SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 29, 1995
------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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AMES DEPARTMENT STORES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-2269444
- -------------------------------- --------------------------------------
(State or other jurisdiction of I.R.S. Employer Identification Number)
incorporation or organization)
2418 Main Street, Rocky Hill, Connecticut 06067
- ----------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (203) 257-2000
------------------------
None
- -------------------------------------------------------------------------------
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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
YES X NO
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20,127,269 shares of Common Stock were outstanding on May 25, 1995.
Exhibit Index on page 13
Page 1 of 15 (including exhibits)
<PAGE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED APRIL 29, 1995
I N D E X
Page
Part I: Financial Information
Consolidated Condensed Statements of Operations 3
for the Quarters Ended April 29, 1995 and
April 30, 1994
Consolidated Condensed Balance Sheets at 4
April 29, 1995, January 28, 1995, and
April 30, 1994
Consolidated Condensed Statements of Cash Flows 5
for the Quarters Ended April 29, 1995 and
April 30, 1994
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
Part II: Other Information
Submission of Matters to a Vote of Security Holders 13
and Exhibits and Reports on Form 8-K
<PAGE>
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
AMES DEPARTMENT STORES, INC. AND SUSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
For the Thirteen
Weeks Ended
April 29, April 30,
1995 1994
----------- -----------
<S> <C> <C>
TOTAL SALES $460,448 $456,153
Less: Leased department sales 18,756 20,398
----------- -----------
NET SALES 441,692 435,755
COSTS, EXPENSES AND (INCOME):
Cost of merchandise sold 326,347 319,716
Selling, general and administrative expenses 133,041 138,852
Leased department and other operating income (6,254) (6,222)
Depreciation and amortization expense 1,941 939
Amortization of the excess of revalued net assets
over equity under fresh-start reporting (1,538) (1,538)
Interest and debt expense, net 5,121 5,957
Gain on disposition of properties (991) (1,802)
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (15,975) (20,147)
Income tax benefit 4,834 6,523
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (11,141) (13,624)
Extraordinary item - gain (loss) on early extinguish-
ment of debt (net of tax benefit of $727) - (1,517)
----------- -----------
NET INCOME (LOSS) ($11,141) ($15,141)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 20,127 20,127
=========== ===========
INCOME (LOSS) PER SHARE BEFORE EXTRAORDINARY ITEM ($0.55) ($0.68)
EXTRAORDINARY GAIN (LOSS) PER SHARE - (0.07)
----------- -----------
NET INCOME (LOSS) PER SHARE ($0.55) ($0.75)
=========== ===========
<FN>
(The accompanying notes are an integral part of these condensed financial statements.)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
<CAPTION>
April 29, January 28, April 30,
1995 1995 1994
ASSETS ------------------------------------
<S> <C> <C> <C>
Current Assets:
Unrestricted cash and short-term investments $20,169 $28,402 $24,362
Restricted cash and short-term investments - 2,047 56,578
------------------------------------
Total cash and short-term investments 20,169 30,449 80,940
Receivables 25,121 16,807 25,458
Merchandise inventories 520,504 430,152 506,841
Prepaid expenses and other current assets 14,873 8,999 19,370
------------------------------------
Total current assets 580,667 486,407 632,609
------------------------------------
Fixed Assets 54,258 48,653 25,766
Less - Accumulated depreciation and amortization (9,628) (7,620) (3,081)
------------------------------------
Net fixed assets 44,630 41,033 22,685
------------------------------------
Other assets and deferred charges 5,022 5,948 1,155
------------------------------------
$630,319 $533,388 $656,449
====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $150,888 $130,737 $110,276
Other 35,116 33,794 44,692
------------------------------------
Total accounts payable 186,004 164,531 154,968
Note payable - revolver 103,147 - 88,498
Current portion of long-term debt and capital lease obligations 19,429 19,156 52,488
Long-term debt classified as current (Note 5) - - 34,844
