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 July 26, 1997
----------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------------- to ------------------
AMES DEPARTMENT STORES, INC.
----------------------------------------------------
(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: (860) 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
----- ------
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
----- ------
22,128,817 shares of Common Stock were outstanding on August 9, 1997.
Exhibit Index on page 12<PAGE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JULY 26, 1997
I N D E X
Page
Part I: Financial Information
Consolidated Condensed Statements of Operations 3
for the Thirteen and Twenty-six Weeks Ended
July 26, 1997 and July 27, 1996
Consolidated Condensed Balance Sheets at 4
July 26, 1997, January 25, 1997, and
July 27, 1996
Consolidated Condensed Statements of Cash Flows 5
for the Twenty-six Weeks Ended
July 26, 1997 and July 27, 1996
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 12
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 For the Twenty-six
Weeks Ended Weeks Ended
------------------ ---------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
TOTAL SALES $530,059 $525,217 $978,634 $980,894
Less: Leased department sales 26,492 26,110 42,466 43,120
---------- ---------- --------- ---------
NET SALES 503,567 499,107 936,168 937,774
COSTS, EXPENSES AND (INCOME):
Cost of merchandise sold 357,219 359,382 671,454 680,647
Selling, general and administrative expenses 137,482 134,609 266,367 262,411
Leased department and other operating income (7,253) (7,221) (12,558) (12,995)
Depreciation and amortization expense 3,264 2,649 6,187 5,269
Amortization of the excess of revalued net assets
over equity under fresh-start reporting (1,539) (1,539) (3,077) (3,077)
Interest and debt expense, net 3,208 5,206 5,600 9,445
Gain on disposition of properties - (395) - (395)
--------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 11,186 6,416 2,195 (3,531)
Income tax (provision) benefit (3,808) (1,902) (747) 1,047
--------- -------- -------- ---------
NET INCOME (LOSS) $7,378 $4,514 $1,448 ($2,484)
========= ======== ======== =========
PRIMARY NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) $0.31 $0.21 $0.06 ($0.12)
========= ======== ======== =========
Weighted average common and common equivalent shares 23,455 21,680 23,354 20,465
========= ======== ======== =========
FULLY DILUTED NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) $0.31 $0.21 $0.06 ($0.12)
========= ======== ======== =========
Weighted average common and common equivalent shares 23,715 21,680 23,629 20,465
========= ========= ======== =========
<FN>
(The accompanying notes are an integral part of these consolidated condensed financial
statements.)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
<CAPTION>
July 26, January 25, July 27,
1997 1997 1996
ASSETS ----------------------------------
<S> <C> <C> <C>
Current Assets:
Cash and short-term investments $17,548 $46,119 $18,226
Receivables 26,386 19,071 25,544
Merchandise inventories 443,827 391,076 458,940
Prepaid expenses and other current assets 15,167 12,169 16,051
----------------------------------
Total current assets 502,928 468,435 518,761
----------------------------------
Fixed Assets 114,147 96,114 85,915
Less - Accumulated depreciation and amortization (38,168) (32,529) (25,233)
----------------------------------
Net fixed assets 75,979 63,585 60,682
----------------------------------
Other assets and deferred charges 8,264 4,773 5,665
----------------------------------
$587,171 $536,793 $585,108
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $153,403 $145,737 $137,595
Other 45,884 43,180 39,846
----------------------------------
Total accounts payable 199,287 188,917 177,441
Note payable - revolver 65,302 - 100,720
Current portion of long-term debt and capital lease oblig 7,426 15,578 16,241
Self-insurance reserves 32,647 34,177 36,081
Accrued expenses and other current liabilities 59,753 66,356 49,969
Store closing reserves 19,007 24,438 19,827
----------------------------------
Total current liabilities 383,422 329,466 400,279
Long-term debt 9,251 11,134 13,267
Capital lease obligations 24,731 27,086 27,525
Other long-term liabilities 7,461 7,565 5,968
Unfavorable lease liability 16,048 17,029 17,847
Excess of revalued net assets over equity under
fresh-start reporting 33,250 36,327 39,404
Stockholders' Equity:
Common stock 218 205 204
Additional paid-in capital 91,702 88,341 80,759
Retained earnings (accumulated deficit) 21,088 19,640 (145)
----------------------------------
Total stockholders' equity 113,008 108,186 80,818
----------------------------------
$587,171 $536,793 $585,108
==================================
