UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 29, 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 number 1-1394
EDISON BROTHERS STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0254900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 N. Broadway, St. Louis, Missouri 63102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 331-6000
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 $1 per share New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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 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. / /
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of April 13, 1994:
Common Stock, $1 par value - $645,852,615
It is assumed for purposes of this calculation that the registrant has no
"affiliates". Information as to the shareholdings of directors of the
registrant is provided in the proxy statement for the 1994 annual meeting
of stockholders.
The number of shares outstanding of each of the registrant's classes of
common stock, as of April 13, 1994:
Common Stock, $1 par value - 21,986,472 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to stockholders for the fiscal year
ended January 29, 1994 ("1993 Annual Report") are incorporated by
reference into Parts I and II.
Portions of the proxy statement for the 1994 annual stockholders
meeting are incorporated by reference into Part III.
PART I
Item 1. BUSINESS
Edison Brothers Stores, Inc. (the "Company") owns and operates chains of
specialty stores in all fifty of the United States, Puerto Rico, the Virgin
Islands, and Mexico. The Company conducts its operations through
subsidiaries and divisions in two principal business segments: apparel and
footwear. See Note 4 of Notes to Consolidated Financial Statements in the
1993 Annual Report for information with respect to the total assets and the
contribution to net sales and earnings from operations of the Company's
principal business segments. Both the apparel and the footwear segments
feature primarily private label merchandise in the moderate price range.
The stores operated by the Company are located primarily in shopping malls.
During 1993 the Company opened 207 stores including 96 acquired by
purchase, and closed 128 stores. A brief description of the Company's
chains follows.
Apparel Segment
Edison Brothers' men's apparel chains and other operations include
J. Riggings, JW/Jeans West, Zeidler & Zeidler/Webster, Oaktree, Coda, Repp,
Ltd. Big & Tall, and Phoenix catalog operations. The women's-wear chains
include 5-7-9 Shops and Spirale.
J. Riggings, the Company's profit leader over the past four years, focuses
on providing updated traditional apparel to a broad age group of 16 to 40
year-old men. Its mainstream merchandise and classic store design are
targeted at a more conservative customer. J. Riggings operated 476 stores
at the end of fiscal 1993.
The JW/Jeans West (JW) chain had 450 stores at the end of fiscal 1993. JW
stores are generally smaller than stores in the Company's other menswear
chains and are designed to maximize the amount of apparel displayed on the
sales floor. This chain targets young men in the 14 to 25 year-old age
group.
The Zeidler & Zeidler/Webster (Zeidler & Zeidler) store group markets
upscale contemporary clothing for men. New stores being opened by this
group are using the Zeidler & Zeidler name. Zeidler & Zeidler had 164
stores at the end of fiscal 1993.
Oaktree offers a mix of sportswear for 18 to 29 year-old men. Its larger
store size accommodates Oaktree's presentation on custom fixtures in a
modern setting. Oaktree operated 306 stores at the end of fiscal 1993.
Coda presents branded and private label current fashion to 18 to 29 year-
old men. Coda's larger stores utilize a variety of merchandising techniques,
including visual displays and advanced sound systems. At the end of fiscal
1993 Coda operated 42 stores.
Repp, Ltd. Big & Tall (Repp) is a chain of 147 big and tall mens stores.
Repp markets sportswear and clothing to men who are 6 foot 3 inches or
taller or have a 44 inch or larger waist.
Phoenix Big & Tall is a catalog operation that markets sportswear and
clothing to big and tall men.
5-7-9 Shops primarily markets sportswear, dresses and coordinates to the
small size junior customer. 5-7-9 Shops operated 388 stores at the end of
fiscal 1993.
Spirale offers adaptations of teen fashion looks in sizes 6 to 14 for
girls. Spirale operated 5 stores at the end of fiscal 1993.
Footwear Segment
The Company's footwear chains include Bakers/Leeds, Precis, The Wild Pair,
and Sacha London.
The Bakers/Leeds stores, which are operated as a single chain, form the
company's second largest chain with 457 stores at the end of fiscal 1993.
Bakers/Leeds offers popularly-priced fashion shoes to women and teenage
girls.
Precis offers fashion footwear and accessories at reasonable prices in a
very high-style setting. Precis operated 28 stores at the end of fiscal
1993.
The Wild Pair offers advanced shoe fashion for young women and men and a
selection of trend setting accessories. The Wild Pair operated 252 stores
at the end of fiscal 1993.
Sacha London markets advanced shoe fashion to customers in urban areas.
This chain operated 14 stores at the end of fiscal 1993.
Entertainment
Edison Brothers Entertainment (EBE) includes Time-Out, Space Port, Party
Zone and Exhilarama family entertainment centers, Dave & Buster's
restaurant/entertainment complexes and Horizon, which is involved with the
development of new entertainment technologies, including VirtualityTM, a
virtual reality entertainment system. Horizon markets high tech
interactive attractions to the corporate event market and other chains in
the Entertainment division.
Edison Brothers Mall Entertainment operated 128 primarily mall-based Time-
Out, Space Port, and Party Zone family amusement centers and 5 larger mall-
based family entertainment centers at the end of fiscal 1993. The centers
are located throughout the United States and Puerto Rico. Dave & Buster's
operated 4 restaurant/entertainment complexes located in Texas and Georgia
at the end of fiscal 1993 and has recently opened a new unit in
Philadelphia, Pennsylvania.
Additional information related to this item is set forth under the captions
"To Our Shareholders" and under "Note 4: Business Segments" of the Notes to
Consolidated Financial Statements in the 1993 Annual Report. Such
information is incorporated herein by reference.
Operations and Data Processing
The specialty retailing business is subject to fluctuations resulting from
changes in customer preferences dictated by fashion and season. This is
especially true for stores emphasizing fashion over classic basics. In
addition, merchandise usually must be ordered a significant time in advance
of the season and sometimes before fashion trends are evidenced by customer
purchases. It has been the general practice of the Company and other
apparel retailers to build up inventory levels prior to peak selling
seasons, which further increases the vulnerability of the Company to demand
and pricing shifts and to errors in selection and timing of the purchases
of merchandise. However, the Company found that the rate of change in
fashion trends slowed in late 1991 and during 1992. As a result, the
Company began ordering and receiving subsequent-season merchandise earlier
in 1992 than had been the case in previous years. In 1993, a lack of
fashion direction in a weak retail environment led the Company to lower
inventory levels.
Substantially all of the Company's merchandise information, accounting, and
financial control systems are operated centrally from the Company's
headquarters in St. Louis, Missouri. Daily polling of activity from the
point-of-sale registers in each store provides current data for updated
sales, merchandise, and bank activity reporting. Integration of this data
with the Company's merchandise system enables each chain's team of
merchandise controllers and distributors to monitor performance and
replenish and control inventory.
The Company must carry large amounts of inventory to meet the rapid
delivery requirements of its stores. The Company operates four main
distribution centers located in St. Louis and Washington, Missouri; Rialto,
California; and Rome, Georgia. The centers are receiving points for
merchandise from foreign and domestic suppliers and coordinate distribution
of individual shipments via common carrier to the stores serviced by the
center.
Purchasing
The Company purchases merchandise from many foreign and domestic suppliers.
The Company has no long-term purchase commitments with any of its
suppliers, and is not dependent on any one supplier. The Company's
importing operations are subject to the contingencies generally associated
with foreign operations, including fluctuations in currency values, customs
duty increases, quota limitations and any other foreign development that
could cause a disruption of supply. The Company opened international
buying offices in Taiwan in 1987; in Hong Kong in 1989; in Shanghai and
Dalian, China and Indonesia in 1991; and in Korea, Honduras, and the
Philippines in 1993, giving it improved control over overseas sourcing.
The Company does not manufacture any merchandise, but it markets most of
its merchandise under private labels. Each chain of stores maintains a
staff of buyers, and buying decisions are made at the chain level.
Competition
The apparel and footwear retailing industries are highly competitive. The
Company's stores are in competition with numerous other independent
retailers, department stores, mail order companies and discount and
manufacturer's outlets, many of which have greater sales, assets and
financial resources than the Company. Because the Company's stores are
primarily in regional shopping malls, each faces several nearby
competitors. In competing for customers, the Company emphasizes the
fashion orientation of its merchandise, customer service, store appearance
and price.
Employees
During fiscal 1993, the Company employed an average of 24,200 persons with
approximately 22,200 of them engaged in retail operations at the store
level (approximately 30% full-time and 70% part-time). In addition, a
substantial number of temporary employees are hired during peak selling
seasons. The Company believes its employee benefits package is competitive
with those offered in the industry.
Seasonal Business
The Company experiences a significant peak in sales during the Christmas
selling season. Sales during that season accounted for 17.3% of total
sales during 1993.
The Company's inventory is generally increased significantly prior to this
peak selling period. The increase may be financed in part by short-term
bank loans and commercial paper borrowings.
Trademarks
The Company holds a number of trademarks covering its products. The
Company believes that the loss of any of these trademarks would not have a
material effect on the Company's business.
Item 2. PROPERTIES
Stores are located nationwide, and most are leased with initial terms
generally from ten to twenty years. The rentals under most leases are
based upon a percentage of sales with a provision for a minimum annual
rental. Many of the leases provide for additional payments for real estate
taxes and other items. The stores generally range in size from 1,300 to
3,000 square feet. The Company owns three locations containing its Dave &
Buster's restaurant/entertainment complexes located in Texas and Georgia
and leases one location in Texas and one location in Pennsylvania. The
complexes range in size from 25,000 to 70,300 square feet.
The company-owned headquarters building in St. Louis, Missouri, was
completed in 1985 and is the home office for all divisions. The building
contains approximately 500,000 square feet, a portion of which the company
leases to others. The Rialto, California distribution center is owned by
the Company. The distribution centers in St. Louis and Washington,
Missouri and in Rome, Georgia are operated under long term lease
arrangements. The Rialto, Washington, and Rome centers service primarily
the apparel segment while St. Louis services primarily the footwear
segment. The company also operates a small distribution center in Georgia
to service its catalog operations.
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter.
<TABLE>
Item 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
<CAPTION>
Position in the Company
Name Age Title Term
<S> <C> <C> <C>
Richard J. Allan 52 Executive Vice President-
Real Estate Since 1992
Vice President and Director of
Real Estate 1989-1992
Vice President and Director of
Shopping Center Leasing 1988-1989
Lester D. Cherry 59 President of The Wild Pair Since 1986
President and General Sales
Manager of The Wild Pair 1986-1989
Peter A. Edison 38 President of Edison Big & Tall Since 1994
Executive Vice President-
Corporate Development Since 1992
General Manager of Repp, Ltd.
Big & Tall 1991-1994
Director Since 1990
Vice President - Corporate
Development 1989-1992
Vice President of Edison Brothers
Shoe Stores 1986-1989
President of Sacha London 1986-1990
Paul D. Eisen 39 President of Oaktree Since 1994
President and General Merchandise
Manager of Jeans West Since 1989
Vice President and General
Merchandise Manager of Jeans West 1988-1989
Barbara A. Feiner 45 President of 5-7-9 Shops Since 1991
Assistant Vice President and
Director of Administration
for Edison Menswear Group 1987-1991
Eric A. Freesmeier 41 Executive Vice President-
Human Resources Since 1992
Vice President-Human Resources 1986-1992
Michael H. Freund 54 Executive Vice President-
Administration Since 1992
Director Since 1984
Vice President - Administration 1982-1992
Andrew R. Halliday 38 President of Edison Brothers Mall
Entertainment Since 1990
Vice President and General Manager
of Sacha London 1987-1990
Frank C. Juarez 44 President of Zeidler & Zeidler/
Webster Since 1994
President and General Merchandise
Manager of J. Riggings Since 1990
Vice President and General
Merchandise Manager of J. Riggings 1989-1990
Roger L. Koehnecke 49 Executive Vice President and
Chief Information Officer Since 1992
Vice President and Chief
Information Officer 1988-1992
Harry A. Looks 41 President of Edison Brothers
Stores International, Inc. Since 1989
General Manager of Fashion
Conspiracy 1988-1992
Karl W. Michner 46 Director Since 1989
President of Edison Menswear Group Since 1987
Alan D. Miller 41 President of Edison Footwear Group Since 1993
Director Since 1992
President of Bakers/Leeds/Precis 1991-1993
President of 5-7-9 Shops 1987-1991
Andrew E. Newman 49 Chairman of the Board Since 1987
Director Since 1978
Alan A. Sachs 47 Executive Vice President and
General Counsel Since 1992
Vice President and General Counsel 1990-1992
Director Since 1990
Secretary Since 1987
Vice President-Law 1985-1990
Martin Sneider 51 President Since 1987
Director Since 1978
Les Wagner 53 President of Bakers/Leeds Since 1993
General Merchandise Manager of
Bakers/Leeds Since 1989
Real Estate Executive 1988-1989
Lee G. Weeks 60 Executive Vice President and
Chief Financial Officer Since 1992
Treasurer Since 1990
Vice President-Finance 1985-1992
Director Since 1985
</TABLE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Information required by Item 5 is contained in "Note 5: Common Stock" of
the Notes to Consolidated Financial Statements and under the caption
"Quarterly Information" in the 1993 Annual Report. Such information is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Information required by Item 6 is contained under the caption "Five-Year
Financial Summary" in the 1993 Annual Report. Such information is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by Item 7 is presented under the captions "To Our
Shareholders" and "Management's Discussion and Analysis" in the 1993
Annual Report. Such information is incorporated herein by reference.
In addition, the Company reported a comparable store sales decrease of
8.4% in 1993 and increases of 3.8% and .3% in 1992 and 1991,
respectively.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by Item 8, as listed below, is included in the 1993
Annual Report. Such information is incorporated herein by reference.
Consolidated Statements of Income - 1993, 1992, and 1991
Consolidated Balance Sheets - 1993 and 1992 year-ends
Consolidated Statements of Cash Flows - 1993, 1992, and 1991
Consolidated Statements of Common Stockholders' Equity - 1993, 1992,
and 1991
Notes to Consolidated Financial Statements
Quarterly Information
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding nominees for director as set forth under the
caption "Election of Directors" in the proxy statement for the 1994
annual stockholders' meeting is incorporated by reference.
Information regarding executive officers is included as Item 4a hereof.
Information regarding the filing of reports required by Section 16(a) of
the Securities Exchange Act as set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the proxy
statement for the 1994 annual stockholders' meeting is incorporated by
reference.
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation, except for the sections
titled "Reports of the Compensation Committees" and "Stock Price
Performance" as set forth under the caption "Executive Compensation",
and information regarding compensation of directors under the caption
"Election of Directors" in the proxy statement for the 1994 annual
stockholders meeting is incorporated by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
and management as set forth under the captions "Election of Directors"
and "Security Ownership of Certain Beneficial Owners and Management" in
the proxy statement for the 1994 annual stockholders meeting is
incorporated by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions to be reported under this item.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(a) (3) Listing of exhibits:
<TABLE>
<CAPTION>
Exhibit No. Exhibit No.
<S> <C> <C>
3(a) Bylaws of the Company, as amended March 17, 1994. Ex-3.a
3(b) The Company's Certificate of Incorporation, as
amended June 28, 1990, was filed as an Exhibit to
the Company's annual report on Form 10-K for the
year ended February 2, 1991, and is incorporated
herein by reference.
4(a) Rights Agreement dated as of January 26, 1988, and
amendments thereto dated November 30, 1989 and
September 29, 1992, between Edison Brothers Stores,
Inc. and Mellon Securities Trust Company, as Rights
Agent, were filed as Exhibits to the Company's
current reports on Form 8-K dated February 17, 1988,
December 11, 1989, and October 28, 1992,
respectively, and are incorporated herein by
reference.
4(b) Note Agreements and Senior Notes, dated March 21,
1993, between Edison Brothers Stores, Inc. and a
number of institutional lenders relating to $150
million of unsecured debt were filed as an Exhibit
to the Company's annual report on Form 10-K for the
year ended January 30, 1993, and are incorporated
herein by reference.
4(c) Amendment Agreements, dated as of January 15, 1994, Ex-4.c
and February 1, 1994, amending the Note Agreements
dated March 1, 1993 between Edison Brothers Stores,
Inc. and a number of institutional lenders relating
to $150 million of unsecured debt.
4(d) Loan Agreement and Senior Promissory Notes, dated
November 15, 1990, between Edison Brothers Stores,
Inc. and Metropolitan Life Insurance Company
relating to $105 million of unsecured debt were
filed as an Exhibit to the Company's annual report
on Form 10-K for the year ended February 2, 1991,
and are incorporated herein by reference.
4(e) Amendment Agreement, dated as of January 25, 1994 , Ex-4.e
amending the Loan Agreement and Senior Promissory
Notes dated November 15, 1990 between Edison
Brothers Stores, Inc. and Metropolitan Life
Insurance Company relating to $105 million of
unsecured debt.
10(a) Form of Indemnification Agreement between the
Company and each of its directors was filed as an
Exhibit to the Company's annual report on Form 10-K
for the year ended January 3, 1987, and is
incorporated herein by reference.
10(b) Form of Termination Agreement entered into by the
Company with Andrew E. Newman, Chairman of the
Board, and Martin Sneider, President of the Company,
was filed as an Exhibit to the Company's annual
report on Form 10-K for the year ended February 3,
1990, and is incorporated herein by reference.
10(c) Form of Termination Agreement entered into by the
Company with other executive officers of the Company
was filed as an Exhibit to the Company's annual
report on Form 10-K for the year ended February 3,
1990, and is incorporated herein by reference.
10(d) The Edison Brothers Stores, Inc. 1992 Stock Option Ex-10.d
Plan, as amended March 3, 1994.
10(e) The Edison Brothers Stores, Inc. 1986 Stock Option Ex-10.e
Plan, as amended April 27, 1987 and March 3, 1994.
10(f) The Edison Brothers Stores, Inc. 1982 Incentive
Stock Option Plan, as amended effective October 25,
1983, January 28, 1986 and March 3, 1986, is
incorporated by reference from the Company's
Registration Statement on Form S-8 (No. 2-84838)
filed with the Commission.
10(g) Non-Qualified Retirement Plan for Outside Directors
is described under the caption "Election of
Directors" in the proxy statement for the Company's
1994 Annual stockholders meeting, which description
is incorporated herein by reference.
11 Computation of per share earnings Ex-11
13 1993 Annual Report to Stockholders Ex-13
22 Subsidiaries Ex-22
23 Consent of Independent Auditors Ex-23
</TABLE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(continued)
(b) There were no reports on Form 8-K filed during the quarter.
