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 August 31, 1997 or
-----------------------------------------
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 #1-8484 .
---------------------------------------------
Heilig-Meyers Company .
- --------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-0558861
- --------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12560 West Creek Parkway, Richmond, Virginia 23238 .
- --------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(804) 784-7300 .
- --------------------------------------------------------------------
(Registrant's telephone number, including area code)
2235 Staples Mill Road, Richmond, Virginia 23230 .
- --------------------------------------------------------------------
(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 October 1, 1997.
57,049,096 shares of Common Stock, $2.00 par value.
<PAGE>
HEILIG-MEYERS COMPANY
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings for
Three and Six Months Ended August 31, 1997
and August 31, 1996 (Unaudited) 3
Consolidated Balance Sheets as of August 31, 1997
(Unaudited), and February 28, 1997 (Audited) 4
Consolidated Statements of Cash Flows for
Six Months Ended August 31, 1997 and
August 31, 1996 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
---------- ----------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Sales $515,162 $286,989 $1,004,202 $587,680
Other income 75,050 56,534 152,335 113,757
-------- -------- ---------- --------
Total revenues 590,212 343,523 1,156,537 701,437
-------- -------- ---------- --------
Costs and Expenses:
Costs of sales 343,961 191,205 663,943 384,920
Selling, general and
administrative 193,815 111,179 379,802 226,637
Interest 16,101 10,974 31,529 21,565
Provision for doubtful
accounts 21,933 18,080 44,861 37,023
-------- -------- ---------- --------
Total costs
and expenses 575,810 331,438 1,120,135 670,145
-------- -------- ---------- --------
Earnings before provision for
income taxes 14,402 12,085 36,402 31,292
Provision for income taxes 5,123 4,338 13,362 11,175
-------- -------- ---------- --------
Net earnings $ 9,279 $ 7,747 $ 23,040 $ 20,117
======== ======== ========== ========
Net earnings per share of common stock:
Primary and fully diluted $ 0.16 $ 0.16 $ 0.41 $ 0.41
======== ======== ========== ========
Cash dividends per share of
common stock $ 0.07 $ 0.07 $ 0.14 $ 0.14
======== ======== ========== ========
See notes to consolidated financial statements.
3
<PAGE>
HEILIG-MEYERS COMPANY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except par value data)
August 31, February 28,
1997 1997
---- ----
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $ 16,400 $ 14,959
Accounts receivable, net 644,996 596,959
Inventories 464,604 433,277
Other current assets 103,254 88,862
---------- ----------
Total current assets 1,229,254 1,134,057
Property and equipment, net 420,448 366,749
Other assets 53,940 42,262
Excess costs over net assets acquired, net 354,511 294,090
---------- ----------
$2,058,153 $1,837,158
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 193,805 $ 156,000
Long-term debt due within
one year 2,204 100,413
Accounts payable 197,102 160,857
Accrued expenses 180,501 166,650
---------- ----------
Total current liabilities 573,612 583,920
---------- ----------
Long-term debt 735,607 561,489
Deferred income taxes 48,756 49,128
Stockholders' equity:
Preferred stock, $10 par value --- ---
Common stock, $2 par value (250,000
shares authorized; shares issued
56,785 and 54,414, respectively) 113,569 108,828
Capital in excess of par value 234,678 195,352
Unrealized gain on investments 9,367 10,797
Retained earnings 342,564 327,644
---------- ----------
Total stockholders' equity 700,178 642,621
---------- ----------
$2,058,153 $1,837,158
========== ==========
See notes to consolidated financial statements.
4
<PAGE>
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six Months Ended
August 31,
--------------------
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $ 23,040 $ 20,117
Adjustments to reconcile net
earnings to net cash used by
operating activities:
Depreciation and amortization 26,804 15,603
Provision for doubtful accounts 44,861 37,023
Other, net 79 (117)
Change in operating assets and
liabilities net of the effects
of acquisitions:
Accounts receivable (90,687) (76,948)
Other receivables (10,801) (2,404)
Inventories (24,217) (9,199)
Prepaid expenses (5,489) (2,426)
Accounts payable 13,826 (5,717)
Accrued expenses 2,205 12,918
-------- --------
Net cash used by
operating activities (20,379) (11,150)
-------- --------
Cash flows from investing activities:
Acquisitions, net of cash acquired (8,386) (8,506)
Additions to property and equipment (68,123) (37,676)
Disposals of property and equipment 3,208 508
Miscellaneous investments (10,953) (7,164)
-------- ------
Net cash used by investing
activities (84,254) (52,838)
-------- -------
Cash flows from financing activities:
Net increase (decrease) in notes payable 37,805 (115,000)
Proceeds from long-term debt 174,767 199,612
Payments of long-term debt (99,545) (16,437)
Issuance of common stock 1,167 681
Dividends paid (8,120) (6,805)
-------- --------
Net cash provided
by financing activities 106,074 62,051
-------- --------
Net increase (decrease) in cash 1,441 (1,937)
Cash at beginning of period 14,959 16,017
-------- --------
Cash at end of period $ 16,400 $ 14,080
======== ========
See notes to consolidated financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. The accompanying consolidated financial statements of Heilig- Meyers
Company (the Company) have not been audited by independent accountants,
except for the balance sheet at February 28, 1997. These financial
statements have been prepared in accordance with regulations of the
Securities and Exchange Commission in regard to quarterly (interim)
reporting. In the opinion of management, the financial information
presented reflects all adjustments, comprised only of normal recurring
accruals, which are necessary for a fair presentation of the results for
the interim periods. Significant accounting policies and accounting
principles have been consistently applied in both the interim and annual
consolidated financial statements. Certain notes and the related
information have been condensed or omitted from the interim financial
statements presented in this Quarterly Report on Form 10-Q. Therefore,
these financial statements should be read in conjunction with the Company's
1997 Annual Report on Form 10-K. The results for the second quarter of
fiscal year 1998 are not necessarily indicative of future financial
results.
