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 September 30, 1995
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 offices) (Zip Code)
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 6, 1995
Common stock, par value $1 41,149,051
Page 1 of 14<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 - 3
September 30, 1995 (unaudited), July 1, 1995 and
October 1, 1994 (unaudited)
Condensed consolidated statements of operations - 4
Three months ended September 30, 1995 and
October 1, 1994 (unaudited)
Condensed consolidated statements of cash flows 5
Three months ended September 30, 1995 and
October 1, 1994 (unaudited)
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of 7 -11
results 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 13
* * * * * * * * * * * *
Page 2 of 14<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(All amounts in thousands)
<CAPTION>
September 30, July 1, October 1,
1995 1995 1994
(Unaudited) (Note A) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 35,215 $ 14,520 $ 4,171
Accounts Receivable 19,081 15,326 16,793
Merchandise Inventories 582,717 452,026 659,169
Deferred Tax Assets 17,257 8,843 11,820
Prepaid and Other Current Assets 9,654 6,006 36,075
Total Current Assets 663,924 496,721 728,028
Property and Equipment Net of Accumulated
Depreciation and Amortization 217,678 224,493 192,528
Other Assets 11,029 14,055 15,394
Total Assets $ 892,631 $ 735,269 $ 935,950
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 255,954 $ 101,046 $ 290,921
Notes Payable 84,300 85,900 119,500
Income Taxes Payable 1,909 2,064 --
Other Current Liabilities 68,753 54,177 57,817
Current Maturities of Long Term Debt 8,066 8,066 61
Total Current Liabilities 418,982 251,253 468,299
Long Term Debt 83,282 83,298 91,348
Other Liabilities 10,010 9,728 7,112
Deferred Tax Liability 6,489 5,971 7,177
Stockholders' Equity:
Unrealized Loss-Marketable Securities (8) (8) (20)
Equity Adjustment for Foreign Currency
Translation -- -- (94)
Preferred Stock -- -- --
Common Stock 41,140 41,139 41,130
Capital in Excess of Par Value 25,152 25,143 24,645
Retained Earnings 309,434 320,595 298,203
Less Treasury Stock at Cost (1,850) (1,850) (1,850)
Total Stockholders' Equity 373,868 385,019 362,014
Total Liabilities and
Stockholders' Equity $892,631 $735,269 $ 935,950
<FN>
See notes to the condensed consolidated financial statements.
Note A: The balance sheet at July 1, 1995 has been derived from the audited
financial statements at that date.
</TABLE>
Page 3 of 14<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(All amounts in thousands except per share data)
<CAPTION>
Three Months Ended
September 30, October 1,
1995 1994
<S> <C> <C>
REVENUES:
Net Sales $ 291,227 $ 299,242
Other Income 4,401 2,115
Total Revenues 295,628 301,357
COSTS AND EXPENSES:
Cost of Sales (Exclusive of Depreciation and Amortization) 194,141 193,367
Selling and Administrative Expenses 109,553 110,384
Depreciation and Amortization 6,905 6,125
Interest Expenses 3,951 3,682
Total Costs and Expenses 314,550 313,558
Loss Before Benefit for Income Taxes (18,922) (12,201)
Benefit For Income Taxes (7,761) (4,675)
Net Loss ($11,161) ($7,526)
Earnings (Loss) Per Share:
Net Loss Per Share ($0.27) ($0.18)
Weighted Average Shares Outstanding 40,711,856 40,698,184
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 4 of 14<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(All amounts in thousands)
<CAPTION>
Three Months Ended
September 30, October 1,
1995 1994
<C> <C>
OPERATING ACTIVITIES
Net Loss ($11,161) ($7,526)
Adjustments to Reconcile Net loss to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 6,905 6,125
Provision for Deferred Income Taxes (7,896) (4,691)
Gain on Disposition of Fixed Assets (1,979) --
Rent Expense and Other 1,263 778
Changes in Operating Assets and Liabilities:
Accounts Receivable (4,664) (3,630)
Merchandise Inventories (130,691) (190,248)
Prepaids and Other Current Assets (3,662) (18,107)
Accounts Payable 154,908 157,215
Other Current Liabilities 13,921 6,365
Net Cash Provided by (Used in) Operating Activities 16,944 (53,719)
INVESTING ACTIVITIES
Acquisition of Property and Equipment (15,200) (14,043)
Proceeds From Sale of Fixed Assets 17,625 --
Issuance of Long Term Notes Receivable (359) (2,087)
Receipts Against Long Term Notes Receivable 3,684 152
Acquisition of Leasehold -- (1,652)
Minority Interest 57 97
Other (450) (340)
Net Cash Provided by (Used in) Investing Activities 5,357 (17,873)
FINANCING ACTIVITIES
Principal Payments on Long Term Debt (16) (14)
Issuance of Common Stock Upon Exercise of
Stock Options 10 61
Net (Repayments) Borrowings Under Lines of Credit (1,600) 54,480
Net Cash (Used in) Provided by Financing Activities (1,606) 54,527
Increase (Decrease) in Cash and Cash Equivalents 20,695 (17,065)
Cash and Cash Equivalents at Beginning of Period 14,520 21,236
Cash and Cash Equivalents at End of Period $35,215 $4,171
Interest Paid: $1,995 $1,795
Income Taxes Paid: $289 $1,084
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 5 of 14<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
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
are of a normal and recurring nature), 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 September 30, 1995
and the corresponding period ended October 1, 1994 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 29, 1995.
