068,900 at February 28, 1994 and 1993, respectively.
3. DEBT
Long-term debt at February 28 is summarized as follows:
(AMOUNTS IN THOUSANDS) 1994 1993
Industrial Development Revenue
Bonds due through 2006 at various
prime-based rates of interest
ranging from 3.7% to 4.9% $18,000 $19,608
Unsecured subordinated notes,
repaid in fiscal 1994 - 60,000
Obligations under capital leases [NOTE 7] 13,467 4,607
Total long-term debt 31,467 84,215
Less current installments 1,819 1,828
Long-term debt, excluding
current installments $29,648 $82,387
The Industrial Development Revenue Bonds are collateralized by land, buildings,
and equipment with an aggregate carrying value of approximately $19,000,000 at
February 28, 1994, and $20,400,000 at February 28, 1993.
The Company maintains a $100,000,000 unsecured revolving credit agreement with
four banks. The agreement calls for interest based on certain money market
rates and a commitment fee of 0.24 percent per annum. The agreement terminates
June 30, 1995, however, it provides for annual one year extensions on or before
June 30 of each succeeding year. Upon termination of the agreement, so long as
the balance outstanding is a minimum of $10,000,000, the agreement converts to
a term loan payable in 16 equal quarterly installments. No amounts were
outstanding under the revolving credit agreement at February 28, 1994 or 1993.
The scheduled aggregate annual principal payments on long-term obligations for
the next five years are as follows: 1995 - $1,819,000; 1996 - $4,051,000; 1997
- - - $1,436,000; 1998 - $1,489,000; 1999 - $1,586,000.
Under certain of the debt agreements, the Company must meet financial covenants
relating to minimum tangible net worth, current ratios, and payment of
dividends. The Company was in compliance with all such covenants at February
28, 1994 and 1993.
During fiscal year 1994, the Company maintained an aggregate amount of
$145,000,000 ($160,000,000 and $164,000,000 in fiscal 1993 and 1992,
respectively) of committed lines of credit for working capital purposes. The
average amount of short-term debt outstanding, including the revolving credit,
committed lines of credit and informal credit arrangements approximated
$77,392,000 during fiscal 1994, $18,333,000 during fiscal 1993 and $63,215,000
during fiscal 1992.
The maximum amount outstanding under the revolving credit agreement and all
short-term debt arrangements, including informal commitments from banks, was
$355,000,000 during fiscal 1994, $148,000,000 during fiscal 1993 and
$196,000,000 during fiscal 1992. The weighted average interest rate on the
outstanding short-term debt was 3.3 percent during fiscal 1994 and fiscal 1993
and 5.5 percent during fiscal 1992.
The Company capitalizes interest in connection with the construction of certain
facilities. In fiscal 1994, capitalized interest amounted to $2,626,000
($2,986,000 and $1,635,000 in fiscal 1993 and 1992, respectively).
4. INCOME TAXES
The Company files a consolidated federal income tax return. The components of
the provision for income taxes on earnings before income taxes follow:
YEARS ENDED FEBRUARY 28 OR 29
(AMOUNTS IN THOUSANDS) 1994 1993 1992
Current:
Federal $ 85,680 $ 75,130 $ 56,765
State 8,720 9,348 6,380
94,400 84,478 63,145
Deferred:
Federal (14,790) (15,550) (15,790)
State (3,010) (3,928) (1,455)
(17,800) (19,478) (17,245)
Provision for income taxes $ 76,600 $ 65,000 $ 45,900
The enactment of the Omnibus Tax Reconciliation Act of 1993 on August 10, 1993,
increased the federal statutory income tax rate for corporations from 34
percent to 35 percent effective January 1, 1993. This change in the federal tax
rate and the resulting revaluation of the Company's deferred tax asset had a
favorable impact on the fiscal 1994 provision for income taxes. The effective
income tax rate of 36.7 percent in fiscal 1994 and 37.0 percent in fiscal 1993
and 1992 differ from the federal statutory income tax rate of 35 percent in
fiscal 1994 and 34 percent in fiscal 1993 and 1992 because of state income
taxes and federal and state income tax credits. In fiscal 1994, the revaluation
of the deferred tax asset also contributed to the difference.