B. On June 18, 1997, the Board of Directors declared a cash dividend of $0.07
per share which was paid on August 23, 1997, to stockholders of record on
July 16, 1997.
C. Accounts receivable are shown net of the allowance for doubtful accounts
and unearned finance income. The allowance for doubtful accounts was
$37,985,000 and $41,120,000 and unearned finance income was $46,502,000 and
$44,356,000 at August 31, 1997, and February 28, 1997, respectively.
D. The Company made income tax payments of $4,832,500 and $1,231,000 during
the three months ended August 31, 1997, and August 31, 1996, respectively.
E. The Company made interest payments of $22,885,000 and $10,974,000 during
the three months ended August 31, 1997, and August 31, 1996, respectively.
F. On July 1, 1997, the Company acquired all of the outstanding capital stock
of Mattress Discounters Corporation and a related corporation ("Mattress
Discounters"). The Company issued 2,269,839 shares of common stock and
placed 264,550 shares of common stock in escrow to be released to the
former shareholders of Mattress Discounters if the acquired stores meet
certain earnings targets in the twelve months following the acquisition.
G. MacSaver Financial Services, Inc. is the Company's wholly-owned subsidiary
whose principal business activity is to obtain financing for the operations
of Heilig-Meyers and its other subsidiaries, and, in connection therewith,
MacSaver generally acquires and holds the aggregate principal amount of
installment credit accounts generated by the Company's operating
subsidiaries. The payment of principal and interest associated with this
debt is guaranteed by the Parent Company. The Company has not presented
separate financial statements and other disclosures concerning MacSaver
because management has determined that such information is not material to
the holders of the MacSaver debt securities guaranteed by the Company.
However, as required by the 1934 Act, the summarized financial information
concerning MacSaver Financial Services is as follows:
6
<PAGE>
MacSaver Financial Services
Summarized Statements of Earnings
(Amounts in thousands)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
---------- ----------
1997 1996 1997 1996
---- ---- ---- ----
Net revenues $63,722 $38,105 $122,965 $74,721
Operating expenses 54,283 25,405 108,333 49,815
------- ------- -------- -------
Earnings before taxes 9,439 12,700 14,632 24,906
------- ------- -------- -------
Net earnings 6,136 8,255 9,511 16,189
======= ======= ======== =======
MacSaver Financial Services
Summarized Balance Sheets
(Amounts in thousands)
August 31, February 28,
1997 1997
--------- -----------
(Unaudited) (Audited)
Current assets $ 34,032 $ 36,401
Accounts receivable, net 550,149 454,774
Due to affiliates 530,067 504,763
---------- ----------
Total Assets $1,114,248 $ 995,938
========== ==========
Current liabilities $ 24,917 $ 128,921
Long-term debt 720,000 545,000
Notes payable 193,800 156,000
Stockholder's equity 175,531 166,017
---------- ----------
Total Liabilities and Equity $1,114,248 $ 995,938
========== ==========
H. In February 1997, the Financial Accounting Standards Board (FASB)issued
Statement of Financial Accounting Standards (SFAS) No. 128 on "Earnings
per Share". The Statement changes the computation, presentation and
disclosure requirements for earnings per share in financial statements
for periods ending after December 15, 1997. Basic earnings per share
will not include stock options as common stock equivalents and may,
therefore, be higher than previously reported primary earnings per
share. Diluted earnings per share will equal previously reported
primary earnings per share under the Company's current capital
structure. Pro forma disclosure of basic EPS and diluted EPS for the
current reporting period and comparable period in the prior year is as
follows (in thousands except per share data):
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
1997 1996 1997 1996
------------------ ----------------
Average shares outstanding
(basic earnings per share) 56,003 48,616 55,208 48,571
Stock option equivalents 914 1,059 874 718
Average shares and equivalents 56,917 49,675 56,082 49,289
(diluted earnings per share)
Basic EPS $0.17 $0.16 $0.42 $0.41
Diluted EPS $0.16 $0.16 $0.41 $0.41
7
<PAGE>
I. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which will be effective for
the Company's fiscal year ended February 28, 1999. SFAS No. 131
redefines how operating segments are determined and requires disclosure
of certain financial and descriptive information about a company's
operating segments. Management has not yet completed its analysis of
which operating segments it will report on.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements included in Item 1 of this document, and with the Company's audited
consolidated financial statements and notes thereto for the fiscal year ended
February 28, 1997.
On July 1, 1997, the Company acquired Mattress Discounters, a privately
held bedding retailer and manufacturer based in Upper Marlboro, Maryland. The
acquisition was accounted for as a purchase and was accomplished through the
issuance of 2,269,839 shares of common stock. In addition, 264,550 shares of
common stock were placed in escrow to be paid to the former shareholders of
Mattress Discounters if the acquired stores meet certain earnings targets in the
twelve months subsequent to the acquisition.
RESULTS OF OPERATIONS
Total revenues for the quarter rose 71.8% to $590.2 million from $343.5
million in the prior year. Approximately $179.2 million of this increase can be
attributed to the recently acquired Rhodes, The RoomStore and Mattress
Discounters operations. Excluding Rhodes, The RoomStore and Mattress
Discounters, total revenues for the quarter increased 19.7% from the prior year.
Net earnings increased 19.8% to $9.3 million (or $0.16 per share) from $7.7
million (or $0.16 per share) in the prior year. The earnings per share remained
flat between current and prior year quarters as a result of the shares issued in
the acquisition of Rhodes, The RoomStore and Mattress Discounters. Net earnings
for the six months ended August 31, 1997 increased 14.5% to $23.0 million (or
$0.41 per share) from $20.1 million (or $0.41 per share) in the prior year
period.