Self-insurance reserve 45,393 46,413 49,585
Accrued expenses and other current liabilities 60,474 63,498 57,951
------------------------------------
Total current liabilities 414,447 293,598 438,334
Long-term debt 29,581 39,030 43,054
Capital lease obligations 36,730 38,065 41,047
Other long-term liabilities 6,258 6,242 10,949
Unfavorable lease liability 22,432 22,903 24,548
Excess of revalued net assets over equity under fresh-start reporting 47,095 48,633 53,248
Stockholders' Equity:
Priority common stock - - 26
Common stock 201 201 175
Additional paid-in capital 80,759 80,759 73,278
Retained earnings (accumulated deficit) (7,184) 3,957 (28,210)
------------------------------------
Total stockholders' equity 73,776 84,917 45,269
------------------------------------
$630,319 $533,388 $656,449
====================================
<FN>
(The accompanying notes are an integral part of these condensed financial statements.)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
For the Thirteen
Weeks Ended
April 29, April 30,
1995 1994
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($11,141) ($15,141)
Adjustments to reconcile net loss to net cash
used for operating activities:
Extraordinary loss on early extinguishment of debt - 1,517
Income tax benefit (4,834) (6,523)
Gain on disposition of properties (991) (1,802)
Depreciation and amortization of fixed assets 2,014 985
Amort. of the excess of revalued net assets over equity (1,538) (1,538)
Increase in accounts receivable (8,314) (7,266)
Increase in merchandise inventories (90,352) (64,643)
Increase in accounts payable 21,473 44,832
Decrease in accrued expenses and other current liabs. (3,403) (1,388)
Increase in other working capital and other, net (81) (1,170)
---------- -----------
Cash used for operations before restructuring items (97,167) (52,137)
Payments of restructuring costs (610) (1,784)
---------- -----------
Net cash used for operating activities (97,777) (53,921)
---------- -----------
Cash flows from investing activities:
Proceeds from sale of properties 294 2,368
Purchases of fixed assets (4,953) (2,208)
(Increase) decr. in restricted cash and short-term invest. 2,047 (598)
---------- -----------
Net cash used for investing activities (2,612) (438)
---------- -----------
Cash flows from financing activities:
Payments of debt and capital lease obligations (10,991) (10,094)
Short-term borrowings under the revolver, net 103,147 73,138
Increase in deferred financing costs - (788)
---------- -----------
Net cash provided by financing activities 92,156 62,256
---------- -----------
Increase (decr.) in unrest. cash and short-term invest. (8,233) 7,897
Unrestricted cash and short-term invest., beg. of period 28,402 16,465
---------- -----------
Unrestricted cash and short-term invest., end of period $20,169 $24,362
========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest and debt fees not capitalized $3,882 $3,269
Income taxes 1 6
<FN>
(The accompanying notes are an integral part of these condensed financial
statements.)
</TABLE>
<PAGE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements of Ames Department Stores,
Inc. (a Delaware Corporation) and subsidiaries (collectively "Ames" or
the "Company") contain all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such financial
statements for the interim periods. Due to the seasonality of the
Company's operations, the results of its operations for the interim
period ended April 29, 1995 may not be indicative of total results
for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations promulgated by the
Securities and Exchange Commission. Certain prior year amounts have
been reclassified to conform to the presentation used for the current
year. The consolidated condensed balance sheet at January 28, 1995
was taken from audited financial statements previously filed with the
Commission in the Company's latest Form 10-K. The accompanying
unaudited consolidated condensed financial statements should be read
in conjunction with the financial statements and notes thereto
included in the Company's latest Form 10-K.
2. Earnings Per Common Share:
Earnings per share was determined using the weighted average
number of common shares outstanding. There were no exercises of
warrants during the quarter ended April 29, 1995. Common stock
equivalents and fully diluted earnings per share were excluded as
their inclusion would have reduced the reported loss per share.