In accordance with SFAS No. 109, which the Company adopted effective March 1,
1992, the tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and liabilities at February 28, 1994 and
1993, are as follows:
(AMOUNTS IN THOUSANDS) 1994 1993
Deferred Tax Assets:
Deferred revenue $ 99,364 $ 82,604
Inventory capitalization 5,815 3,710
Accrued expenses 26,082 18,246
Other 4,335 4,213
Total gross deferred tax assets 135,596 108,773
Deferred Tax Liabilities:
Depreciation and amortization (20,691) (12,669)
Prepaid benefit programs (2,620) (2,338)
Other (6,897) (6,178)
Total gross deferred tax liabilities (30,208) (21,185)
Net Deferred Tax Asset $ 105,388 $ 87,588
Of the gross deferred tax assets at February 28, 1994 and 1993, approximately
$119 million and $98 million, respectively, can be realized by carrybacks or
offsetting of deferred tax liabilities. Based on the Company's historical and
current pre-tax earnings, management believes the remaining amount will be
realized through future taxable income, therefore, no valuation allowance is
necessary.
For fiscal 1992, the deferred income tax benefit results from timing
differences in the recognition of income and expense for tax and financial
reporting purposes and was primarily related to deferred revenue on extended
warranty contracts.
5. CAPITAL STOCK AND STOCK INCENTIVE PLANS
(a) PREFERRED STOCK: In conjunction with the adoption in fiscal 1989 of a
Shareholders Rights Plan, preferred stock purchase rights were distributed as a
dividend at the rate of one right for each share of the Company's common stock.
The rights are exercisable only upon the attainment of, or the commencement of
a tender offer to attain, a specified ownership interest in the Company by a
person or group. When exercisable, each right would entitle shareholders to buy
one four-hundredth of a newly issued share of Cumulative Participating
Preferred Stock, Series E, $20 par value, at an exercise price of $140. A total
of 500,000 shares of such preferred stock, which have preferential dividend and
liquidation rights, have been authorized; 250,000 shares have been reserved. No
such shares are outstanding. In the event that an acquiring person or group
engages in certain transactions with the Company after the rights become
exercisable, each right will be converted into a right to purchase, for half
the current market price at that time, shares of the Company's common stock
valued at two times the exercise price.
The Company also has 1,500,000 shares of Undesignated Preferred Stock
authorized of which no shares are outstanding.
(b) RESTRICTED STOCK: The Company has issued restricted stock under the
provisions of the 1988 Stock Incentive Plan whereby key employees and certain
employee directors are granted restricted shares of the Company's common stock.
Shares are awarded in the name of the employee, who has all the rights of a
stockholder, subject to certain restrictions or forfeitures. Restrictions on
the awards generally expire over periods of three or four years. In fiscal
1994, restricted stock awards for 145,565 shares were granted to eligible
employees. The market value of these shares has been recorded as unearned
compensation and is a component of stockholders' equity. Unearned compensation
is expensed over the restriction periods. In fiscal 1994, a total of $2,955,361
was charged to operations ($2,955,937 in 1993 and $2,302,890 in 1992). As of
February 28, 1994, 764,445 restricted shares were outstanding.
(c) EMPLOYEE STOCK PURCHASE PLAN: The Company has an Employee Stock Purchase
Plan for all employees meeting certain eligibility criteria. Under the Plan,
eligible employees may purchase shares of the Company's common stock, subject
to certain limitations, at 85 percent of its fair market value. Purchases are
limited to 10 percent of an employee's eligible compensation, up to a maximum
of $7,500 per year. At February 28, 1994, a total of 74,762 shares remain
eligible for issuance under the Plan. During fiscal 1994, 436,400 shares were
issued to or purchased on the open market for employees (407,990 and 613,516 in
fiscal 1993 and 1992, respectively). The average price per share was $26.20,
$18.78 and $10.32 in fiscal 1994, 1993 and 1992, respectively. The purchase
price discount is charged to operations and totalled $1,653,700, $1,135,930 and
$917,830 in fiscal 1994, 1993 and 1992, respectively.