(c) Exhibits:
The response to this portion of Item 14 is submitted as
a separate section of this report.
(d) Financial statement schedules:
The response to this portion of Item 14 is submitted as a
separate section of this report.
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.
EDISON BROTHERS STORES, INC.
(Registrant)
By /s/ Andrew E. Newman 4/15/94 By /s/ Martin Sneider 4/15/94
Chairman of the Board (date) President (date)
By /s/Norman Gold 4/19/94 By /s/Lee G. Weeks 4/18/94
Vice President and (date) Executive Vice President and (date)
Corporate Controller Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
registrant on the dates indicated.
By /s/ Julian I. Edison 4/19/94 By /s/ Peter A. Edison 4/15/94
(date) (date)
By Jane Evans (date) By /s/ Michael H. Freund 4/15/94
See Page 14a (date)
By /s/ Karl W. Michner 4/15/94 By /s/ Alan D. Miller 4/15/94
(date) (date)
By /s/ Andrew E. Newman 4/15/94 By /s/ Eric P. Newman 4/15/94
(date) (date)
By /s/ Alan A. Sachs 4/15/94 By Craig D. Schnuck (date)
(date) See page 14b
By /s/ Martin Sneider 4/15/94 By Robert W. Staley (date)
(date) See page 14c
By /s/ Lee G. Weeks 4/18/94
(date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
By /s/ Jane Evans 4/16/94
(date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
By /s/ Craig D. Schnuck 4/16/94
(date)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
4/18/94
By /s/ Robert W. Staley (date)
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) and (2) and ITEM 14(d)
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED JANUARY 29, 1994
EDISON BROTHERS STORES, INC.
ST. LOUIS, MISSOURI
FORM 10-K - ITEM 14(a) (1) and (2)
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of Edison Brothers Stores,
Inc. and subsidiaries, included in the 1993 annual report of the registrant
to its stockholders, are incorporated by reference in Item 8:
Consolidated Statements of Income - 1993, 1992, and 1991
Consolidated Balance Sheets - 1993 and 1992 year-ends
Consolidated Statements of Cash Flows - 1993, 1992, and 1991
Consolidated Statements of Common Stockholders' Equity - 1993, 1992,
and 1991
Notes to consolidated financial statements
The following consolidated financial statement schedules of Edison Brothers
Stores, Inc. and subsidiaries are included in Item 14(d):
Schedule II - Amounts receivable from related parties and
underwriters, promoters, and employees other than
related parties
Schedule V - Property, plant, and equipment
Schedule VI - Accumulated depreciation and amortization of property,
plant, and equipment
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
Schedule X - Supplementary income statement information
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions, or are inapplicable, and therefore
have been omitted.
Individual financial statements of the registrant have been omitted as the
registrant is primarily an operating company and all subsidiaries included
in the consolidated financial statements filed, in the aggregate, do not
have minority equity interests and/or indebtedness to any person other than
the registrant or its consolidated subsidiaries in amounts which together
(excepting indebtedness incurred in the ordinary course of business which
is not overdue and matures within one year from the date of its creation,
whether or not evidenced by securities, and indebtedness of subsidiaries
which is collateralized by the registrant by guarantee, pledge, assignment,
or otherwise) exceed five percent of the total assets as shown by the most
recent year-end consolidated balance sheet.
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Deductions Balance at end
(2) of period
Balance at (1) Amounts (2)
beginning Amounts written (1) Not
Name of debtor of period Additions collected off Current Current
Current
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED
JANUARY 29, 1994:
David O. Corriveau
(employee) <FA> $403,547 $ 10,266 $413,813
James W. Corley
(employee) <FB> $348,579 $ 7,564 $356,143
YEAR ENDED
JANUARY 30, 1993:
David O. Corriveau
(employee) <FA> $389,542 $ 14,005 $403,547
James W. Corley
(employee) <FB> $339,542 $ 9,037 $348,579
YEAR ENDED
FEBRUARY 1, 1992:
David O. Corriveau
(employee) <FA> $328,843 $ 60,699 $389,542
James W. Corley
(employee) <FB> $328,843 $ 10,699 $339,542
<FN>
Notes
<FA> Represents a non-interest bearing advance of $175,000 and loans of
$140,000 and $50,000 bearing interest at the Applicable Federal Rate
plus accrued interest thereon. The advance and $140,000 loan are
repayable in accordance with incentive agreements with the employee.
The $50,000 loan is repayable in accordance with a loan agreement with
the employee.
<FB> Represents a non-interest bearing advance of $175,000 and a loan of
$140,000 bearing interest at the Applicable Federal Rate plus accrued
interest thereon. The advance and loan are repayable in accordance
with incentive agreements with the employee.
</TABLE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED JANUARY 29, 1994
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Balance at Balance at
beginning Additions Other changes end of
Classification <fa> of period at cost (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Land $ 11.2 $ (.1)<fc> $ 11.1
Buildings 70.8 $ .2 71.0
Leasehold improvements 268.0 44.8 (16.7)<fc> 299.4
1.8 <fd>
1.5 <fe>
Fixtures, equipment,
games and rides 197.0 33.4 (11.5)<fc> 221.4
1.2 <fd>
1.3 <fe>
Property held under
capital leases,
principally buildings 9.6 9.6
$556.6 $ 78.4<fb> $(22.5) $612.5
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa> Fixed asset estimated lives are as follows: buildings, 25 to 50
years; leasehold improvements, 5 to 15 years; fixtures and
equipment, 5 to 10 years; games and rides, 3 to 20 years; property
held under capital leases, principally buildings, 20 to 50 years.
<fb> Primarily additions for retail stores and store remodelings.
<fc> Other disposals.
<fd> Net transfer of assets in stores previously reserved for closing.
<fe> Obtained through business acquisition or assets purchase.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED JANUARY 30, 1993
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Balance at Balance at
beginning Additions Other changes end of
Classification <fa> of period at cost (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Land $ 9.5 $ 1.7 $ 11.2
Buildings 65.1 5.7 70.8
Leasehold improvements 248.0 40.8 $(14.7)<fc> 268.0
(.5)<fd>
.4 <fe>
(6.0)<ff>
Fixtures and equipment 164.8 44.7 (9.7)<fc> 197.0
(.2)<fd>
.3 <fe>
(2.9)<ff>
Property held under
capital leases,
principally buildings 9.6 9.6
$497.0 $92.9<fb> $(33.3) $556.6
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa>Fixed asset estimated lives are as follows: buildings, 25 to 50
years; leasehold improvements, 5 to 15 years; fixtures and equipment,
5 to 10 years; property held under capital leases, principally
buildings, 20 to 50 years.
<fb>Primarily additions for retail stores and store remodelings.
<fc>Other disposals.
<fd>Net transfer and write-off of assets in stores previously and/or
presently fully reserved for closing.
<fe>Obtained through business acquisition or assets purchase.
<ff>Assets sold to F.W. Woolworth Co.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED FEBRUARY 1, 1992
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Balance at Balance at
beginning Additions Other changes end of
Classification <fa> of period at cost (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Land $ 6.6 $ 2.9 $ 9.5
Buildings 56.5 8.7 $ (.1) 65.1
Leasehold improvements 222.4 33.2 (9.0)<fc> 248.0
.1 <fd>
1.1 <fe>
.2
Fixtures and equipment 139.5 31.9 (6.8)<fc> 164.8
(.2)<fd>
.5 <fe>
(.1)
Property held under
capital leases,
principally buildings 9.6 9.6
$434.6 $ 76.7<fb> $(14.3) $497.0
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa>Fixed asset estimated lives are as follows: buildings, 25 to 50 years;
leasehold improvements, 5 to 15 years; fixtures and equipment, 5 to 10
years; property held under capital leases, principally buildings, 20
to 50 years.
<fb>Primarily additions for retail stores and store remodelings.
<fc>Other disposals.
<fd>Net transfer and write-off of assets in stores previously and/or
presently fully reserved for closing.
<fe>Obtained through business acquisition or assets purchase.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED JANUARY 29, 1994
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Additions
Balance at charged to Balance at
beginning costs and Other changes end of
Description of period expenses (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Buildings $ 9.1 $ 1.6 $ 10.7
Leasehold improvements 119.2 27.5 $(12.0)<fa> 135.3
.6 <fb>
Fixtures, equipment,
games and rides 88.4 25.2 (8.1)<fa> 106.3
.8 <fb>
Property held under
capital leases,
principally buildings 6.1 .3 6.4
$222.8 $54.6 $(18.7) $258.7
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa>Other disposals.
<fb>Net transfer of accumulated depreciation applicable to assets in
stores previously reserved for closing.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED JANUARY 30, 1993
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Additions
Balance at charged to Balance at
beginning costs and Other changes end of
Description of period expenses (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Buildings $ 7.8 $ 1.3 $ 9.1
Leasehold improvements 106.1 26.4 $(11.0)<fa> 119.2
(.2)<fb>
(2.1)<fc>
Fixtures and equipment 74.2 21.9 (6.4)<fa> 88.4
(.2)<fb>
(1.1)<fc>
Property held under
capital leases,
principally buildings 5.9 .2 6.1
$194.0 $49.8 $(21.0) $222.8
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa>Other disposals.
<fb>Net transfer and write-off of accumulated depreciation applicable to
assets in stores previously and/or presently fully reserved for
closing.
<fc>Assets sold to F.W. Woolworth Co.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT, AND EQUIPMENT
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
YEAR ENDED FEBRUARY 1, 1992
<CAPTION>
Col. A Col. B Col. C Col. E Col. F
Additions
Balance at charged to Balance at
beginning costs and Other changes end of
Description of period expenses (deduct) period
(In millions)
<S> <C> <C> <C> <C>
Property and equipment:
Buildings $ 6.5 $ 1.4 $ (.1) $ 7.8
Leasehold improvements 86.8 24.7 (6.7)<fa> 106.1
1.0 <fb>
.3
Fixtures and equipment 59.2 19.0 (4.1)<fa> 74.2
.3 <fb>
(.2)
Property held under
capital leases,
principally buildings 5.5 .4 5.9
$158.0 $45.5 $ (9.5) $194.0
<FN>
Column D ("Retirements") is inapplicable.
Notes
<fa>Other disposals.
<fb>Net transfer and write-off of accumulated depreciation applicable to
assets in stores previously and/or presently fully reserved for
closing.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
EDISON BROTHERS STORES, INC
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
(1) (2)
Charged
Balance Charged to Balance
at to other Additions at
beginning costs and accounts- (Deductions)- end of
Description of period expenses describe describe period
(In Millions)
<S> <C> <C> <C> <C> <C>
YEAR ENDED
FEBRUARY 1, 1992
Store closing and
Fashion
Conspiracy/Gussini
phaseout reserves $11.8 $(1.3)<fa> $ (.2)<fb> $3.7<fg>
(4.0)<fc>
(.7)<fd>
(1.9)<fe>
Foxmoor stores
conversion reserve 1.0 (.3)<fa> (.3)<fc> 0
(.4)<fe>
Acquisition
related reserves 6.7 (1.3)<fa> 4.2<fh>
(.9)<fc>
(.8)<fe>
.5 <ff>
<FN>
Notes
<fa>Adjustment to reserve based on current evaluation of costs to be
incurred during phase out of remaining operations or conversions to
other operations.
<fb>Write-off of fixed assets.
<fc>Operating losses incurred by reserved properties and entities.
<fd>Reduction of divisional current liabilities reclassified to reserve.
<fe>Miscellaneous costs and losses incurred.
<ff>In connection with the 1991 acquisition, a reserve was provided for
the operating results and costs to close poorly performing locations
acquired and relocation of operations.
<fg>$1.6 of the reserve is included in the line item "Other current
liabilities" on the 1991 year-end consolidated balance sheet. The
remaining $2.1 of the reserve is included in the line entitled "Other
Liabilities" on the 1991 year-end consolidated balance sheet.
<fh>$1.7 of the reserve is included in the line item "Other current
liabilities" on the 1991 year-end consolidated balance sheet. The
remaining $2.5 of the reserve is included in the line entitled "Other
Liabilities" on the 1991 year-end consolidated balance sheet.
<fi>Schedule VIII is not presented for fiscal years 1993 and 1992 as the
amounts involved are not material.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE IX - SHORT-TERM BORROWINGS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Category of Balance Average outstanding outstanding rate
aggregate short- at end Interest during the during the during the
term borrowings of period Rate period period <fc> period <fd>
(In Millions)
<S> <C> <C> <C> <C> <C>
YEAR ENDED
JANUARY 29, 1994:
Commercial Paper <fa> $44.8 3.2% $105.2 $44.5 3.3%
Bank Borrowings <fb> 87.8 46.2 3.3
YEAR ENDED
JANUARY 30, 1993:
Commercial Paper <fa> $61.3<fe> 3.7% $101.8 $52.8 3.8%
Bank Borrowings <fb> 31.5<fe> 3.8 118.0 61.9 3.8
YEAR ENDED
FEBRUARY 1, 1992:
Commercial Paper <fa> $18.3 4.4% $ 76.1 $31.1 5.8%
Bank Borrowings <fb> 11.5 4.6 92.4 27.1 5.6
<FN>
Notes
<fa>Commercial paper maturities varied with a maximum of 61 days in 1993,
100 days in 1992, and 61 days in 1991 from date of issue with no
provisions for extensions.
<fb>Bank borrowing maturities varied with a maximum of 43 days in 1993, 99
days in 1992, and 35 days in 1991 with no provisions for extensions.
<fc>The average amount outstanding during the period was computed by
dividing the total of daily outstanding principal balances by 360
days.
<fd>The weighted average interest rate during the period was computed by
dividing the actual interest expense by the average short-term
borrowings outstanding.
<fe>$75.0 of total short-term borrowings were reclassified to long-term
debt in the 1992 consolidated balance sheet.
See notes to consolidated financial statements.
</TABLE>
<TABLE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B
Charged to costs and expenses
Year Ended Year Ended Year Ended
Item January 29, 1994 January 30, 1993 February 1, 1992
(In Millions)
<S> <C> <C> <C>
1. Maintenance and
repairs $14.6 $15.1 $14.2
<FN>
Items other than the above have been excluded because they are either not
applicable, are less than 1% of total sales, or are furnished in the
consolidated statement of income or in a note thereto.
See notes to consolidated financial statements.
</TABLE>
EDISON BROTHERS STORES, INC.
____________________
BY-LAWS
____________________
ARTICLE I.
OFFICES
SECTION 1. Registered Office in Delaware. The registered office of
the Corporation in the State of Delaware shall be in the City of Dover,
County of Kent.
SECTION 2. Other Offices. The principal executive offices of the
Corporation shall be in St. Louis, Missouri. The Corporation may also have
offices in such other places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the stockholders shall
be held at the executive offices of the Corporation in St. Louis, Missouri.
SECTION 2. Annual Meetings. An annual meeting of the stockholders,
for the election of directors and for the transaction of such other
business as may properly come before the meeting, shall be held on the
second Wednesday in June of each year at 11:00 A.M., Central Time, or on
such other date or at such other time as the Board of Directors may
designate.
Written notice of an annual meeting of stockholders, stating the
place, date and hour of the meeting, shall be mailed to each stockholder
entitled to vote thereat, at such address as appears on the records of the
Corporation, not less than ten nor more than sixty days prior to the date
of the meeting.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or
(c) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than sixty days prior to the meeting; provided,
however, that in the event that less than seventy days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the date on
which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, (b) the name and address, as they appear
on the Corporation's books, of the stockholder proposing such business,
(c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-laws to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2. The presiding
officer of an annual meeting shall, if the facts warrant, determine that
business was not properly brought before the meeting in accordance with the
provisions of this Section 2, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 3. Special Meetings. Except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
special meetings of the stockholders may be called only by the Chairman of
the Board, the President, or the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
Written notice of a special meeting of the stockholders, stating the
place, date and hour of the meeting, and the purpose or purposes for which
the meeting is called, shall be mailed to each stockholder entitled to vote
thereat, at such address as appears on the records of the Corporation, not
less than ten nor more than sixty days prior to the date of the meeting.
The business transacted at any special meeting of the stockholders
shall be confined to the purpose or purposes stated in the call.
SECTION 4. Organization. Each meeting of the stockholders shall be
presided over by the Chairman of the Board, or, in the absence of the
Chairman, by the President; if neither is present, the meeting shall be
presided over by a chairman to be chosen at the meeting. The Secretary of
the Corporation shall act as secretary of the meeting; if he is not
present, the secretary of the meeting shall be such person as the presiding
officer appoints.
SECTION 5. Voting. At each meeting of the stockholders, each
stockholder shall have one vote for each share of stock having voting power
registered in his name on the books of the Corporation. Each stockholder
having the right to vote may vote in person or by proxy appointed either by
an instrument in writing or by a transmission permitted by
Section 212(c)(2) of the Delaware General Corporation Law subscribed or
transmitted, as the case may be, by such stockholder or by his authorized
agent, except that no proxy shall be voted after three years from its date
unless such proxy provides for a longer period.
SECTION 6. Quorum. At all meetings of the stockholders, the
presence, in person or by proxy, of the holders of record of a majority of
the shares issued and outstanding and entitled to vote thereat shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation or by these By-Laws.
In the absence of a quorum, the holders of record of a majority of the
shares present in person or by proxy and entitled to vote at the meeting
may adjourn the meeting from time to time until a quorum is present. No
notice need be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than thirty days or a new record date is fixed for
the adjourned meeting, in which event a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote thereat. At
any such adjourned meeting at which a quorum is present, any business may
be transacted that might have been transacted at the meeting as originally
called.
SECTION 7. Vote Required for Action. At each meeting of the
stockholders, if a quorum is present, the affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote shall decide all matters brought before the meeting, except as
otherwise provided by law, by the Certificate of Incorporation or by these
By-Laws.
SECTION 8. List of Stockholders. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in his name, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten days prior to the meeting at
the place where the meeting is to be held. The list shall also be kept at
the place of the meeting during the whole time thereof and shall be open to
inspection by any stockholder who is present.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by the Board of Directors. Except as
otherwise provided by law, by the Certificate of Incorporation or by these
By-Laws, the Board of Directors may exercise all powers and do all such
acts and things as may be exercised or done by the Corporation.
SECTION 2. Number, Election, Term of Office and Qualification.
