FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 1, 1999
Commission file number 0-6319
JACOBSON STORES INC.
(Exact name of registrant as specified in its charter)
Michigan 38-0686330
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3333 Sargent Road, Jackson, Michigan 49201
(Address of principal executive offices, including zip code)
(517) 764-6400
(Registrant's telephone number, including area code)
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 latest practicable date.
Common Stock ($1 Par Value):
5,788,209-2/3 Shares outstanding as of May 1, 1999
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For Quarter Ended May 1, 1999
INDEX
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
. Consolidated Balance Sheets - May 1, 1999 and
January 30, 1999 1
. Consolidated Statements of Earnings - Thirteen Week Periods
Ended May 1, 1999 and May 2, 1998 2
. Consolidated Statements of Cash Flows - Thirteen Week
Periods Ended May 1, 1999 and May 2, 1998 3
. Notes to Consolidated Financial Statements 4
Review by Independent Public Accountants 6
Exhibit:
. Report of Independent Public Accountants 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
All items except those set forth above are inapplicable
and have been omitted.
SIGNATURES 15
INDEX OF EXHIBITS
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
May 1, January 30,
ASSETS 1999 1999
------ ----------
CURRENT ASSETS:
Cash and cash equivalents $ 2,645 $ 2,929
Receivables from customers, net 30,521 32,151
Merchandise inventories 91,925 90,454
Prepaid expenses and other assets 1,124 1,370
Deferred taxes 4,894 4,894
--------- ---------
Total current assets 131,109 131,798
--------- ---------
PROPERTY AND EQUIPMENT, NET 84,119 84,989
--------- ---------
OTHER ASSETS 20,124 20,088
--------- ---------
$ 235,352 $ 236,875
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,504 $ 3,719
Accounts payable 28,907 34,769
Accrued expenses 18,300 16,774
Accrued income taxes 1,367 442
--------- ---------
Total current liabilities 51,078 55,704
--------- ---------
LONG-TERM DEBT 100,356 99,803
--------- ---------
DEFERRED TAXES 6,386 6,386
--------- ---------
OTHER LIABILITIES 3,951 4,045
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 5,975 5,975
Paid-in surplus 7,201 7,201
Retained earnings 60,804 58,160
Treasury stock (399) (399)
--------- ---------
73,581 70,937
--------- ---------
$ 235,352 $ 236,875
========= =========
The accompanying notes are an integral part of these statements.
- 1 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share data)
(unaudited)
Thirteen Weeks Ended
--------------------
May 1, May 2,
1999 1998
-------- --------
NET SALES $113,959 $114,825
-------- --------
COSTS AND EXPENSES:
Cost of merchandise sold, buying and
occupancy expenses 73,697 72,762
Selling, general and administrative expenses 34,391 36,204
Interest expense, net
1,804 1,948
-------- --------
Total costs and expenses 109,892 110,914
-------- --------
EARNINGS BEFORE INCOME TAXES 4,067 3,911
PROVISION FOR INCOME TAXES 1,423 1,369
-------- --------
NET EARNINGS $ 2,644 $ 2,542
======== ========
EARNINGS PER COMMON SHARE:
Basic $ 0.46 $ 0.44
Diluted 0.46 0.42
======== ========
The accompanying notes are a integral part of these statements.
- 2 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Thirteen Weeks Ended
--------------------
May 1, May 2,
1999 1998
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,644 $ 2,542
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 2,104 2,120
Deferred taxes -- (26)
Other liabilities (94) (184)
Change in:
Receivables from customers, net 1,630 1,910
Merchandise inventories (1,471) (4,282)
Prepaid expenses and other assets 246 83
Accounts payable and accrued expenses (4,336) 665
Current income taxes 925 974
------- -------
Net cash provided by operating
activities 1,648 3,802
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (1,234) (3,216)
Other non-current assets (36) (75)
------- -------
Net cash used in investing activities (1,270) (3,291)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 1,038 2,596
Reduction of long-term debt (1,701) (620)
Proceeds of exercise of stock options -- 3
------- -------
Net cash provided by (used in)
financing activities (662) 1,979
------- -------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (284) 2,490
------- -------
Cash and cash equivalents, beginning of period 2,929 3,883
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,645 $ 6,373
======= =======
The accompanying notes are an integral part of these statements.
