UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 3, 1997
//TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
Not applicable
Former name, former address and former fiscal year,
if changed since last report
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report:
Common Stock, $1 par value - 22,201,778
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheets as of
May 3, 1997; February 1, 1997; and May 4, 1996 1
Condensed Consolidated Statements of Operations for
the 13 weeks ended May 3, 1997, and the 13 weeks
ended May 4, 1996 2
Condensed Consolidated Statements of Cash Flows
for the 13 weeks ended May 3, 1997, and the 13 weeks
ended May 4, 1996 3
Notes to Condensed Consolidated
Financial Statements 4
Management's Discussion and Analysis of Operating
Results and Financial Condition 10
Part II. Other Information 12
Signatures 12
<TABLE>
PART I FINANCIAL INFORMATION
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
May 3, February 1 May 4
1997 1997 1996
(In Millions)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 159.3 $125.6 $164.8
Investments 10.1 78.5 --
Merchandise inventories 206.5 210.7 252.1
Prepaid expenses 16.7 5.0 20.8
Other current assets 4.5 5.6 9.9
Total Current Assets 397.1 425.4 447.6
Assets Held for Sale 10.9 10.9 -
Property and Equipment, net 144.8 146.0 198.4
Intangible Assets, net - - 48.0
Prepaid Pension Expense 42.6 41.3 39.1
Other Assets 8.1 10.2 14.3
Total Assets $603.5 $ 633.8 $747.4
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 56.5 $ 69.2 69.8
Payroll and vacations 10.6 10.7 12.3
Other taxes 5.9 5.7 6.9
Other current liabilities 26.0 23.1 17.5
Total Current Liabilities 99.0 108.7 106.5
Liabilities Subject to Settlement under
Reorganization Proceedings 455.7 508.3 497.5
Postretirement Benefits 42.6 - -
Other Liabilities 25.3 18.9 20.4
Common Stockholders' Equity (Deficit):
Common stock, par value $1 22.2 22.2 22.2
Capital in excess of par value 76.9 76.9 76.8
Retained earnings (deficit) (118.6) (101.6) 24.0
Foreign currency translation
adjustment and other 0.4 0.4 -
Total Common Stockholders' Equity
(Deficit) (19.1) (2.1) 123.0
Total Liabilities and Equity
(Deficit) $603.5 $633.8 $ 747.4
<fn1>
See notes to condensed consolidated financial statements.
</fn1>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
13 Weeks Ended
May 3, May 4
1997 1996
(In millions except per share data)
<S> <C> <C>
Net Sales $224.0 $258.1
Cost of goods sold, occupancy,
and buying expenses 158.2 182.9
Store operating and administrative expenses 62.5 68.9
Depreciation and amortization 7.6 10.4
Interest expense, net 0.9 0.4
Restructuring and reorganization expenses 8.1 11.6
Other 2.6 1.2
Total Costs and Expenses 239.9 275.4
Loss before Income Taxes (15.9) (17.3)
Income tax provision 1.1 (0.4)
Net Loss $(17.0) $(17.7)
Net Loss Per Common Share: $(0.77) $(0.80)
Weighted average common shares
outstanding (in thousands) 22,202 22,135
<fn2>
See notes to condensed consolidated financial statements.