3. Cash and Short-Term Investments:
As of January 28, 1995, the Company had $1.8 million of cash
received in escrow from the December, 1994 sale of a store's leasehold
interest. This cash was included in "Restricted cash and short-term
investments" at January 28, 1995 and was released from escrow in
February, 1995. In addition, as of January 28, 1995 and April 30,
1994, Ames restricted approximately $0.2 and $1.0 million of cash,
respectively, for expected payments of certain remaining
administrative and priority claims under the Company's plan of
reorganization. These amounts were also included in "Restricted cash
and short-term investments." The associated liability was included in
"Accrued expenses".
As of April 30, 1994, approximately $55.6 million was placed for
collateral pledge and consignment as a condition precedent to the
issuance of letters of credit under the Letter of Credit Facility
(Note 5). This cash collateral was included in "Restricted cash and
short-term investments" at April 30, 1994. Ames earned interest on
the invested cash collateral.
<PAGE>
4. Inventories:
Substantially all inventories are valued at the lower of cost or
market. Cost is determined by the retail last-in, first-out (LIFO)
cost method for all merchandise inventories. If the first-in,
first-out (FIFO) cost method had been used, inventories would have
increased by $.2 million at April 30, 1994. No LIFO reserve was
necessary at April 30, 1995 and January 28, 1995.
5. Debt:
On April 28, 1994, the Company entered into an agreement with
BankAmerica Business Credit, Inc., as agent, two financial
institutions as co-agents (together with the agent, the "Agents"), and
a syndicate consisting of five other banks and financial institutions,
for a secured revolving credit facility of up to $300 million, with a
sublimit of $100 million for letters of credit (the "Credit
Agreement"). The Credit Agreement is in effect until June 22, 1997,
is secured by substantially all of the assets of the Company and
requires the Company to meet certain quarterly financial covenants.
In addition, each year the Company must have no outstanding borrowings
under the Credit Agreement for a consecutive 30-day period between
November 15th and February 15th of the following year. The Company is
in compliance with the financial covenants through the quarter ended
April 29, 1995.
As of April 29, 1995, borrowings of $103.1 million were
outstanding under the Credit Agreement. In addition, $30.3 and $8.0
million of standby and trade letters of credit, respectively, were
outstanding under the Credit Agreement. The weighted average interest
rate on the borrowings was 10.6% for the thirteen weeks ended April
29, 1995. The peak borrowing level in the first quarter this year was
$103.1 million.
In June, 1994, the Company utilized the funds that were no longer
restricted for the collateralization of letters of credit (Note 3),
and funds from the Credit Agreement, to prepay its then outstanding
Series A, B and D Notes, a $1.2 million term note, and the outstanding
borrowings under the Prior Credit Agreement (as defined below). As a
result of the refinancing and associated commitment to prepay the
above debt, a non-cash extraordinary charge of approximately $1.5
million, net of tax benefit of approximately $.7 million, was recorded
in last year's first quarter, primarily for the write-off of deferred
financing costs and debt discounts related to the debt to be prepaid.
As of April 30, 1994, approximately $34.8 million represented the
portion of long-term debt that was to be prepaid and was classified as
"Long-term debt classified as current."
The amount of borrowing under the Credit Agreement generally shall
not exceed the sum of (i) an amount equal to 55% of inventory not
covered by any outstanding letter of credit plus (ii) an amount equal
to 50% of inventory covered by any outstanding letter of credit less
(iii) a reserve for reinstated debt ($20.5 million as of April 29,
1995). In addition, the Credit Agreement provides for potential
establishment of other reserves contingent upon the Company's
financial performance. In addition, each Agent reserves the right in
good faith, based upon such collateral consideration as such Agent may
in its sole discretion deem necessary or appropriate to adjust the
total available to be borrowed by establishing reserves, making
determinations of eligible inventory, revising standards of
eligibility or decreasing from time to time the percentages set forth
above. Reference can be made to the latest Form 10-K for further
descriptions of the Credit Agreement and the obligations summarized
below, and for descriptions of the Company's other obligations not
discussed herein.