<FN>
(The accompanying notes are an integral part of these consolidated 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 Twenty-six
Weeks Ended
---------------------
July 26, July 27,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,448 ($2,484)
Adjustments to reconcile net loss to net cash
used for operating activities:
Income tax provision (benefit) 747 (1,047)
Gain on disposition of properties - (395)
Depreciation and amortization of fixed and other assets 6,476 5,513
Amort. of the excess of revalued net assets over equity (3,077) (3,076)
Increase in accounts receivable (7,315) (11,066)
Increase in merchandise inventories (52,751) (60,007)
Increase in accounts payable 10,370 21,123
Decrease in accrued expenses and other current liabilities (8,132) (8,290)
Increase in other working capital and other, net (3,210) (1,884)
---------- ----------
Cash used for operations before store closing items (55,444) (61,613)
Payments of store closing costs (5,899) (5,044)
---------- ----------
Net cash used for operating activities (61,343) (66,657)
---------- ----------
Cash flows from investing activities:
Proceeds from sales of properties and leases - 490
Purchases of fixed assets (19,256) (9,978)
Purchase of leases (4,148) (2,965)
---------- ----------
Net cash used for investing activities (23,404) (12,453)
---------- ----------
Cash flows from financing activities:
Payments of debt and capital lease obligations (11,753) (13,285)
Short-term borrowings under the revolver, net 65,302 96,436
Proceeds from the exercise of options and warrants 2,627 -
---------- ----------
Net cash provided by financing activities 56,176 83,151
---------- ----------
(Decrease) increase in cash and short-term investments (28,571) 4,041
Cash and short-term investments, beginning of period 46,119 14,185
---------- ----------
Cash and short-term investments, end of period $17,548 $18,226
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest and debt fees not capitalized $4,763 $6,792
Income taxes 2 2
<FN>
(The accompanying notes are an integral part of these consolidated 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 July 26, 1997 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 (the "SEC").
Certain prior year amounts have been reclassified to conform to the
presentation used for the current year. The consolidated condensed
balance sheet at January 25, 1997 was taken from audited financial
statements previously filed with the SEC 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. 139,789 warrants were converted
and 254,960 options were exercised during the quarter ended July 26,
1997. No warrants or options were exercised during last year's
second quarter. Common stock equivalents were excluded for the
twenty-six weeks ended July 27, 1996, as their inclusion would have
reduced the reported loss per share.
In February, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("SFAS No. 128"). Under SFAS No. 128, the presentation of
Primary and Fully Diluted Earnings per Share will be replaced by
Basic and Diluted Earnings per Share. The Company will adopt the
provisions of SFAS No. 128 effective January 31, 1998, and restate
all prior periods. Adoption will not have any affect on the
Company's financial condition, results of operations or cash flows.
Had the Company reported earnings per share for the periods
presented as determined under SFAS No. 128, Basic and Diluted
Earnings per Share would have been as follows:
Quarter Ended Year-To-Date Ended
------------- --------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
---- ---- ---- ----
Basic Earnings Per Share $.34 $.22 $.07 ($.12)
Diluted Earnings Per Share $.31 $.21 $.06 ($.12)
3. INVENTORIES:
-----------
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 inventories. No LIFO reserve was necessary at July 26, 1997,
January 25, 1997 and July 27, 1996. <PAGE>
4. DEBT:
-----
On December 27, 1996, 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 $320
million, with a sublimit of $100 million for letters of credit and a
$20 million term loan portion available for capital expenditures (the
"Credit Agreement").
Prior to this date, the Company had a $300 million secured
revolving credit facility (the "Prior Credit Agreement") in place
with the same financial institutions. The Prior Credit Agreement
terminated on the effective date of the Credit Agreement.
The Credit Agreement is in effect until June 30, 2000, is
secured by substantially all of the assets of the Company, and
requires the Company to meet certain financial covenants. In
addition, each year outstanding borrowings under the Credit Agreement
may not exceed any balance due under the term loan portion plus up to
$20 million in revolver loans 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 July 26, 1997.