</fn2>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
13 Weeks Ended
May 3, 1997 May 4, 1996
(In Millions)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (17.0) $(17.7)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 7.6 10.4
Loss on disposal of property and equipment 1.7 --
Restructuring and reorganization expenses,
noncash portion 2.3 4.7
Working capital changes, net of effects from
acquisitions and divestitures: (20.9) (8.9)
Other (0.1) 41.4
Total Operating Activities (26.4) 29.9
Cash Flows from Investing Activities:
Capital expenditures (8.4) (4.6)
Decrease in investments 68.4 --
Proceeds from property and equipment disposals 0.1
- --
Total Investing Activities 60.1 (4.6)
Cash Flows from Financing Activities:
Net Prepetition payments under short-term
Credit facility -- (.2)
Other -- 0.4
Total Financing Activities -- 0.2
Effect of exchange rate changes on cash -- (0.3)
Cash Provided 33.7 25.2
Beginning Cash and Cash Equivalents 125.6 139.6
Ending Cash and Cash Equivalents $ 159.3 $ 164.8
</TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions)
1. The information set forth in these interim financial statements
as of and for the three months ended May 3, 1997 and May 4, 1996,
respectively, is unaudited. In the opinion of management, the
unaudited financial statements reflect all adjustments necessary to
present fairly the consolidated financial results of Edison
Brothers Stores, Inc. (the Company) for the periods indicated.
Results of operations for the interim period ended May 3, 1997 are
not necessarily indicative of the results of operations for the
full fiscal year.
2. On November 3, 1995 (the Petition Date), the Company and 65 of
its subsidiaries and affiliates (the Debtors) filed petitions for
relief under Chapter 11 of the United States Bankruptcy Code
(Chapter 11) in the United States Bankruptcy Court in Wilmington,
Delaware. The Debtors are presently operating their respective
businesses as debtors-in-possession. A statutory Creditors'
Committee has been appointed in the Chapter 11 cases. In addition,
the U.S. Trustee appointed an Equity Committee during the fourth
quarter of 1996. The Chapter 11 cases of the Debtors are being
jointly administered for procedural purposes only.
Certain foreign subsidiaries were not included in the Chapter 11
filing. The results of their operations and financial position are
not material to the consolidated financial statements.
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles applicable
to a going concern, which principles, except as otherwise
disclosed, assume that assets will be realized and liabilities will
be discharged in the normal course of business. As a result of the
Chapter 11 cases and circumstances relating to this event,
including the Company's debt structure, its recurring losses, and
current economic conditions, such realization of assets and
liquidation of liabilities are subject to significant uncertainty.
Additionally, the amounts reported on the consolidated balance
sheet could materially change because of the plan of
reorganization, since such reported amounts do not give effect to
adjustments to the carrying value of the underlying assets or
amounts of liabilities that may ultimately result.
In the Chapter 11 cases, substantially all liabilities as of the
Petition Date are subject to compromise or other treatment under a
plan of reorganization. For financial reporting purposes, those
liabilities and obligations whose disposition is dependent on the
outcome of the Chapter 11 cases have been segregated and classified
as liabilities subject to settlement under reorganization
proceedings in the consolidated balance sheets. Generally, actions
to enforce or otherwise effect repayment of all pre-Chapter 11
liabilities as well as all pending litigation against the Debtors
are stayed while the Debtors continue their business operations as
debtors-in-possession. Schedules have been filed by the Debtors
with the Bankruptcy Court setting forth the assets and liabilities
of the Debtors as of the Petition Date as reflected in the Debtors'
accounting records. Differences between amounts reflected in such
schedules and claims filed by creditors will be investigated and
either amicably resolved or adjudicated. The ultimate amount of and
settlement terms for such liabilities are subject to a plan of
reorganization and accordingly are not presently determinable.
Under the Bankruptcy Code, the Company may elect to assume or
reject real estate leases, employment contracts, personal property
leases, service contracts, and other prepetition executory
contracts, subject to Bankruptcy Court approval. The liabilities
subject to settlement under reorganization proceedings include a
provision for the estimated amount that may be claimed by lessors
and allowed in connection with the real estate leases. The Company
will continue to analyze its executory contracts and may assume or
reject additional contracts.
On February 27, 1997, the Debtors filed a proposed Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code, which was
amended by subsequent filings on March 31 and May 13, 1997 (the plan as
amended, the "Plan"). On March 31, 1997, the Debtors also filed a
Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code
which was amended by subsequent filings on May 13 and May 21, 1997. The
Court approved the Disclosure Statement, as amended, on May 27, 1997.