Unless and until changed by amendment to this By-Law, the number of
directors constituting the Board of Directors shall be thirteen (changed,
effective June 8, 1994, to "twelve"); provided, however, that if and
whenever by the terms and provisions of the Certificate of Incorporation
the holders of any class of stock other than the common stock shall be
entitled to elect additional directors, the number of directors shall be
increased in accordance with the terms and provisions of the Certificate of
Incorporation; and if and whenever the common stock shall become revested
with the exclusive voting right for the election of directors, the number
of directors shall be reduced by the number of additional directors chosen
by the holders of such other class of stock. Directors need not be
stockholders. All elections of directors by the holders of the common
stock shall be by a plurality of the votes cast. Except as otherwise
provided in this Article III, the directors to be chosen by the holders of
the common stock shall be elected at the annual meeting of the
stockholders. Each such director shall continue in office until the annual
meeting of the stockholders held next after his election and until his
successor shall have been elected and shall qualify, or until his earlier
resignation or removal. The directors, if any, to be chosen by the holders
of any class of stock other than the common stock shall be elected in the
manner, and their tenure of office shall be limited, as set forth in the
Certificate of Incorporation. No person shall be eligible for election as
a director if such person shall have attained the age of seventy, unless
such person is or was an employee of the Corporation and is eligible to
receive or is receiving pension benefits under the Edison Brothers Stores
Pension Plan or any successor or similar plan then in effect.
Subject to the rights of holders of any class or series of stock
having a preference over the common stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the
Board of Directors or a committee appointed 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 the stockholder has given timely notice in writing to the
Secretary of the Corporation of such stockholder's intent to make such
nomination or nominations. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Corporation not later than (i) with respect to an election to be held
at an annual meeting of stockholders, ninety days prior to the anniversary
date of the immediately preceding annual meeting, and (ii) with respect to
an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the tenth 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 by the Board of Directors; and (e) the consent of each nominee to
serve as a director of the Corporation, if so elected. The presiding
officer of the meeting shall refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
SECTION 3. Resignation. Any director may resign at any time by
written notice to the Corporation, addressed to the attention of the
Chairman of the Board, the President or the Secretary. Unless otherwise
specified therein, such resignation shall take effect on receipt thereof.
SECTION 4. Vacancies. If the position of any director elected, or
entitled to be elected, by the holders of the common stock becomes vacant
by reason of death, resignation, removal, increase in the number of
directors or otherwise, such vacancy may be filled by the vote of a
majority of the remaining directors elected, or entitled to be elected, by
the holders of the common stock, though less than a quorum. If the
position of any director elected, or entitled to be elected, by the holders
of stock other than the common stock becomes vacant by reason of death,
resignation, removal from office (otherwise than by reason of the revesting
in the common stock of the exclusive voting right for the election of
directors), or otherwise, such vacancy may be filled by the vote of a
majority of the remaining directors elected, or entitled to be elected, by
the holders of such stock other than the common stock, though less than a
quorum.
SECTION 5. Annual and Regular Meetings. As soon as practicable after
the annual meeting of the stockholders in each year, an annual meeting of
the Board of Directors shall be held for the election of officers and for
the transaction of such other business as may properly come before the
meeting.
Annual and regular meetings of the Board of Directors may be held at
such times and places (within or without the State of Delaware) as the
Board may from time to time determine. No notice of any such meeting need
be given.
SECTION 6. Special Meetings. A special meeting of the Board of
Directors may be called at any time by the Chairman of the Board or by the
President, and shall be called by the Chairman, the President or the
Secretary upon the written request of two directors. The person calling
such meeting shall fix the time and place therefor. Notice of such meeting
shall be given (a) by written notice delivered personally, sent by telegram
or mailed to each director at his business or home address or (b) by verbal
notice communicated personally or by telephone to each director. Such
notice shall be given at least six hours prior to the meeting, except that
if given by mail such notice shall be given at least two days prior to the
meeting. If mailed, such notice shall be deemed delivered when deposited
in the United States mail. If given by telegram, such notice shall be
deemed delivered when the telegram is delivered to the telegraph company.
No such notice need be given to any director if waived by such director in
writing, whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of the Board need be
specified in the notice or waiver of notice of such meeting.
SECTION 7. Quorum and Vote Required for Action. At all meetings of
the Board of Directors, the presence in person of a majority of the total
number of directors shall constitute a quorum for the transaction of
business, and, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, if a quorum is present, the act of a
majority of the directors present shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the directors
present, without notice other than by announcement at the meeting, may
adjourn the meeting to another date, time or place.
SECTION 8. Participation in a Meeting by Conference Telephone. A
member of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
SECTION 9. Written Consent in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of
the Board or committee.
SECTION 10. Compensation. Directors, as such, may receive such
compensation for their services, including their services as members of
committees of the Board of Directors, as the Board of Directors may fix
from time to time.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. Designation and Powers. The Board of Directors may, by
resolution or resolutions adopted by a majority of the whole Board,
designate one or more committees, each committee to consist of two or more
directors, which, to the extent specified in such resolution or
resolutions, and except as otherwise provided by law, shall have and may
exercise all of the powers of the Board of Directors in the management of
the business and affairs of the Corporation.
The members of each committee shall be appointed by the Board of
Directors. Any member of a committee may resign at any time by written
notice addressed to the Chairman of the Board, the President or the
Secretary. Unless otherwise specified therein, such resignation shall take
effect on receipt thereof. Any member of a committee may be removed at any
time, either with or without cause, by a majority vote of the directors
then in office. Any committee designated pursuant to this Article IV may
at any time thereafter be dissolved by resolution of the Board of
Directors.
SECTION 2. Meetings. Each committee may provide for the holding of
regular meetings at such times and places (within or without the State of
Delaware) as it may from time to time determine. No notice of any such
meeting need be given. A special meeting of a committee may be called at
any time by the chairman of such committee (if one has been appointed) or
by the Chairman of the Board or by the President. The person calling such
meeting shall fix the time and place therefor. Notice of such meeting
shall be given (a) by written notice delivered personally, sent by telegram
or mailed to each member of the committee at his business or home address
or (b) by verbal notice communicated personally or by telephone to each
member of the committee. Such notice shall be given at least six hours
prior to the meeting, except that if given by mail such notice shall be
given at least two days prior to the meeting. If mailed, such notice shall
be deemed delivered when deposited in the United States mail. If given by
telegram, such notice shall be deemed delivered when the telegram is
delivered to the telegraph company. Such notice need not state the purpose
of the meeting. Each committee shall keep minutes of its proceedings and
shall report the same to the Board of Directors when so requested by the
Board. At any meeting of a committee, the presence in person of a majority
of the members of the committee shall constitute a quorum for the
transaction of business, and, except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws, if a quorum is present,
the act of a majority of the members present shall be the act of such
committee. In the absence of a quorum, a majority of the members present,
without notice other than by announcement at the meeting, may adjourn the
meeting to another date, time or place.
ARTICLE V
NOTICES
SECTION 1. Waiver of Notice. Whenever any notice is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a
written waiver thereof signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to such notice. Neither the business to be transacted at, nor
the purpose of, any meeting need be specified in such waiver.
SECTION 2. Attendance at Meeting. Attendance of a person at any
meeting shall constitute a waiver of notice of such meeting, except when
the person attends such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Executive Vice Presidents,
one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as the Board of Directors may from time to time appoint. Any
number of offices may be held by the same person.
SECTION 2. Selection, Term of Office and Duties. All officers shall
be elected by the Board of Directors. Each officer shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal. Each officer shall have such authority and perform such duties as
may be prescribed by these By-Laws or by the Board of Directors.
SECTION 3. Resignation. Any officer may resign at any time by
written notice to the Corporation, addressed to the attention of the
Chairman of the Board, the President or the Secretary. Unless otherwise
specified therein, such resignation shall take effect on receipt thereof.
SECTION 4. Removal. Any officer may be removed at any time, either
with or without cause, by the affirmative vote of a majority of the
directors then in office.
SECTION 5. Vacancies. If an office becomes vacant by reason of
death, resignation, removal or otherwise, such vacancy may be filled by the
Board of Directors.
SECTION 6. Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or such committee
thereof as the Board may designate.
SECTION 7. Chairman of the Board. The Chairman of the Board shall be
chosen from among the directors and shall, if present, preside at all
meetings of the stockholders and of the Board of Directors. Except where
by law the signature of the President is required, the Chairman of the
Board shall possess the same power as the President to sign all
certificates, contracts and other instruments of the Corporation. The
Chairman of the Board shall, subject to the direction and control of the
Board of Directors, have overall responsibility for the management and
supervision of the business and affairs of the Corporation. He shall, in
general, perform all duties incident to the office of the Chairman of the
Board and such other duties as from time to time may be assigned to him by
the Board of Directors.
SECTION 8. President. The President shall, subject to the direction
and control of the Board of Directors, share with the Chairman of the Board
responsibility for the management and supervision of the business and
affairs of the Corporation. He shall have the power to sign all
certificates, contracts and other instruments of the Corporation. In
general, the President shall perform all duties incident to the office of
President and shall have such other duties as the Board of Directors may
from time to time prescribe.
SECTION 9. Executive Vice Presidents and Vice Presidents. Each
Executive Vice President and Vice President shall have such duties as may
be assigned to him from time to time by the Board of Directors. In the
absence of both the Chairman of the Board and the President, or in the
event of their death or disability, the Executive Vice President having the
greatest seniority with the Corporation shall perform the duties and
exercise the powers of the Chairman of the Board and the President.
SECTION 10. Secretary and Assistant Secretaries. The Secretary shall
give, or cause to be given, notice of all meetings of the stockholders and
of the Board of Directors in accordance with these By-Laws, shall attend
all meetings of the stockholders and of the Board of Directors, and shall
record their proceedings in a book to be kept for that purpose. The
Secretary shall have custody of the corporate seal and affix the seal to
any instrument requiring it. He shall perform such other duties as the
Board of Directors may from time to time prescribe.
The Assistant Secretary or Assistant Secretaries, if any, shall, in
the absence or disability of the Secretary, or at his request, perform his
duties and exercise his powers and authority.
SECTION 11. Treasurer and Assistant Treasurers. The Treasurer shall
have custody of the funds and securities of the Corporation, shall keep
full and accurate accounts of receipts and disbursements in books belonging
to the Corporation, and shall deposit all money and other valuable effects
in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors. The Treasurer shall disburse
the funds of the Corporation as may be prescribed by the Board of
Directors, taking proper vouchers for such disbursements, and shall render
to the Board of Directors, at meetings of the Board of Directors or
whenever the Board may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. The Treasurer
shall perform such other duties as the Board of Directors may from time to
time prescribe.
The Assistant Treasurer or Assistant Treasurers, if any, shall, in the
absence or disability of the Treasurer, or at his request, perform his
duties and exercise his powers and authority.
SECTION 12. Delegation of Authority. Notwithstanding any provision
hereof, the Board of Directors may from time to time delegate the powers or
duties of any officer to any other officer.
SECTION 13. Surety Bonds. In the event that the Board of Directors
shall so require, any officer of the Corporation shall execute to the
Corporation a bond in such sum and with such surety or sureties as the
Board of Directors may direct, conditioned on the faithful performance of
his duties to the Corporation.
SECTION 14. Proxies. Subject to such limitations as the Board of
Directors may from time to time prescribe, the Chairman of the Board, the
President and any other officer of the Corporation so authorized by the
Chairman of the Board or the President shall have full power and authority
on behalf of the Corporation to attend, to vote at, and to waive notice of,
any meeting of stockholders of any other corporation, shares of stock of
which are owned by or stand in the name of the Corporation, to execute and
deliver proxies and actions in writing, and otherwise to exercise on behalf
of the Corporation any and all rights and powers incident to the ownership
of such shares.
ARTICLE VII
STOCK
SECTION 1. Certificates of Stock. The interest of each stockholder
shall be evidenced by a certificate or certificates representing shares of
stock of the Corporation which shall be in such form as the Board of
Directors may from time to time adopt. Each such certificate shall exhibit
the stockholder's name and the number of shares represented thereby, shall
be signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, shall be
sealed with the seal of the Corporation, and shall be countersigned and
registered in such manner, if any, as the Board of Directors may prescribe.
If such certificate is signed by a transfer agent of the Corporation, the
signature of any such officer and the seal of the Corporation on such
certificate may be facsimile. If any officer who has signed, or whose
facsimile signature has been used, on any such certificate shall cease to
be such officer of the Corporation before such certificate is issued and
delivered by the Corporation, such certificate may nevertheless be issued
and delivered with the same effect as if the person who signed such
certificate, or whose facsimile signature was used thereon, had not ceased
to be such officer. There shall be entered on the stock books of the
Corporation the number of each certificate issued, the number of shares
represented thereby, the name of the person to whom such certificate was
issued and the date of issuance thereof.
SECTION 2. Transfer of Stock. Transfers of shares of the stock of
the Corporation shall be made only on the books of the Corporation by the
holder of record thereof, or by his attorney thereunto duly authorized by a
power of attorney, upon the surrender of the certificate or certificates
for such shares properly endorsed, with such evidence of the authenticity
of such transfer, authorization and other matters as the Corporation or its
agents may reasonably require, and accompanied by all necessary federal and
state stock transfer stamps.
SECTION 3. Lost, Stolen or Destroyed Certificates. A certificate for
shares of stock of the Corporation may be issued in place of any
certificate alleged to have been lost, stolen or destroyed, but only upon
delivery to the Corporation of such evidence of loss, theft or destruction
as the Board of Directors may require, and, if the Board of Directors so
requires, of a bond of indemnity, in form and amount and with one or more
sureties satisfactory to the Board.
SECTION 4. Regulations, Transfer Agents and Registrars. The Board of
Directors may establish such other rules and regulations as it deems
appropriate concerning the issuance and transfer of certificates for shares
of the stock of the Corporation and may appoint one or more transfer agents
or registrars, or both.
SECTION 5. Record Date. (a) In order that the Corporation may
determine the stockholders entitled to notice of and to vote at any meeting
of stockholders, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall not be more than sixty days
nor less than ten days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of and to vote at a meeting of stockholders
shall be the close of business on the day next preceding the day on which
notice of the meeting is given. A determination of the stockholders of
record entitled to notice of and to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall
be not more than sixty days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose
shall be the close of business on the date on which the Board of Directors
adopts the resolution relating thereto.
SECTION 6. Dividends and Reserves. Dividends shall be declared and
paid at such times as the Board of Directors may determine, provided that
no dividends shall be paid or declared contrary to applicable provisions of
law or of the Certificate of Incorporation. The Board of Directors may,
from time to time, set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board, in its discretion, deems
proper as a reserve fund for working capital, or to meet contingencies, or
for repairing or maintaining the property of the Corporation, or for any
other purpose that the Board deems to be in the best interests of the
Corporation. The Board of Directors may modify or abolish any such reserve
at any time.
SECTION 7. Record Ownership. The Corporation shall be entitled to
treat the holder of record of any shares of stock of the Corporation as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal of the Corporation shall be circular and shall have
inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Delaware." In all cases in
which the corporate seal is authorized to be used, it may be used by
causing it or a facsimile of it to be impressed, affixed, reproduced,
engraved or printed.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be either a 52 or 53 week
year which shall commence on the Sunday occurring on or nearest to
February 1 and shall end on the Saturday occurring on or nearest to the
following January 31.
ARTICLE X
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, these
By-Laws may be amended or repealed at any regular meeting of the
stockholders, or at any special meeting thereof duly called for that
purpose, at which a quorum is present, by a majority vote of the shares
represented and entitled to vote at such meeting. Subject to the laws of
the State of Delaware, the Certificate of Incorporation and these By-Laws,
the Board of Directors may, by majority vote of those directors present at
any meeting of the Board at which a quorum is present, amend these By-Laws
or adopt such other By-Laws as in their judgment may be advisable for the
regulation of the conduct of the affairs of the Corporation.
EDISON BROTHERS STORES, INC.
AMENDMENT AGREEMENT
Dated as of January 15, 1994
Re: Note Agreements dated as of March 1, 1993
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Heading Page
<S> <C> <C>
SECTION 1. AMENDMENTS
Section 1.1. Amendment of Section 5.8 1
Section 1.2. Amendment of Section 6.1 2
SECTION 2. MISCELLANEOUS
Section 2.1. Representation by Company 2
Section 2.2. Execution in Counterparts 2
Section 2.3. Fees and Expenses 2
Section 2.4. Governing Law 2
Section 2.5. Captions 3
Signature 4
</TABLE>
EDISON BROTHERS STORES, INC.
AMENDMENT AGREEMENT
To the Institutions Named on
Schedule I Hereto
Ladies and Gentlemen:
Reference is made to those certain separate Note Agreements, each
dated as of March 1, 1993 (the "Note Agreements"), between Edison Brothers
Stores, Inc., a Delaware corporation (the "Company"), and the Purchasers
named in Schedule I attached thereto, under which $45,000,000 aggregate
principal amount of 7.09% Series A Senior Notes due March 1, 2000,
$60,000,000 aggregate principal amount of 7.52% Series B Senior Notes due
March 1, 2003 and $45,000,000 aggregate principal amount of 8.04% Series C
Senior Notes due March 1, 2008 of the Company (the "Notes") were originally
issued.
The Company hereby certifies that Schedule I hereto contains the names
of all of the registered holders of all of the Notes outstanding on the
date hereof under each of the Note Agreements.
The Company desires to amend certain provisions of the Note Agreements
and, upon the execution and delivery of this Amendment Agreement by the
Company and the holders of at least 66-2/3% in aggregate principal amount
of outstanding Notes, the following provisions of the various Note
Agreements shall be amended as of the date hereof as follows:
SECTION 1. AMENDMENTS.
Section 1.1. Amendment of Section 5.8. Section 5.8 of each of the
Note Agreements is hereby amended in its entirety so that the same shall
henceforth read as follows:
"Section 5.8. Fixed Charges Coverage Ratio. The
Company will keep and maintain the ratio of Net Income
Available for Fixed Charges to Fixed Charges for:
(a) each period of four (4) consecutive fiscal
quarters up to and including the fiscal quarter ending
October 30, 1993, at not less than 1.25 to 1.00;
(b) the fiscal quarter ending January 29, 1994,
at not less than 1.25 to 1.00;
1
(c) each of the first three fiscal quarters
during the fiscal years of 1994 and 1995, at not less
than 1.00 to 1.00, except that if Consolidated Net
Income during any of the first three fiscal quarters of
fiscal years 1994 or 1995 is a net loss, the Company
will keep and maintain a ratio of Net Income Available
for Fixed Charges to Fixed Charges for the four (4)
consecutive fiscal quarters ending with the fiscal
quarter in which the loss occurs at not less than 1.10
to 1.00, if the loss occurs during any of the first
three fiscal quarters of fiscal year 1994, or at not
less than 1.175 to 1.00, if the loss occurs during any
of the first three fiscal quarters of fiscal year 1995;
(d) the fourth fiscal quarters of fiscal years
1994 and 1995, at not less than 1.25 to 1.00; and
(e) each period of four (4) consecutive fiscal
quarters beginning with the four (4) consecutive fiscal
quarter period ending with the first fiscal quarter of
fiscal year 1996, and thereafter, at not less than 1.25
to 1.00."