(d) STOCK INCENTIVE PLANS: Under the Company's stock incentive plans, incentive
and non-qualified stock options may be granted to management, key employees,
and outside directors to purchase shares of the Company's common stock. The
exercise price for incentive stock options for employees and non-qualified
options for outside directors is the market value at the date of grant; for
non-qualified options for employees it is at least 85 percent of the market
value at the date of grant. Options are generally exercisable over a period of
from one to ten years from the date of grant.
Changes in stock options outstanding (and option exercise prices for such
options) are as follows:
YEARS ENDED FEBRUARY 28 OR 29
1994 1993 1992
Options outstanding at
beginning of year
($5.72 to $25.00) 3,494,626 4,017,342 4,057,858
Granted
($7.70 to $33.00) 562,425 1,593,806 797,862
Exercised
($2.22 to $16.31) (316,243) (1,981,362) (649,028)
Cancelled
($5.72 to $25.13) (147,063) (135,160) (189,350)
Options outstanding at
end of year
($5.72 to $33.00) 3,593,745 3,494,626 4,017,342
Options exercisable at
end of year
($5.72 to $25.00) 1,662,032 743,268 1,703,676
Shares available for grant
at end of year (options
and restricted stock) 1,010,488 1,519,754 1,044,710
The stock incentive plans provide for the granting of stock appreciation rights
(SARs) in tandem with non-qualified stock option grants at the discretion of
the board of directors' compensation and personnel committee. The SARs become
fully exercisable upon a change of control, as defined, of the Company,
notwithstanding other conditions of exercisability of the options. The SARs
permit the optionee to surrender an exercisable SAR for an amount equal to the
excess of the market price of the common stock over the option price when the
right is exercised. Market value is defined as the greater of the highest
closing price of the Company's stock during the 90 days preceding the change of
control or the closing price on the date preceding the exercise. As of February
28, 1994, 4,888,333 non-qualified options with related SARs had been granted
with such terms (4,506,688 at February 28, 1993).
6. PENSION PLAN
The Company has a non-contributory defined benefit pension plan covering the
majority of full-time employees who are at least age 21 and have completed one
year of service. The cost of this program is being funded currently. Plan
benefits are generally based on years of service and average compensation. Plan
assets consist primarily of equity securities and included 80,000 shares of the
Company's common stock at February 28, 1994 and 1993.
The components of net pension expense are as follows:
YEARS ENDED FEBRUARY 28 OR 29
(AMOUNTS IN THOUSANDS) 1994 1993 1992
Service cost of benefits earned
during the year $3,916 $3,286 $3,058
Interest cost on projected benefit
obligation 2,351 1,851 1,746
Actual return on plan assets (3,632) (1,936) (2,477)
Net amortization 1,212 61 1,591
Net pension expense $3,847 $3,262 $3,918
Contributions of $4,503,000, $4,883,000 and $4,645,000 were required in fiscal
1994, 1993 and 1992, respectively.
Assumptions used in the accounting for the pension plan were:
YEARS ENDED FEBRUARY 28 OR 29
1994 1993 1992
Weighted average discount rate 7.5% 8.0% 8.0%
Rate of increase in compensation
levels 6.0% 6.5% 6.5%
Rate of return on plan assets 9.0% 8.0% 8.0%
The following table sets forth the plan's financial status and amounts
recognized in the consolidated balance sheets as of February 28:
(AMOUNTS IN THOUSANDS) 1994 1993
Actuarial present value of benefit obligation:
Accumulated benefit obligation
Vested $22,549 $16,246
Non-vested 2,420 2,070
Total benefits 24,969 18,316
Additional amounts related to projected
salary increases 11,414 11,208
Projected benefit obligation for services
rendered to date 36,383 29,524
Plan assets at fair market value (33,564) (25,760)
Projected benefit obligation in excess of
plan assets 2,819 3,764
Unrecognized loss from past experience (2,597) (1,771)
Unrecognized prior service cost 1,086 (232)
Unrecognized net obligation being
recognized over 15 years 1,616 1,819
Accrued pension cost $2,924 $3,580
7. LEASE COMMITMENTS
The Company conducts a substantial portion of its business in leased premises.
