FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended October 1, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ... to ...
Commission File No. 1-8739
Burlington Coat Factory Warehouse Corporation
________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 22-1970303
- ------------------------------ -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1830 Route 130 North
Burlington, New Jersey 08016
- ------------------------------ -------------------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (609)387-7800
Indicate by check mark whether the
Registrant (1) has filed all reports
required 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.
Class Outstanding at November 8, 1994
- -------------------------- --------------------------------
Common stock, par value $1 41,127,980
Page 1 of 12
<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
I N D E X
Page
Part I - Financial Information:
Item 1. Financial Statements:
Condensed consolidated balance sheets - October 1, 1994 3
(unaudited), July 2, 1994 and October 2, 1993 (unaudited)
Condensed consolidated statements of operations - 4
Three months ended October 1, 1994 and October 2, 1993
(unaudited)
Condensed consolidated statements of cash flows 5
Three months ended October 1, 1994 and October 2, 1993
(unaudited)
Notes to condensed consolidated financial statements 6-7
Item 2. Management's discussion and analysis of results 8 -11
of operations and financial condition
Part II - Other Information:
Item 1. Legal Proceedings 12
Item 6. Exhibits and reports on Form 8-K 12
SIGNATURES 12
* * * * * * * * * * * *
Page 2 of 12
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(All amounts in thousands)
<CAPTION>
October 01, July 02, October 02,
1994 1994 1993
ASSETS ----------- ----------- -----------
- ------
<S> <C> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 4,171 $21,236 $21,201
Accounts Receivable 16,793 13,915 14,752
Merchandise Inventories 659,169 468,921 468,027
Deferred Tax Asset 11.820 6,782 4,483
Prepaid Income Taxes 614 - -
Prepaid and Other Current Assets 35,461 17,968 24,082
-------- -------- --------
Total Current Assets 728,028 528,822 532,545
Property and Equipment Net of Accumulated Depreciation
and Amortization 192,528 184,590 154,650
Other Assets 15,394 12,027 7,756
-------- -------- -----------
Total Assets $935,950 $725,439 $694,951
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable $290,921 $133,706 $200,487
Notes Payable 119,500 65,020 20,800
Income Taxes Payable - 454 3,064
Other Current Liabilities 57,817 50,998 47,280
Current Maturities of Long Term Debt 61 54 64
-------- -------- --------
Total Current Liabilities 468,299 250,232 271,695
Long Term Debt 91,348 91,369 91,414
Other Liabilities 7,112 7,151 5,930
Deferred Tax Liability 7,177 6,830 5,570
Stockholders' Equity:
Unrealized Loss-Marketable Securities (20) (20) (11)
Equity Adjustment for Foreign Currency Translation (94) 284 -
Preferred Stock - - -
Common Stock 41,130 41,122 41,044
Capital in Excess of Par Value 24,645 24,592 23,729
Retained Earnings 298,203 305,729 257,430
Treasury Stock at Cost; 1994 and 1993--427,387 Shares (1,850) (1,850) (1,850)
-------- -------- -------
Total Stockholders' Equity 362,014 369,857 320,342
-------- -------- -------
Total Liabilities and Stockholders' Equity $935,950 $725,439 $694,951
======== ======== =======
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 3 of 12
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(All amounts in thousands except per share data)
<CAPTION>
THREE MONTHS ENDING
OCTOBER 01, OCTOBER 02,
1994 1993
--------------------------
<S> <C> <C>
REVENUES:
Net Sales $299,242 $241,215
Other Income 2,115 2,211
--------------------------
301,357 243,426
--------------------------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of Depreciation
and Amortization) 193,367 155,770
Selling and Administrative Expenses 110,384 83,829
Depreciation and Amortization 6,125 5,579
Interest Expense 3,682 2,516
--------------------------
313,558 247,694
--------------------------
Loss Before Benefit for Income Taxes (12,201) (4,268)
Benefit For Income Taxes (4,675) (1,352)
--------------------------
Net Loss ($7,526) ($2,916)
==========================
Earnings Per Share:
Net Loss Per Share ($0.18) ($0.07)
==========================
Weighted Average Shares Outstanding 40,698,184 40,598,603
==========================
Dividends Per Share - -
===== =====
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 4 of 12
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(All amounts in thousands)
<CAPTION>
Three Months Ended
October 1, October 2,
1993 1992
--------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss ($7,526) ($2,916)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 6,125 5,579
Provision for Deferred Income Taxes (4,691) 212
Gain on Disposition of Fixed Assets - (5)
Rent Expense and Other 778 1,029
Changes in Operating Assets and Liabilities:
Accounts Receivable (3,630) (5,444)
Merchandise Inventories (190,248) (115,108)
Prepaids and Other Current Assets (18,107) (7,441)
Accounts Payable 157,215 84,280
Other Current Liabilities 6,365 6,686
---------------------------
Net Cash (Used) by Operating Activities (53,719) (33,128)
---------------------------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (14,043) (17,654)
Short Term Investments-Net - 16,421
Proceeds From Sale of Fixed Assets - 12
Issuance of Long Term Notes Receivable (2,087) (375)