Sales for the second quarter of fiscal 1998 increased 79.5% to $515.2
million from $287.0 million in the second quarter of the prior year. For the six
month period ended August 31, 1997, sales increased 70.9% to $1,004.2 million
from $587.7 million. Approximately $172.2 million and $302.8 million of this
increase resulted from the recently acquired Rhodes, The RoomStore and Mattress
Discounters operations for the second quarter and the six months ended August
31, 1997, respectively. Excluding Rhodes, The RoomStore and Mattress
Discounters, total sales for the three and six months ended August 31, 1997
increased 19.5% and 19.3%, respectively, from the prior year. The remaining
increase in sales for both periods was primarily attributable to an increase in
Heilig-Meyers operating units from August 31, 1996 to August 31, 1997, and a
comparable store sales increase of 3.0% and 3.3% for the three and six months
ended August 31, 1997, respectively.
Through recent acquisitions, the Company now has five retail formats
targeting a wide range of markets. The Company's Heilig-Meyers stores provided
61.4% of total sales for the second quarter of fiscal 1998, or $316.5 million,
representing an 19.8% increase in sales over the same period of the prior year.
The Heilig-Meyers stores provided 64.3% of total sales for the six months ended
August 31, 1997, or $646.4 million, representing an 19.5% increase in sales over
the same period of the prior year. The Company's 32 Puerto Rican stores, which
operate under the "Berrios" name, contributed $26.5 million and $55.0 million,
or 5.1% and 5.5% of total sales, for the three and six months ended August 31,
1997, respectively. Sales also include the results from the recently acquired
Rhodes, The RoomStore and Mattress Discounters units. The 99 Rhodes stores
contributed $111.1 million and $222.7 million, or 21.6% and 22.2% of total
sales, for the three and six months ended August 31, 1997, respectively. The 18
RoomStore units contributed $25.0 million and $44.1 million, or 4.9% and 4.4% of
9
<PAGE>
total sales, for the three and six months ended August 31, 1997, respectively.
The 171 Mattress Discounters stores contributed $36.1 million, or 7.0% and 3.6%
of sales, for the three and six months ended August 31, 1997, respectively.
Price changes had an immaterial impact on the overall sales increase for the
quarter. Management believes the consumer demand for home furnishings remained
relatively unchanged from the prior year quarter and that demand is impacted by
the high level of consumer debt. As a result, the Company is anticipating modest
same store sales increases in the upcoming quarters.
As a percentage of sales, other income decreased during the second quarter
to 14.6% from 19.7% in the prior year quarter. For the six months ended August
31, 1997, other income decreased as a percentage of sales to 15.2% from 19.4% in
the prior year. This decrease is primarily the result of the effect of the
Rhodes, The RoomStore and Mattress Discounters operations, as these stores'
credit programs are maintained by a third party and, unlike the Heilig-Meyers
in-house program, do not produce finance income for the Company. Excluding the
results of Rhodes, The RoomStore and Mattress Discounters, other income for the
three and six months ended August 31, 1997 represented 19.8% and 19.2% of sales,
respectively.
The Company offers third party private label credit card programs to
customers of the Rhodes and The RoomStore locations and plans to continue its
program of periodically securitizing a portion of the installment accounts
receivable portfolio of its other stores. Proceeds from securitized accounts
receivable are generally used by the Company to lower debt levels. Interest
costs related to securitized receivables, which are based on the dollar value of
accounts receivable sold to third parties, are netted against finance income.
Costs and Expenses
Costs of sales increased during the quarter to 66.8% of sales from
66.6% in the prior year quarter. This increase was primarily the result of the
liquidation of merchandise associated with recent acquisitions. For the six
month period ending August 31, 1997, costs of sales were 66.1% of sales as
compared to 65.5% in the prior year. This increase resulted from higher
distribution costs and lower raw selling margins as a percentage of sales. Raw
selling margins, particularly in the Heilig-Meyers stores, were impacted by a
shift in the sales mix to lower margin goods during the first quarter.
Selling, general and administrative expenses decreased as a percentage of
sales to 37.6% from 38.7% in the prior year quarter. For the six month period
ended August 31, 1997, selling, general and administrative expenses were 37.8%
compared to 38.6% in the prior year. The decrease between years was the result
of leverage gained on the sales at the Rhodes, The RoomStore and Mattress
Discounters units. Compared to the prior year quarter, the addition of these
units has resulted in a lower administrative cost structure generally due to the
use of third-party credit providers. However, the decrease caused by the Rhodes,
The RoomStore and Mattress Discounters leverage was somewhat offset by the
Heilig-Meyers stores' continued commitment of additional store-level resources
to collection efforts which resulted in higher salaries as a percentage of sales
than the prior year. Advertising increased slightly as a percentage of sales due
to increased circular distribution and television advertising.
Interest expense decreased to 3.1% of sales in the second quarter of
fiscal 1998 from 3.8% of sales in the second quarter of the prior year. The
decrease is mainly due to leverage on the sales of Rhodes, The RoomStore and
Mattress Discounters, which were purchased with common stock. For the quarter,
weighted average long-term debt increased to $608.1 million from $401.9 million
10
<PAGE>
in the prior year second quarter. The Company issued $175 million in public debt
during the quarter. The Company also issued approximately $300 million in public
debt in the last half of fiscal 1997 as part of the financing strategy discussed
below. Weighted average long-term interest rates remained consistent at 7.9%
between periods. Weighted average short-term debt increased to $248.5 million
from $207.4 million in the prior year second quarter. Weighted average
short-term interest rates increased to 6.1% from 5.9% in the prior year. For the
six months ended August 31, 1997 interest expense decreased to 3.1% of sales
from 3.7% from the prior year period. The Company has focused on structuring its
debt portfolio to contain a higher percentage of long-term fixed rate debt. This
strategy is designed to minimize the Company's exposure to significant changes
in short-term interest rates.
The provision for doubtful accounts decreased for the second quarter, as a
percentage of sales, to 4.3% from 6.3% in the prior year quarter. For the six
months ended August 31, 1997, the provision decreased to 4.5% from 6.3% in the
prior year. The decrease in the current fiscal year was the result of the
operations of Rhodes, The RoomStore and Mattress Discounters as these units
primarily use third-party credit providers and, accordingly, do not record
significant provisions for doubtful accounts. Excluding the effect of Rhodes,
The RoomStore and Mattress Discounters, the provision was 6.4% of sales for the
second quarter and for the six months ended August 31, 1997.