<PAGE>
Prior Credit Agreement
Citibank was the agent in a post-Chapter 11 credit agreement (the
"Prior Credit Agreement") which combined a $175.9 million revolving
credit facility and a $1.2 million term note. The Prior Credit
Agreement was between the Company, Citibank, and a syndicate
consisting of other banks and financial institutions. At April 30,
1994, $88.5 million was outstanding under the revolver portion of the
Prior Credit Agreement. The Prior Credit Agreement was terminated
when the Credit Agreement became effective.
Letter of Credit Facility
The Company had a $120 million letter of credit facility with
Republic National Bank of New York (the "Letter of Credit Facility")
that had sublimits of $60 million for trade letters of credit and $60
million for standby letters of credit. As of April 30, 1994, $11.9
million and $41.0 million was outstanding in trade and stand-by
letters of credit, respectively, under the Letter of Credit Facility.
Before the Credit Agreement became effective and the Letter of Credit
Facility was terminated, all letters of credit outstanding under the
Letter of Credit Facility had to be cash collateralized at 105% from
the date of issuance.
Deferred Cash Distributions
The Company's plan of reorganization, which was consummated on
December 30, 1992, provided that $46.5 million of cash distributions
in respect to several classes of claims would be paid subsequent to
the consummation date. On January 31, 1993, January 31, 1994, and
January 31, 1995, $15.0, $8.0 and $8.0 million, respectively, of these
deferred cash distributions were paid as scheduled. The remaining
unsecured amounts are due as follows, with interest that began on
February 1, 1994 at 5% per annum: $8.0 million due at January 31,
1996; and $7.5 million due at January 31, 1997.
6. Income Taxes:
The Company's estimated annual effective income tax rate for each
year was applied to the loss incurred before income taxes and
extraordinary item for the thirteen weeks ended April 29, 1995 and
April 30, 1994 to compute non-cash income tax benefits of $4.8 and
$6.5 million, respectively. The same method was used to compute an
income tax benefit of $.7 million for the extraordinary loss in the
first quarter of 1994. The Company currently expects that, as a
result of the seasonality of the Company's business, this year's
income tax benefit will be offset by non-cash income tax expense in
the remaining interim periods. The income tax benefits are included
in other current assets in the accompanying balance sheet as of April
29, 1995 and April 30, 1994.
7. Litigation:
Reference can be made to the latest Form 10-K (Note 12 to the
Consolidated Financial Statements) for various litigation involving
the Company, for which there were no material changes since the filing
date of the Form 10-K.
<PAGE>
<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
FISCAL QUARTER ENDED APRIL 29, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<CAPTION>
Results of Operations
The following table sets forth the number of stores in operation as of the dates indicated:
Number of Stores in Operation
April 29, January 28, April 30,
1995 1995 1994
--------- ----------- -----------
305 306 306
The following discussion and analysis is based on the historical results of operations for
the thirteen weeks ended April 29, 1995 and April 30, 1994. One store was closed during the
quarter ended April 29, 1995, and two stores were closed during the quarter ended April 30, 1994.
During the first quarter of 1995, the Company announced the opening of a new store in Dudley, MA
in late summer 1995.