Receipts Against Long Term Notes Receivable 152 76
Acquisition of Leasehold (1,652) -
Minority Interest 97 -
Other (340) 84
---------------------------
Net Cash Used by Investing Activities (17,873) (1,436)
---------------------------
FINANCING ACTIVITIES
Principal Payments on Long Term Debt (14) (63)
Issuance of Common Stock Upon Exercise of Stock Option 61 147
Net Borrowings Under Line of Credit 54,480 20,800
---------------------------
Net Cash Provided (Used) in Financing Activities 54,527 20,884
---------------------------
Decrease in Cash and Cash Equivalents (17,065) (13,680)
Cash and Cash Equivalents at Beginning of Period 21,236 34,881
---------------------------
Cash and Cash Equivalents at End of Period $4,171 $21,201
===========================
Interest Paid: $1,795 $638
Income Taxes Paid: $1,084 $1,088
===========================
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 5 of 12
<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 1, 1994 AND OCTOBER 2, 1993
1. The condensed consolidated financial statements include the
accounts of the Company and all its subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The
accompanying financial statements are unaudited, but in the opinion of
management reflect all adjustments, which include normal recurring
accruals, necessary for a fair presentation of the results of operations
for the interim period. Because the Company's business is seasonal in
nature, the operating results for the three months ended October 1, 1994
and the corresponding period ended October 2, 1993 are not necessarily
indicative of results for the fiscal year.
2. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on September 30, 1994.
3. Inventories as of October 1, 1994 and October 2, 1993 are stated
at the lower of FIFO cost or market, as valued by the gross profit
method. Inventories as of July 2, 1994 were valued by the retail
inventory method.
Page 6 of 12
4. As of October 1, 1994, the Company had a deferred tax liability of
$7.2 million and a current deferred tax asset of $11.8 million. As of
October 2, 1993, the Company had a deferred tax liability of $5.6 million
and a current deferred tax asset of $4.5 million. Valuation allowances were
not required. Deferred tax assets consisted primarily of certain operating
costs, provisions for uncollectible receivables, and certain inventory related
costs not currently deductible for tax purposes and tax loss carryforwards.
Deferred tax liabilities primarily reflected the excess of tax depreciation
over book depreciation.
5. Licensee department sales, included in net sales, amounted to $4.1
million for the three months ended October 1, 1994 compared with $4.0
million for the similar period of fiscal 1994.
6. Other current liabilities primarily consisted of sales tax payable,
accrued operating expenses, payroll taxes payable and other
miscellaneous items.
7. Certain reclassifications have been made to the prior year's
condensed consolidated financial statements to conform to the
classifications used in the current year.
8. On December 6, 1993, the Company acquired 100% ownership of a
Northeastern regional retail chain (Decelle, Inc.) for approximately $.2
million and at closing repaid Decelle bank debt of approximately $2.1 million.
The chain is comprised of eight stores in Massachusetts and New Hampshire.
Net sales for the Decelle, Inc. chain amounted to $8.3 million for the first
quarter of fiscal 1995.
Page 7 of 12
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition.
Results of Operations
- ---------------------
The following table sets forth certain items in the condensed
consolidated statements of operations as a percentage of net sales for
the three month periods ended October 1, 1994 and October 2, 1993.
Percentage of Net Sales
Three Months Ended
October 1, October 2,
1994 1993
----------- ------------
Net Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 64.6 64.6
Selling & administrative
expenses 36.9 34.8
Depreciation &
amortization 2.1 2.3
Interest expense 1.2 1.0
-------- --------
104.8 102.7
-------- --------
Other income .7 .9
-------- --------
Loss before income taxes (4.1) (1.8)
Income tax benefit 1.6 .6
________ _________
Net loss (2.5%) (1.2%)
======== ========
Page 8 of 12
<PAGE>
Three Months Ended October 1, 1994 and October 2, 1993
- ------------------------------------------------------------
Net sales increased by $58.0 million (24.1%) for the three month
period ended October 1, 1994 compared with the similar period a
year ago. Comparative store sales increased 2.6%. New Burlington
Coat Factory stores opened subsequent to October 2, 1993 contributed
$29.4 million to this quarter's sales increase. Stores which were in
operation a year ago, but which were closed prior to this year's first
quarter contributed $3.0 million to last year's first quarter
sales. Specialty stores opened subsequent to last fiscal year's first
quarter, including one Totally 4 Kids store, one Baby Depot store, and
one Fit for Men store, contributed sales of $1.6 million to this year's
first quarter. The Cohoes stores showed a comparative stores sales
decrease of 11.8%, while contributing $8.5 million to this year's first
quarter sales compared with $9.6 million in last year's first
quarter. In addition, one new Cohoes store was opened subsequent to last
year's first quarter and contributed $1.3 million to the Company's net sales
total. Sales in the quarter for Decelle amounted to $8.3 million.