- 3 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended May 1, 1999
The condensed financial statements included herein have been
prepared by the Company without audit and reflect all adjustments
which are, in the opinion of management, necessary to achieve a
fair statement of results for the interim periods. All adjustments
are of a normal and recurring nature.
Because of the nature of the specialty department store business,
the results for the thirteen week periods ended May 1, 1999 and
May 2, 1998 (which do not include the Christmas holiday season)
are not indicative of the results for the year as a whole.
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles has been condensed or amended,
although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested
that these condensed financial statements be read in conjunction
with the financial statements and notes to consolidated financial
statements included in the Company's latest annual report on Form
10-K.
(1) EARNINGS PER SHARE
Basic earnings per share are computed by dividing reported
earnings available to common shareholders by weighted average
common shares outstanding. Diluted earnings per share give effect
to potential common shares represented by stock options and the
Company's 6-3/4% Convertible Subordinated Debentures due 2011,
except if anti-dilutive. Earnings per common share are calculated
as follows:
Thirteen Weeks
---------------
(dollars and shares in thousands) 1999 1998
--------------------------------- ------ ------
Earnings available to common shareholders $2,644 $2,542
====== ======
Weighted average common shares outstanding 5,788 5,779
Dilutive stock options -- 204
------ ------
Shares used to calculate diluted
earnings per common share 5,788 5,983
====== ======
Earnings per common share:
Basic $ .46 $ .44
Diluted .46 .42
====== ======
- 4 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended May 1, 1999
(2) CUSTOMER CREDIT AND RECEIVABLES
Receivables from customers were as follows:
May 1, January 30,
(in thousands) 1999 1999
---------------------------------- -------- -----------
Receivables from customers $31,142 $32,749
Less reserve for doubtful accounts 621 598
------- -------
$30,521 $32,151
======= =======
(3) MERCHANDISE INVENTORIES
Merchandise inventories were as follows:
May 1, January 30,
(in thousands) 1999 1999
---------------------------------- -------- -----------
Inventories at first-in, first out
(FIFO) cost $110,069 $108,263
Less LIFO reserves 18,144 17,809
-------- --------
$ 91,925 $ 90,454
======== ========
(4) PROPERTY AND EQUIPMENT
Property and equipment are set forth below:
May 1, January 30,
(in thousands) 1999 1999
---------------------------------- -------- -----------
Property and equipment $179,066 $177,864
Less accumulated depreciation
and amortization 94,947 92,875
-------- --------
$ 84,119 $ 84,989
======== ========
- 5 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended May 1, 1999
(5) SUPPLEMENTARY CASH FLOW INFORMATION
The Company considers all short-term investments with a maturity
at date of purchase of three months or less to be cash
equivalents.
Interest paid (net of interest capitalized) totalled $1,439,000
and $1,483,000 in the thirteen week periods ended May 1, 1999 and
May 2, 1998, respectively. The Company paid income taxes totalling
$502,000 and $423,000 in the thirteen week periods ended May 1,
1999 and May 2, 1998, respectively.
(6) FINANCING
In May 1999, the Company and the lenders under its Revolving
Credit Agreement extended the maturity date by one year to
March 24, 2002.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have
performed a limited review of the condensed consolidated financial
statements for the thirteen week period ended May 1, 1999. Since
they did not perform an audit, they express no opinion on the
financial statements referred to above.