The following table sets forth the historical operating results expressed as a percentage
of net sales for the periods indicated:
Thirteen
Weeks Ended
Apr. 29, Apr. 30,
1995 1994
------- --------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Cost of merchandise sold 73.9 73.4
------- -------
Gross margin 26.1 26.6
Expenses and (income):
Selling, general and administrative expenses 30.1 31.9
Leased department and other operating income (1.4) (1.4)
Depreciation and amortization expense 0.4 0.2
Amortization of the excess of revalued net
assets over equity (0.3) (0.4)
Interest and debt expense, net 1.2 1.4
Gain on disposition of properties (0.2) (0.4)
------- -------
Income (loss) before income taxes and
extraordinary item (3.7) (4.7)
Income tax benefit 1.1 1.5
------- -------
Income (loss) before extraordinary item (2.6) (3.2)
Extraordinary gain (loss) - (0.3)
------- -------
Net income (loss) (2.6)% (3.5)%
======= =======
</TABLE>
<PAGE>
Total sales (which include leased department sales) for the thirteen
weeks ended April 29, 1995 increased $4.3 million or .9% from the prior-
year's first quarter. Net sales for the same period increased $5.9 million
or 1.4% from the prior year. These increases were due to an increase of
2.0% in comparable store sales on a 304-store base, partially offset by the
operation of two fewer stores during this year's first quarter. The major
causes for the increase in comparable store sales were the sales generated
by the "55 Gold" senior citizen discount program, additional circular
advertising and the favorable comparison to the prior year when merchandise
shortages were experienced in the first two months due to the temporary
closure of the Leesport, PA distribution center. These factors were
partially offset by additional new competition and a continued weak apparel
sales market.
Gross profit declined $.7 million from the prior year, or .5% as a
percentage of net sales. The first quarter's gross margin rate was
negatively impacted by a lower markup on sales, reflecting a strategy of
lowering prices in certain merchandise categories, and the impact of the
discounts related to the "55 Gold" senior citizen discount program. These
factors were partially offset by lower markdowns and lower inventory
shrinkage.
Selling, general and administrative expenses declined approximately
$5.8 million, or 1.8% as a percentage of net sales, in the thirteen weeks
ended April 29, 1995 compared to the same prior-year period. Reductions in
store non-payroll, home office, and advertising expenses were partially
offset by an increase in store payroll.
Depreciation and amortization expense increased by $1.0 million, or
.2% of net sales, in the thirteen weeks ended April 29, 1995 compared to
the same prior-year period. The adoption of fresh-start reporting as of
December 26, 1992 resulted in the write-off of all of the Company's non-
current assets at that date, and therefore depreciation and amortization
expense reflects capital additions after that date.
The amortization of the "excess of revalued net assets over equity
under fresh-start reporting" remained the same in the current period
presented as compared to the prior year. The Company is using a ten-year
life for the period of amortization.
Interest and debt expense, net of interest income, declined by $.8
million, or .2% of net sales, in the thirteen weeks ended April 29, 1995.
The Company's average outstanding debt under its revolving credit
facilities was effectively unchanged ($57.5 million this year vs. $57.4
million last year) during the two interim periods presented. In June, 1994,
the Company prepaid approximately $69 million of debt utilizing a portion
of the Credit Agreement (see below, under "Liquidity and Capital
Resources") and the funds that were no longer required to be restricted for
the collateralization of letters of credit. The favorable impact on
interest expense from this prepayment was partially offset by the reduction
of interest income resulting from the reduced restricted cash balance, the
amortization of the financing costs associated with the Credit Agreement
and an increase in market interest rates.
In March, 1995, the Company completed the assignment of a lease for a
warehouse that was not part of Ames' operations and recognized a gain of
$1.0 million. In the first quarter of 1994, the Company recognized a gain
of $1.1 million on the sale of a store lease, which was an operating
property until closed in February, 1994, and also recognized a gain of $.7
million on the settlement of the inventory portion of a property insurance
claim.
<PAGE>
The Company's estimated annual effective income tax rate for each year
was applied to the loss before income taxes and extraordinary item for the
thirteen weeks ended April 29, 1995 and April 30, 1994 to compute non-cash
income tax benefits of $4.8 million and $6.5 million, respectively. The
same method was used to compute an income tax benefit of $.7 million for
the extraordinary loss in the first quarter of 1994. The Company currently
expects that, as a result of the seasonality of the Company's business,
this year's income tax benefit will be offset by non-cash income tax
expense in the remaining interim periods.
As a result of the debt refinancing and associated commitment to
prepay certain debt, the Company recorded a non-cash extraordinary charge
of $1.5 million, net of tax benefit of $.7 million, in the first quarter of
1994. The charge was primarily for the write-off of deferred financing
costs and debt discounts related to the debt to be prepaid.