Other income (consisting primarily of rental income from lease
departments, investment income and miscellaneous items) decreased
$.1 million for the three months ended October 1, 1994 compared
with the three months ended October 2, 1993. The decrease is
primarily due to a reduction in investment income. Last year's first
quarter included a $.2 million gain from the sale of investments.
Cost of sales increased by $37.6 million (24.1%) for the three
month period ended October 1, 1994 compared with the similar period
a year ago. The dollar increase in cost of sales is attributable
to comparative store sales increases and to the sales from stores
open at October 1, 1994, which were not in operation a year ago.
Cost of sales, as a percentage of net sales, for the three month period
ended October 1, 1994 and for the similar period of the prior year was 64.6%.
Selling and administrative expenses increased by $26.6 million
(31.7%) for the three month period ended October 1, 1994 compared
with the similar period a year ago, primarily due to an increase in
the number of stores in operation. As a percentage of sales,
selling and administrative expenses increased to 36.9% for the
three months ended October 1, 1994 from 34.8% for the similar
period of fiscal 1994 primarily due to increases in payroll, payroll
related expenses, and advertising.
Interest expense increased $1.2 million to $3.7 million for the three
months ended October 1, 1994 compared with the comparable period ended
October 2, 1993. This increase is the result of interest charges
associated with the borrowings made by the Company under its
revolving credit and term loan agreements as well as uncommitted lines of
credit. (see Liquidity and Capital Resources).
The income tax benefit increased to $4.7 million for the three
months ended October 1, 1994, from $1.4 million for the comparable
period of a year ago. The effective tax benefit percentages were
38.3% for the three months ended October 1, 1994 and 31.7% for
comparable period a year ago. The effective tax benefit increased from
the prior year's quarter due to the federal income tax rate increase of
1% in August 1993 retroactive to January 1993 which decreased the prior
year effective tax benefit.
Page 9 of 12
Net loss increased to $7.5 million for the three months ended October 1,
1994 from $2.9 million for the comparable period of fiscal 1994. Loss
per share increased to ($.18) per share compared with ($.07) for the
comparable period of a year ago.
The Company's business is seasonal, with its highest sales occurring in
the months of October, November, and December of each year. The Company's
net income generally reflects the same seasonal pattern as its net sales.
In the past, substantially all of the Company's profits have been derived
from operations during the months of October, November and December.
Since mid-September through the first week of November, the weather
throughout most of the country has been significantly warmer than last
year. This has had an adverse effect on sales, particularly outerwear
sales. If this warm trend continues, sales will continue to be
affected in the second quarter.
Liquidity and Capital Resources
During the first quarter of fiscal 1995, the Company opened ten
Burlington Coat Factory Warehouse stores. In addition, the Company
opened one Specialty Men's Store, "Fit for Men" in New York.
The Company estimates spending between $10 million and $17 million to open
an additional ten to fifteen Burlington Coat Factory stores, three to six
Luxury Linen stores, two to three Totally 4 Kids stores, and two Decelle
stores during the remaining nine months of fiscal 1995. Expenditures
incurred to set up and fixture new stores through the first quarter of
fiscal 1995, were approximately $4.0 million. All locations opened during
the period were leased, except two which were purchased for an aggregate of
approximately $5.5 million.
Net cash used by operating activities of $53.7 million, for the
three months ended October 1, 1994, increased from $33.1 million
for the comparable period of fiscal 1994. This increase is
primarily the result of increases in merchandise inventories
associated with the opening of new stores during the period and
inventory growth at existing stores. The inventory increases were
financed by cash generated from increases in amounts owed to suppliers,
and short term borrowings.
The Company believes that its current capital expenditure and operating
requirements will be satisfied from internally generated funds, and from
short-term borrowings under its revolving credit and term loan agreements
as well as uncommitted lines of credit. The Company may, consider replacing
some of its short term borrowings with long term financing. Furthermore, to
the extent that the Company decides to purchase additional store locations,
it may be necessary to finance such acquisitions with additional long term
borrowings.
Page 10 of 12
The Company has in place a committed line of credit agreement in the
amount of $40 million. The Company also has uncommitted lines of credit
of $140 million. During the first quarter of fiscal 1995 the Company had
maximum borrowings of $173.3 million. The average borrowing during this
quarter amounted to $92.4 million at an average interest rate of 5.2%.