On June 5, 1997 the Creditors' and Equity Committees reached a tentative
agreement that would result in both committees recommending approval of
the Company's plan of reorganization, subject to certain amendments
reflecting the terms of such agreement. The Disclosure Statement will
be revised accordingly. The Company will distribute copies of the
Disclosure Statement to those holders of claims and equity interests
entitled to vote thereon under the terms of the Plan on June 27, 1997 in
order to solicit acceptances of the Plan. A confirmation hearing is
currently scheduled to be held by the Bankruptcy Court on August 14,
1997 to determine whether the Plan satisfies all of the requirements for
confirmation specified in Section 1129 of the Bankruptcy Code, among
which are that the Plan be: (i) accepted by all impaired classes of
claims and equity interests or, if rejected by an impaired class, that
the Plan "does not discriminate unfairly" and is "fair and equitable" as
to such class; (ii) feasible; and (iii) in the "best interests of
creditors and stockholders that are impaired under the Plan."
The Plan and Disclosure Statement may be subject to further amendment
and revisions before the process is completed. As currently
contemplated, the Plan would provide for a distribution to creditors of
a combination of cash, new corporate debt, new Company common stock and
other assets. General unsecured creditors would receive: (i) a cash
payment of $119 (subject to certain possible adjustments); (ii) ten
year, 11% unsecured notes in the principal amount of $100 (subject to
certain possible upward adjustments) (with the first three years of
interest prefunded, based on $100 of notes and no scheduled principal
payments until maturity in 2007); (iii) new common stock of the Company,
which would be issued at the time of emergence and replace all existing
shares; (iv) title to the Company's headquarters building in downtown
St. Louis, which the Company would continue to occupy under the terms of
a ten year lease; and (v) excess cash of approximately $48 from the
Company's overfunded pension plan. Holders of existing equity interests
in the Company would receive eight-year warrants to purchase a total of
approximately nine percent of the new common stock and rights to, among
other things, purchase shares of the new common stock.
The Plan will not become effective unless and until certain conditions
specified therein have been satisfied or waived. Among these conditions
are that: (i) an order confirming the Plan, in form and substance
reasonably acceptable to the Debtors and the statutory Creditors'
Committee, shall have been signed by the Bankruptcy Court and there
shall not be a stay or injunction in effect with respect thereto; (ii)
the Debtors shall have at least $10 in cash as of July 5, 1997 after
giving effect to the distributions of cash projected to be made under
the Plan; (iii) the Debtors shall have credit availability under a
working capital credit facility providing the Debtors with working
capital sufficient to meet their requirements; and (iv) various other
actions, documents and agreements necessary to implement the Plan shall
have been effected or executed.
Pursuant to an order of the Bankruptcy Court dated May 13, 1997, the
assets and liabilities of the Debtors will be deemed substantively
consolidated solely for purposes relating to the Debtors' joint plan of
reorganization discussed below, including with respect to voting and
distributions. As a result, among other things, for purposes of that
plan, all claims against the Debtors and all guarantee and similar
claims will be eliminated. Substantive consolidation, however, will not
affect, among other things, the separate legal and corporate structure
of the individual Debtors subsequent to their emergence from Chapter 11.
The Company anticipates using fresh start accounting once the Plan is
consummated.
3.The principal categories of claims classified as liabilities subject to
settlement under reorganization proceedings are identified below. All
amounts below may be subject to future adjustment depending on
Bankruptcy Court action, further developments with respect to disputed
claims, determination as to the value of any collateral securing claims,
or other events. Additional claims may arise resulting from rejection of
additional executory contracts by the Company.