The Company's lease obligations are based upon contractual minimum rates. For
certain locations, amounts in excess of these minimum rates are payable based
upon specified percentages of sales. Rental expense and sublease income for all
operating leases are summarized as follows:
YEARS ENDED FEBRUARY 28 OR 29
(AMOUNTS IN THOUSANDS) 1994 1993 1992
Minimum rentals $96,110 $78,184 $65,697
Rentals based on sales
volume 1,910 1,686 1,755
Sublease income (8,441) (7,695) (7,456)
Net $89,579 $72,175 $59,996
The Company computes rent based on a percentage of sales volumes in excess of
defined amounts in certain store locations. Most of the Company's other leases
are fixed dollar rental commitments, many with rent escalations. Most provide
that the Company pay taxes, maintenance, insurance and certain other operating
expenses applicable to the premises.
The initial terms of real property leases will expire within the next 25 years;
however, most of the leases have options providing for additional lease terms
of from five to 25 years at terms substantially the same as the initial terms.
It is expected that real property leases will be renewed upon expiration.
Future minimum fixed lease obligations, excluding taxes, insurance, and other
costs payable directly by the Company, as of February 28, 1994, were:
Fiscal Operating Operating
Capital Lease Sublease
(AMOUNTS IN THOUSANDS) Leases Commitments Income
1995 $ 1,614 $ 102,689 $ (8,185)
1996 1,502 103,266 (7,653)
1997 1,541 104,160 (6,536)
1998 1,541 104,867 (5,883)
1999 1,579 103,719 (4,206)
After 1999 25,027 1,177,747 (21,114)
Total minimum lease
payments $32,804 $1,696,448 $(53,577)
Less amounts
representing interest 19,337
Present value of net
minimum capital lease
payments [NOTE 3] $13,467
In fiscal 1994, the Company entered into sale-leaseback transactions with
unrelated parties at an aggregate selling price of $87,980,000 ($69,195,000 in
fiscal 1993 and $86,050,000 in fiscal 1992). The Company does not have
continuing involvement under the sale-leaseback transactions.
8. SUPPLEMENTARY INCOME STATEMENT INFORMATION
Advertising expense, which is included in selling, general and administrative
expenses in the accompanying consolidated statements of earnings, amounted to
$211,022,000, $174,167,000 and $168,685,000 (5.1 percent, 5.3 percent and 6.1
percent of net sales and operating revenues) in fiscal years 1994, 1993 and
1992, respectively.
9. CREDIT CARD RECEIVABLES AND OFF BALANCE SHEET RISK
The Company uses securitization transactions, which allow for the sale of
receivables to unrelated entities, to finance the consumer revolving credit
receivables generated by its wholly owned bank subsidiary. No gain or loss is
recorded on the sale. At February 28, the following amounts were outstanding:
(AMOUNTS IN THOUSANDS) 1994 1993
Gross receivables transferred $727,966 $457,400
Interest retained by the Company (98,606) (42,600)
Net transferred amount $629,360 $414,800
Program capacity $630,000 $435,000
The finance charges from the transferred receivables are used to fund interest
costs, bad debts and servicing fees. The securitization agreements state that
there is recourse to the Company for any cash flow deficiencies if the monthly
credit card cash flows from finance charges are inadequate to cover the
aforementioned expenses. The Company believes that as of February 28, 1994, no
liability exists under the recourse provision.