As of July 26, 1997, borrowings of $65.3 million were
outstanding under the Credit Agreement. In addition, $21.6 and $5.6
million of standby and trade letters of credit, respectively, were
outstanding under the Credit Agreement. The weighted average
interest rate on the borrowings was 8.2% for the thirteen and twenty-
six weeks ended July 26, 1997. The peak borrowing level through July
26, 1997 was $95.4 million.
The amount of borrowing under the Credit Agreement shall not
exceed the sum of (i) an amount equal to 60% 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. In
addition, the Credit Agreement provides for the potential
establishment of other reserves contingent upon the Company's
financial performance. Each Agent, in addition, reserves the right
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 for
descriptions of the Company's other obligations not discussed herein.
5. STOCK OPTIONS:
-------------
The Company has two stock option plans, the 1994 Management
Stock Plan and the 1994 Non-Employee Directors Stock Option Plan.
The Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized. The impact of
applying SFAS Statement No. 123 to the Company's net income and loss
per share would have been immaterial for all periods presented.
6. INCOME TAXES:
------------
The Company's estimated annual effective income tax rate for
each year was applied to the income (loss) before income taxes for
each period to compute a non-cash income tax provision/benefit. The
income tax benefit is included in other current assets in the
accompanying balance sheet as of July 26, 1997. <PAGE>
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, except as follows.
Subsequent to the Court approval of the settlement in the Root
matter, Ms. Austin, the plaintiff in the Second Complaint, appealed
the Court's denial of her motion to intervene. The First Circuit
Court of Appeals dismissed the appeal for lack of jurisdiction. Ms.
Austin's counsel then filed a Motion to Disapprove the Settlement and
Submit Objections on behalf of a "Jane Doe." The Company opposed
that motion and the District Court denied it. The time for appeal
has now expired.
The Company moved to stay the MOSCHELLE matter pending a
decision on the Company's motion to dismiss in the AUSTIN matter. On
August 7, 1997 the District Court allowed the motion to stay.
The Company has now also answered the GOULD Complaint and
asserted the same defenses as in ABRAMS. Gould has moved for class
certification, which the Company will oppose.
<PAGE>
<PAGE>
<TABLE>
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
FISCAL QUARTER ENDED JULY 26, 1997
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
---------------------------------------------
July 26, January 25, July 27,
1997 1997 1996
--------- ----------- -----------
296 303 300
The following discussion and analysis is based on the results of operations for the
thirteen and twenty-six weeks ended July 26, 1997 and July 27, 1996. During the first half of 1997,
seven (7) stores were opened, thirteen (13) stores were closed and the Company determined that it
would not re-open a store previously closed as a result of flooding. In the comparable prior-year
period, seventeen (17) stores were closed and ten (10) stores were opened. In addition, the
Company has announced that it will open two (2) new stores in October, 1997.
The following table sets forth the operating results expressed as a percentage of net sales
for the periods indicated:
Thirteen Twenty-six
Weeks Ended Weeks Ended
------------------ -------------------
Jul. 26, Jul. 27, Jul. 26, Jul. 27,
1997 1996 1997 1996
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of merchandise sold 70.9 72.0 71.7 72.6
------- ------- ------- --------
Gross margin 29.1 28.0 28.3 27.4
Expenses and (income):
Selling, general and administrative expenses 27.3 27.0 28.5 28.0
Leased department and other operating income (1.4) (1.4) (1.3) (1.4)
Depreciation and amortization expense 0.6 0.5 0.7 0.5
Amortization of the excess of revalued net
assets over equity under fresh start accounting (0.3) (0.3) (0.3) (0.3)
Interest and debt expense, net 0.6 1.0 0.6 1.0
Gain on disposition of properties - (0.1) - -
------- ------- ------- --------
Income (loss) before income taxes 2.2 1.3 0.2 (0.4)
Income tax (provision) benefit (0.7) (0.4) (0.1) 0.1
------- ------- ------- --------
Net income (loss) 1.5 % 0.9 % 0.1 % (0.3)%
======= ======= ======= ========
</TABLE>
<PAGE>
Net sales for the thirteen weeks ended July 26, 1997 increased $4.5
million or 0.9% from the prior-year's second quarter due primarily to an
increase of 0.3% in comparable-store sales. Net sales for the twenty-six
weeks ended July 26, 1997 decreased $1.6 million or 0.2% from the same
prior-year period. Comparable-store sales increased by 0.2% for the first
twenty-six weeks.