<TABLE>
<CAPTION>
May 3, 1997 February 1, 1997
<S> <C> <C>
Long-term senior notes payable $150.0 $150.0
Notes payable - banks 205.9 205.9
Cash set-off applied to debt (3.6) (3.6)
Capital lease obligations 8.4 12.4
Accrued interest payable 4.4 4.3
Deferred debt costs (4.3) (4.3)
Postretirement benefit/Pension accrual - 47.7
Accounts payable 37.8 36.1
Lease termination claims 43.8 42.8
Taxes 4.9 6.0
Other 8.4 11.0
Liabilities subject to settlement
under reorganization proceedings $455.7 $508.3
</TABLE>
During the first quarter of 1997, postretirement benefit accruals of
$42.2 and non-qualified pension accruals of $5.5 were reclassified from
liabilities subject to settlement under reorganization proceedings to
other noncurrent liabilities. Under the proposed plan of
reorganization, the Company will assume the postretirement benefit and
non-qualified pension liabilities.
As a result of the bankruptcy filing, principal or interest payments
will not be made on any prepetition debt without Bankruptcy Court
approval or until a reorganization plan defining the repayment terms has
been approved. Interest on prepetition obligations has generally not
been accrued after the Petition Date.
Prior to the bankruptcy filing and certain agreements discussed below,
the Company's debt consisted of senior notes held by various
institutional lenders amounting to $150.0. The unsecured senior notes,
having maturities from 7 to 15 years, were to bear interest at rates of
7.09% to 8.04%. The Company also had outstanding borrowings under a
$125.0 revolving credit facility as well as short-term and demand notes
under uncommitted bank lines with varying interest rates and maturity
dates. In addition, the Company had $8.4 in obligations relating to its
Washington, Missouri, distribution center which are characterized as
capital leases for financial reporting purposes.
As a result of its operating loss for second quarter 1995, the Company
was in violation of certain financial covenants under its bank and
senior note agreements. During the third quarter 1995, the Company and
its subsidiary, Edison Brothers Apparel Stores, Inc., entered into an
agreement for a $75.0 secured revolving line of credit facility with
BankAmerica Business Credit, Inc. extending through February 29, 1996.
In addition, the Company entered into override agreements with its
existing lenders through February 29, 1996. The override agreements
covered existing 1995 financial covenants and deferred principal
repayments otherwise due December 1, 1995. Furthermore, the Company's
primary existing letter of credit bank agreed to continue to provide
international letters of credit through the override period. In exchange
for these concessions, the Company paid a one-time forbearance fee of
$3.6 and agreed to increase the interest rate on the outstanding debt to
9.75%.
As of the bankruptcy filing, the Company had outstanding $150.0 of
senior notes, $125.0 under its $125.0 revolving credit facility, $80.9
of short-term and demand notes under its uncommitted bank lines, $8.4 of
capital lease obligations, and $21.6 under its $75.0 secured revolving
line of credit facility. The Company received authorization from the
Bankruptcy Court to make a $21.6 payment on the secured revolving line
of credit facility. In addition, $3.6 of cash was set-off by the banks
against outstanding principal and accrued interest balances.
As part of the Chapter 11 reorganization process, the Company has
attempted to notify all known or potential creditors of the Chapter 11
filing for the purpose of identifying all prepetition claims against the
Debtors. Generally, creditors whose claims arose prior to the Petition
Date had until August 1, 1996 ("Bar Date") to file claims or be barred
from asserting claims in the future. Claims arising from rejection of
executory contracts by the Debtors on or after July 1, 1996, and claims
related to certain other items were permitted to be filed by other dates
set by the Bankruptcy Court. Differences between amounts shown by the
Debtors and claims filed by creditors are being investigated and will
either be amicably resolved or adjudicated. The ultimate amount of and
settlement terms for such liabilities are subject to the plan of the
reorganization when confirmed, and accordingly are not presently
determinable.
4.The Company and its subsidiary, Edison Brothers Apparel Stores, Inc., as
debtors-in-possession, are parties to a Loan Agreement dated effective
November 9, 1995 (the DIP Facility) with BankAmerica Business Credit,
Inc., as Agent and Lender, under which the Company may borrow up to
$200.0, subject to collateral restrictions, to fund ongoing working
capital needs. The DIP Facility, which has been approved by the
Bankruptcy Court, has a sublimit of $150.0 for the issuance of letters
of credit. The DIP Facility is intended to provide the Company with the
cash and liquidity to conduct its operations and pay for merchandise
shipments at normal levels through the emergence date.