The effective income tax rate for the second quarter of fiscal 1998 was
35.6% compared to 35.9% for the second quarter of fiscal 1997. For the six
months ended August 31, 1997, the income tax rate was 36.7% compared to 35.7% in
the prior year period. This increase for the six months is due to the higher
effective tax rates of the recently acquired operating subsidiaries resulting
from the carryover tax attributes of acquired assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company increased its cash position $1.4 million to $16.4 million at
August 31, 1997, from $15.0 million at February 28, 1997, compared to a decrease
of $1.9 million in the comparable period a year ago.
Net cash outflow from operating activities was $20.4 million, compared to
a net cash outflow of $11.2 million in the comparable period of the prior year.
As the Company continued to expand its store base, cash flows used for investing
activities exceeded cash provided by operating activities for the first six
months of fiscal years 1998 and 1997. The Company traditionally produces minimal
or negative cash flow from operating activities because it extends in-house
credit in its Heilig-Meyers and Berrios stores. During the six months ended
August 31, 1997, inventory levels increased at a higher rate than the prior year
period primarily due to the stocking of line-up inventory in the recently
acquired stores in order to support the merchandising plan for the upcoming fall
selling season. There was a corresponding increase in the Company's accounts
payable as a result of the higher levels of inventory purchases. Continued
extension of credit and related increases in customer accounts receivable will
likely produce minimal or negative cash flow from operations in the upcoming
fiscal 1998 quarters. However, the Company periodically sells accounts
receivable as a source of liquidity, providing additional positive cash flows
from operating activities.
Investing activities produced negative cash flows of $84.3 million during
the six months ended August 31, 1997 compared to negative cash flows of $52.8
million in the prior year period. The increase in negative cash flows from
11
<PAGE>
investing activities is primarily due to an increase in additions to property
and equipment during the period. Cash used for additions to property and
equipment resulted from the opening of 33 new store locations (excluding
acquisitions) and related support facilities as well as the remodeling and
improvement of existing and acquired locations. The Company plans to open
approximately 40 to 50 additional new stores during the remainder of fiscal 1998
as well as continue its existing store remodeling program. Capital expenditures
will continue to be financed by cash flows from operations and external sources
of funds.
Financing activities produced positive cash flows of $106.1 million during
the six months ended August 31, 1997 compared to a $62.1 million positive cash
flow in the prior year period. The positive cash flow from financing activities
in both the current and prior year quarters was due to an increase in long-term
debt. On June 24, 1997, the Company and a wholly-owned subsidiary filed a joint
Registration Statement on Form S-3 with the Securities and Exchange Commission
relating to up to $400.0 million aggregate principal amount of securities. As of
August 31, 1997, long-term notes payable with an aggregate principal amount of
$175.0 million have been issued to the public and are outstanding under this
facility. The Company has access to a variety of external capital sources to
finance asset growth and plans to continue to finance accounts receivable,
inventories and future expansion from operating cash flows supplemented by other
sources of capital. As of August 31, 1997, the Company had a $400.0 million
revolving credit facility in place which expires in July 2000. This facility
includes fourteen banks and had $170.0 million outstanding and $230.0 million
unused as of August 31, 1997. The Company also had additional lines of credit
with banks totaling $60.0 million of which $23.8 million was unused as of August
31, 1997.
Total debt as a percentage of debt and equity was 57.1% at August 31,
1997, compared to 56.0% at February 28, 1997. The current ratio was 2.1 at
August 31, 1997, compared to 1.9 at February 28, 1997. The increase in the
current ratio from February 28, 1997 to August 31, 1997 is primarily attributed
to the maturity of $100.0 million in long-term debt in the current quarter. The
increase in total debt as a percentage of debt and equity from February 28, 1997
to August 31, 1997 is primarily attributed to the issuance of $175 million of
long-term notes payable during the quarter, which was somewhat offset by the
payment on the maturity of long-term notes discussed above.
FORWARD-LOOKING STATEMENTS
Certain statements included above are not based on historical facts,
but are forward-looking statements. These statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. These statements
reflect the Company's reasonable judgments with respect to future events and are
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the customer's willingness, need
and financial ability to purchase home furnishings and related items, the
Company's ability to extend credit to its customers, the costs and effectiveness
of promotional activities, the Company's ability to realize cost savings and
other synergies from recent acquisitions as well as the Company's access to, and
cost of, capital. Other factors such as changes in tax laws, recessionary or
expansive trends in the Company's markets, inflation rates and regulations and
laws which affect the Company's ability to do business in its markets may also
impact the outcome of forward-looking statements.
12
<PAGE>
PART II
Item 1. Legal Proceedings
The Company previously reported involvement in certain cases regarding
non-filing fees charged by the Company on certain credit transactions in the
Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1997
(the "Company's 1997 Form 10-K") and the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1997. These cases included Kirby et al v.
Heilig-Meyers Furniture Company and Heilig-Meyers Company and Richardson v.
Heilig-Meyers Company and Heilig-Meyers Furniture Company which, as previously
reported in the Company's 1997 Form 10-K, were transferred by the Panel on
Multi-District Litigation (the "MDL Panel") to the United States District Court
for the Middle District of Alabama. The Company's motion to return these cases
to the courts in which these cases were originally filed was denied; however,
the court dismissed the Richardson case without prejudice in September 1997. In
addition, the plaintiffs in the Kirby case, who originally requested
certification of a class in all states except Alabama and Georgia and
subsequently moved to substitute a Mississippi class, have now requested
certification of a class for all states except Alabama and Florida. Among the
other cases regarding non-filing fees reported in the Company's 1997 Form 10-K
were Faulkner v. Heilig-Meyers Company (Northern District of Illinois) and Via
v. Heilig-Meyers Company and Heilig-Meyers Furniture Company (Western District
of Virginia). The MDL Panel has pending a motion to transfer the Faulkner case
to the United States District Court for the Middle District of Alabama. The
plaintiffs in the Via case have filed a motion to withdraw the case without
prejudice.