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
First Quarter Second Quarter Third Quarter Fourth Quarter Year
(AMOUNTS IN THOUSANDS)
1994 1993 1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales and
operating revenues $798,950 $644,840 $906,678 $721,251 $1,018,051 $805,426 $1,406,736 $1,098,252 $4,130,415 $3,269,769
Gross profit $215,066 $182,163 $240,764 $200,500 $262,578 $221,225 $387,248 $319,832 $1,105,656 $923,720
Net earnings $17,230 $11,384 $27,967 $21,450 $19,460 $16,632 $67,743 $60,784 $132,400 $110,250
Net earnings
per share $0.18 $0.12 $0.29 $0.23 $0.20 $0.17 $0.70 $0.63 $1.36 $1.15
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Circuit City Stores, Inc.:
We have audited the accompanying consolidated balance sheets of Circuit City
Stores, Inc. and subsidiaries as of February 28, 1994 and 1993, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the fiscal years in the three-year period ended February 28, 1994.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Circuit City
Stores, Inc. and subsidiaries as of February 28, 1994 and 1993, and the results
of their operations and their cash flows for each of the fiscal years in the
three-year period ended February 28, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 1 (G) to the consolidated financial statements, the
Company changed its method of accounting for income taxes in fiscal 1993.
KPMG PEAT MARWICK
Richmond, Virginia
April 4, 1994
MANAGEMENT'S REPORT
The Board of Directors and Stockholders of
Circuit City Stores, Inc.:
The consolidated financial statements of Circuit City Stores, Inc. and
subsidiaries have been prepared under the direction of management, which is
responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles and, as such, include amounts that are the best estimates and
judgments of management with consideration given to materiality.
Management is responsible for maintaining an internal control structure,
designed to provide reasonable assurance that the books and records reflect the
transactions of the Company and that its established policies and procedures
are carefully followed. Because of inherent limitations in any system, there
can be no absolute assurance that errors or irregularities will not occur.
Nevertheless, management believes that the internal control structure provides
reasonable assurance that assets are safeguarded and that financial information
is objective and reliable.
The Company's consolidated financial statements have been audited by KPMG Peat
Marwick, independent auditors. Their Independent Auditors' Report, which is
based on an audit made in accordance with generally accepted auditing
standards, expresses an opinion as to the fair presentation in conformity with
generally accepted accounting principles of the consolidated financial
statements. In performing its audit, KPMG Peat Marwick considers the Company's
internal control structure to the extent it deems necessary in order to issue
its opinion on the consolidated financial statements.
The audit committee of the board of directors is composed solely of outside
directors. The committee meets periodically with management, the internal
auditors and the independent auditors to assure that each is properly
discharging its responsibilities. KPMG Peat Marwick and the internal auditors
have full and free access to meet privately with the audit committee to discuss
accounting controls, audit findings and financial reporting matters.
RICHARD L. SHARP
President and Chief Executive Officer
MICHAEL T. CHALIFOUX
Senior Vice President, Chief Financial Officer and Corporate Secretary
April 4, 1994
Exhibit 23
[LETTERHEAD OF KPMG PEAT MARWICK]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Circuit City Stores, Inc.:
We consent to the incorporation by reference in the registration
statements (Numbers 33-53185, 33-50144, 33-36650, 33-22874, 33-17876 and
33-12081) on Form S-8 of Circuit City Stores, Inc. of our report dated
April 4, 1994, relating to the consolidated balance sheets of Circuit City
Stores, Inc. and subsidiaries (the Company) as of February 28, 1994 and
1993, and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the fiscal years in the three-year period
ended February 28, 1994, which report is incorporated by reference from the
annual report to shareholders in the February 28, 1994 annual report on
Form 10-K of Circuit City Stores, Inc. We also consent to the
incorporation by reference in the foregoing registration statements of our
report dated April 4, 1994, relating to the financial statement schedules
of Circuit City Stores, Inc., which report appears as listed in Item 14(a)2
of this Form 10-K.
As discussed in Note 1(G) to the consolidated financial statements, the
Company changed its method of accounting for income taxes in fiscal 1993.
s/KPMG PEAT MARWICK
Richmond, Virginia
May 23, 1994
Exhibit 21
CIRCUIT CITY STORES, INC.
SUBSIDIARIES OF THE COMPANY
SUBSIDIARY STATE OF INCORPORTAION
Acme Commercial Corporation Virginia
CC Distribution Company, Inc. Virginia
Cipher Digital, Inc. Maryland
Circuit City Stores West Coast, Inc. California
First North American National Bank Georgia
Northern National Insurance Ltd. Bermuda
Patapsco Designs, Inc. Maryland