At the Company's option, the Company may borrow under the DIP Facility
at the Reference Rate (as defined in the DIP Facility) plus .25% or at
the Eurodollar Rate (as defined in the DIP Facility) plus 1.5%. The
current borrowing rate is 8.5%. The maximum borrowing, up to $200.0, is
limited to 50% of the value of eligible inventory (as defined in the DIP
Facility) plus 95% of the amount of cash deposited with the Agent. The
Company is required to pay a commitment fee of .375% per annum on the
unused portion of the DIP Facility. The DIP Facility contains
restrictive covenants including, among other things, a limitation on
store closings of 1,100 (as amended), limitations on the incurrence of
additional liens and indebtedness, limitations on capital expenditures
and the sale of assets, the maintenance of minimum operating earnings
(EBITDA) and inventory levels, and a prohibition on paying dividends.
At May 3, 1997 the Company was in compliance with the DIP Facility
covenants.
The lenders under the DIP Facility have a "super-priority"
administrative expense claim against the estate of the Company. The DIP
Facility expires on the earlier of November 9, 1997, or the effective
date of a plan of reorganization that is confirmed by the Bankruptcy
Court.
As of May 3, 1997 no significant borrowings were outstanding under the
DIP Facility. Outstanding letters of credit were $86.7 and available
borrowings under the DIP Facility were $51.9.
5. Restructuring and reorganization expenses were as follows:
<TABLE>
<CAPTION>
13 Weeks Ended
May 3, 1997 May 4, 1996
<S> <C> <C>
Legal and consulting fees $ 4.7 $ 2.8
Estimated costs of store closings 2.4 8.7
Estimated loss on sale of subsidiaries - 0.9
Payroll and related expenses 2.1 -
Interest income (2.2) (1.7)
Other 1.1 0.9
Restructuring and reorganization
expenses $ 8.1 $ 11.6
</TABLE>
A $1.5 charge for store closings during first quarter 1997 represents
reserves for anticipated closings prior to emergence, and is included in
the $2.4 above. In first quarter 1996, the Company announced plans to
close its Zeidler & Zeidler division. Accordingly, store closing
provisions of $8.7 were recognized during first quarter 1996.
6.Net income per common share is based on the weighted average common
shares outstanding during the period. Shares issuable under the
Company's stock option plans would have no material dilutive effect on
earnings per common share.
7.Common stock shares authorized total 100,000,000; at May 3, 1997,
27,554,232 shares were issued of which 5,352,454 shares were being held
in the Company's treasury and 22,201,778 shares were outstanding.
8.Investments are stated at cost that approximates market and consist of
U. S. government debt securities having maturities ranging from May,
1997 to July, 1997.
The Company considers those investments with maturities of three months
or less to be cash equivalents for condensed consolidated statements of
cash flows.
9. Property and equipment, net is composed of the following:
<TABLE>
<CAPTION>
May 3, Feb.1, May 4,
1997 1997 1996
<S> <C> <C> <C>
Cost $346.9 $346.1 $414.5
Accumulated depreciation and
amortization (202.1) (200.1) (216.1)
Net book value $144.8 $146.0 $198.4
10. Intangible assets, net is
composed of the following:
Cost $ - $ - $ 69.5
Accumulated amortization - - (21.5)
Net book value $ - $ - $ 48.0
</TABLE>
During fourth quarter 1996, the remaining net book value of intangibles
of $42.4 was written off in accordance with Statement of Financial
Accounting Standards 121, "Accounting for Long-Lived Assets and for Long-
Lived Assets to be Disposed Of."