Section 1.2. Amendment of Section 6.1. Section 6.1(f) of each of the
Note Agreements is hereby amended in its entirety so that the same shall
henceforth read as follows:
"(f) (i) the Company shall fail to observe or perform
any covenant or agreement contained in section 5.6 through
section 5.11 or section 6.2 or (ii) Consolidated Net Income
for each of any two consecutive fiscal quarters during the
first three fiscal quarters of fiscal years 1994 or 1995 is
a net loss and the loss reported for the second such
consecutive fiscal quarter is greater than the loss reported
for the fist such fiscal quarter; or"
SECTION 2. MISCELLANEOUS.
Section 2.1. Representation by Company. The Company hereby
represents to each of you that on the date hereof and after giving effect
to this Amendment Agreement, no Default or Event of Default (as such terms
are defined in the Note Agreements) has occurred and is continuing.
Section 2.2. Execution in Counterparts. Two or more duplicate
originals of this Amendment Agreement may be signed by the parties hereto,
each of which shall be an original but all of which together shall
constitute one and the same instrument. This Amendment Agreement may be
executed in one or more counterparts and will be effective (as of the
effective date set forth below), when at least one counterpart has been
executed by the Company and the holders of at least 66-2/3% in aggregate
2
principal amount of outstanding Notes, and each set of counterparts which,
collectively, show execution by each such party shall constitute one
duplicate original.
Section 2.3. Fees and Expenses. All fees and expenses relating to
the subject matter of this Amendment Agreement, including, without
limitation, all fees and expenses of special counsel to the holders of the
Notes, shall be paid by the Company.
Section 2.4. Governing Law. This Amendment Agreement shall be
governed by and construed in accordance with Illinois law.
Section 2.5. Captions. The descriptive headings of the various
Sections or parts of this Amendment Agreement are for convenience only and
shall not affect the meaning or construction of any of the provisions
hereof.
If this Amendment Agreement is satisfactory to you, please so indicate
by signing the acceptance at the foot of a counterpart of this Amendment
Agreement and return such counterpart to the Company, and upon receipt by
the Company of counterparts of this Amendment Agreement executed by the
holders of at least 66-2/3% in aggregate principal amount of outstanding
Notes, each of the Note Agreements shall be amended as set forth above, but
all other terms and provisions of the Note Agreements shall remain
unchanged and are in all respects ratified, confirmed and approved. If and
to the extent that any of the terms or provisions of the Note Agreements,
as amended prior to the date hereof, are in conflict with or are
inconsistent with any of the terms or provisions of this Amendment
Agreement, this Amendment Agreement shall govern.
3
This Amendment Agreement shall be effective as of January 15, 1994.
EDISON BROTHERS STORES, INC.
By /s/ Alan A. Sachs
Its Executive Vice President
Accepted and Agreed to: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Stephen G. Skrivanek, Counsel
By /s/ Clint Woods, Counsel
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Patricia W. Wilson
Its Authorized Signatory
By /s/ Gary W. Fridley
Its Authorized Signatory
FARMLAND LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Attorney-In-Fact
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Vice President
Corporate Fixed-Income Securities
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Vice President
Corporate Fixed-Income Securities
WEST COAST LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Attorney-In-Fact
WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY
By /s/ Donald Miller
Its Assistant Vice President and
Manager, Securities Department
By /s/ Michael J. Shay
Its Portfolio Manager
GENERAL AMERICAN LIFE INSURANCE COMPANY
By /s/ Leonard M. Rubenstein
Its Executive Vice President and
Treasurer
NATIONAL LIFE INSURANCE COMPANY
By /s/ Scott Higgins
Its VP - NLIMC
PROVIDENT MUTUAL LIFE INSURANCE COMPANY OF
PHILADELPHIA
By
PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY
OF AMERICA
By
PROVIDENT MUTUAL LIFE INSURANCE COMPANY-
GALIC
By
MODERN WOODMEN OF AMERICA
By /s/ G. E. Stoefen
Its Director, Treasurer &
Investment Manager
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
Its Senior Investment Officer -
Securities
WOODMEN ACCIDENT AND LIFE COMPANY
By /s/ M. F. Wilder
Its Senior Vice President and
Treasurer
ATWELL & CO., AS NOMINEE FOR CENTURY LIFE OF
AMERICA
By /s/ Susan Paige
ATWELL & CO., AS NOMINEE FOR CUNA MUTUAL
INSURANCE SOCIETY
By /s/ Susan Paige
4
Composite Conformed Copy
Of
Edison Brothers Stores, Inc.
Amendment Agreement
Dated as of February 1, 1994
Re:
Note Agreements Dated As of March 1, 1993
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Heading Page No.
<S> <C> <C>
SECTION 1. AMENDMENTS
Section 1.1. Amendment of Section 5.8 1
Section 1.2. Amendment of Section 6.1 2
SECTION 2. MISCELLANEOUS
Section 2.1. Representation by Company 2
Section 2.2. Execution in Counterparts 2
Section 2.3. Fees and Expenses 3
Section 2.4. Governing Law 3
Section 2.5. Captions 3
Signature 4
</TABLE>
Edison Brothers Stores, Inc.
Amendment Agreement
To the Institutions Named on
Schedule I Hereto
Ladies and Gentlemen:
Reference is made to those certain separate Note Agreements, each
dated as of March 1, 1993, as amended by that certain Amendment Agreement
dated as of January 15, 1994 (collectively, the "Note Agreements"), between
Edison Brothers Stores, Inc., a Delaware corporation (the "Company"), and
the Purchasers named in Schedule I attached thereto, under which
$45,000,000 aggregate principal amount of 7.09% Series A Senior Notes due
March 1, 2000, $60,000,000 aggregate principal amount of 7.52% Series B
Senior Notes due March 1, 2003 and $45,000,000 aggregate principal amount
of 8.04% Series C Senior Notes due March 1, 2008 of the Company (the
"Notes") were originally issued.
The Company hereby certifies that Schedule I hereto contains the names
of all of the registered holders of all of the Notes outstanding on the
date hereof under each of the Note Agreements.
The Company desires to amend certain provisions of the Note Agreements
and, upon the execution and delivery of this Amendment Agreement by the
Company and the holders of at least 66-2/3% in aggregate principal amount
of outstanding Notes, the following provisions of the various Note
Agreements shall be amended as of the date hereof as follows:
Section 1. Amendments.
Section 1.1. Amendment of Section 5.8. Section 5.8 of each of the
Note Agreements is hereby amended in its entirety so that the same shall
henceforth read as follows:
"Section 5.8. Fixed Charges Coverage Ratio. The Company
will keep and maintain the ratio of Net Income Available for
Fixed Charges to Fixed Charges for:
(a) each period of four (4) consecutive fiscal quarters up
to and including the fiscal quarter ending October 30, 1993, at
not less than 1.25 to 1.00;
(b) the fiscal quarter ending January 29, 1994, at not less
than 1.25 to 1.00;
1
(c) Each period of four (4) consecutive fiscal quarters
beginning with the period that ends with the first fiscal quarter
of fiscal year 1994 to and including the period that ends with
the fourth fiscal quarter of fiscal year 1994, at not less than
1.10 to 1.00;
(d) each period of four (4) consecutive fiscal quarters
beginning with the period that ends with the first fiscal quarter
of fiscal year 1995 to and including the period that ends with
the fourth fiscal quarter of fiscal year 1995, at not less than
1.175 to 1.00;
(e) the fourth fiscal quarters of fiscal years 1994 and
1995, at not less than 1.25 to 1.00; and
(f) each period of four (4) consecutive fiscal quarters
beginning with the period that ends with the first fiscal quarter
of fiscal year 1996, and thereafter, at not less than 1.25 to
1.00."
Section 1.2. Amendment of Section 6.1. Section 6.1(f) of each of the
Note Agreements is hereby amended in its entirety so that the same shall
henceforth read as follows:
"(f)(i) the Company shall fail to observe or perform any
covenant or agreement contained in subsection 5.6 through
subsection 5.11 or subsection 6.2 or
(ii) Consolidated Net Income for each of any two consecutive
fiscal quarters during fiscal years 1994 or 1995 is a net loss
and the loss reported for the second such consecutive fiscal
quarter is greater than the loss reported for the first such
fiscal quarter; or"
Section 2. MISCELLANEOUS.
Section 2.1. Representation by Company. The Company hereby
represents to each of you that on the date hereof and after giving effect
to this Amendment Agreement, no Default or Event of Default (as such terms
are defined in the Note Agreements) has occurred and is continuing.
Section 2.2. Execution in Counterparts. Two or more duplicate
originals of this Amendment Agreement may be signed by the parties hereto,
each of which shall be an original but all of which together shall
constitute one and the same instrument. This Amendment Agreement may be
executed in one or more counterparts and will be effective (as of the
effective date set forth below), when at least one counterpart has been
executed by the Company and the holders of at least 66 2/3% in aggregate
principal amount of outstanding Notes, and each set of counterparts which,
collectively, show execution by each such party shall constitute one
duplicate original.
2
Section 2.3. Fees and Expenses. All fees and expenses relating to
the subject matter of this Amendment Agreement, including, without
limitation, all fees and expenses of special counsel to the holders of the
Notes, shall be paid by the Company.
Section 2.4. Governing Law. This Amendment Agreement shall be
governed by and construed in accordance with Illinois law.
Section 2.5. Captions. The descriptive headings of the various
Sections or parts of this Amendment Agreement are for convenience only and
shall not affect the meaning or construction of any of the provisions
hereof.
If this Amendment Agreement is satisfactory to you, please so indicate
by signing the acceptance at the foot of a counterpart of this Amendment
Agreement and return such counterpart to the Company, and upon receipt by
the Company of counterparts of this Amendment Agreement executed by the
holders of at least 66 2/3% in aggregate principal amount of outstanding
Notes, each of the Note Agreements shall be amended as set forth above, but
all other terms and provisions of the Note Agreements shall remain
unchanged and are in all respects ratified, confirmed and approved. If and
to the extent that any of the terms or provisions of the Note Agreements,
as amended prior to the date hereof, are in conflict with or are
inconsistent with any of the terms or provisions of this Amendment
Agreement, this Amendment Agreement shall govern.
3
This Amendment Agreement shall be effective as of February 1, 1994.
EDISON BROTHERS STORES, INC.
By /s/ Lee G. Weeks
Its Executive Vice President
Accepted and Agreed to: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Dennis D. Ballard
Its Counsel
By /s/ Clint Woods
Its Counsel
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By /s/ Claire M. Olstein
Its Vice President
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Patricia W. Wilson
Its Authorized Signatory
By /s/ David E. McPherson
Its Authorized Signatory
FARMLAND LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Attorney-In-Fact
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Vice President
Corporate Fixed-Income Securities
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Vice President
Corporate Fixed-Income Securities
WEST COAST LIFE INSURANCE COMPANY
By /s/ Jeffrey G. Milburn
Its Attorney-In-Fact
WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY
By /s/ Don L. Miller
Assistant Vice President and
Manager, Securities Department
By /s/ Michael J. Shay
Its Portfolio Manager
GENERAL AMERICAN LIFE INSURANCE COMPANY
By /s/ Leonard M. Rubenstein
Its Executive Vice President and
Treasurer
ATWELL & CO., as nominee for Century Life
of America
By /s/ Freddy Marinez
Its Authorized Signature
ATWELL & CO., as nominee for CUNA
Mutual Insurance Society
By /s/ Freddy Marinez
Its Authorized Signature
NATIONAL LIFE INSURANCE COMPANY
By /s/ R. Scott Higgins
Its Vice President
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By
Its
PROVIDENT MUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
By
Its
PROVIDENT MUTUAL LIFE INSURANCE COMPANY -
CALIC
By
Its
MODERN WOODMEN OF AMERICA
By /s/ Nick S. Coin
Its Supervisor, Securities Division
GUARANTEE MUTUAL LIFE COMPANY
By /s/ Steven A. Scanlan
Its Senior Investment Officer -
Securities
WOODMEN ACCIDENT AND LIFE COMPANY
By /s/ M.F. Wilder
Its Senior Vice President and
Treasurer
4
<TABLE>
SCHEDULE I
<CAPTION>
PRINCIPAL AMOUNT
NAME OF OF NOTES HELD
REGISTERED HOLDER BY SUCH HOLDER
<S> <C>
Principal Mutual Life Insurance Company $35,000,000
CIG & Co. (as nominee for Cigna Property and $6,000,000
Casualty Insurance Company)
CIG & Co. (as nominee for Connecticut $13,000,000
General Life Insurance Company)
CIG & Co. (as nominee for Connecticut $6,000,000
General Life Insurance Company, on behalf
of one or more separate accounts)
ZANDE & Co. (as nominee for Life Insurance $5,000,000
Company of North America)
Allstate Life Insurance Company $25,000,000
Farmland Life Insurance Company $500,000
Financial Horizons Life Insurance Company $2,000,000
Nationwide Life Insurance Company $12,000,000
West Coast Life Insurance Company $2,000,000
Woodmen of the World Life Insurance Society $10,000,000
GALICO (as nominee of General American $7,500,000
Life Insurance Company)
ATWELL & Co. (as nominee for Century Life $3,000,000
of America)
ATWELL & Co. (as nominee for CUNA Mutual $4,000,000
Insurance Society)
National Life Insurance Company $7,000,000
Provident Mutual Life Insurance Company $1,500,000
of Philadelphia
Provident Mutual Life and Annuity Company $2,000,000
of America
Provident Mutual Life Insurance Company - $1,500,000
CALIC
Modern Woodmen of America $3,000,000
Guarantee Mutual Life Company $2,000,000
Woodmen Accident and Life Company $2,000,000
</TABLE>
January 17, 1994
Metropolitan Life Insurance Co.
One Lincoln Center, Suite 800
Oakbrook Terrace, IL 60181
ATTN: Mr. Bob Bodett
Dear Mr. Bodett:
Reference is made to the Loan Agreement dated as of November 15, 1990,
between Edison Brothers Stores, Inc. (the "Company") and Metropolitan Life
Insurance Company (the "Purchaser") relating to, among other things, the
issuance and sale by the Company to such Purchaser of $15,000,000 aggregate
principal amount of 9.19% Senior Promissory Notes Due November 15, 1994
(the "Notes"). Capitalized terms used herein, not otherwise defined, are
used as defined in the Notes.
Section 4.04 of the Notes stipulates that the Company will at all times
cause the a ratio of Consolidated Net Income Available for Interest
Charges, Income Taxes and Rentals for its four most recent consecutive
fiscal quarters (taken as a whole) to the aggregate amount of Interest
Charges and Rentals (after eliminating intercompany items) of the Company
and its Subsidiaries for such period of four fiscal quarters (taken as a
whole) to be not less than 1.25:1. Based on our most recent projections,
we believe the Company will likely fail to meet this test for the four
consecutive quarters ending January 29, 1994. We believe the cause of this
problem to be the weak retail environment for fashion apparel and footwear.
The Company has been forced to reduce margins to stimulate customer demand
and compete with similar actions by other retailers. To minimize the
effects of the downturn, the Company has made great efforts to closely
control operating costs and certain cash usage. Total costs, excluding
depreciation and interest, increased by less than one percent during the
third quarter of 1993 compared with the same period in 1992. The Company
has also acted to secure its cash position by reducing inventories (nearly
7% at third quarter 1993 compared to one year earlier) and capital
expenditures for new stores, remodelling, etc. (down an estimated 10% for
the year). Our current expectations are that the current depression in
demand is temporary and will bottom-out following the spring 1994 season.
The attached schedule reflects our current estimate of fixed charges
performance for the last quarter of 1993 and through the first quarter of
1995. Also provided are a schedule of fixed charges performance over the
past five quarters and a schedule of selected financial statement analyses.
Because we believe the current difficulties are temporary, we are
requesting that the Purchaser consent, pursuant to Section 5 of the Notes,
to amendment of Section 4.04 to read as follows (effective as of October
30, 1993):
"Section 4.04. Maintenance of Fixed Charges Coverage. The Company
will cause the ratio of (i) Consolidated Net Income Available for Interest
Charges, Income Taxes, and Rentals to (ii) the aggregate amount of Interest
Charges and Rentals (after eliminating intercompany items) of the Company
and its Subsidiaries for:
(a) each period of four (4) consecutive fiscal quarters up to and
including the quarter ending October 30, 1993, at not less than
1.25 to 1.00;
(b) the fiscal quarter ending January 29, 1994, at not less than 1.25
to 1.00;
(c) each of the first three quarters during fiscal year 1994, at not
less than 1.00 to 1.00, except that:
(i) if Consolidated Net Income during any one of the first three
quarters of fiscal year 1994 is a net loss, the Company will
keep and maintain a ratio for the four (4) consecutive
fiscal quarters ending with the quarter in which the loss
occurs at not less than 1.10 to 1.00; or
(ii) if Consolidated Net Income for each of any two
consecutive quarters during the first three quarters of
fiscal year 1994 is a net loss and the loss reported for
the second such consecutive quarter is smaller than the
loss reported for the first such quarter, the Company
will keep and maintain a ratio for the four (4)
consecutive fiscal quarters ending with the second such
consecutive quarter at not less than 1.10 to 1.00.
If Consolidated Net Income for each of any two consecutive quarters during
the first three quarters of fiscal years 1994 is a net loss and the loss
reported for the second such consecutive quarter is greater than the loss
reported for the first such quarter, such event shall constitute a breach
of this Section 4.04.
No Default or Event of Default exists after giving effect to the Amendment
set forth herein. Except as expressly provided in this Amendment, the Loan
Agreement and all documents and instruments executed in connection with, or
contemplated by, the Loan Agreement shall remain in full force and effect.
This Amendment shall be binding upon, and shall inure to the benefit of,
the successors and assigns of the parties hereto and the holders from time
to time of the Notes.
The Company has taken appropriate steps to minimize the effects of the
current business environment and to protect your investment. We believe
the requested amendment is to everyone's benefit. Your consent and prompt
response would be greatly appreciated.
Very truly yours
/s/ Lee G. Weeks
Executive Vice President and Chief Financial Officer
Consented and Agreed to
Metropolitan Life Insurance Co.
By: /s/ Michael J. Kroeger
Vice-President
January 25, 1994
EDISON BROTHERS STORES, INC.