3. Inventories as of September 30, 1995 and October 1, 1994 are
stated at the lower of FIFO cost or market, as valued by the
gross profit method. Inventories as of July 1, 1995 were valued
by the retail inventory method.
4. As of September 30, 1995, the Company had a deferred tax
liability of $6.5 million and a current deferred tax asset of
$17.3 million. 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. 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 $7.1 million for the three months ended September 30, 1995
compared with $4.1 million for the similar period of fiscal 1995.
6. Other current liabilities primarily consisted of sales tax
payable, accrued operating expenses, payroll taxes payable and
other miscellaneous items.
Page 6 of 14<PAGE>
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 September 30, 1995 and
October 1, 1994.
Percentage of Net Sales
Three Months Ended
September 30, October 1,
1995 1994
Net Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 66.7 64.6
Selling & administrative
expenses 37.6 36.9
Depreciation &
amortization 2.4 2.1
Interest expense 1.3 1.2
-------- --------
108.0 104.8
-------- --------
Other income 1.5 .7
-------- --------
Loss before income taxes (6.5) (4.1)
Income tax benefit 2.7 1.6
-------- --------
Net loss (3.8%) (2.5%)
======== ========
Page 7 of 14<PAGE>
Three Months Ended September 30, 1995 and October 1, 1994
- ------------------------------------------------------------
Net sales decreased by $8.0 million (2.7%) for the three month
period ended September 30, 1995 compared with the similar period
a year ago. Comparative store sales decreased 12.5%. New
Burlington Coat Factory stores opened subsequent to October 1,
1994 contributed $19.3 million to this quarter's sales. Stores
which were in operation a year ago, but which were closed prior
to this year's first quarter contributed $3.8 million to last
year's first quarter sales. Specialty stores opened subsequent
to last fiscal year's first quarter, including two Totally 4 Kids
stores, and five Luxury Linens stores, contributed sales of $4.1
million to this year's first quarter. The Cohoes stores showed a
comparative stores sales decrease of 19.8%, while contributing
$9.5 million to this year's first quarter sales compared with
$11.9 million in last year's first quarter. Sales in the quarter
for Decelle amounted to $7.6 million compared with $8.3 million
for the similar period of a year ago.
Other income (consisting primarily of rental income from lease
departments, investment income and miscellaneous items) increased
$2.3 million for the three months ended September 30, 1995
compared with the three months ended October 1, 1994. The
increase is primarily due to a $2.0 million gain on the sale of
the Company's Secaucus, New Jersey facility, a portion of which
the Company had been leasing to third parties and a portion of
which it uses as a store.
Cost of sales increased by $.8 million (.4%) for the three month
period ended September 30, 1995 compared with the similar period
a year ago. Cost of sales, as a percentage of net sales, for the
three month period ended September 30, 1995 and for the similar
period of the prior year were 66.7% and 64.6%, respectively.
Cost of goods sold continues to reflect a weak apparel
environment and the Company's efforts to remain competitive
through lower initial markons and a continued competitive
markdown program.