13
<PAGE>
Item 2. Changes in Securities.
(c) On July 1, 1997, the Company acquired all the outstanding capital stock of
Mattress Discounters Corporation and a related corporation ("Mattress
Discounters") in merger transactions in which the shareholders of Mattress
Discounters received 2,269,839 shares of the Company's Common Stock and an
additional 264,550 shares of the Company's Common Stock were placed in escrow.
The sale of the foregoing shares were exempt from registration under the
Securities Act of 1933 (the "Act") as transactions not involving a public
offering, based on the fact that the shares were sold to accredited investors
under Rule 506 of Regulation D under the Act.
14
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of the Company's shareholders was held June
18, 1997.
(c)(i) The shareholders approved the ratification of the selection of
Deloitte & Touche LLP as accountants and auditors for the
Company for the current fiscal year. The ratification was approved by
the following vote:
FOR - 47,505,229
AGAINST - 94,503
ABSTAIN - 64,697
(c)(ii) The shareholders of the Company elected a board of thirteen
directors for one-year terms. The elections were approved by
the following vote:
Directors: For Withheld
William C DeRusha 46,998,566 665,863
Troy A. Peery, Jr. 47,001,968 662,461
Alexander Alexander 47,032,362 632,067
Robert L. Burrus, Jr. 46,714,679 949,750
Beverley E. Dalton 47,048,158 616,271
Charles A. Davis 46,680,360 984,069
Benjamin F. Edwards III 46,883,564 780,865
Alan G. Fleischer 47,001,423 663,006
Nathaniel Krumbein 46,881,216 783,213
Hyman Meyers 46,874,524 789,905
S. Sidney Meyers 46,876,697 787,732
Lawrence N. Smith 47,048,918 615,511
Eugene P. Trani 47,029,876 634,553
15
<PAGE>
Item 5. Other Information.
(i). On August 27, 1997 the Company announced that the Board of
Directors appointed former Virginia Governor Douglas Wilder as an
additional director.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See INDEX TO EXHIBITS
(b) There were three Current Reports on Form 8-K filed during the
quarterly period ended August 31, 1997. On July 17, 1997,
Registrant filed a Form 8-K in which it reported the acquisition
of all outstanding capital stock of Mattress Discounters
Corporation and a related corporation ("Mattress Discounters").
On August 8, 1997, Registrant filed a Form 8-K in which it
reported Heilig-Meyers Company ("Heilig-Meyers") and MacSaver
Financial Services, Inc. ("MacSaver") entered into a Pricing
Agreement with Goldman, Sachs & Co., on behalf of itself and
NationsBanc Capital Markets, Inc. and Salomon Brothers Inc.,
which incorporated by reference a related Underwriting Agreement,
dated July 31, 1997, for the public offering by MacSaver of $175
million aggregate principal amount of 7.60% Notes due August 1,
2007, guaranteed as to payment of principal and interest by
Heilig-Meyers (the "7.60% Notes"). The 7.60% Notes were issued
pursuant to an Indenture dated as of August 1, 1996 among
Heilig-Meyers, MacSaver and First Union National Bank, formerly
known as First Union National Bank of Virginia, as Trustee, and
an Officers' Certificate dated as of August 5, 1997.
On August 13, 1997, Registrant filed a Form 8-K in which it
attached and incorporated by reference the August 6, 1997 press
release issued by the Registrant reporting July sales and other
information.
INDEX TO EXHIBITS
Page
3. Articles of Incorporation
a. Registrant's Amended Bylaws 19
11. Computation of Per Share Earnings 25
27. Financial Data Schedule 26
17
<PAGE>
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.
Heilig-Meyers Company
(Registrant)
Date: October 13, 1997 /s/Roy B. Goodman
---------------- -----------------
Roy B. Goodman
Senior Vice President and
Principal Financial Officer
Date: October 13, 1997 /s/William J. Dieter
---------------- --------------------
William J. Dieter
Senior Vice President,
Accounting and Principal
Accounting Officer
18
EXHIBIT 3.a.
BY-LAWS
OF
HEILIG-MEYERS COMPANY
ARTICLE 1 - OFFICES
A. The principal office of the Corporation shall be at 2235
Staples Mill Road, Richmond, Virginia. The Corporation may also have
offices at such other places, within or without the State of Virginia, as the
Board of Directors may, from time to time, appoint, or the business of the
Corporation may require.
B. The registered office of the Corporation shall be its initial
registered office as shown in the Articles of Incorporation or at such other
place in Virginia as the Board of Directors shall, from time to time, appoint,
and may, but need not, be at the principal office of the Corporation.
ARTICLE II - STOCK AND OTHER SECURITIES
A. Certificates of Stock shall be in such form as is required by law
and approved by the Board of Directors. Each stockholder shall be entitled to a
certificate signed by either the Chairman of the Board and Chief Executive
Officer or a Vice President, and by either the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary or any other officer
authorized by resolution of the Board of Directors. Each certificate may (but
need not) be sealed with the seal of the Corporation or a facsimile thereof.
B. The signatures of the officers upon a stock certificate,
bond, note or debenture issued by the Corporation may be facsimiles if such
stock certificate is countersigned by a transfer agent or registered by a
registrar, other than the Corporation itself or an employees of the Corporation,
or if such bond, note or debenture is countersigned or otherwise authenticated
by the signature of a trustee. If any officer who has signed, or whose facsimile
signature has been placed upon, a stock certificate, bond, note or debenture,
shall be ceased to be such officer before such certificate, bond, note or
debenture is issued, or may be issued by the Corporation with the same effect as
if he were such officer at the date of its issue.