1992 STOCK OPTION PLAN
1. Purpose of the Plan
The Edison Brothers Stores, Inc. 1992 Stock Option Plan is
intended as an incentive to, and to encourage ownership of the stock of
Edison Brothers Stores, Inc. by, certain Key Employees (as herein defined)
of EBS and its Subsidiaries. It is intended that some options to purchase
Common Stock granted pursuant to the Plan will qualify as incentive stock
options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended ("ISO's"), and some options to purchase Common Stock will not
qualify as ISO's and will be non-qualified options ("NQO's"). It is
anticipated that tax-offset bonus rights may be granted by the Committee,
in its discretion, from time to time, concurrently with or subsequent to
the grant of, but only with respect to, NQO's.
2. Definitions
A. "Board" means the Board of Directors of EBS.
B. "Committee" means the appropriate committee or subcommittee
designated in paragraph 5 hereof.
C. "Common Stock" means shares of the Common Stock, par value
One Dollar ($1.00) per share, of EBS.
D. "Disability" means the inability of an optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which, in the judgment of a physician
selected by EBS who certifies to such judgment, is expected to be of
indefinite duration or to result in imminent death. The Disability must
have continued for at least 52 weeks and the optionee must have received a
federal Social Security disability insurance award (unless the optionee
lacks the quarters of coverage required for Social Security entitlement).
The cause of such Disability must be other than an injury or disease
sustained by the optionee:
(a) while serving in any armed services or on voluntary leave
for other than health reasons;
(b) as a result of an act of war;
(c) while willfully and illegally participating in a fight,
riot, or civil insurrection or while committing a crime.
E. "EBS" means Edison Brothers Stores, Inc., a Delaware
corporation.
F. "Key Employee" means an executive or other person who is
employed in a position of administrative or managerial responsibility by
EBS or a Subsidiary, including store managers.
G. "Officer" means any person who is deemed to be an officer of
EBS under the definition set forth in Rule 16a-1(f) promulgated pursuant to
the Securities Exchange Act of 1934, as amended.
H. "Outside Director" means a member of the Board who
(i) qualifies as an "outside director" as such term is used in
Section 162(m) of the Internal Revenue Code of 1986, as amended, and
(ii) has not been, during the one year prior to service as an administrator
of the Plan, and is not, during such service, granted or awarded equity
securities pursuant to the Plan or any other plan of EBS or any of its
affiliates.
I. "Parent" means any corporation (other than EBS) in an
unbroken chain of corporations ending with EBS if, at the time of the
granting of an option, each of the corporations other than EBS owns stock
possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
J. "Plan" means the Edison Brothers Stores, Inc. 1992 Stock
Option Plan.
K. "Subsidiary" means any corporation (other than EBS) in an
unbroken chain of corporations beginning with EBS if, at the time of the
granting of an option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
L. "Ten Percent Shareholder" means a person who owns, on the
date of grant of an ISO, more than 10% of the total combined voting power
of all classes of stock of EBS or its Parent or Subsidiary.
3. Stock Subject to the Plan
The total number of shares of Common Stock available for grants
of options under the Plan shall be one million (1,000,000), subject to
adjustment in accordance with paragraph 16F. If any option shall expire or
terminate or be canceled for any reason without having been exercised in
full, the unpurchased shares subject thereto shall again be available for
the purposes of the Plan. The shares of Common Stock subject to issuance
upon exercise of options under the Plan may be either authorized but
unissued shares or shares held in the treasury of EBS.
4. Administration
The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have complete authority
to:
(a) interpret the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) determine the individuals to whom, and the time or times at
which, options shall be granted;
(d) determine the number of shares to be subject to each option,
the price at which such shares may be purchased, and all other terms
and provisions of each option agreement;
(e) make all determinations not specifically set forth in
(a) through (d) above which it considers necessary or desirable for the
administration of the Plan.
The determinations of the Committee with respect to (a) through (e) above
shall be final.
5. The Committee
A. Except as provided in subparagraph B below, the Committee
shall be the Compensation Committee of the Board or such other committee as
is designated by the Board. The Committee shall be appointed by the Board,
which may from time to time appoint members of the Committee in
substitution for members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its
members as its Chairman and shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of
its members. Any decision or determination reduced to writing and signed
by a majority of the members shall be fully as effective as if it had been
made by a majority vote at a meeting duly called and held. The Committee
may appoint a Secretary, shall keep minutes of its meetings and shall make
such rules and regulations for the conduct of its business as it shall deem
advisable.
B. With respect to the grant of options to persons who are
members of the Board and/or Officers, the Committee shall be the Special
Compensation Subcommittee of the Compensation Committee of the Board. Such
Special Compensation Subcommittee shall consist of two or more Outside
Directors. The Special Compensation Subcommittee shall be appointed by the
Board and shall have such duties, responsibilities and authority with
respect to the administration of the Plan for optionees within its purview
as the Compensation Committee (or its designated alternate) shall have with
respect to all other optionees.
6. Eligibility
Options may be granted under the Plan only to Key Employees.
7. Option Price
Except as provided below, the purchase price of the Common Stock
under each ISO issued hereunder shall be not less than 100% of the fair
market value of the Common Stock at the time of the grant of the option.
The purchase price of Common Stock under each ISO issued to a Ten Percent
Shareholder shall be not less than 110% of the fair market value of the
Common Stock at the time of the grant of the option. The purchase price of
the Common Stock under each NQO issued hereunder shall be not less than 85%
of the fair market value of the Common Stock at the time of the grant of
the option. The fair market value shall generally be considered to be the
mean between the highest and lowest selling prices of the Common Stock as
reported on the New York Stock Exchange on the day the option is granted;
provided, however, that the Committee may adopt any other criterion for the
determination of such fair market value as it may in good faith determine
to be appropriate. It is the intent of EBS that all ISO's granted under
the Plan shall be exercisable at no less than the fair market value of the
Common Stock on the date of grant as determined in good faith and that all
NQO's granted under the Plan shall be exercisable at no less than 85% of
the fair market value of the Common Stock on the date of grant as
determined in good faith.
8. Manner of Exercise and Payment
An option shall be exercised by delivery of a written notice of
exercise to EBS and payment of the full price of the shares being purchased
pursuant to the option. An optionee may exercise an option with respect to
less than the total number of shares for which the option may then be
exercised. The price of the shares purchased pursuant to an option may be
paid either (i) in cash, (ii) by the tender to EBS of shares of Common
Stock owned by the optionee and registered in the name of the optionee
having an aggregate fair market value on the date of exercise equal to the
price of the shares being purchased, such fair market value to be
determined in such manner as may be provided for by the Committee or as may
be required in order to comply with any applicable law or regulation,
(iii) by delivery of irrevocable instructions to a financial institution to
deliver promptly to EBS sale or loan proceeds with respect to the shares
sufficient to pay the purchase price, (iv) through the written election of
the optionee to have shares of Common Stock withheld by EBS from the shares
otherwise to be received, with such withheld shares having an aggregate
fair market value on the date of exercise equal to the price of the shares
being purchased, or (v) by any combination of the payment methods specified
in clauses (i) through (iv) hereof; provided, that no shares of Common
Stock may be tendered in exercise of an option if such shares were acquired
by the optionee through the exercise of an ISO unless (a) such shares have
been held by the optionee for at least one year and (b) at least two years
have elapsed since such ISO was granted. The proceeds received by EBS from
the sale of Common Stock subject to an option are to be added to the
general funds of EBS or to the Common Stock held in its treasury, and used
for its corporate purposes as the Board shall determine.
9. Limitation on Amounts of ISO's
The aggregate fair market value (determined as of the date the
option is granted) of the Common Stock with respect to which ISO's are
exercisable for the first time by an optionee during any calendar year
(under all plans of EBS and its Parents and Subsidiaries) shall not exceed
$100,000. If the provisions of this paragraph 9 limit the exercisability
of certain ISO's which would otherwise become exercisable on account of an
event described in paragraph 11 or paragraph 16I, the Committee, in its
sole discretion, shall determine the times at which such ISO's become
exercisable so that the provisions of this paragraph 9 are not violated,
provided that in no event shall any ISO be exercisable more than ten years
from the date of granting thereof (five years in the case of ISO's granted
to Ten Percent Shareholders).
10. Term and Exercise of Options
Except as provided below, the term of each option shall be not
more than ten years from the date of granting thereof. The term of each
ISO granted to a Ten Percent Shareholder shall not be more than five years
from the date of granting thereof. Within such limit, options will be
exercisable at such time or times, and subject to such restrictions and
conditions, as the Committee shall approve, which need not be uniform for
all optionees; provided, however, that except as provided in paragraph 11,
no option may be exercised at any time unless the optionee is then an
employee of EBS or a Parent or Subsidiary and has been employed
continuously since the granting of the option by EBS or a Parent or
Subsidiary.
11. Termination of Employment
Notwithstanding other provisions of the Plan, if an optionee
voluntarily or involuntarily terminates employment with EBS or a Parent or
Subsidiary, any option held by such optionee, to the extent the optionee
was entitled to exercise it at the date of termination of employment, shall
remain exercisable at any time within three months after such termination
but not after ten years from the date of grant of the option (five years in
the case of an ISO issued to a Ten Percent Shareholder). Any option not so
exercised shall expire. However, subject to the provisions of paragraph 9
of this Plan:
(a) If an optionee retires after reaching age 65, any or all of
the optionee's unexercised unexpired options, whether otherwise
eligible for immediate exercise by the terms of the option agreement or
not, may be exercised provided such exercise is within three months of
the optionee's retirement and within ten years from the date of grant
of the option (five years in the case of an ISO granted to a
Ten Percent Shareholder).
(b) If an optionee retires after attaining age 55 but not
age 65, the Committee, in its sole discretion, may permit the exercise
of any or all of the optionee's unexercised unexpired options, whether
otherwise eligible for immediate exercise by the terms of the option
agreement or not, provided such exercise is within three months of the
optionee's retirement and within ten years from the date of grant of
the option (five years in the case of an ISO granted to a Ten Percent
Shareholder).
(c) If an optionee's employment is terminated by reason of death
or Disability, any or all of the optionee's unexercised unexpired
options, whether otherwise eligible for immediate exercise by the terms
of the option agreement or not, may be exercised provided such exercise
is within one year of such termination and within ten years from the
date of grant of the option (five years in the case of an ISO granted
to a Ten Percent Shareholder).
Notwithstanding the foregoing, if the employment of any optionee
shall be terminated because of the optionee's violation of law or the
business conduct rules of EBS or for other breach of duty, all unexercised
options of such optionee or the estate of the optionee shall terminate and
be unexercisable on and after the termination of the optionee's employment.
The existence or nonexistence of such violation or breach and the date of
termination of employment shall be determined by the Committee in its sole
discretion, and such determination shall be final.
12. Nontransferability of Options
Each option granted under the Plan shall, by its terms, be
nontransferable otherwise than by will or the laws of descent and
distribution and an option may be exercised, during the lifetime of an
optionee, only by the optionee.
13. Successive Option Grants
Successive option grants may be made to any holder of options
under the Plan.
14. Amendment and Termination of the Plan
The Board may at any time terminate the Plan or make such
modifications of the Plan as it shall deem advisable; provided, however,
that the Board may not, without further approval by the holders of Common
Stock of EBS, increase the number of shares as to which options may be
granted under the Plan (except pursuant to the antidilution provisions in
paragraph 16F), change the class of persons to whom options may be granted,
or materially increase the benefits accruing to participants under the
Plan.
15. Term of the Plan
This Plan shall terminate ten years after the date on which it is
approved and adopted by the Board, and no option shall be granted hereunder
after the expiration of such ten-year period. Options outstanding at the
termination of the Plan shall continue in full force and effect and shall
not be affected thereby.
16. Miscellaneous
A. Rights as Stockholder. An optionee shall have none of the
rights of a stockholder with respect to Common Stock subject to an option,
until such shares are issued to such optionee upon exercise of the option.
B. Rights to Continued Employment. Nothing in the Plan or in
any option granted pursuant to the Plan shall confer on any individual any
right to continue in the employ of EBS or a Parent or Subsidiary or
interfere with the right of EBS or a Parent or Subsidiary to terminate such
individual's employment at any time.
C. Leaves of Absence. The option agreements issued pursuant to
the Plan may contain such provisions as the Committee shall determine with
respect to the effect of approved leaves of absence.
D. Pension Rights. Benefits received under the Plan by an
optionee shall not affect or be used in the calculation of pension or other
retirement benefits under any other plan of EBS.
E. Investment Purpose. Each option under the Plan shall be
granted only on the condition that all purchases of stock thereunder shall
be for investment purposes, and not with a view to resale or distribution,
except that the Committee may make such provision in options granted under
the Plan as it deems necessary or advisable for the release of such
condition upon the registration with the Securities and Exchange Commission
of stock subject to the options, or upon the happening of any other
contingency warranting the release of such condition.
F. Adjustments Upon Changes in Capitalization. Notwithstanding
any other provision in the Plan, the option agreements may contain such
provisions as the Committee shall determine to be appropriate for the
adjustment of the number and class of shares subject to each outstanding
option and the option prices in the event of changes in the outstanding
Common Stock by reason of stock dividends, recapitalizations, mergers,
consolidations, splitups, spin-offs, combinations or exchanges of shares
and the like; and, in the event of any such change in the outstanding
Common Stock, the aggregate number of shares as to which options may be
granted hereunder shall be appropriately adjusted by the Committee.
G. Adverse Effect on Optionee of Amendment or Termination of
Plan. No amendment or termination of the Plan may, without the consent of
an employee to whom any option shall have been granted, adversely affect
the rights of such employee under such option.
H. Time of Granting of Options. An option grant under the Plan
shall be deemed to be made on the date on which the Committee, by formal
action of its members, duly recorded in the records thereof, makes an award
of an option to an eligible employee of EBS or a Subsidiary.
I. Effect of Certain Changes. In the event of a Potential
Change in Control of EBS, as defined below, all options then outstanding
under the Plan shall become immediately and fully exercisable, subject,
however, to the provisions of paragraph 9, and provided that no ISO may be
exercised in whole or in part by the holder thereof earlier than one year
after the date of grant. As used herein, a Potential Change in Control
shall be deemed to occur if, at any time during any 24-month period, the
membership of the Board of Directors of EBS is not at least two-thirds
constituted by (a) individuals who were directors at the beginning of such
period or (b) individuals whose election, or nomination for election by the
Corporation's stockholders, to the Board during such period was approved by
the vote of two-thirds of those directors then still in office who were
directors at the beginning of such period, unless such approval by such
directors was incident to a Third Party Transaction described below.
Notwithstanding the foregoing, no Potential Change in Control shall be
deemed to have occurred with respect to any change in the members of the
Board that occurs as a result of a consolidation, merger, liquidation or
sale of substantially all the assets of EBS or any similar transaction
("Transaction") which has been approved by two-thirds of the Board unless
the Transaction is with a third party ("Third Party Transaction") that
commenced an offer for more than 30% of the outstanding shares of voting
stock of EBS without the prior approval of two-thirds of the Board.
17. Tax Withholding
An optionee shall be required to pay to EBS at the time of
exercise of an option the amount that EBS deems necessary to satisfy its
withholding obligation with respect to Federal, state or local income or
other taxes (which for purposes of this paragraph 17 includes an optionee's
FICA obligation) incurred by reason of the exercise. Upon the exercise of
an option requiring tax withholding, an optionee may (subject to any
applicable restrictions contained in Rule 16b-3(e) promulgated under the
Securities Exchange Act of 1934, as amended) make a written election to
have shares of Common Stock withheld by EBS from the shares otherwise to be
received. The number of shares so withheld shall have an aggregate fair
market value on the date of exercise sufficient to satisfy the applicable
withholding taxes.
18. Tax-Offset Bonus Rights
The Committee, in its sole discretion, may grant tax-offset bonus
rights ("TOBR's") with respect to NQO's. Such TOBR's may be granted to an
optionee at the time of the grant of the related NQO or subsequent thereto.
A TOBR shall entitle the optionee to receive from EBS upon exercise of the
related NQO an amount in cash equal to (1) the excess, if any, of the
aggregate market price of the shares acquired by the exercise of the option
on the date of exercise over the aggregate purchase price of the shares
acquired by such exercise, multiplied by (2) a percentage (either fixed or
by formula) determined solely by the Committee. The Committee shall
determine all other terms and provisions of any TOBR. No TOBR shall be
assignable or transferable except to the extent the Committee permits such
TOBR to be assigned by will or through the laws of descent and
distribution.
19. Effectiveness of the Plan
The Plan shall become effective upon adoption by the Board,
subject, however, to its further approval by the stockholders of EBS given
within twelve months after the date the Plan is adopted by the Board, at a
regular meeting of the stockholders, at a special meeting duly called and
held for such purpose, or by any other method permitted by the law of
Delaware. Grants of options may be made prior to such stockholder
approval, but all option grants made prior to such stockholder approval
shall be subject to the obtaining of such approval and, if such approval is
not obtained, such options shall not be effective for any purpose.
EDISON BROTHERS STORES, INC.
1986 STOCK OPTION PLAN
1. Purpose of the Plan
The Edison Brothers Stores, Inc. 1986 Stock Option Plan is
intended as an incentive to, and to encourage ownership of the stock of
Edison Brothers Stores, Inc. ("EBS") by, certain Key Employees (as herein
defined) of EBS and its Subsidiaries. It is intended that some options to
purchase Common Stock granted pursuant to the Plan will qualify as
incentive stock options as defined in Section 422A(b) of the Internal
Revenue Code of 1986, as amended ("ISO's"), and some options to purchase
Common Stock will not qualify as ISO's and will be non-qualified options
("NQO's"). It is anticipated that tax-offset bonus rights may be granted
by the Committee, in its discretion, from time to time, concurrently with
or subsequent to the grant of, but only with respect to, NQO's.
2. Definitions
A. "Board" means the Board of Directors of EBS.
B. "Committee" means the appropriate committee or subcommittee
designated in paragraph 5 hereof.
C. "Common Stock" means shares of the Common Stock, par value
One Dollar ($1.00) per share, of EBS.
D. "Disability" means inability of an optionee to engage in any
substantial gainful activity by reason of any medically determined physical
or mental impairment which, in the judgment of a physician selected by EBS
who certifies to such judgment, is expected to be of indefinite duration or
to result in imminent death. The Disability must have continued for at
least 52 weeks and the optionee must have received a federal Social
Security disability insurance award (unless the optionee lacks the quarters
of coverage required for Social Security entitlement). The cause of such
Disability must be other than an injury or disease sustained by the
optionee:
(a) while serving in any armed services or on voluntary leave
for other than health reasons;
(b) as a result of an act of war;
(c) while willfully and illegally participating in a fight,
riot, or civil insurrection or while committing a crime.