Selling and administrative expenses decreased by $1.9 million
(.9%) for the three month period ended September 30, 1995
compared with the similar period a year ago, primarily due to a
decrease in payroll and payroll related expenses. As a
percentage of sales, selling and administrative expenses
increased to 37.6% for the three months ended September 30, 1995
from 36.9% for the similar period of fiscal 1995 primarily due to
decreases in comparative store sales. As a result of its weaker
than planned sales performance, the Company instituted more
stringent controls on payroll expenditures which have resulted in
payroll and payroll related savings of $5.0 million for the three
months ended September 30, 1995 compared with the similar period
Page 8 of 14<PAGE>
of a year ago. These cost savings were partially offset by
increases in occupancy costs associated with new stores opened
subsequent to October 1, 1994.
Interest expense increased $.3 million to $4.0 million for the
three months ended September 30, 1995 compared with the
comparable period ended October 1, 1994. This increase is the
result of an increase in interest rates this year over last year.
(See Liquidity and Capital Resources.)
The income tax benefit increased to $8.0 million for the three
months ended September 30, 1995, from $4.7 million for the
comparable period of a year ago. The effective tax benefit
percentages were 41.0% for the three months ended September 30,
1995 and 38.3% for comparable period a year ago. The effective
tax benefit increased from the prior year's quarter due to an
increase in the effective state income tax rate and the
elimination of the Federal Targeted Jobs Tax Credit program
effective January 1, 1995.
Net loss increased to $11.2 million for the three months ended
September 30, 1995 from $7.5 million for the comparable period of
fiscal 1995. Loss per share increased to ($.27) per share
compared with ($.18) 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.
Liquidity and Capital Resources
During the first quarter of fiscal 1996, the Company opened ten
Burlington Coat Factory Warehouse stores. The Company estimates
spending approximately $5 million to open an additional two to
three Burlington Coat Factory Warehouse stores, one Totally 4
Kids store, and one Luxury Linens store during the remaining nine
months of fiscal 1996. Expenditures incurred to set up and
fixture new stores through the first quarter of fiscal 1996 were
approximately $7.4 million. In addition, the Company expended
approximately $3.7 million for capital improvements and
refurbishing of existing stores and its former Secaucus, New
Jersey property (which was sold on September 29, 1995).
Approximately $2.0 million have been budgeted for capital
improvement of existing stores for the balance of fiscal 1996.
In September 1995 the Company realized approximately $17.9
Page 9 of 14<PAGE>
million in net cash upon the sale of its Secaucus, New Jersey
facility. The sale added approximately $2.0 million to this
fiscal year's first quarter earnings before provision for income
taxes.
Working capital decreased from $259.7 million at October 1, 1994
to $244.9 million at September 30, 1995.
Net cash provided by operating activities of $16.9 million for
the fiscal quarter ended September 30, 1995, increased from $53.7
million in net cash used by operating activities for the
comparable period of fiscal 1995, an increase of $70.6 million.
This change in net cash from operations was the result of the
Company's seasonal inventory build-up being at a reduced level
compared with the similar period of a year ago.
The Company's long-term borrowings at September 30, 1995 include
$80 million of long term subordinated notes issued 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 industrial development bond financing was
originally fixed at 9.78% over the life of these serial and term
bonds (the "Bonds"). The Company refinanced its industrial
development bonds with the New Jersey Economic Development
Authority on September 1, 1995. The original bonds were called
at 103 and refinanced with credit enhanced bonds (the "Refunding
Bonds"). The Refunding Bonds consist of serial and term bonds
having the same maturity as the original issue. The serial bonds
aggregate $3.6 million and mature in series annually on September
1, beginning in 1996 and continuing to and including 2003. The
term bonds consist of two portions, $1.4 million maturing on
September 1, 2005 and $5.0 million maturing on September 1, 2010.
The serial bonds bear interest ranging from 3.75% to 5.4% per
annum, and the term bonds bear interest at the rates of 5.60% for
the portion maturing on September 1, 2005 and 6.125% per annum
for the portion maturing on September 1, 2010. The average
interest rate and average maturity of the Refunding Bonds are
5.84% and 9.78 years, respectively.
Page 10 of 14<PAGE>
The Company has in place a committed line of credit agreement in
the amount of $40.0 million and $160.0 million in uncommitted
lines of credit. The maximum borrowings outstanding under these
lines were $120.4 million and $123.3 million during the first
quarter of fiscal 1996 and the first quarter of fiscal 1995,
respectively. The average borrowings outstanding under the lines
were $98.1 million and $92.4 million during the first quarters of
fiscal 1996 and fiscal 1995, respectively. The weighted average
interest rate on outstanding borrowings during the first quarters
of fiscal 1996 and fiscal 1995 were 6.2% and 5.2%, respectively.