Compared with the projections for the first quarter of 1995 contained
in the Form 8-K filed on February 16, 1995 (referred to herein as the
"Plan"), sales were $5.4 million less than Plan and EBITDA (earnings (loss)
before net interest expense, income taxes, LIFO expense, extraordinary or
non-recurring items, depreciation and amortization and other non-cash
charges) was $.1 million less than Plan and $1.2 million above last year.
The EBITDA results reflected the below Plan sales performance and a lower-
than-planned gross margin rate, partially offset by lower-than-planned
expenses and higher-than-planned other income and property gains.
Liquidity and Capital Resources
On April 28, 1994, the Company entered into an agreement with
BankAmerica Business Credit, Inc., as agent, two financial institutions as
co-agents and a syndicate consisting of five other banks and financial
institutions, for a secured revolving credit facility of up to $300
million, with a sublimit of $100 million for letters of credit (the "Credit
Agreement"). The Company is in compliance with the financial covenants of
the Credit Agreement through the quarter ended April 29, 1995.
Reference can be made to Note 5 of this Quarterly Report and the
latest Form 10-K for further descriptions of the Credit Agreement and the
Company's other obligations.
Restricted cash and short-term investments decreased $56.6 million
from April 30, 1994 to April 29, 1995 primarily because the Company is no
longer required to cash collateralize its letters of credit. Reference can
be made to Note 3 of this Quarterly Report for further descriptions of the
components of restricted cash and short-term investments.
Merchandise inventories, valued on a LIFO basis, increased $13.7
million from April 30, 1994 to April 29, 1995 due to a build-up of
inventories in certain apparel categories and home entertainment, partially
offset by a planned reduction in jewelry, crafts, and health and beauty
care inventories. The increase in inventories of $90.3 million from
January 28, 1995 to April 29, 1995 was principally the result of a normal
seasonal build-up of inventories.
Trade accounts payable increased $40.6 million from April 30, 1994 to
April 29, 1995 due primarily to improved trade payment terms and an
increase in merchandise purchases in April, 1995 over the merchandise
purchases in April, 1994. The increase in trade accounts payable of $20.2
million from January 28, 1995 to April 29, 1995 was principally the result
of the seasonal build-up of inventories.
<PAGE>
Capital expenditures for the thirteen weeks ended April 29, 1995
totalled $5.0 million and for the balance of the year are estimated to be
approximately $22.5 million. The increase in capital expenditures of $2.8
million over the prior-year's thirteen week period was primarily due to the
current year's expenditures for store remodels and for improved inventory
control and scanning technology. The Company expects that capital
expenditures for the remainder of the year will be principally for
remodeling stores (both small-scale and complete remodels), three new
stores and management information systems. The Company adjusts its plans
for making such expenditures depending on the amount of internally
generated funds.
The significant net operating loss carryovers remaining after fiscal
year 1995, subject to limitations pursuant to Internal Revenue Code Sec.
382, should offset income on which taxes would otherwise be payable in
future years.
The Company believes that available cash and expected cash flows from
the current fiscal year's operations and beyond, and the availability of
its financing facilities, will enable the Company to fund its expected
needs for working capital, capital expenditures and debt service
requirements. Achievement of expected cash flows from operations and
compliance with the EBITDA (as defined above) covenant in the Credit
Agreement is dependent upon the Company's attainment of sales, gross
profit, and expense levels that are reasonably consistent with its
financial projections.