- 6 -
EXHIBIT
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To Jacobson Stores Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
JACOBSON STORES INC. (a Michigan corporation) and subsidiaries as of May 1,
1999 and the related condensed consolidated statements of earnings and cash
flows for the thirteen week period then ended. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Jacobson Stores Inc. and
subsidiaries as of January 30, 1999, and the related consolidated statements
of earnings, shareholders' equity and cash flows for the year then ended (not
presented herein), and, in our report dated March 5, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of January 30, 1999, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan
May 14, 1999
- 7 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The registrant, Jacobson Stores Inc., a Michigan corporation and successor to
a business founded in 1868, offers customers distinctive apparel and
accessories for women, men and children, as well as decorative accents for
the home. The Company operates 24 specialty stores in Michigan, Indiana,
Kansas, Kentucky, Ohio and Florida, catering to discerning customers with
preferences for high quality merchandise and individualized service provided
by knowledgeable sales associates.
The Company owns a substantial portion of the real property used in its
business, primarily through its consolidated, wholly-owned real estate
subsidiary, Jacobson Stores Realty Company ("Jacobson Realty"). The Company
also has a consolidated wholly-owned finance subsidiary, Jacobson Credit
Corp. ("Jacobson Credit"). As used in this report, the terms "registrant",
"Company" and "Jacobson's" refer to Jacobson Stores Inc. and its subsidiaries
unless the context indicates otherwise.
The principal distribution functions are performed at service centers in
Jackson, Michigan and Winter Park, Florida. Functions common to all stores,
such as management coordination, merchandising, sales promotion, data
processing and accounting, are centralized at the corporate headquarters in
Jackson, Michigan.
a. OPERATING RESULTS: THIRTEEN WEEKS ENDED MAY 1, 1999 COMPARED TO
THIRTEEN WEEKS ENDED MAY 2, 1998
Sales for the quarter ended May 1, 1999, totalled $113,959,000, a
decrease of 0.8% from 1998. The Company operated the same number of
stores in 1999 and 1998.
The Company's gross profit percentage decreased to 35.3% for the
thirteen weeks this year from 36.6% in 1998, reflecting principally
higher markdowns partially offset by higher markup.
Selling, general and administrative expenses, expressed as a
percentage of sales, decreased to 30.2 % in the quarter from 31.5% one
year ago. The decrease is due primarily to lower sales promotion
expense, partially offset by one-time expense (primarily severance) to
integrate the Company's Florida and Midwest buying offices.
Interest expense, expressed as a percentage of sales, decreased to
1.6% for the quarter from 1.7% one year ago, primarily due to lower
average long-term borrowings.
1999 net earnings for the thirteen weeks totalled $2,644,000, or 46
cents per common share, compared to $2,542,000, or 44 cents per common
share, last year. As a percent of sales, net earnings were 2.3% in
1999 compared to 2.2% in 1998.
- 8 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
b. LIQUIDITY AND CAPITAL RESOURCES
At May 1, 1999, the Company's current ratio was 2.57 to 1 and working
capital totalled $80,031,000 including $2,645,000 of cash and cash
equivalents. At January 30, 1999, the current ratio was 2.37 to 1 and
working capital totalled $76,094,000, including $2,929,000 of cash and
cash equivalents.
The Company utilizes cash flows from operations and revolving credit
line borrowings to fund its seasonal working capital needs, debt
service and expenditures to modernize and refixture existing stores.
To support its present and planned working capital requirements, the
Company has a $100,000,000 revolving credit facility under a Revolving
Credit Agreement with a commercial lender. The revolving credit
facility currently provides for borrowings of up to $80,000,000,
subject to a borrowing base limitation and lender reserves. The
Company may, at its option, increase the maximum available borrowings
under the revolving credit facility to up to $100,000,000 in the
aggregate, subject to the borrowing base limitation and lender
reserves. As of May 1, 1999, the Company had borrowed $35,914,000
under this facility and had $44,086,000 of borrowing availability. For
the quarter ended May 1, 1999, the daily weighted average interest
rate on borrowings under the Revolving Credit Agreement was 7.5%.