Further, such Disability must not have arisen from the chronic use of
alcohol or from addiction to drugs.
E. "EBS" means Edison Brothers Stores, Inc., a Delaware
corporation.
F. "Key Employee" means an executive or other person who is
employed in a position of administrative or managerial responsibility by
EBS or a Subsidiary, including store managers.
G. "Officer" means any person who is deemed to be an officer of
EBS under the definition set forth in Rule 16a-1(f) promulgated pursuant to
the Securities Exchange Act of 1934, as amended.
H. "Outside Director" means a member of the Board who (i)
qualifies as an "outside director" as such term is used in Section 162(m)
of the Internal Revenue Code of 1986, as amended, and (ii) has not been,
during the one year prior to service as an administrator of the Plan, and
is not, during such service, granted or awarded, or eligible to be granted
or awarded, equity securities pursuant to the Plan or any other plan of EBS
or any of its affiliates.
I. "Parent" means any corporation (other than EBS or a
Subsidiary) in an unbroken chain of corporations ending with EBS if, at the
time of the granting of an option, each of the corporations, other than EBS
or a Subsidiary, owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
J. "Plan" means the Edison Brothers Stores, Inc. 1986 Stock
Option Plan.
K. "Subsidiary" means any corporation (other than EBS) in an
unbroken chain of corporations beginning with EBS if, at the time of the
granting of an option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
L. "Ten Percent Shareholder" means a person who owns, on the
date of grant of an ISO, more than 10% of the total combined voting power
of all classes of stock of EBS, or its Parent or Subsidiary.
3. Stock Subject to the Plan
There has been allocated to the Plan and reserved for issuance
upon the exercise of options granted under the Plan an aggregate of seven
hundred fifty thousand (750,000) shares of Common Stock. If any such
option shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan. The Common Stock subject to
issuance under options under the Plan may be authorized but unissued shares
or shares held in the treasury of EBS.
4. Administration
The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have complete authority
to:
(a) interpret the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) determine the individuals to whom, and the time or times at
which, options shall be granted;
(d) determine the number of shares to be subject to each option
and the terms and provisions of each option agreement;
(e) make all determinations not specifically set forth in
(a) through (d) above which it considers necessary or desirable for the
administration of the Plan.
The determination of the Committee with respect to (a) through (e) above
shall be final.
5. The Committee
A. Except as provided in B below, the Committee shall be the
Compensation Committee of the Board or such other committee as is
designated by the Board. The Committee shall be appointed by the Board,
which may from time to time appoint members of the Committee in
substitution for members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its
members as its Chairman and shall hold its meetings at such time and places
as it may determine. A majority of its members shall constitute a quorum.
All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held. The Committee may
appoint a Secretary, shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable.
B. With respect to the grant of options to persons who are
members of the Board and/or Officers, the Committee shall be the Special
Compensation Subcommittee of the Compensation Committee of the Board. Such
Special Compensation Subcommittee shall consist of two or more Outside
Directors. The Special Compensation Subcommittee shall be appointed by the
Board and shall have such duties, responsibilities and authority with
respect to the administration of the Plan for optionees within its purview
as the Compensation Committee (or its designated alternate) shall have with
respect to all other optionees.
6. Eligibility
Options may be granted under the Plan only to Key Employees of
EBS or its Subsidiaries.
7. Option Price
Except as provided below, the purchase price of the Common Stock
under each ISO issued hereunder shall not be less than one hundred percent
(100%) of the fair market value of the Common Stock at the time of the
grant of the option. The purchase price of Common Stock under each ISO
issued to a Ten Percent Shareholder shall be not less than 110% of the fair
market value of the Common Stock at the time of the grant of the option.
The purchase price of the Common Stock under each NQO issued hereunder
shall not be less than eighty-five percent (85%) of the fair market value
of the Common Stock at the time of the grant of the option. The fair
market value shall generally be considered to be the mean between the
highest and lowest selling prices of the Common Stock as reported on the
New York Stock Exchange on the day the option is granted; provided,
however, that the Committee may adopt any other criterion for the
determination of such fair market value as it may in good faith determine
to be appropriate. It is the intent of EBS that all ISO's granted under
the Plan shall be exercisable at no less than the fair market value of the
Common Stock on the date of grant as determined in good faith and that all
NQO's granted under the Plan shall be exercisable at no less than eighty-
five percent (85%) of the fair market value of the Common Stock on the date
of grant as determined in good faith.
8. Payment of Option Price
The purchase price is to be paid in full upon the exercise of an
option, either (i) in cash; or (ii) by the tender to EBS of shares of the
Common Stock owned by the optionee and registered in the name of the
optionee having a fair market value equal to the cash exercise price of the
option being exercised, with the fair market value of such stock to be
determined in such appropriate manner as may be provided for by the
Committee or as may be required in order to comply with, or to conform to
the requirements of, any applicable law or regulation; or (iii) by any
combination of the payment methods specified in clauses (i) and (ii)
hereof; provided, that no shares of Common Stock may be tendered in
exercise of an option if such shares were acquired by the optionee through
the exercise of an ISO unless (i) such shares have been held by the
optionee for at least one year, and (ii) at least two years have elapsed
since such ISO was granted. The proceeds received by EBS from the sale of
Common Stock subject to an option are to be added to the general funds of
EBS or to the Common Stock held in treasury, and used for its corporate
purposes as the Board shall determine.
9. Option Amounts
The aggregate fair market value (determined at the time the
option is granted) of the Common Stock with respect to which ISO's are
exercisable for the first time by an optionee during any calendar year
(under all plans of EBS and its Parent and Subsidiaries) shall not exceed
$100,000. If the provisions of this paragraph 9 limit the exercisability
of certain ISO's which would otherwise become exercisable on account of an
event described in paragraph 11 or paragraph 16I, the Committee, in its
sole discretion, shall determine the times at which such ISO's become
exercisable so that the provisions of this paragraph 9 are not violated,
provided that in no event shall any ISO be exercisable more than ten (10)
years from the date of granting thereof (five (5) years in the case of
ISO's granted to Ten Percent Shareholders).
10. Term and Exercise of Options
Except as provided below, the term of each option shall be not
more than ten (10) years from the date of granting thereof. The term of
each ISO granted to a Ten Percent Shareholder shall not be more than five
(5) years from the date of granting thereof. Within such limit, options
will be exercisable at such time or times, and subject to such restrictions
and conditions, as the Committee shall, in each instance, approve, which
need not be uniform for all optionees; provided, however, that except as
provided in paragraph 11 and following, no option may be exercised at any
time unless the optionee is then an employee of EBS or a Subsidiary and has
been so employed continuously since the granting of the option or was an
employee of the Parent of EBS at the time of grant and has been
continuously employed since that time by either such Parent or by EBS or a
Subsidiary.
11. Termination of Employment
Notwithstanding other provisions of the Plan, if an optionee
voluntarily or involuntarily terminates employment with EBS or any of its
Subsidiaries, the optionee may exercise any option held by such optionee,
to the extent the optionee was entitled to exercise it at the date of
termination of employment, at any time within three months after such
termination but not after ten years from the date of grant of the option
(five years in the case of ISO's issued to a Ten Percent Shareholder). Any
option not so exercised shall expire. However, subject to the provisions
of paragraph 9 of this Plan:
(a) If an optionee retires after reaching age 65, the optionee
or the personal representative of the optionee may exercise any or all
of the optionee's unexercised unexpired options, whether otherwise
eligible for immediate exercise by the terms of the option agreement or
not, provided such exercise is within three months of the optionee's
retirement and within ten years from the date of grant of the option
(five years in the case of ISO's granted to a Ten Percent Shareholder).
(b) If an optionee retires after attaining age 55 but not
age 65, the Committee, in its sole discretion, may provide that the
optionee may exercise any or all of the optionee's unexercised
unexpired options, whether otherwise eligible for immediate exercise by
the terms of the option agreement or not, provided such exercise is
within three months of the optionee's retirement and within ten years
from the date of grant of the option (five years in the case of ISO's
granted to a Ten Percent Shareholder).
(c) If an optionee's employment is terminated by reason of death
or Disability, the optionee or the personal representative of the
optionee may exercise any or all of the optionee's unexercised
unexpired options, whether otherwise eligible for immediate exercise by
the terms of the option agreement or not, provided such exercise is
within one year of termination and within ten years from the date of
grant of the option (five years in the case of ISO's granted to a
Ten Percent Shareholder).
Notwithstanding the foregoing, if the employment of any optionee
shall be terminated because of the optionee's violation of law or the
business conduct rules of EBS or for other breach of duty, all unexercised
options of such optionee or the estate of the optionee shall lapse and be
unexercisable on and after the termination of the optionee's employment.
The existence or nonexistence of such violation or breach and the date of
termination of employment shall be determined by the Committee in its sole
discretion, and such determination shall be final.
12. Nontransferability of Options
Each option granted under the Plan shall, by its terms, be
nontransferable otherwise than by will or the laws of descent and
distribution and an option may be exercised, during the lifetime of an
optionee, only by the optionee.
13. Successive Option Grants
Successive option grants may be made to any holder of options
under the Plan.
14. Amendment and Termination of the Plan
The Board may at any time terminate the Plan or make such
modifications of the Plan as it shall deem advisable; provided, however,
that the Board may not, without further approval by the holders of Common
Stock of EBS, increase the maximum number of shares as to which options may
be granted under the Plan (except under the antidilution provisions in
paragraph 16F), change the class of employees to whom options may be
granted, withdraw the authority to administer the Plan with respect to
persons who are members of the Board from a committee whose members meet
the requirements of paragraph 5B hereof, or materially increase the
benefits accruing to participants under the Plan.
15. Term of the Plan
This Plan shall terminate ten (10) years after the date on which
it is approved and adopted by the Board, and no option shall be granted
hereunder after the expiration of such ten (10) year period. Options
outstanding at the termination of the Plan shall continue in full force and
effect and shall not be affected thereby.
16. Miscellaneous
A. Rights as Stockholder. An optionee shall have none of the
rights of a stockholder with respect to Common Stock subject to an option,
until such shares are issued to such optionee upon exercise of the option.
B. Rights to Continued Employment. Nothing in the Plan or in
any option granted pursuant to the Plan shall confer on any individual any
right to continue in the employ of EBS or a Subsidiary or interfere with
the right of EBS or a Subsidiary to terminate his or her employment at any
time.
C. Leaves of Absence. The option agreements issued pursuant to
the Plan may contain such provisions as the Committee shall determine with
respect to the effect of approved leaves of absence.
D. Pension Rights. Benefits received under the Plan by an
optionee shall not affect or be used in the calculation of pension or other
retirement benefits under any other plan of EBS.
E. Investment Purpose. Each option under the Plan shall be
granted only on the condition that all purchases of stock thereunder shall
be for investment purposes, and not with a view to resale or distribution,
except that the Committee may make such provision in options granted under
the Plan as it deems necessary or advisable for the release of such
condition upon the registration with the Securities and Exchange Commission
of stock subject to the options, or upon the happening of any other
contingency warranting the release of such condition.
F. Adjustments Upon Changes in Capitalization. Notwithstanding
any other provision in the Plan, the option agreements may contain such
provisions as the Committee shall determine to be appropriate for the
adjustment of the number and class of shares subject to each outstanding
option and the option prices in the event of changes in the outstanding
Common Stock by reason of stock dividends, recapitalization, mergers,
consolidations, splitups, spin-offs, combinations or exchanges of shares
and the like; and, in the event of any such change in the outstanding
Common Stock, the aggregate number of shares as to which options may be
granted to any individual shall be appropriately adjusted by the Committee.
G. Adverse Effect on Optionee of Amendment or Termination of
Plan. No amendment or termination of the Plan may, without the consent of
an employee to whom any option shall have been granted, adversely affect
the rights of such employee under such option.
H. Time of Granting of Options. An option grant under the Plan
shall be deemed to be made on the date on which the Committee, by formal
action of its members, duly recorded in the records thereof, makes an award
of an option to an eligible employee of EBS or a Subsidiary.
I. Effect of Certain Changes. In the event of a Potential
Change in Control of EBS, as defined below, all options then outstanding
under the Plan shall become immediately and fully exercisable subject,
however, to the provisions of paragraph 9, and provided that no ISO may be
exercised in whole or in part by the holder thereof earlier than one year
after the date of grant. As used herein, a Potential Change in Control
shall be deemed to occur if, at any time during any 24-month period, the
membership of the Board of Directors of EBS is not at least two-thirds
constituted by (a) individuals who were directors at the beginning of such
period or (b) individuals whose election, or nomination for election by the
Corporation's stockholders, to the Board during such period was approved by
the vote of two-thirds of those directors then still in office who were
directors at the beginning of such period, unless such approval by such
directors was incident to a Third Party Transaction described below.
Notwithstanding the foregoing, no Potential Change in Control shall be
deemed to have occurred with respect to any change in the members of the
Board that occurs as a result of a consolidation, merger, liquidation or
sale of substantially all the assets of EBS or any similar transaction
("Transaction") which has been approved by two-thirds of the Board unless
the Transaction is with a third party ("Third Party Transaction") that
commenced an offer for more than 30% of the outstanding shares of voting
stock of EBS without prior approval of two-thirds of the Board.
17. Discretionary Payment in Lieu of Purchase
In lieu of exercise of an NQO, an optionee may request that the
Special Compensation Subcommittee of the Compensation Committee of the
Board authorize cancellation of that portion of the NQO covered by the
request and, as to such portion, authorize payment to the optionee of an
amount equal to the difference between the option price and the fair market
value of the Common Stock on the date of the request. Such request may, in
the sole discretion of the Special Compensation Subcommittee of the
Compensation Committee of the Board, be approved or denied in whole or in
part. To the extent not canceled, an NQO shall remain exercisable in
accordance with its terms. The Special Compensation Subcommittee of the
Compensation Committee of the Board may, if it shall approve any such
request either in whole or in part, in its sole discretion, authorize such
payment to be made in shares of Common Stock valued at fair market value on
the date of the request, or in cash, or partly in such shares and partly in
cash. Denial or approval of any such request shall not require a
subsequent request to be similarly treated by the Special Compensation
Subcommittee of the Compensation Committee of the Board.
18. Tax-Offset Bonus Rights
The Committee, in its sole discretion, may grant tax-offset bonus
rights ("TOBR's") with respect to NQO's. Such TOBR's may be granted to an
optionee at the time of the grant of the related NQO or subsequent thereto,
but only with respect to the related NQO. A TOBR shall entitle the
optionee to receive from EBS or a Subsidiary upon exercise of the related
NQO or six months thereafter, whichever is appropriate as hereinafter
indicated, an amount in cash equal to (1) the excess, if any, of the
aggregate market price of the shares acquired by the exercise of the option
on the date of exercise (or, if the optionee is subject to the restrictions
of Section 16 of the Securities Exchange Act of 1934 and does not make an
election under Section 83(b) of the Internal Revenue Code of 1986, as
amended, the aggregate market price six months after the date of exercise),
over the aggregate purchase price of the shares acquired by such exercise,
multiplied by (2) a percentage (either fixed or by formula) determined
solely by the Committee. The Committee shall determine all other terms and
provisions of any TOBR, including but not limited to the date of grant, the
term, the effect of employment termination and death and the formula to
determine the amount payable upon exercise of the related NQO. No TOBR
shall be assignable or transferable except to the extent the Committee
permits such TOBR to be assigned by will or through the laws of descent and
distribution.
19. Effectiveness of the Plan
The Plan shall become effective upon adoption by the Board,
subject, however, to its further approval by the stockholders of EBS given
within twelve (12) months after the date the Plan is adopted by the Board,
at a regular meeting of the stockholders, at a special meeting duly called
and held for such purpose, or by any other method permitted by the law of
Delaware. Grants of options may be made prior to such stockholders'
approval, but all option grants made prior to such stockholder approval
shall be subject to the obtaining of such approval and, if such approval is
not obtained, such options shall not be effective for any purpose.
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
1993 1992 1991
(In thousands, except per share data)
<S> <C> <C> <C>
Income from continuing operations $ 22,134 $ 71,097 $ 60,807
Preferred stock dividends (26) (29) (29)
Income before cumulative effect of a
change in accounting principle 22,108 71,068 60,778
Cumulative effect on prior years'
income of the change in post-
retirement benefits accounting method (23,111)
Net income applicable to common stock $ 22,108 $ 47,957 $ 60,778
SIMPLE AND PRIMARY
Weighted average shares outstanding 21,998 21,744 21,489
Net effect of dilutive stock options
- based on the treasury method 188 374 457
TOTAL 22,186 22,118 21,946
Per common share amounts: Simple
Income before cumulative effect of a
change in accounting principle $ 1.01 $ 3.27 $ 2.83
Cumulative effect on prior years'
income of the change in post-
retirement benefits accounting
method (1.06)
Net Income applicable to common
stock $ 1.01 $ 2.21 $ 2.83
Per common share amounts: Primary
Income before cumulative effect of a
change in accounting principle $ 1.00 $ 3.21 $ 2.77
Cumulative effect on prior years'
income of the change in
postretirement benefits accounting
method (1.04)
Net Income applicable to common
stock $ 1.00 $ 2.17 $ 2.77
FULLY DILUTED
Weighted average shares outstanding 21,998 21,744 21,489
Net effect of dilutive stock options
- based on treasury method 212 390 482
TOTAL 22,210 22,134 21,971
Per common share amounts: Fully
diluted
Income before cumulative effect of a
change in accounting principle $ 1.00 $ 3.21 $ 2.77
Cumulative effect on prior years'
income of the change in
postretirement benefits accounting
method (1.04)
Net Income applicable to common
stock $ 1.00 $ 2.17 $ 2.77
</TABLE>
To Our Shareholders:
In a difficult period for specialty apparel and footwear retailing, the
company's sales declined in 1993 and operating earnings declined sharply
from the record levels of 1992. Total sales were $1.46 billion, down 3.0
percent compared with 1992 sales. Total net income for 1993 was $22.1
million, down 68.9 percent compared with 1992 net operating income
(excluding a one-time charge in 1992, related to retiree medical benefits).
Please see The Year in Brief on the facing page and the financial
statements for complete details.
Consumers spent conservatively on fashion goods, choosing instead to
invest in the relative permanence of home furnishings, electronics, and
automobiles. Cautious consumer attitudes toward apparel and footwear were
compounded by a lack of appealing new fashion trends. Within Edison
Brothers, sales were healthiest in those chains that emphasize more
traditional fashions with greater wardrobe staying power.