<PAGE>
Part II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 10, 1995, the Company sent a notice of the annual
meeting and a proxy statement to its stockholders. The notice of
meeting announced that the Annual Meeting of Stockholders would
be held Wednesday, May 24, 1995, to consider and act upon the
following matters: (a) the election of seven (7) directors for a
term of one year or until their successor(s) have been elected
and qualified; (b) the ratification and approval of the
appointment of Arthur Andersen LLP as the Company's independent
certified public accountants and auditors for the fiscal year
ending January 27, 1996; (c) the approval of the Ames Department
Stores, Inc. 1995 Long Term Incentive Plan, as described in the
Proxy Statement dated April 10, 1995 (the "Proxy Statement");
(d) the approval of the Ames Department Stores, Inc. 1994 Non-
Employee Directors Stock Option Plan, as described in the Proxy
Statement; and (e) the transaction of such other business as may
properly come before the meeting or any adjournments thereof.
The results of the meeting will be disclosed in the
Quarterly Report for the Company's fiscal quarter ending July 29,
1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits
Exhibit No. Exhibit Page No.
----------- ------- --------
11 Schedule of computation of primary 15
earnings per share
(b) Reports on Form 8-K:
The following reports on Form 8-K were filed
with the Securities and Exchange Commission
during the first quarter:
Date of Report Date of Filing Item # Description
-------------- -------------- ------ -----------
February 16, 1995 February 16, 1995 5 Disclosure of
the fiscal 1995
summary
financial plan.
March 30, 1995 March 30, 1995 5 Disclosure of
fiscal January
and February
1995 results.
April 14, 1995 April 14, 1995 5 Disclosure of
fiscal March
1995 results.
<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.
AMES DEPARTMENT STORES, INC.
(Registrant)
Dated: May 30, 1995 /s/ Joseph R. Ettore
------------------------------------
Joseph R. Ettore, President, Director,
and Chief Executive Officer
Dated: May 30, 1995 /s/ John F. Burtelow
------------------------------------
John F. Burtelow, Executive Vice
President and Chief Financial Officer
Dated: May 30, 1995 /s/ William C. Najdecki
------------------------------------
William C. Najdecki, Senior Vice
President Finance
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 11
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF PRIMARY EARNINGS PER SHARE
(Amounts in thousands except per share amounts)
<CAPTION>
For the Thirteen
Weeks Ended
April 29, April 30,
1995 1994
------------ ------------
<S> <C> <C>
Income (loss) before extraordinary item ($11,141) ($13,624)
Extraordinary gain (loss) - (1,517)
------------ ------------
Primary net income (loss) ($11,141) ($15,141)
------------ ------------
Weighted average number of common shares
outstanding during the period 20,127 20,127
Add: Common stock equivalent shares
represented by the Series B Warrants (a) (a)
Common stock equivalent shares
represented by the Series C Warrants (a) (a)
Common stock equivalent shares represented
by management stock options granted (a) (a)
------------ ------------
Weighted average number of common and
common equivalent shares used in the
computation of primary earnings per share 20,127 20,127
============ ============
Primary earnings per share:
Primary income (loss) per share
before extraordinary item ($0.55) ($0.68)
Extraordinary gain (loss) - (0.07)
------------ ------------
Primary net income (loss) per share ($0.55) ($0.75)
============ ============
<FN>
(a) Common stock equivalents have not been included because the effect would
be anti-dilutive.
Note: Fully diluted earnings per share has not been presented as the effect
would be anti-dilutive.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-27-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 20169
<SECURITIES> 0
<RECEIVABLES> 25121
<ALLOWANCES> 0
<INVENTORY> 520504
<CURRENT-ASSETS> 580667
<PP&E> 54258
<DEPRECIATION> 9628
<TOTAL-ASSETS> 630319
<CURRENT-LIABILITIES> 414447
<BONDS> 66311
<COMMON> 201
0
0
<OTHER-SE> 73575
<TOTAL-LIABILITY-AND-EQUITY> 630319
<SALES> 441692
<TOTAL-REVENUES> 447946
<CGS> 326347
<TOTAL-COSTS> 326347
<OTHER-EXPENSES> 133444
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5184
<INCOME-PRETAX> (15975)
<INCOME-TAX> (4834)
<INCOME-CONTINUING> (11141)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11141)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.55)
</TABLE>