C. Only stockholders of record on the stock transfer books of
the Corporation shall be entitled to be treated by the Corporation as the
holders of the stock standing in their respective names, and except to the
extent, if any, required by law, the Corporation shall not be obligated to
recognize any equitable or other claim to, or interest in, any share on the part
of any other person, whether or not it shall have express or other notice
thereof.
D. Transfers of stock shall be made on the stock transfer books
only upon surrender of the certificate therefor, endorsed or accompanied
by a written assignment signed by the holder of record or by his duly authorized
attorney-in-fact. The Board of Directors may, from time to time, make reasonable
regulations governing transfers of stock and other securities. No share shall be
transferred, unless otherwise required by law, if such transfer would violate
the terms of any written agreement to which the Corporation, and either the
transferor or transferee, is a party.
E. In case of the loss, mutilation or destruction of a stock
certificate, bond, note or debenture, a duplicate may be issued upon such terms,
and bearing such legend, if any, as the Board of Directors may lawfully
prescribe.
ARTICLE III - STOCKHOLDERS' MEETING
A. Meetings of the stockholders shall be held at the principal
office of the Corporation, or at such other place, within or without the State
of Virginia, as the Board of Directors may designate from time to time. At least
19
<PAGE>
ten (10) days before each meeting, a complete list of the stockholders entitled
to vote at such meeting, or any adjournment thereof, with the address and number
of shares held by each, shall be prepared, kept on file subject to inspection by
any stockholder during regular business hours, at the principal office of the
Corporation or its registered office or the office of its transfer agent or
registrar.
B. The annual meeting of the stockholders shall be held on the
second Wednesday of July of each year (and if such day is a legal holiday, on
the next business day) or such other date as may be set by the Board of
Directors, for the purpose of electing Directors and transacting such other
business as may properly come before the meeting.
C. Special meetings of the stockholders may be called by the
Chairman of the Board and Chief Executive Officer, the President, the Secretary
or the Board of Directors.
D. Written notice stating the place, day and hour of the
meeting, and, in the case of a special meeting (or required by law or the
Articles of Incorporation or these By-Laws), the purpose or purposes for which
the meeting was called, shall be given to each stockholder entitled to vote at
such meeting. Such notice shall be given either personally or by mail, by or at
the direction of the officer or other person or persons calling the meeting not
more than fifty (50) days nor less than ten (10) days before the date of the
meeting (except that such notice shall be given not less than twenty-five (25)
days before a meeting called to act on a plan of merger of consolidation, or on
proposal to amend the Articles of Incorporation or to reduce stated capital, or
to sell,, lease, exchange, mortgage or pledge for a consideration other than
money, all or substantially all the property or assets of the Corporation, if
not in the usual and regular course of its business and such notice shall be
accompanied by a copy of any proposed amendment or plan of reduction, merger or
consolidation). Notice to a stockholder shall be deemed given when deposited in
the United States mail, with postage prepaid, addressed to the stockholder at
his address as it appears on the stock transfer books of the Corporation.
Any stockholder who attends a meeting shall be deemed to have had
timely and proper notice of the meeting, unless the attends for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
E. Notice of any meeting may be waived, and any action may be taken by
the stockholders without a meeting if a consent in writing, setting forth the
action to be taken, shall be signed by all the stockholders entitled to vote
thereon, in accordance with " 13.1-27 and 13.1-28 of the Virginia Stock
Corporation Act.
F. The stock transfer books may be closed by order of the Board
of Directors for not more than fifty (50) days for the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of the
stockholders or any adjournment thereof (or entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
purpose). In lieu of closing such books, the Board of Directors may fix in
advance, as the record date for any such determination, a date not more than
fifty (50) days before the date on which such meeting is to be held (or such
payment is to be made, or other action requiring such determination is to be
taken). If the books are not thus closed or the record date is not thus fixed,
then the date on which the notice of the meeting was mailed (or on which such
dividend is declared or such other action approved by the Board of Directors)
shall be the record date.
G. The Chairman of the Board and Chief Executive Officer or the
President shall preside as Chairman over the meetings of stockholders. If
neither the Chairman of the Board and Chief Executive Officer nor the President
is present, the meeting shall elect a chairman. The Secretary, or, in his
absence, an Assistant Secretary, shall act as Secretary of such meeting. If no
such officer is present, the chairman shall appoint the Secretary of the
meeting.
H. Two inspectors of election may be appointed by the Board of
Directors before each meeting of the stockholders; and if no such appointment
20
<PAGE>
has been made, or if any inspector thus appointed shall not be present, the
Chairman may, and if requested by stockholders holding in the aggregate at least
one-fifth (1/5) of the stock entitled to vote at the meeting shall, appoint such
an inspector or inspectors to determine the qualifications of voters, the
validity of proxies and the number of shares represented at the meeting, to
supervise voting, and to ascertain the results thereof.
I. A stockholder may vote either in person or by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. No proxy
shall be valid after eleven (11) months from its date unless otherwise provided
in the proxy. A proxy may be revoked at any time before the shares to which it
relates are voted by written notice, which may be in the form of a substitute
proxy to the secretary of the meeting. A proxy apparently executed in the name
of a partnership or other Corporation, or by one of several fiduciaries, shall
be presumed to be valid until challenged, and the burden of proving invalidity
shall rest upon the challenger.
J. The procedure at each meeting of the stockholders shall be
determined by the Chairman of the meeting, and (subject to paragraph H of this
Article III) the vote on all questions before any meeting shall be taken in such
manner as the Chairman prescribes. However, upon the demand of stockholders
holding in the aggregate at least one-fifth (1/5) of the stock entitled to vote
on any questions, such vote shall be by ballot.