Our close monitoring of our market allowed us to anticipate the sales
slowdown; by year-end we had reduced average per-store inventories by 16
percent. We avoided the heavy losses suffered by some of our competitors
who were burdened with large quantities of distressed merchandise.
Nevertheless, we were faced with the need to promote heavily during the
fall and holiday seasons in order to attract bargain seekers and to move
stock in preparation for fresher spring goods. Consequently, margins
suffered more than sales.
In addition to reducing inventory, in this challenging period we've
worked to minimize risk and maximize profit potential through a series of
other prudent controls. We've held corporate overhead dollars steady for
five years, a period in which sales grew 36 percent and our number of
stores increased 23 percent. During that time we saw an increase of 47
percent in sales productivity per home office employee. In 1993 we
eliminated millions of dollars in expenses we determined to be of marginal
benefit. We continue to close or convert stores that don't make a positive
contribution.
Current expansion is focused on the areas of our business we believe to
be the most promising over the next several years. J. Riggings, our most
mainstream young men's fashion chain, continues to grow and continues to
lead the company in profitability. Repp, Ltd. grew from 57 to 147 big-and-
tall stores in 1993 and added a catalog operation at year-end. Exhilarama
and Dave & Buster's our large-space entertainment concepts, are moving
into additional major markets. The latest Exhilarama is in Memorial City
in Houston, and the newest Dave & Buster's is on Pier 19 in Philadelphia.
Our experiment with international retailing has been successful. Sales
are strong in the several menswear stores we've opened in Mexico, and we're
looking at other retailing possibilities outside the U.S.
We're taking control of more and more of our overseas sourcing. In 1993
we acquired buying offices in Korea, the Philippines, and Honduras. We now
buy 50 percent of our apparel imports through our network of nine such
international buying offices in Asia and Central America.
During 1993 we added 207 stores (including 96 through acquisition) and
closed 128, ending the year with 2,866 units in operation. We expect to
open about 90 stores in 1994, not including any further acquisitions.
We are planning inventories conservatively for 1994. While we expect
sales to improve somewhat, we are maintaining our cautious posture and
continuing to seek additional ways to increase profits.
/s/ Andrew E. Newman,
Chairman of the board
/s/ Martin Sneider,
President
St. Louis, Missouri
March 24, 1994
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
<CAPTION>
1993 1992 1991
(52 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
Net Sales $1,462.9 $1,508.8 $1,385.3
Cost of goods sold, occupancy
and buying expenses 990.8 967.1 894.3
Store operating and
administrative expenses 350.3 347.0 316.2
Depreciation and amortization 67.1 63.0 59.5
Interest expense, net 19.7 18.7 18.8
1,427.9 1,395.8 1,288.8
Income before Income Taxes 35.0 113.0 96.5
Income tax provision 12.9 41.9 35.7
Income before the Effect of a
Change in Accounting Method 22.1 71.1 60.8
Cumulative effect of the change
in postretirement benefits accounting
method (23.1)
Net Income $ 22.1 $ 48.0 $ 60.8
Per Common Share:
Income before the Effect of
a Change in Accounting Method $ 1.01 $ 3.27 $ 2.83
Cumulative Effect of the
Change in Postretirement
Benefits Accounting Method (1.06)
Net Income $ 1.01 $ 2.21 $ 2.83
<FN>
See accompanying notes.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
<CAPTION>
ASSETS
1993 1992
Year-end Year-end
<S> <C> <C>
Current Assets:
Cash and short-term investments $ 32.6 $ 23.4
Merchandise inventories 295.0 341.6
Deferred income taxes 17.4 13.3
Prepaid expenses 9.4 10.1
Other current assets 12.5 6.9
Total Current Assets 366.9 395.3
Property and Equipment, net 353.8 333.8
Intangible Assets, net 102.4 79.4
Prepaid Pension Expense 36.2 34.1
Other Assets 13.8 7.6
$873.1 $850.2
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 72.2 80.6
Notes payable and commercial paper 44.8 17.8
Current portion of long-term debt 35.1 .1
Payroll and vacations 16.8 15.0
Income taxes 10.6
Other taxes 11.6 8.8
Other current liabilities 40.9 30.3
Total Current Liabilities 221.4 163.2
Long-Term Debt 159.2 194.4
Postretirement Benefits 38.8 37.9
Other Liabilities 31.9 29.1
Deferred Income Taxes 10.0 7.3
Common Stockholders' Equity:
Common stock, par value $1 22.0 22.0
Capital in excess of par value 75.6 76.6
Retained earnings 314.2 319.7
Total Common Stockholders' Equity
411.8 418.3
$873.1 $850.2
<FN>
See accompanying notes.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
<CAPTION>
1993 1992 1991
(52 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 22.1 $ 48.0 $ 60.8
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 67.1 63.0 59.5
Provision for deferred income
taxes 3.5 (20.0) (.1)
Change in assets and liabilities
net of effects from
acquisitions and dispositions:
Merchandise inventories 55.5 (61.5) (47.8)
Other assets (18.6) (2.2) .6
Accounts payable, accrued
expenses and other
liabilities (2.2) 59.6 .1
Other 3.6 8.9 4.9
131.0 95.8 68.2
Cash Flows from Investing Activities:
Payment for companies and assets
purchased, net of cash acquired (39.2) (13.4) (1.7)
Capital expenditures (78.4) (92.9) (76.7)
Net proceeds from disposal of
subsidiary 7.3
Other (2.5) (1.8) (.3)
(120.1) (100.8) (78.7)
Cash Flows from Financing Activities:
Principal payments of long-term debt (75.2) (45.1) (43.6)
Short-term debt (payments)
borrowings (48.0) 63.0 29.8
Dividends on common stock (27.3) (25.0) (22.8)
Common stock purchased (5.5)
Proceeds from long-term debt
issuance 150.0 20.0
Other 4.3 9.8 3.8
(1.7) 2.7 (12.8)
Cash Provided (Used) 9.2 (2.3) (23.3)
Beginning cash and short-term investments 23.4 25.7 49.0
Ending cash and short-term investments $ 32.6 $ 23.4 $ 25.7
Cash payments for:
Interest expense $ 19.0 $ 19.4 $ 17.8
Income taxes $ 21.7 $ 38.9 $ 31.2
<FN>
See accompanying notes.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(Dollars in millions, except per share data)
<CAPTION>
Capital in
Common excess of Retained
stock par value earnings
<S> <C> <C> <C>
Balance at Beginning of 1991 $21.4 $63.0 $258.9
Net income 60.8
Stock options exercised and employee
benefit plans .2 4.1 (.2)
Dividends on common stock - $1.06
per share (22.8)
Balance at End of 1991 21.6 67.1 296.7
Net income 48.0
Stock options exercised and employee
benefit plans .4 9.5
Dividends on common stock - $1.15
per share (25.0)
Balance at End of 1992 22.0 76.6 319.7
Net income 22.1
Stock options exercised and employee
benefit plans .2 4.3 (.3)
Common stock purchased - 195,600
shares (.2) (5.3)
Dividends on common stock - $1.24
per share (27.3)
Balance at End of 1993 $22.0 $75.6 $314.2
<FN>
See accompanying notes.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data)
Note 1: Summary of Significant Accounting Policies
Consolidation - The financial statements include the accounts of all
subsidiaries; intercompany accounts and transactions have been eliminated.
Short-term investments are stated at the lower of cost or market, consist
of highly liquid debt instruments with maturities of three months or less,
and are considered to be cash equivalents for consolidated statements of
cash flows.
Inventories - A portion of the inventories (72%) is determined using the
retail method and is based on the lower of cost or market. The other
portion (28%) is stated at the lower of cost, principally average cost, or
market, based principally on anticipated realizable values.
Depreciation and amortization of property and equipment and intangible
assets are computed principally on the straight-line basis. Lease rights
acquired are amortized on a straight-line basis over remaining lease terms
and anticipated renewals.
Income Taxes - The liability method is used to compute deferred income
taxes resulting from temporary differences in the recognition of income and
expense items for tax and financial reporting purposes. Financial
Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes," adopted in 1992, had no material effect on the company's accounting
for income taxes.
Interest Expense - 1993, 1992, and 1991 interest expense has been reduced
by interest income of $.7, $1.2, and $1.2, respectively.
Store opening and closing costs - Store preopening costs are charged
against income as incurred. Closing costs are accrued when the decision is
made to close a store.
Earnings Per Share - Earnings per common share is based on the weighted
average number of shares outstanding (21,998,000 in 1993; 21,744,000 in
1992; and 21,489,000 in 1991). Shares issuable under the stock option and
stock bonus plans did not have a significant dilutive effect on earnings
per share.
Reclassifications - Certain prior-year items have been reclassified to
conform to the current year presentation.
Fiscal Year - The company's fiscal year ends on the Saturday closest to
January 31. References to 1993, 1992, and 1991 are to the 52 weeks ended
January 29, 1994, January 30, 1993, and February 1, 1992, respectively.
Note 2: Leases
Most operations are conducted in leased premises. Some of the leases
include options for renewal or extension on various terms. For 1993, 1992,
and 1991, respectively, minimum rentals for operating leases were $129.9,
$125.7, and $117.5; additional percentage rentals based on sales were $5.3,
$9.2, and $9.3. Most leases also require the payment of common area
expenses and real estate taxes.
At year-end 1993 future minimum lease payments required under operating
leases are $128.8, 1994; $120.8, 1995; $110.4, 1996; $99.0, 1997; $87.3,
1998 and $776.1, total.
In accordance with Financial Accounting Standards Board Technical Bulletin
85-3, the company accrues non-cash rent expense for leases with scheduled
increases in minimum lease payments such that minimum rent expense is
recognized on a straight-line basis over the lease term. Minimum rent
expense accrued in excess of cash rent payments was $3.8, $4.5 and $4.3, in
1993, 1992, and 1991, respectively.
Note 3: Acquisitions
During 1993 the company made several acquisitions for an aggregate of
$40.2. The acquisitions were accounted for by the purchase method, and
operating results of the acquired entities have been included in the
consolidated financial statements since their respective acquisition dates.
<TABLE>
Note 4: Business Segments
<CAPTION>
Net Sales Operating Profit (Loss)
1993 1992 1991 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Apparel $ 981.6 $ 982.1 $ 888.4 $ 37.2 $ 91.4 $ 90.8
Footwear 394.3 450.8 436.7 22.5 47.9 28.5
1,375.9 1,432.9 1,325.1 59.7 139.3 119.3
Corporate and
other 87.0 75.9 60.2 (4.3) (6.4) (2.8)
Interest expense (20.4) (19.9) (20.0)
$1,462.9 $1,508.8 $1,385.3 $ 35.0 $113.0 $ 96.5
</TABLE>
<TABLE>
<CAPTION>
Depreciation Capital
Identifiable assets and amortization expenditures
1993 1992 1991 1993 1992 1991 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Apparel $492.3 $499.4 $424.4 $39.1 $38.0 $35.6 $34.5 $45.8 $43.2
Footwear 145.5 153.0 144.8 9.8 9.2 9.3 14.2 18.8 11.5
637.8 652.4 569.2 48.9 47.2 44.9 48.7 64.6 54.7
Corporate and
other 235.3 197.8 190.4 18.2 15.8 14.6 29.7 28.3 22.0
$873.1 $850.2 $759.6 $67.1 $63.0 $59.5 $78.4 $92.9 $76.7
</TABLE>
<TABLE>
Note 5: Common Stock
<CAPTION>
1993 year-end 1992 year-end
<S> <C> <C>
Shares:
Issued (100,000,000
authorized) 27,554,116 27,553,160
Less held in treasury 5,571,429 5,567,069
Outstanding 21,982,687 21,986,091
Stockholders of record 4,200 4,200
</TABLE>
The 1982, 1986, and 1992 stock option plans authorize the sale of 1.5, 1.5,
and 1.0 million common shares to executives, including store managers. No
options have been granted under the 1982 and 1986 plans subsequent to
adoption of the 1986 and 1992 plans, respectively. Options are exercisable
over various option terms not exceeding 10 years following the grant. The
1975 Stock Bonus Plan, as amended in 1980, authorized the issuance of 3.0
million shares of common stock to executives, including store managers. At
year-end 1992, there were no shares issuable and, cumulatively, 703,368
shares had been issued. The plan by its terms prohibits any further grants
after December 31, 1990, and, in fact, no grants of stock units have been
made since 1986. Activity under these plans was as follows:
<TABLE>
<CAPTION>
1993 1992 1991
Option Option Option
Price Price Price
Number of per Number of per Number of per
Options Share Options Share Options Share
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of $ 9.56- $9.51- $9.51-
year 801,500 37.25 1,057,957 27.15 1,309,829 27.15
Granted 154,300 37.25
9.56- 9.51- 9.51-
Exercised (185,771) 27.15 (383,676) 27.15 (202,308) 27.15
9.56- 9.51- 9.51-
Canceled (45,208) 37.25 (27,081) 27.15 (49,564) 27.15
Outstanding at 11.38- 9.56- 9.51-
end of year 570,521 37.25 801,500 37.25 1,057,957 27.15
Shares
exercisable
at end of
year 214,151 226,802 345,949
Shares issued
for:
Options
exercised 185,771 383,676 202,308
Bonus units
exercised 219 344
</TABLE>
Each share of outstanding common stock includes a right which entitles the
holder to purchase one common stock share for $93. Rights attach to all
new shares of common stock issued and become exercisable only under certain
conditions involving actual or potential acquisitions of the company's
common stock. Depending on the circumstances, all holders except the
acquiring person may be entitled to purchase at the exercise price
additional shares of common stock of the company and/or of the acquiring
person having a market value equal to two times the exercise price. The
rights remain in existence until January 26, 1998, unless they are redeemed
(at five cents per right) or terminated.
At January 29, 1994, 1,494,936 shares of common stock were reserved for
issuance under the stock option and the stock bonus plans.
Note 6: Pension Plan
The pension plan covers employees who have met age and service eligibility
requirements. Benefits are based on each employee's highest average
compensation for any 5 consecutive full calendar years out of the last 15
years of credited service preceding separation. The company funds at least
the minimum amount required by funding standards.
In determining the actuarial present value of projected future benefits for
1993 and 1992 the weighted-average discount rate is 7.50% and 8.25%
respectively, and the rate of increase in future compensation levels is
5.2% and 5.7%. For 1993, 1992, and 1991, the assumed rate of return on
assets is 9.5%.
<TABLE>
The plan's funded status is as follows:
<CAPTION>
1993 1992
Year-end Year-end
<S> <C> <C>
Actuarial present value of accumulated plan
benefits, including vested benefits of $33.1 and
$28.2 $38.3 $32.8
Net assets available for benefits, primarily fixed
income and equity securities at market value $88.1 $78.2
Actuarial present value of projected future
benefits (50.4) (43.9)
Plan assets greater than projected future benefits $37.7 $34.3
Net assets as a percentage of:
Present value of accumulated plan benefits 230% 238%
Present value of projected future benefits 174% 178%
</TABLE>
<TABLE>
The accounting for plan assets greater than projected future benefits is as
follows:
<CAPTION>
1993 1992
Year-end Year-end
<S> <C> <C>
Plan assets not recognized in the company's
balance sheet, principally resulting from
market value gains:
1984 and prior $1.2 $ 1.6
Since 1984 5.2 6.6
Pension prepayment recognized in the company's
balance sheet 34.6 29.5
Unrecognized prior service cost (7.3) (5.2)
Additional minimum liability 4.0 1.8
Plan assets greater than projected future
benefits $37.7 $34.3
</TABLE>
Net pension income for 1993, 1992, and 1991, respectively, of $1.1, $1.1,
and $1.2 consisted of actual return on assets, $11.0, $5.5, and $11.7; plus
partial recognition of prior-period net gains (losses), $(.1), $(.1), and
$0; less net gains (losses) deferred to future periods, $3.9, $(1.0), and
$6.0; less cost of current-year employee service, $2.1, $1.9, and $1.7;
less interest cost on projected future benefits, $3.8, $3.4, and $2.8.
<TABLE>
Note 7: Property and Equipment
<CAPTION>
1993 1992
Year-end Year-end
<S> <C> <C>
Land $ 11.1 $ 11.2
Buildings 71.0 70.8
Leasehold improvements 299.4 268.0
Fixtures and equipment 221.4 197.0
Property held under capital leases, principally
buildings 9.6 9.6
Total cost 612.5 556.6
Accumulated depreciation and amortization (258.7) (222.8)
$353.8 $333.8
</TABLE>
Depreciation and amortization expense for 1993, 1992, and 1991 was $54.6,
$49.8, and $45.5, respectively.
<TABLE>
Note 8: Intangible Assets
<CAPTION>
1993 1992
year-end year-end
<S> <C> <C>
Leasehold rights $ 54.0 $54.8
Goodwill 62.9 43.0
Other 28.3 17.9
Total cost 145.2 115.7
Accumulated amortization (42.8) (36.3)
$102.4 $79.4
</TABLE>
Intangibles are amortized over useful lives ranging from 2 to 30 years.
Amortization expense for 1993, 1992, and 1991 was $12.5, $13.2, and $14.0,
respectively.
<TABLE>
Note 9: Financing Arrangements
<CAPTION>
Interest 1993 1992
Rate Maturities Year-end Year-end
<S> <C> <C> <C> <C>
7.09-
Unsecured senior notes 9.19% 1994-2008 $185.0 $110.0
Capital lease obligations 8.5 8.6
Notes payable and
commercial paper to be
refinanced 75.0
Other obligations .8 .9
Total long-term debt 194.3 194.5
Less current maturities 35.1 .1
Long-term debt $159.2 $194.4
</TABLE>
Future maturities of long-term debt are $35.2, 1994; $.3, 1995; $9.2 1996;
$17.8, 1997; and $21.9, 1998. Future interest payments on capital lease
obligations were $4.9 at year-end 1993. The company's financing agreements
contain certain restrictions, including limitations on dividend payments
and the company's acquisition of its capital stock. At year-end 1993,
retained earnings of $114.4 were free of the most restrictive of these
limitations.
At year-end 1993, the company had unused credit arrangements offering
short-term financing totaling $150.0 with various expiration dates. In
addition, the company has a $125.0 credit agreement of which $50.0 expires
in December 1994 and $75.0 expires in June 1996. This credit agreement
supports potential commercial paper borrowing arrangements of $125.0.
In early 1993 the company completed a private placement with institutional
lenders of senior notes having maturities ranging from 7 to 15 years. The
proceeds from this offering were used primarily to refinance existing debt.