The Company's debt obligations that are sensitive to changes in
interest rates, scheduled principal maturities, weighted average
interest rates associated with those maturities and market value of
debt have not changed materially from fiscal year-end, except that in
May 1999 the Company received a one-year extension of the revolving
credit facility maturity date to March 24, 2002. In the Form 10-K for
the year ended January 30, 1999, revolving credit borrowings of
$34,875,000 were included in 2001 principal maturities.
c. CASH FLOWS
Cash and cash equivalents decreased $284,000 in the thirteen weeks
ended May 1, 1999, compared to an increase of $2,490,000 in the
thirteen weeks ended May 2, 1998. Cash flows are impacted by
operating, investing and financing activities. In the thirteen weeks
this year, cash provided by operating activities totalled $1,648,000,
compared to $3,802,000 in 1998.
Net operating cash inflows in the 1999 quarter resulted primarily from
earnings before non-cash charges and collection of receivables from
customers, partially offset by seasonal inventory increases and
paydown of accounts payable. Net cash inflows in the 1998 quarter
resulted primarily from earnings before non-cash charges and
collection of receivables from customers, partially offset by seasonal
inventory increases.
- 9 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
Investing activities used cash of $1,270,000 in the thirteen weeks
this year compared to $3,291,000 used in 1998. Capital expenditures
totalled $1,234,000 in the first thirteen weeks of 1999 compared to
$3,216,000 in the comparable 1998 period.
Financing activities used cash of $662,000 in the thirteen weeks this
year compared to $1,979,000 provided last year. In the thirteen weeks
in 1999, the Company borrowed $1,038,000 under its revolving credit
facility, used $471,000 to service current maturities of long-term
debt and used $1,230,000 to purchase 6 3/4% Convertible Subordinated
Debentures, satisfying all but $30,000 of the December 1999 sinking
fund requirement. In 1998, the Company borrowed $2,596,000 under its
revolving credit facility and used $620,000 to service current
maturities of long-term debt.
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets are adequate to
fund its operations and debt maturities.
d. CORPORATE DEVELOPMENT
The Company has no commitments for any new store locations at the
present time. The Company reviews the performance of its less
profitable stores from time to time to determine whether it would be
in the Company's best interest to close any of these stores. Store
closings could have a significant impact on the Company's sales,
expenses and capital requirements and would likely entail additional
significant one-time charges to effect the closing and to recognize
any impairment of assets resulting from the closing decision. In 1998,
the Company sold closed facilities in Jackson and Kalamazoo, Michigan.
At May 1, 1999, the Company holds a closed facility in Dearborn,
Michigan, pending disposition.
In 1999, the Company is constructing a 17,000 square foot expansion of
its leased store in Naples, Florida and is remodeling its Sarasota,
Florida store. Both projects are scheduled for completion in time for
the 1999 Holiday season.
The Company is actively addressing the issues related to the year
2000. In 1997, the Company assessed its critical information systems,
communications networks, equipment and facilities, and established a
plan of action to remediate or replace all non-compliant software and
hardware that could pose a significant risk to the Company's
operations. The Company expects to complete remediation or
replacement, testing and implementation of all key systems by
September 1999.
- 10 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
In addition, the Company has contacted third-party providers of
computer hardware and software to secure appropriate representations
that such hardware or software is or will be year 2000 compliant. The
Company has received year 2000 compliant versions of most third-party
software and expects to complete testing and implementation of those
third-party software programs that have been identified as critical to
the Company's operation by September 1999.
The Company believes its information systems will be ready for the
year 2000. Under the most reasonably likely worst case scenario, it
may experience isolated incidences of non-compliance. The Company
expects that its technically trained personnel, working in cooperation
with key vendors and service providers, should be able to address any
year 2000 issues that may arise. As part of its contingency planning
effort, the Company has made inquiries as to the year 2000 readiness
of select key merchandise vendors. The Company is currently evaluating
the responses to identify any significant exposure that may exist and
to establish alternate sources or strategies where necessary. The
Company believes it generally will have alternative sources of
comparable products and services and does not expect to experience any
material business interruption.