11. The effective tax rate of 6.9% of pretax loss for the 13 weeks ended
May 3, 1997, differs from the Company's customary relationship between
the income tax provision and pretax accounting loss. Due to the
uncertainty of the Company producing future income which will be
available to absorb net operating loss carryforwards, no tax benefit
relative to current operating results has been recorded. In addition,
the Company has concluded that it is likely it will not be able to
realize its deferred tax assets. The provision of $1.1 on the 1997
condensed consolidated statements of operations generally relates to
operations in Puerto Rico, Canada, Taiwan, Hong Kong and the
Philippines.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Net sales for first quarter 1997 were $224.0 million, a decrease of $34.1
million from first quarter 1996. The decrease reflects a 16.7% decrease in
the average number of stores in operation between the first quarter of 1996
and first quarter of 1997. Same-store sales declined 1.9%. Wild Pair and
Repp. Ltd. posted same-store sales increases of 6.1% and 1.1%,
respectively. All other chains reported same-store sales decreases from the
prior year.
Consistent with the retail industry, the Company experiences a significant
increase in sales during the Christmas selling season (Thanksgiving through
Christmas). This selling season generally accounts for approximately 15% of
annual sales.
Cost of goods sold, including occupancy and buying expenses, was 70.6% of
sales in first quarter 1997 compared to 70.9% in first quarter 1996.
Merchandise costs decreased 13.7% between 1997 and 1996, reflective of the
decrease in sales volume, with costs as a percentage of sales remaining
consistent between the two periods. Occupancy and buying costs decreased
13.0% between years, again with costs as a percentage of sales remaining
consistent.
Merchandise markdowns decreased to 16.2% of sales in first quarter 1997,
compared to 17.2% in the first quarter of 1996. The 5-7-9 chain contributed
significantly to the reduced markdowns by a change in its merchandising
strategy from the prior year, resulting in less clearance inventory
markdowns for 1997. The reduction in markdowns was offset by increased
costs of merchandise and freight, as more branded goods were purchased
during 1997. Occupancy and buying costs decreased due to the closing of
numerous under-performing stores during 1996, coupled with reduced store
occupancy costs as a result of negotiations with landlords. The reduced
occupancy costs were offset by increases in merchandising and buying
payroll and foreign buying office expenses.
Store operating and administrative expenses as a percentage of sales
increased to 27.9% of sales in 1997 compared to 26.7% in 1996. Store
expenses decreased $6.3 million, remaining consistent as a percentage of
sales during the two periods. The decrease in expenses relates primarily to
the closing of under-performing stores. Additional expenses for first
quarter 1997 reflected minimum wage increases for all chains and new
incentive and inventory shrinkage bonus programs.
Administrative expenses remained constant in total between first quarter
1997 and first quarter 1996, increasing as a percentage of sales to 7.7%
of sales in 1997 compared to 6.7% in 1996.
Depreciation and amortization expense decreased $2.8 million or 26.9%
between 1997 and 1996 due to the impairment of long-lived assets recognized
in fourth quarter of 1996 in accordance with Statement of Financial
Accounting Standard 121, "Accounting for Long-Lived Assets and for Long-
Lived Assets to be Disposed of" (SFAS 121), and the closing of
approximately 300 stores between first quarter of 1996 and first quarter of
1997.
Restructuring and reorganization expenses of $8.1 million in first quarter
1997 consisted of $2.4 for early lease termination costs and write-offs of
fixtures and equipment and discontinued operations, $4.7 million for legal
and consulting fees, $2.1 for severance payroll and related fringe
benefits, and $1.1 of other bankruptcy related expenses, reduced by $2.2 of
interest income.