Accordingly, $75.0 of unsecured senior notes maturing in 1993 and $75.0 of
notes payable and commercial paper were reported as long-term debt in the
1992 consolidated balance sheet.
Based on borrowing rates currently available to the company, the estimated
fair value of long-term debt, including current maturities, at year-end
1993 is $201.6.
Note 10: Income Taxes
<TABLE>
The provision for income taxes consists of:
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Current Expense
Federal $ 8.5 $41.5 $31.2
State and local .9 6.2 4.6
Deferred Expense - Operations 3.5 (5.8) (.1)
Total provision - Operations 12.9 41.9 35.7
Cumulative effect of accounting
change (14.2)
Total provision $12.9 $27.7 $35.7
</TABLE>
<TABLE>
Significant components of the deferred tax liabilities and assets in the
consolidated balance sheet are as follows:
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Accelerated depreciation $16.5 $15.9 $ 17.3
Pension income 14.3 11.1 11.0
Other 14.4 14.8 17.7
Total deferred tax liabilities 45.2 41.8 46.0
Restructuring reserves .5 .8 1.4
Rent expense accruals 9.0 6.9 5.4
Postretirement benefits 15.2 14.3
Acquisition - related reserves 6.7
Other 21.2 25.8 24.1
Total deferred tax assets 52.6 47.8 30.9
Net deferred tax asset
(liability) $ 7.4 $ 6.0 $(15.1)
</TABLE>
<TABLE>
Reconciliation of federal statutory rates to effective income tax
rates:
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal corporate statutory rate 35.0% 34.0% 34.0%
State and local income taxes,
net of federal income tax
benefit 2.7 2.8 2.5
Miscellaneous items, net (1.0) (.1) .5
Actual tax expense 36.7% 36.7% 37.0%
</TABLE>
Note 11: Employee Benefits
The company at its discretion provides medical, dental, and life insurance
coverage for its employees and retirees. Medical and life insurance
expenses were $12.1 in 1993, $14.3 in 1992 (excluding the cumulative effect
of the accounting change for postretirement benefits) and $10.9 in 1991.
Dental expenses were $.8 in 1993, $.7 in 1992 and $.6 in 1991.
The company provides an employee savings plan that permits employees to
make contributions in accordance with Internal Revenue Code Section 401(k).
Employees who meet age and service requirements are eligible to participate
by contributing up to 15% of their pretax compensation. The company
matches a portion of the employee's contribution under a predetermined
formula based on the company's return on equity. Company contributions to
the plan may be remitted to the Trustee in the form of company common stock
or cash which is then used to acquire company common stock on the open
market. The company's expense related to the plan was $.2 for 1993, $.5
for 1992, and $.4 for 1991.
Payroll taxes paid by the company primarily for social security and
unemployment compensation totaled $22.9 in 1993, $20.9 in 1992, and $19.5
in 1991.
Note 12: Postretirement Benefits
The company provides a defined dollar benefit health and life plan to its
retirees and their eligible spouses. To qualify, an employee must retire
at age 55 or later with at least 15 years of credited service under the
pension plan. The health care portion of the plan is contributory with
retiree contributions subject to adjustment annually. The life insurance
portion of the plan is noncontributory. The company funds, as needed, plan
costs incurred over and above retiree contributions. The company reserves
the right to modify or terminate these benefits. In 1992, the company
adopted Statement of Financial Accounting Standards No. 106, "Employer's
Accounting for Postretirement Benefits Other Than Pensions", a change from
the cash basis of accounting used in prior years.
<TABLE>
The plan's funded status is as follows:
<CAPTION>
1993 1992
Year-end Year-end
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $33.7 $ 31.6
Fully eligible active plan
participants 3.3 3.1
Other active plan participants 4.3 3.3
Unrecognized net loss (2.5) (.1)
Accrued postretirement benefit cost $38.8 $ 37.9
</TABLE>
<TABLE>
Net periodic postretirement benefit cost consists of:
<CAPTION>
1993 1992
<S> <C> <C>
Service cost $ .2 $ .2
Interest cost 3.0 3.0
Net periodic postretirement benefit
cost $ 3.2 $ 3.2
</TABLE>
An increase in the cost of covered health care benefits of 13% for pre-age-
65 participants and 12% for post-age-65 participants was assumed for fiscal
year 1994. This rate is assumed to decrease gradually to 6% by the year
2000 and remain at that level thereafter. A 1% increase in the health care
cost trend rate would increase the accumulated postretirement benefit
obligation by $2.5 million at year-end 1993 and the aggregate of the
service and interest cost components of net periodic postretirement benefit
cost for 1993 by $.2 million. The weighted average discount rate used in
determining the accumulated postretirement benefit obligation was 7.5%
and 8.25% at year-end 1993 and 1992, respectively.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Stockholders and Board of Directors
Edison Brothers Stores, Inc.
We have audited the accompanying consolidated balance sheets of Edison
Brothers Stores, Inc. and subsidiaries as of January 29, 1994 and January
30, 1993, and the related consolidated statements of income, common
stockholders' equity, and cash flows for each of the three years in the
period ended January 29, 1994. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 over-all financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Edison
Brothers Stores, Inc. and subsidiaries at January 29, 1994 and January 30,
1993, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended January 29, 1994, in
conformity with generally accepted accounting principles.
As described in Notes 1 and 12 to the consolidated financial statements, in
1992 the company changed its method of accounting for income taxes and
postretirement benefits.
/s/ Ernst & Young
St. Louis, Missouri
March 9, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Dollars in millions, except per share data)
BUSINESS
Edison Brothers Stores, Inc. (the company) owns and operates chains of
specialty retailing stores located in all fifty states, Puerto Rico, the
Virgin Islands and Mexico. The company conducts its principal operations
through subsidiaries in two segments: apparel and footwear. Stores within
the apparel and footwear segments are almost exclusively mall-based and
generally range in size from 1,300 to 3,000 square feet. Merchandise is
acquired from many vendors, and the company is not dependent on any one
supplier. Four main distribution centers serve as receiving points for
merchandise and coordinate the distribution of shipments to the stores via
common or contract carrier. The company also operates an entertainment
division composed of predominantly mall-based entertainment centers and
free-standing restaurant/entertainment complexes.
At year-end 1993 the apparel segment operated 1,978 stores in eight
chains. Six chains, JW/Jeans West, Oaktree, J. Riggings, Coda, Repp Ltd.,
and Zeidler & Zeidler/Webster (Zeidler & Zeidler), focus on menswear. Each
menswear chain targets a specific age group of men with a different product
mix. The women's wear chains, 5-7-9 Shops and Spirale, primarily market
casual wear and accessories to young adults, teens, and pre-teens.
The footwear segment operated 751 stores in four chains at the end of
1993. The principal footwear chains are Bakers/Leeds, and its off shoot
Precis, which offer popular-priced women's fashion shoes, and Wild Pair and
Sacha London, which focus on advanced shoe fashion for young men and women.
FINANCIAL CONDITION
Cash levels at the end of 1993 were somewhat higher than at the end of
1992 as the company decided to retain, in Mexico, a portion of funds
generated by Mexican operations to fund operations and as a hedge against
fluctuations in currency exchange rates. Merchandise inventories were
reduced by 13.6% compared with 1992 levels in anticipation of a weak retail
environment during the fall 1993 season. The increase in property and
equipment resulted primarily from the $78.4 of capital expenditures on new
and existing locations. The 1993 acquisitions had only a modest effect on
fixed assets but did account for the rise in intangible assets.
The increase in reported levels of notes payable and commercial paper
and the current portion of long-term debt is principally a function of
financing actions taken by the company subsequent to the end of 1992. In
March 1993 the company arranged a long-term borrowing of $150.0. The
proceeds were used to refinance existing debt. Accordingly, at year-end
1992, $75.0 of notes payable and commercial paper and $75.0 of current
maturities of long-term debt were reported as long-term debt. At the end
of 1993, the company had not determined whether it will be necessary to
refinance pending debt maturities.
CAPITAL RESOURCES AND LIQUIDITY
In 1993 the company increased cash flow from operations by 36.7%. The
improvement was the result of reducing inventories and was partially offset
by the decrease in income. At the end of 1993, working capital was $145.5
as compared to $232.1 and $137.0 at the end of 1992 and 1991, respectively.
The 1993 decrease reflects the inventory reduction and short-term debt
increase. The 1992 increase resulted from increased inventory and lower
short-term debt owing to the refinancing actions discussed earlier.
During 1994 the company plans to make capital improvements at levels
somewhat lower than those of 1993. The company will continue to seek
opportunities to expand through acquisitions when appropriate. Other
expected demands on company funds include normal seasonal inventory
requirements.
The company has used, and if needed will use, short-term financing to
provide additional working capital when appropriate. The company has
available a $125.0 credit facility and, at the end of 1993, other unused
credit arrangements of $150.0. Management believes that funds from
operations and the short-term facilities provide adequate working capital.
OPERATING RESULTS
Net sales for 1993 decreased by $45.9 or 3.0% from 1992 levels.
Comparable store sales, that is, sales reported by stores open during both
years, declined in all segments. This decrease was offset to a great
extent by the contribution of acquired locations in the Repp Ltd. chain and
new outlets in J. Riggings, Zeidler & Zeidler, and entertainment. The
company anticipated the weak retail market for fashion merchandise during
the fall season of 1993 and promoted heavily to attract the available
customers and to move stock in preparation for the spring of 1994. In
1992, net sales increased by $123.5 or 8.9% over sales in 1991. Comparable
stores accounted for over 40% of the increase. Bakers/Leeds reported
significant comparable-store sales gains. J. Riggings and Jeans West led
the apparel segment, which reported a 10.5% increase in sales with only a
2.3% increase in operating units. Entertainment operations, a modest
portion of the company, increased sales by over 25% in 1992, primarily as a
result of new units.
Cost of goods sold, including occupancy and buying expenses, as a
percentage of sales was 67.7%, 64.1%, and 64.6% in 1993, 1992, and 1991,
respectively. The increase in 1993 cost was primarily the result of two
factors. First, in a weak retail environment that lacked a strong fashion
direction, the company found it necessary to promote heavily during the
fall and holiday seasons of 1993. Second, the apparel and footwear
segments experienced higher occupancy and buying expenses. The increase
came almost entirely from the occupancy portion of expense, reflecting
higher rent costs for store locations. In 1992, a policy of competitive
pricing and cost control provided improvement in performance in this
category. The company was able to decrease merchandise cost as a
percentage of sales somewhat in 1992, while occupancy and buying expenses
experienced a slight increase over 1991 levels. Footwear reported the most
significant improvement by increasing gross margins by nearly 3% of sales.
Store operating and administrative expenses as a percentage of sales
were 23.9%, 23.0%, and 22.8% in 1993, 1992, and 1991, respectively. Nearly
all of the modest percentage increase in 1993 was in the area of store
operating expenses. A portion of the increased percentage was caused by
the decrease in sales. The balance of the change resulted from minor
increases in several categories of store expense. None of the fluctuations
were considered significant. The 1992 increase was attributable to higher
employee benefit costs, including some additional expense resulting from
the new accounting rules for postretirement benefits. Depreciation and
amortization expense rose in 1993, reflecting the increased levels of
property and equipment. The amortization component declined somewhat,
despite the higher ending balance of intangible assets, as the 1993
acquisitions that generated the increase in intangibles took place at mid-
to-late year. Results were similar in 1992, also owing to higher levels of
capital assets and few additions to the intangible category. Net interest
expense in 1993 was slightly above 1992 levels. Approximately one-half of
the change resulted from decreased interest income. The balance of the
increase reflected the new long-term debt in 1993 at a rate above that
available on short-term borrowings. Interest expense for 1992 was
consistent with 1991 as 1992 pay-downs of higher rate long-term debt were
offset by the cost of additional short-term borrowings.
Lower sales, margin erosion resulting from promotional markdowns, and
slightly higher store operating expenses combined to produce a 69% decline
in pretax income in 1993 compared with 1992 levels before the cumulative
effect of the accounting change. The downturn affected operations fairly
equally as both the footwear and apparel segments reported significant
declines in operating profit. In 1992, record sales, better margins and
flat expense performance yielded a 17.1% increase in pretax income over
1991. The footwear segment was a primary contributor, increasing operating
profits by 68%. The apparel chains remained consistent with 1991 and
provided two-thirds of profits from retail merchandise operations.
On a seasonal average basis the company employed approximately 24,200
people during 1993. Salaries and wages in 1993, 1992, and 1991 were
$245.4, $235.2, and $224.5, respectively.
In 1992 the Financial Accounting Standards Board issued Statement No.
112, "Employers Accounting for Postemployment Benefits" and in 1993 issued
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Investments." These statements are applicable to the company and will be
adopted in fiscal 1994. Neither statement is expected to have a
significant effect on the company's financial position or results of
operations. In response to declines in the rates of return on fixed income
investments used as a basis for estimation of an appropriate discount rate
to be used for purposes of valuing pension and postretirement obligations,
the company lowered such valuation rates to 7.5% from the 8.25% rates used
in the prior year, effective as of the end of fiscal 1993. As the effect
of this change is subject to deferral and amortization over an extended
period of time, it is not expected to have a material effect on future
operating results.
<TABLE>
FIVE-YEAR FINANCIAL SUMMARY
(dollars in millions, except per share data)
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Stores at the end of the year 2,866 2,787 2,781 2,733 2,32
Net sales $1,462.9 $1,508.8 $1,385.3 $1,253.6 $1,073.
Income from continuing operations 22.1 71.1 60.8 59.0 61.
Net income 22.1 48.0 60.8 59.0 56.
Total assets 873.1 850.2 759.6 725.3 527.
Long-term debt 159.2 194.4 119.5 145.1 51.
Common stockholders' equity 411.8 418.3 385.4 343.3 243.
Return on common stockholders' equity 5.3% 11.9% 16.7% 20.1% 25.8
Per common share:
Income from continuing operations $ 1.01 $ 3.27 $ 2.83 $ 2.78 $ 3.0
Net income 1.01 2.21 2.83 2.78 2.8
Dividends on common stock 1.24 1.15 1.06 1.04 .93
Common stockholders' equity 18.73 19.03 17.85 16.05 12.0
</TABLE>
See Management's Discussion and Analysis for significant items affecting data
comparability between 1991, 1992, and 1993.
Per share amounts reflect the two-for-one common stock split effective
December 20, 1989.
<TABLE>
QUARTERLY INFORMATION
(dollars in millions, except per share data)
<CAPTION>
Quarter
1st 2nd 3rd 4th Fiscal Year
13 weeks 13 weeks 13 weeks 13 weeks 52 weeks
1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $329.2 $326.9 $338.0 $348.7 $343.9 $361.7 $451.8 $471.5 $1,462.9 $1,508.8
Cost of goods sold,
occupancy and
buying expenses 212.7 208.6 228.1 226.4 231.2 231.3 318.8 300.8 990.8 967.1
Income before the
accounting
change 6.9 9.6 3.2 12.7 2.2 13.2 9.8 35.6 22.1 71.1
Net income (loss) 6.9 (13.5) 3.2 12.7 2.2 13.2 9.8 35.6 22.1 48.0
Per common share:
Income before the
accounting
change .31 .44 .15 .59 .10 .61 .45 1.63 1.01 3.27
Net income (loss) .31 (.62) .15 .59 .10 .61 .45 1.63 1.01 2.21
Dividends .31 .28 .31 .28 .31 .28 .31 .31 1.24 1.15
Common stock
market price:
High 49.13 40.13 42.63 40.50 32.50 46.75 33.50 48.25 49.13 48.25
Low 36.50 34.75 30.00 35.50 26.25 38.75 28.25 43.50 26.25 34.75
Decrease in income
resulting from
adoption of SFAS
No. 106 in the
fourth quarter
1992:
Income before
the accounting
change .1 .2 .1 .4
Net income (loss) 23.2 .2 .1 23.5
</TABLE>
Amounts presented for the first three quarters of 1992 differ from amounts
previously reported on Form 10-Q because of the adoption of SFAS No. 106.
SFAS No. 106.
Edison Brothers Stores, Inc. common stock is listed on the New York Stock
Exchange.
Transfer Agent and Registrar: Boatmen's Trust Company, St. Louis, MO 63101
EXHIBIT 22 - SUBSIDIARIES
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
JANUARY 29, 1994
The following is a grouping of subsidiary corporations by segment. All of
the outstanding capital stock of the subsidiaries (except for 20% of
certain of the Dave and Buster's subsidiaries) is owned, directly or
indirectly, by the Company. All of the subsidiaries are included in the
consolidated financial statements filed herein.
<TABLE>
<CAPTION>
No. of
Principal State of subsidiary
Segment business names incorporation corporations
<S> <C> <C> <C>
Apparel JW/Jeans West, Oaktree,
J. Riggings, Coda, Maryland 1
Zeidler & Zeidler/Webster, Missouri 3
Repp, Ltd. Big & Tall, California 1
5-7-9 Shops, Spirale Delaware 1
Footwear Bakers, Leeds, Precis,
The Wild Pair, Sacha London Various 48
Other Dave and Buster's, Time-Out,
Space Port, Party Zone,
Exhilarama, Horizon
Entertainment, Inc.,
Other: Corporate-Related
Functions Various 20
Foreign subsidiaries involved in
retail operations or acquisition Mexico 1
of merchandise for Apparel and Taiwan 1
Footwear segments Hong Kong 1
77
</TABLE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Edison Brothers Stores, Inc. of our report dated March 9, 1994, included in
the 1993 Annual Report to Stockholders of Edison Brothers Stores, Inc.
Our audits also included the financial statement schedules of Edison Brothers
Stores, Inc. listed in Item 14(a). These schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in Registration Statements
(Form S-8 Number 2-72334) pertaining to the Edison Brothers Stores, Inc. 1975
Stock Bonus Plan, (Form S-8 Number 2-84838) pertaining to the Edison Brothers
Stores, Inc. 1982 Incentive Stock Option Plan, (Form S-8 Number 33-13297)
pertaining to the Edison Brothers Stores, Inc. 1986 Stock Option Plan, and
(Form S-8 Number 33-54754) pertaining to the Edison Brothers Stores, Inc. 1992
Stock Option Plan and in the related Prospectuses of our report dated
March 9, 1994, with respect to the consolidated financial statements
incorporated herein, by reference, and our report included in the preceding
paragraph with respect to its financial statements and schedules included in
the Annual Report (Form 10-K) of Edison Brothers Stores, Inc. for the year
ended January 29, 1994.
ERNST & YOUNG
St. Louis, Missouri
April 27, 1994