During the first quarter of fiscal 1994 the Company had maximum borrowing
of $31.4 million with an average borrowing of $12.1 million at an average
interest rate of $3.6%. The increase in borrowings in the first quarter
fiscal 1995 over the first quarter of fiscal 1994 reflects the opening of new
stores as well as inventory growth at existing stores.
The Company's long-term borrowings at October 1, 1994 include $80 million
of long term subordinated notes isssued by the Company to institutional
investors in June 1990 (the Notes) and an industrial development bond of
$10 million issued by the New Jersey Economic Development Authority.
The Notes mature on June 27, 2005 and bear interest at the rate of
10.6% per annum. The Notes have an average maturity of ten years
and are subject to mandatory prepayment in installments of $8
million each without premium on June 27 of each year beginning in
1996. The Notes are subordinated to senior debt, including, among
others, bank debt and indebtedness for borrowed money. The
interest rate on the bonds issued in connection with the Company's
industrial development bond financing is fixed at 9.78% over the
life of these serial and term bonds. The bonds mature at various
dates commencing in September 1996 and ending in September 2010.
Over the past two years, which has been a period of low inflation, the
Company has been able to increase sales volume to compensate for increases
in operating expenses. Historically, the Company has been able to increase
its selling prices as the costs of merchandising and related operating
expenses have increased and therefore, inflation has not had a significant
effect on operations.
On or about September 23, 1994 three separate class actions were filed
against the Company (see Part II - Other Information, Item 1 Legal
Proceedings). The Company is unable to determine the probability of any
potential loss with respect to these class action suits or the materiality
thereof at this time and accordingly has not established any reserve for
this matter.
New Accounting Standards
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Post Employment Benefits". This pronouncement did
not have an effect on the Company's condensed consolidated
financial statements as the benefits covered in the pronouncement
are not provided by the Company.
Page 11 of 12
<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
In late September 1994, three class action lawsuits were filed
against the Company, Monroe G. Milstein, Stephen E. Milstein and
Robert L. LaPenta, Jr. in the United States District Court for the District
of New Jersey. Each of the Complaints filed in those lawsuits,
P. Gregory Buchanan v. Monroe G. Milstein, et al., Civil Action No.
94-CV-4663, Jacob Turner v. Monroe G. Milstein, et al., Civil Action No.
94-CV-4737, and Ronald Abramoff v. Monroe G. Milstein, et al., Civil Action
No. 94-CV-4751 (collectively, the "Class Actions"), seeks unspecified
damages in connection with alleged violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, as amended, and Rule 10b-5
promulgated thereunder. The Class Action Complaints allege material
misstatements and omissions by the Company and certain of its officers and
directors that plaintiffs allege caused the Company's common stock to be
artificially inflated during the so-called "Class Period," which is defined
variously in the Class Action Complaints as the period from November 1, 1993
through September 21, 1994. Although the Company is unable at this time to
assess the probable outcome of the Class Actions or the materiality of
the risk of loss in connection therewith (given that none of the
Class Action Complaints alleges damages with any particularity), the
Company believes that the Class Actions are without merit and intends to
vigorously defend them.
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits - None
b. No reports on Form 8-K have been filed during the
quarter for which this report is filed
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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
/s/ Monroe G. Milstein
Monroe G. Milstein
President & Chief Executive Officer
/s/ Robert L. LaPenta, Jr.
Robert L. LaPenta, Jr.
Corporate Controller & Chief Accounting
Officer
Date: November 9, 1994
Page 12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> OCT-01-1994
<CASH> 4,171,000
<SECURITIES> 0
<RECEIVABLES> 22,604,000
<ALLOWANCES> (5,811,000)
<INVENTORY> 659,169,000
<CURRENT-ASSETS> 728,028,000
<PP&E> 299,810,000
<DEPRECIATION> (107,282,000)
<TOTAL-ASSETS> 935,950,000
<CURRENT-LIABILITIES> 468,299,000
<BONDS> 91,348,000
<COMMON> 41,130,000
0
0
<OTHER-SE> 320,884,000
<TOTAL-LIABILITY-AND-EQUITY> 935,950,000
<SALES> 299,242,000
<TOTAL-REVENUES> 301,357,000
<CGS> 193,367,000
<TOTAL-COSTS> 193,367,000
<OTHER-EXPENSES> 115,692,000
<LOSS-PROVISION> 817,000
<INTEREST-EXPENSE> 3,682,000
<INCOME-PRETAX> (12,201,000)
<INCOME-TAX> (4,675,000)
<INCOME-CONTINUING> (7,526,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,526,000)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