FINANCIAL CONDITION
Cash and investments were $4.6 million higher at the end of first quarter
1997 compared with first quarter 1996. Overall cash and investments
decreased by $34.7 million since the end of fiscal 1996. The Company used
cash to fund operations and working capital needs during the first quarter
of 1997. Cash flow from operations decreased $56.3 million during the first
quarter of 1997 compared to 1996. The decrease was primarily due to the
receipt of an income tax refund of $37.9 million in the first quarter of
1996. The decrease in investments resulted from the Company's decision to
focus investments in securities with less than 90 day maturities, which
also caused the increase in cash from investing activities. Decreases in
operating cash flows were offset by a slight reduction in the net loss for
first quarter 1997 and reduced cash payments for reorganization expenses.
Merchandise inventories decreased by $45.6 million from first quarter 1996
to first quarter 1997 due to the numerous store closings and tighter
inventory controls.
Capital expenditures increased by $3.8 million in first quarter 1997
compared to 1996, primarily due to extensive remodeling projects and store
moves being performed in 1997. Fixed assets, net decreased $53.5 million or
27.0% between 1997 and 1996 due to the asset impairment loss recognized
with SFAS 121 and the reduction of approximately 300 stores.
Postretirement benefits were previously included in liabilities subject to
settlement under reorganization proceedings for first quarter 1996 and at
the end of fiscal year 1996.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 1 of the Notes to Condensed Consolidated Financial
Statements.
Items 2, 3, 4 and 5 of Part II are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Bylaws of the Company, as amended April 23, 1996, were filed as an
Exhibit to the Company's Annual Report on Form 10-K for the year ended
February 3, 1996 and are incorporated herein by reference.
(b) The Company's Certificate of Incorporation, as amended September 8,
1995, was filed as an Exhibit to the Company's quarterly report on Form
10-Q for the quarter ended July 29, 1995 and is incorporated herein by
reference.
(c) Exhibit 11, computation of per share earnings, is on page 13 of this
Form 10-Q.
(d) Exhibit 27, Financial Data Schedule, is on page 14 of this Form 10-Q.
(e) There were no reports on Form 8-K filed during the quarter ended May
3, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EDISON BROTHERS STORES, INC.
DATE: June 16, 1997
By/s/David B. Cooper, Jr.
Executive Vice President and
Chief Financial Officer
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
<CAPTION>
13 Weeks Ended
May 3, May 4,
1997 1996
(In thousands, except per share data)
<S> <C> <C>
Loss from continuing operations $(17,028) $(17,674)
Preferred stock dividends - -
Net Loss applicable to common stock $(17,028) $(17,674)
SIMPLE AND PRIMARY
Weighted average shares outstanding 22,202 22,135
Net effect of dilutive stock options -
based on the treasury method - -
TOTAL 22,202 22,135
Per common share amounts: Simple
Net Loss applicable to common stock $ (.77) $ ( .80)
Per common share amounts: Primary
Net Loss applicable to common stock $ (.77) $ ( .80)
FULLY DILUTED
Weighted average shares outstanding 22,202 22,135
Net effect of dilutive stock options -
based on the treasury method
TOTAL 22,202 22,135
Per common share amounts: Fully Diluted
Net Loss applicable to common stock $ (.77) $ (.80)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet as of May 3, 1997, and the condensed
consoldiated statement of operations for the 13 weeks ended May 3, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-03-1997
<CASH> 159,300
<SECURITIES> 10,100
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 206,500
<CURRENT-ASSETS> 397,100
<PP&E> 346,900
<DEPRECIATION> 202,100
<TOTAL-ASSETS> 603,500
<CURRENT-LIABILITIES> 99,000
<BONDS> 0
0
0
<COMMON> 22,200
<OTHER-SE> (41,300)
<TOTAL-LIABILITY-AND-EQUITY> 603,500
<SALES> 224,000
<TOTAL-REVENUES> 224,000
<CGS> 158,200
<TOTAL-COSTS> 70,100
<OTHER-EXPENSES> 10,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 900
<INCOME-PRETAX> (15,900)
<INCOME-TAX> 1,100
<INCOME-CONTINUING> (17,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,000)
<EPS-PRIMARY> (.77)
<EPS-DILUTED> (.77)
</TABLE>