Many risks, however, such as the failure to perform by public
utilities, telecommunications providers and financial institutions,
and the impact of the year 2000 issue on the economy as a whole, are
outside the Company's control and could adversely affect the Company
and its ability to conduct business. While the Company believes its
remediation and contingency planning efforts adequately identify and
address the year 2000 issues that are within the Company's reasonable
control, there can be no assurance that the year 2000 issue will not
have a material adverse impact on the Company's financial condition,
operating results or business.
The substantial majority of the costs to replace non-compliant
software and hardware would have been incurred regardless of the year
2000 issue to meet current business needs and to take advantage of new
lower cost technology platforms. In addition, the Company expects to
spend approximately $800,000 in internal development costs related to
year 2000 readiness, principally for payroll costs of its internal
information systems staff in 1998 and 1999, of which approximately
$550,000 had been spent through May 1, 1999. These system replacement
and internal costs are expected to be funded primarily through cash
flows from operations.
- 11 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
Each of the above statements regarding future revenues, expenses or
business plans (including statements regarding the sufficiency of the
Company's capital resources to fund future operations) may be a
"forward looking statement" within the meaning of the Securities
Exchange Act of 1934. Such statements are subject to important factors
and uncertainties that could cause actual results to differ materially
from those in the forward-looking statement, including the continued
support of the Company's trade creditors and factors, the risks
inherent in the level of the Company's long-term debt compared to its
equity, the risks inherent in the Year 2000 computer issue, the
Company's ability to reduce its operating expenses, general trends in
retail clothing apparel purchasing, especially during the Christmas
season, and the factors set forth in this Management's Discussion and
Analysis of Financial Condition and Results of Operations.
- 12 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended May 1, 1999
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's debt obligations that are sensitive to changes
in interest rates, scheduled principal maturities, weighted
average interest rates associated with those maturities and
market value of debt have not changed materially from fiscal
year-end, except that in May 1999 the Company received a
one-year extension of the revolving credit facility maturity
date to March 24, 2002. In the Form 10-K for the year ended
January 30, 1999, revolving credit borrowings of $34,875,000
were included in 2001 principal maturities.
- 13 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended May 1, 1999
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Release and Waiver Agreement, dated as of March
29, 1999, between George Kelly and Jacobson
Stores Inc.
15 Letter from Independent Public Accountants
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during its
fiscal quarter ended May 1, 1999.
All exhibits except as set forth above have been omitted as not
applicable or not required.
- 14 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
For Quarter Ended May 1, 1999
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.
JACOBSON STORES INC.
-------------------------------------
(Registrant)
Date: June 11 , 1999 BY: /s/ P. Gerald Mills
------------- -------------------------------------
P. GERALD MILLS
Chairman of the Board, President and
Chief Executive Officer
Date: June 11 , 1999 BY: /s/ Paul W. Gilbert
------------- -------------------------------------
PAUL W. GILBERT
Vice Chairman of the Board
(Principal Financial Officer)
- 15 -
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
INDEX OF EXHIBITS
10 Release and Waiver Agreement, dated as of March 29,
1999, between George Kelly and Jacobson Stores Inc.
15 Letter from Independent Public Accountants
27 Financial Data Schedule
All exhibits except as set forth above have been omitted as not
applicable or not required.
EXHIBIT 10
RELEASE AND WAIVER AGREEMENT
This Release and Waiver Agreement ("Agreement") is between George
Kelly and Jacobson Stores Inc. and all past, present and future subsidiaries
and affiliates of Jacobson Stores Inc. individually and collectively referred
to as ("the Company").
1. Complete Release. In consideration for $50,000 in severance
pay, and continued health and dental coverage through May 28, 1999 (at my
normal contribution rate), which I agree is sufficient consideration and is
in excess of anything of value to which I am otherwise entitled, including
any earned wages or benefits due and owing me, I release, waive, and fully
discharge the Company and all present and former employees, officers,
directors, shareholders, and agents of the Company, from any and all charges,
causes of action, damages, claims or demands, whether known or unknown at
this time, arising out of, connected with, or based on my employment and
separation from employment with the Company, including, but not limited to,
those based on contract, personal injury, tort, common law, employment
discrimination, the Age Discrimination in Employment Act of 1967 (as amended)
("ADEA") and any and all other federal, state or local laws or ordinances.