Short term borrowings outstanding at September 30, 1995 were
$84.3 million compared with $119.5 million at October 1, 1994.
The decrease in short term borrowings at September 30, 1995 over
October 1, 1994 is the direct result of planned inventory
decreases which reached $76.5 million on September 30, 1995 when
compared with inventory levels at October 1, 1994. The Company
anticipates having its lines of credit paid off by the end of the
calendar year 1995.
The Company believes that its current capital expenditures and
operating requirements can be satisfied from internally generated
funds, from short term borrowings under its revolving credit and
term loan agreement as well as uncommitted lines of credit and
from its long term borrowings. 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.
The Company believes that the current operating results will not
have a material effect on its ability to obtain financing.
On or about September 23, 1994 three separate class actions were
filed against the Company. These three actions were consolidated
and an amended complaint was served on January 17, 1995. The
Company filed a motion to dismiss on May 17, 1995 and a hearing
on the motion was held on July 20, 1995. (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.
However, the Company believes the actions are without merit and
intends to vigorously defend them.
Page 11 of 14<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
In late September 1994, three putative class action
lawsuits, P. Gregory Buchanan v. Monroe G. Milstein, et al., No.
94-CV-4663, Jacob Turner v. Monroe G. Milstein, et al., No. 94-
CV-4737, and Ronald Abramoff v. Monroe G. Milstein, et al., No.
94-CV-4751 (collectively, the "Class Actions"), 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. By Order entered November 15, 1994,
the Court consolidated the Class Actions under the caption In re
Burlington Coat Factory Securities Litigation. On January 17,
1995, plaintiffs filed their Consolidated Amended and
Supplemental Class Action Complaint (the "Amended Complaint"),
naming as defendants, in addition to those originally named in
September 1994, Andrew R. Milstein and Mark A. Nesci. The
Amended Complaint seeks unspecified damages in connection with
alleged violations of Sections 10(b) (and Rule 10b-5 promulgated
thereunder) and 20(a) of the Securities Exchange Act of 1934, as
amended. The Amended Complaint alleges 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 proposed Class
Period, which is defined in the Amended Complaint as the period
from October 4, 1993 through September 23, 1994. On March 3,
1995, the Company and the individual defendants served a motion
to dismiss plaintiffs' Amended Complaint. That motion was fully
briefed and filed with the Court on May 17, 1995; oral argument
on that motion was held on July 20, 1995. 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 the Amended Complaint does not
allege damages with any particularity), the Company believes that
the Class Actions are without merit and intends to continue to
vigorously defend them.
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits - None
b. On October 6, 1995, the Company filed a current
report on Form 8-K reporting the sale of its
Secaucus, New Jersey building.
Page 12 of 14<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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
By: /s/ Monroe G. Milstein
-----------------------------------------
Monroe G. Milstein
President & Chief Executive Officer
By: /s/ Robert L. LaPenta, Jr.
----------------------------------------
Robert L. LaPenta, Jr., Corporate
Controller & Chief Accounting Officer
Date: November 14, 1995
Page 13 of 14<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> SEP-30-1995
<CASH> 35,215,000
<SECURITIES> 0
<RECEIVABLES> 23,624,000
<ALLOWANCES> (4,543,000)
<INVENTORY> 582,717,000
<CURRENT-ASSETS> 663,924,000
<PP&E> 344,911,000
<DEPRECIATION> (127,233,000)
<TOTAL-ASSETS> 892,631,000
<CURRENT-LIABILITIES> 418,982,000
<BONDS> 83,282,000
<COMMON> 41,140,000
0
0
<OTHER-SE> 332,728,000
<TOTAL-LIABILITY-AND-EQUITY> 892,631,000
<SALES> 291,227,000
<TOTAL-REVENUES> 295,628,000
<CGS> 194,141,000
<TOTAL-COSTS> 194,141,000
<OTHER-EXPENSES> 115,626,000
<LOSS-PROVISION> 832,000
<INTEREST-EXPENSE> 3,951,000
<INCOME-PRETAX> (18,922,000)
<INCOME-TAX> (7,761,000)
<INCOME-CONTINUING> (11,161,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,161,000)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)
Page 14 of 14
</TABLE>