Gross margin for the second quarter increased $6.6 million, or 1.1%
as a percentage of net sales. Gross margin for the twenty-six weeks
increased $7.6 million, or 0.9% as a percentage of net sales. The improvement
in second quarter and year-to-date gross margin rates was primarily
attributable to lower markdowns.
Selling, general and administrative expenses increased $2.9 and $4.0
million, or 0.3% and 0.5% as a percentage of net sales, in the thirteen and
twenty-six weeks ended July 26, 1997, respectively, compared to the same
prior-year periods. The Company experienced increased store payroll, general
liability and performance bonus expenses partially offset by a reduction in
advertising expenses during both the quarter and year-to-date periods.
Depreciation and amortization expense increased by $0.6 and $0.9
million, or 0.1% and 0.2% as a percentage of net sales, in the thirteen and
twenty-six weeks ended July 26, 1997, respectively, compared to the same
prior-year periods. 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 only
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 periods
presented as compared to the prior year. The Company is amortizing this
amount over a ten-year period.
Interest and debt expense, net of interest income, declined by $2.0
and $3.8 million, or 0.4% as a percentage of net sales, in the thirteen and
twenty-six weeks ended July 26, 1997, respectively. These decreases were due
primarily to a reduction in the amortization of deferred financing costs, a
reduction in short-term interest expense and lower outstanding long-term
debt balances. Short-term interest expense was lower as a result of lower
average outstanding balances (from $101.1 to $77.2 million during the
thirteen week period and from $75.2 to $55.6 million during the twenty-six
week period) and lower interest rates.
The Company's estimated annual effective income tax rate for each
year was applied to the income (loss) before income taxes for each period to
compute a non-cash income tax provision/benefit. The income tax benefit is
included in other current assets in the balance sheet as of July 27, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On December 27, 1996, 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 $320 million, with a sublimit of $100 million for
letters of credit (the "Credit Agreement").
Prior to this date, the Company had a $300 million secured revolving
credit facility (the "Prior Credit Agreement") in place with the same
financial institutions. The Prior Credit Agreement terminated on the
effective date of the Credit Agreement.
<PAGE>
The Credit Agreement is in effect until June 30, 2000. The Company
was in compliance with the financial covenants of the Credit Agreement
through the quarter ended July 26, 1997. Reference can be made to Note 4 of
this Quarterly Report and the latest Form 10-K for further descriptions of
the Credit Agreement.
Merchandise inventories, valued on a LIFO basis, decreased $15.1
million from July 27, 1996 to July 26, 1997 due to a reduction in the number
of stores in operation and a reduction in apparel inventories. The increase
in inventories of $52.8 million from January 25, 1997 to July 26, 1997 was
principally the result of a normal seasonal build-up of inventories.
Trade accounts payable increased $15.8 million from July 27, 1996 to
July 26, 1997 due primarily to the timing of merchandise receipts and
improved trade payment terms. The increase in trade accounts payable of $7.7
million from January 25, 1997 to July 26, 1997 was the result of the seasonal
build-up of merchandise inventories referenced above, partially offset by the
seasonal dating in effect as of January 25, 1997.
Capital expenditures for the twenty-six weeks ended July 26, 1997
totaled $19.3 million and for the balance of the year are estimated to be
approximately $23.0 million. The Company adjusts its plans for making such
expenditures depending on the amount of internally generated funds.
The net operating loss carryovers remaining after fiscal year 1996,
subject to any 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
financial covenants in the Credit Agreement are 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 1. LEGAL PROCEEDINGS
-----------------
Reference can be made to Note 12 to the Consolidated
Financial Statements included in the Company's most recent
Form 10-K for various litigation involving the Company, for
which there were no material changes since the filing date of
the Form 10-K, except as set forth in Note 7 of this Quarterly
Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The Annual Meeting of Stockholders was held Wednesday,
May 21, 1997, 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;
and (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 31, 1998.