2. Non-Release of Future Claims. This Agreement does not waive or
release any rights or claims that I may have under the ADEA which arise after
the date I sign this Agreement.
3. 21 Day Period for Review and Consideration of Agreement. I
understand that I have been given a period of at least 21 days to review and
consider this Agreement before signing it.
4. Encouragement to Consult with Attorney. I acknowledge that I
have been advised in writing to consult with an attorney before signing this
Agreement.
5. Employee's Right to Revoke Agreement. I may revoke this
Agreement for a period of seven (7) calendar days after signing it. This
Agreement is not effective or enforceable until this revocation period has
expired. I understand that any revocation to be effective must be in writing
and either: (1) post-marked within seven (7) days of execution of this
Agreement and addressed to the Vice President, Personnel, Jacobson Stores
Inc., 3333 Sargent road, Jackson, Michigan 49201. I understand that if
revocation is made by mail, mailing by certified mail, return receipt
requested, is recommended to show proof of mailing. If I revoke this
Agreement it shall not be effective or enforceable and I will not receive the
consideration set forth in Paragraph 1 above.
6. Entire Agreement. I agree no oral or written statement have
been made by the Company which vary the terms of this Agreement and that this
constitutes the entire Agreement between myself and the Company.
7. Voluntary Agreement. I acknowledge that I have read this
Agreement, understand its terms and its binding effect, and am acting
voluntarily and of my own free will in signing it.
George Kelly
--------------------
WITNESS Associate (Print)
- --------------------------------
/s/ George Kelly
---------------------
Associate (Signature)
THE COMPANY
March 29, 1999
----------------------
By: James K. Delaney Dated
Its: Vice President-Human Resources
------------------------------
3/29/99
VOLUNTARY WAIVER OF 21 DAY REVIEW AND CONSIDERATION PERIOD
I understand that Paragraph 3 of the attached Release and Waiver
Agreement specifically provides me with 21 day time period within which to
consider this Agreement. By signing this Waiver, I knowingly and voluntarily
choose to waive the 21-day time period, and understand that all other
provisions of the Agreement continue to apply to me.
The decision to sign this Waiver was completely voluntary and in
so doing, I have not relied on any oral or written statements or promises
made by the Company or its representatives.
George Kelly
--------------------
WITNESS Associate (Print)
- --------------------------------
/s/ George Kelly
---------------------
Associate (Signature)
March 29, 1999
---------------------
Dated
3/29/99
EXHIBIT 15
ARTHUR ANDERSEN LLP
To Jacobson Stores Inc.:
We are aware that Jacobson Stores Inc. has incorporated by reference in its
Form S-8 Registration Statements File Nos. 033-53469, 333-31989 and 333-59031
and Form S-2 File No. 33-10532 its Form 10-Q for the quarter ended May 1,
1999, which includes our report dated May 14, 1999, covering the unaudited
interim condensed consolidated financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
---------------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan
June 11, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES AS
OF, AND FOR THE THIRTEEN WEEK PERIOD ENDED, MAY 1, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-END> MAY-01-1999
<PERIOD-TYPE> 3-MOS
<CASH> 2,645
<SECURITIES> 0
<RECEIVABLES> 31,142
<ALLOWANCES> 621
<INVENTORY> 91,925
<CURRENT-ASSETS> 131,109
<PP&E> 179,066
<DEPRECIATION> 94,947
<TOTAL-ASSETS> 235,352
<CURRENT-LIABILITIES> 51,078
<BONDS> 100,356
<COMMON> 5,975
0
0
<OTHER-SE> 67,606
<TOTAL-LIABILITY-AND-EQUITY> 235,352
<SALES> 113,959
<TOTAL-REVENUES> 113,959
<CGS> 73,697
<TOTAL-COSTS> 73,697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,804
<INCOME-PRETAX> 4,067
<INCOME-TAX> 1,423
<INCOME-CONTINUING> 2,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,644
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.46
</TABLE>