K. A quorum at any meeting of stockholders shall be a majority of the
shares entitled to vote, represented in person or by proxy. The affirmative vote
of a majority of such quorum shall be the act of the stockholders, unless a
greater vote is required by the Virginia Stock Corporation Act or the Articles
of Incorporation (except that in elections of directors, those receiving the
greatest number of votes shall be elected even though less than such a
majority). Less than a quorum may, by the vote of a majority of the shares
present and entitled to vote, adjourn the meeting to a fixed time and place,
without further notice; and if a quorum shall then be present in person or by
proxy, any business may be transacted which might have been transacted if a
quorum had been present at the meeting as originally called.
L. All committees of stockholders created at any meeting of the
stockholders shall be appointed by the Chairman of the meeting unless otherwise
directed by the meeting.
ARTICLE IV - BOARD OF DIRECTORS
A. The Board of Directors shall consist of fourteen (14)
persons, none of whom need be residents of Virginia or stockholders of the
Corporation. Nominations for the election of directors may be made by the
Directors or a nominating committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of directors. A stockholder
entitled to vote in the election of directors may nominate one or more persons
for election as a director at an annual or special meeting of stockholders only
if written notice of such stockholder's intent to make such nomination has been
given, either by personal delivery to the Secretary of the Corporation not later
than the close of business on the tenth day following the date on which notice
of such meeting is first mailed to stockholders or by Untied States mail,
postage prepaid, to the Secretary of the Corporation postmarked not later than
the tenth day following the date on which notice of such meeting is first mailed
to stockholders. Each notice required by this section shall set forth: (1) the
name and address of the stockholder who intends to make the nomination; (2) the
name, address, and principal occupation of each proposed nominee; (3) a
representation that the stockholder is 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; and (4) the consent of each proposed nominee to
serve as a director of the Corporation if so elected. The Chairman of the
21
<PAGE>
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
B. Regular meetings of the Board of Directors may be held
without notice at such time and place as the Board of Directors may designate
from time to time (and, in the absence of such designation, at the principal
office of the Corporation). A regular meeting shall be held as soon as
practicable after each annual meeting of the stockholders for the purpose of
electing officers and transacting such other business as may properly come
before the meeting.
C. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board and Chief Executive Officer or by
any director.
D. Notice of the time and place of each special meeting shall be given
to each director either by mail, telegraph, or written communication delivered
to the address of such director as it appears in the records of the Corporation,
at least twenty-four (24) hours before such meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of the Board of Directors need be
specified in the notice or any waiver of notice of such meeting.
A director who attends a meeting shall be deemed to have had
timely and proper notice thereof, unless he attends for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
E. Notice of any meeting may be waived, and any action may be
taken by the Board of Directors (or by any committee thereof) without a meeting
if a consent in writing, setting forth the action taken, shall be signed by all
the directors (or members of the committee, as the case may be), in accordance
with "13.1-41 and 13.1-41.1 of the Virginia Stock Corporation Act.
F. Each director shall be elected to hold office until the next
succeeding annual meeting, and shall hold office until his successor shall have
been elected and qualifies, or until such earlier time as he shall resign, die
or be removed. No decrease in the number of directors by amendment to these
By-Laws shall change the term of any incumbent director.
G. Any director may be removed, with or without cause, by a vote
of the holders of a majority of the number of shares entitled to vote at an
election of directors.
H. Any vacancy in the Board of Directors (including any vacancy
resulting from an increase of not more than thirty percent (30%) of the
number of directors last elected by the shareholders) may be filled by the
affirmative vote of a majority of the remaining directors, even
though less than a quorum, unless filled by the stockholders.
I. A quorum at a meeting of the Board of Directors shall be a
majority of the number of directors fixed by these By-Laws. The act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
J. An Executive Committee consisting of at least two (2) or more
directors may be designated by a resolution adopted by a majority of the number
of directors fixed by these By-Laws. To the extent provided in such resolution,
such Executive Committee shall have and may exercise all of the authority of the
Board of Directors except to approve an amendment to the Articles of
Incorporation or a plan of merger or consolidation. Other committees with
limited authority may be designated by resolution adopted by a majority of the
directors present at a meeting at which a quorum is present.
Regular meetings of any committee may be held without notice
at such time and place as shall be fixed by a majority of the committee. Special
meetings of any committee may be called at the request of the Chairman of the
Board and Chief Executive Officer or any member of the committee. Notice of such
special meetings shall be given by the Chairman of the Board and Chief Executive
Officer or any member of any such committee, and shall be deemed duly given, or
may be waived, or action may be taken without a meeting, as provided in
paragraphs D and E of this Article IV. A majority of any such committee shall
22
<PAGE>
constitute a quorum, and the act of a majority of those present at any meeting
at which a quorum is present shall be the act of the committee, unless otherwise
provided by the Board of Directors.
ARTICLE V - OFFICERS, AGENTS AND EMPLOYEES
A. The officers of the Corporation shall be a Chairman of the
Board and Chief Executive Officer, a President, a Secretary, and a Treasurer,
each of whom shall be elected by the Board of Directors at the regular meeting
of the Board of Directors to be held as soon as practicable after each annual
meeting of the stockholders, and any officer may be elected at any meeting of
the Board of Directors. Any officer may hold more than one office and he may,
but need not be a director, except that the same person may not be Chairman of
the Board and Chief Executive Officer and Secretary, and the Chairman of the
Board and Chief Executive Officer shall be a director. The Board may elect one
or more Vice Presidents and any other officers and assistant officers and may
fill any vacancies. The officers shall have such authority and perform such
duties as generally pertain to their offices and as may lawfully be provided by
these By-Laws or by resolution of the Board of Directors not inconsistent with
these By-Laws.
B. The Chairman of the Board and Chief Executive Officer shall
have general supervision over, responsibility for, and control of the other
officers, agents, and employees of the Corporation and shall preside as Chairman
at meetings of the stockholders and the directors. The Chairman of the Board and
Chief Executive Officer shall also perform such duties and shall also have such
authority as may lawfully be required of or conferred upon him by the Board of
Directors.