Each nominee for director was elected as follows:
For Withheld
---------- -------------
Francis X Basile 17,593,425 105,658
Paul Buxbaum 17,555,875 143,208
Alan Cohen 14,172,785 3,526,298
Joseph R. Ettore 17,555,785 143,298
Richard M. Felner 17,595,656 103,427
Sidney S. Pearlman 17,554,406 144,677
Laurie M. Shahon 17,555,975 143,108
The appointment of Arthur Andersen LLP was approved by a
vote of 17,590,750 shares in favor with 76,673 shares against
and 31,660 shares abstaining.
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
and fully diluted earnings per share
<PAGE>
(b) REPORTS ON FORM 8-K:
-------------------
The following reports on Form 8-K were filed with the
Securities and Exchange Commission during the second quarter:
DATE OF REPORT DATE OF FILING ITEM # DESCRIPTION
-------------- -------------- ------- -----------
May 8, 1997 May 8, 1997 5 Disclosure of the fiscal
April 1997 results.
June 5, 1997 June 5, 1997 5 Disclosure of fiscal
May 1997 results.
July 10, 1997 July 10, 1997 5 Disclosure of fiscal
June 1997 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: August 26, 1997 /s/ Joseph R. Ettore
-------------------------------------
Joseph R. Ettore, President, Director,
and Chief Executive Officer
Dated: August 26, 1997 /s/ John F. Burtelow
-------------------------------------
John F. Burtelow, Executive Vice
President and Chief Financial Officer
Dated: August 26, 1997 /s/ Gregory D. Lambert
-------------------------------------
Gregory D. Lambert
Senior Vice President - Finance
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS
PER SHARE
(Amounts in thousands except per share amounts)
<CAPTION>
For the Thirteen For the Twenty-six
Weeks Ended Weeks Ended
-------------------- --------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $7,378 $4,514 $1,448 ($2,484)
========= ========= ========= =========
For Primary Earnings Per Share
- ------------------------------
Weighted average number of common shares
outstanding during the period 21,486 20,460 21,188 20,465
Add: Common stock equivalent shares represented by
- Series B Warrants 67 (a) 64 (b)
- Series C Warrants 1,082 1,161 1,240 (b)
- Options under 1994 Management Stock
Option Plan 780 59 823 (b)
- Options under 1994 Non-Employee Directors
Stock Option Plan 40 (a) 39 (b)
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares used in the calculation
of primary earnings per share 23,455 21,680 23,354 20,465
========= ========= ========= =========
Primary net income (loss) per share $0.31 $0.21 $0.06 ($0.12)
========= ========= ========= =========
For Fully Diluted Earnings Per Share
- ---------------------------------------
Weighted average number of common shares
outstanding during the period 21,486 20,460 21,188 20,465
Add: Common stock equivalent shares represented by
- Series B Warrants 107 (a) 107 (b)
- Series C Warrants 1,127 1,161 1,289 (b)
- Options under 1994 Management Stock
Option Plan 944 59 997 (b)
- Options under 1994 Non-Employee Directors
Stock Option Plan 51 (a) 48 (b)
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares used in the calculation
of fully diluted earnings per share 23,715 21,680 23,629 20,465
========= ========= ========= =========
Fully diluted net income (loss) per share $0.31 $0.21 $0.06 ($0.12)
========= ========= ========= =========
<FN>
(a) These options/warrants were not considered common stock equivalents because the
exercise price exceeded the market price of the common stock for all or substantially
all of the period.
(b) Common stock equivalents have not been included because the effect would be
anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-26-1997
<CASH> 17548
<SECURITIES> 0
<RECEIVABLES> 26386
<ALLOWANCES> 0
<INVENTORY> 443827
<CURRENT-ASSETS> 502928
<PP&E> 114147
<DEPRECIATION> 38168
<TOTAL-ASSETS> 587171
<CURRENT-LIABILITIES> 383422
<BONDS> 33982
0
0
<COMMON> 218
<OTHER-SE> 112790
<TOTAL-LIABILITY-AND-EQUITY> 587171
<SALES> 503567
<TOTAL-REVENUES> 510820
<CGS> 357219
<TOTAL-COSTS> 357219
<OTHER-EXPENSES> 139207
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3263
<INCOME-PRETAX> 11186
<INCOME-TAX> 3808
<INCOME-CONTINUING> 7378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7378
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