C. The President and each Vice President shall perform such duties and
shall have such authority as may be lawfully required of or conferred upon him
by the Chairman of the Board and Chief Executive Officer or the Board of
Directors. The President shall, during the absence, disqualification, or
incapacity of the Chairman of the Board and Chief Executive Officer, exercise
all the functions and perform all the duties of the Chairman of the Board and
Chief Executive Officer.
D. The Secretary shall, as Secretary of the meeting, record all
proceedings at stockholders' meetings and directors' meetings, in books
kept for that purpose. He shall maintain the record of stockholders of the
Corporation, giving the names and addresses of all stockholders and the number,
classes and series of the shares held by each; and, unless otherwise prescribed
by the Board of Directors, he shall maintain the stock transfer books.
E. The Treasurer shall have custody of all moneys and securities of the
Corporation. He shall deposit the same in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors,
disburse the funds of the Corporation as may be required, and cause books and
records of account to be kept in accordance with generally accepted accounting
practices and principles.
F. During the absence, disqualification, or incapacity of any officer
of the Corporation other than the Chairman of the Board and Chief Executive
Officer, the Chairman of the Board and Chief Executive Officer may be written
order, or the Board of Directors may by resolution, delegate the power of each
such officer to any other officer or employee of the Corporation.
G. Each officer shall be elected to hold office until the next
succeeding regular meeting of the Board of Directors to be held as soon as
practicable after each annual meeting of the stockholders, or for such longer or
shorter term as the Board of Directors may lawfully specify; and he shall hold
office until his successor shall have been elected and qualified, or until such
earlier time as he shall resign, die or be removed.
H. Any officer may be removed, with or without cause, at any time
whenever the Board of Directors in its absolute discretion shall consider that
the best interests of the Corporation would be served thereby. Any officer or
23
<PAGE>
agent appointed otherwise than by the Board of Directors may be removed with or
without cause at any time by any officer having authority to appoint such an
officer or agent, except as may be otherwise provided in these By-Laws, whenever
such officer in his absolute discretion shall consider that the best interests
of the Corporation will be served thereby. Any such removal shall be without
prejudice to the recovery of damages for breach of the contract rights, if any,
of the person removed. Election or appointment of an officer or agent shall not
of itself create contract rights.
I. Checks, drafts, notes and orders for the payment of money shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may, from time to time, authorize, and any endorsement of such
paper in the ordinary course of business shall be similarly made, except that
any officer or assistant officer of the Corporation may endorse checks, drafts
or notes for collection or deposit to the credit of the Corporation. The
signature of any such officer or other person may be a facsimile when authorized
by the Board of Directors.
J. Unless otherwise provided by resolution of the Board of Directors,
the Chairman of the Board and Chief Executive Officer may, from time to time,
himself or by such proxies, attorneys, or agents of the Corporation as he shall
designate in the name and on behalf of the Corporation, cast the votes to which
the Corporation may be entitled as a stockholder or otherwise in any other
Corporation, at meetings, or consent in writing to any action by any such
Corporation. He may instruct the person or persons so appointed as to the manner
of casting such votes or giving such consent, and may execute or cause to be
executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies consents, waivers, or other instruments as he
may deem necessary or desirable in the premises.
ARTICLE VI - SEAL
The seal of the Corporation shall be a flat-face circular die, of which
there may any number of counterparts or facsimiles, in such form as the Board of
Directors shall, from time to time, adopt as the corporate seal of the
Corporation.
ARTICLE VII - AMENDMENTS
These By-Laws may be repealed or changed, and new By-Laws
made, by the stockholders entitled to vote at any annual or special meeting, or
by the Board of Directors at any regular or special meeting. By-Laws made by the
directors may be repealed or changed by the stockholders; and By-Laws made by
the stockholders may be repealed or changed by the directors, except as, and to
the extent that, the stockholders prescribe that the By-Laws, or any specified
By-Law, shall not be altered, amended or repealed by the directors.
24
HEILIG-MEYERS COMPANY
COMPUTATION OF PER SHARE EARNINGS
(Amounts in thousands except per share data)
Three Months Ended Six Months Ended
August 31, August 31,
1997 1996 1997 1996
---- ---- ---- ----
Primary Earnings Per Share:
Average number of
shares outstanding 56,003 48,616 55,208 48,571
Net effect of stock
options 914 1,059 874 718
Average number of
shares as adjusted 56,917 49,675 56,082 49,289
Net earnings $9,279 $7,747 $23,040 $20,117
Per share amount $ .16 $ .16 $ .41 $ .41
Fully Diluted Earnings Per Share:
Average number of
shares outstanding 56,003 48,616 55,208 48,571
Net effect of stock
options 914 1,059 915 733
Average number of
shares as adjusted 56,917 49,675 56,123 49,304
Net earnings $9,279 $7,747 $23,040 $20,117
Per share amount $ .16 $ .16 $ .41 $ .41
Earnings Per Common Share:
Earnings per common share is computed by dividing net earnings by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the year. The Company has issued stock options, which are the
Company's only common stock equivalent, at exercise prices ranging from $5.52 to
$35.06. Stock options which were antidilutive for the period ended August 31,
1997 were not included in the earnings per share calculation.
25
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1997
<CASH> 16400000
<SECURITIES> 0
<RECEIVABLES> 682981000
<ALLOWANCES> 37985000
<INVENTORY> 464604000
<CURRENT-ASSETS> 1229254000
<PP&E> 575419000
<DEPRECIATION> 154971000
<TOTAL-ASSETS> 2058153000
<CURRENT-LIABILITIES> 573612000
<BONDS> 735607000
0
0
<COMMON> 113569000
<OTHER-SE> 586609000
<TOTAL-LIABILITY-AND-EQUITY> 2058153000
<SALES> 1004202000
<TOTAL-REVENUES> 1156537000
<CGS> 663943000
<TOTAL-COSTS> 663943000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 44861000
<INTEREST-EXPENSE> 31529000
<INCOME-PRETAX> 36402000
<INCOME-TAX> 13362000
<INCOME-CONTINUING> 23040000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23040000
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
