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 December 28, 1996
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 February 5, 1997
- -------------------------- --------------------------------
Common stock, par value $1 41,182,420
Page 1 of 18<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 - December 28, 1996 3
(unaudited), June 29, 1996 and December 30, 1995 (unaudited)
Condensed consolidated statements of operations - Six and 4
three months ended December 28, 1996 and December 30, 1995
(unaudited)
Condensed consolidated statements of cash flows - Six and 5
three months ended December 28, 1996 and December 30, 1995
(unaudited)
Notes to condensed consolidated financial statements 6 - 7
Item 2. Management's discussion and analysis of results 8 - 14
of operations and financial condition
Part II - Other Information:
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and reports on Form 8-K 16
SIGNATURES 17
* * * * * * * * * * * *
Page 2 of 18<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
<CAPTION>
December 28, June 29, December 30,
1996 1996 1995
(Unaudited) (Note A) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and Cash Equivalents $288,464 $ 73,560 $158,745
Accounts Receivable 22,073 15,003 23,661
Merchandise Inventories 414,607 370,437 439,238
Deferred Tax Asset 10,415 9,762 9,828
Prepaid and Other Current Assets 14,875 19,808 6,919
-------- -------- --------
Total Current Assets 750,434 488,570 638,391
Property and Equipment Net of Accumulated
Depreciation and Amortization 208,172 206,582 219,304
Other Assets 9,052 9,579 10,781
-------- -------- --------
Total Assets $967,658 $704,731 $868,476
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $279,706 $118,900 $221,120
Notes Payable -- -- --
Income Taxes Payable 30,481 5,227 24,169
Other Current Liabilities 102,611 67,945 92,877
Current Maturities of Long Term Debt 7,827 8,391 8,069
-------- -------- --------
Total Current Liabilities 420,625 200,463 346,235
Long Term Debt 69,716 74,907 83,263
Other Liabilities 8,682 8,237 10,224
Deferred Tax Liability 7,546 7,379 6,062
Stockholders' Equity:
Unearned Compensation (68) (87) --
Preferred Stock -- -- --
Common Stock 41,187 41,165 41,145
Capital in Excess of Par Value 25,486 25,384 25,179
Retained Earnings 404,783 349,608 358,218
Less Treasury Stock at Cost (10,299) (2,325) (1,850)
-------- -------- --------
Total Stockholders' Equity 461,089 413,745 422,692
-------- -------- --------
Total Liabilities and
Stockholders' Equity $967,658 $704,731 $868,476
======== ======== ========
<FN>
See notes to the condensed consolidated financial statements.
NOTE A: The balance sheet at June 29, 1996 has been derived from the audited
financial statements at that date.
</TABLE>
Page 3 of 18<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(All amounts in thousands except per share data)
<CAPTION>
Six Months Ended Three Months Ended
December 28, December 30, December 28, December 30,
1996 1995 1996 1995
-------------------------- -------------------------
REVENUES:
<S> <C> <C> <C> <C>
Net Sales $1,047,198 $ 949,858 $739,958 $658,631
Other Income 7,593 7,592 4,515 3,191
---------- --------- -------- --------
1,054,791 957,450 744,473 661,822
---------- --------- -------- --------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of Depreciation
and Amortization) 674,734 619,012 471,424 424,871
Selling and Administrative Expenses 267,551 253,420 152,090 143,867
Depreciation and Amortization 15,092 14,284 7,468 7,379
Interest Expenses 4,150 7,103 1,923 3,152
---------- --------- --------- -------
961,527 893,819 632,905 579,269
---------- --------- --------- -------
Income Before Provision for Income Taxes 93,264 63,631 111,568 82,553
Provision For Income Taxes 38,089 26,008 45,519 33,769
---------- --------- --------- --------
Net Income $ 55,175 $ 37,623 $ 66,019 $ 48,784
Earnings Per Share:
Net Income Per Share $ 1.36 $ 0.92 $ 1.64 $ 1.20
========== ========= ========= =========
Weighted Average Shares Outstanding 40,550,167 40,713,693 40,377,366 40,715,543
========== ========== ========== ==========
- - - -
Dividends Per Share
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 4 of 18<PAGE>
<TABLE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(All amounts in thousands)
<CAPTION>
Six Months Ended
December 28, December 30,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 55,175 $ 37,623
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 15,092 14,284
Provision for Losses on Accounts Receivable 3,462 2,636
Provision for Deferred Income Taxes (486) (894)
Loss (Gain) on Disposition of Fixed Assets 1,132 (1,937)
Rent Expense and Other 786 912
Changes in Operating Assets and Liabilities:
Accounts Receivable (11,070) (11,213)
Merchandise Inventories (44,170) 12,788
Prepaids and Other Current Assets 4,927 (913)
Accounts Payable 160,806 120,074
Other Current Liabilities 59,348 60,305
--------- --------
Net Cash Provided by Operating Activities 245,002 233,665
INVESTING ACTIVITIES
Acquisition of Property and Equipment (17,248) (24,286)
Proceeds From Sale of Fixed Assets 4 17,628
Issuance of Long Term Notes Receivable - (539)
Receipts Against Long Term Notes Receivable 651 4,021
Minority Interest 43 44
Other 38 (418)
--------- --------
Net Cash Used by Investing Activities (16,512) (3,550)
--------- --------
FINANCING ACTIVITIES
Principal Payments on Long Term Debt (5,755) (32)
Issuance of Common Stock Upon Exercise of
Stock Options 143 42
Repayment of Borrowings Under Lines of Credit - (85,900)
Purchase of Treasury Stock (7,974) -
--------- --------
Net Cash Used in Financing Activities (13,586) (85,890)
--------- --------
Increase in Cash and Cash Equivalents 214,904 144,225
Cash and Cash Equivalents at Beginning
of Period 73,560 14,520
--------- --------
Cash and Cash Equivalents at End of Period $288,464 $158,745
========= ========
Interest Paid: $ 4,182 $7,424
Income Taxes Paid: $ 13,321 $4,798
========= ========
<FN>
See notes to the condensed consolidated financial statements.
</TABLE>
Page 5 of 18<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX AND THREE MONTHS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995
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 six and three months ended December 28, 1996 and the corresponding
periods ended December 30, 1995 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 28, 1996.
3. Inventories as of December 28, 1996 and December 30, 1995 are stated
at the lower of FIFO cost or market, as valued by the gross profit method.
Inventories as of June 29, 1996 were valued by the retail inventory method.
4. As of December 28, 1996, the Company had a deferred tax liability of
$7.5 million and a current deferred tax asset of $10.4 million. As of
December 30, 1995, the Company had a deferred tax liability of $6.1 million
and a current deferred tax asset of $9.8 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.
Deferred tax liabilities primarily reflected the excess of tax depreciation
over book depreciation.
5. Licensee department sales, included in net sales, amounted to $19.2
million and $12.4 million for the six and three month periods ended
December 28, 1996 compared with $19.6 million and $12.5 million for the
similar periods of fiscal 1996.
6. Other current liabilities primarily consisted of sales tax payable,
accrued operating expenses, payroll taxes payable and other miscellaneous
items.
Page 6 of 18<PAGE>
7. Recent Accounting Pronouncements
a. In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of. The Company has adopted this statement in the
first fiscal quarter of the current fiscal year as required by this
statement. This statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Also, in general,
long-lived assets and certain intangibles to be disposed of should be
reported at the lower of carrying amount or fair value less cost to sell.
The Company considers historical performance and future estimated results
in its evaluation of potential impairment and then compares the carrying
amount of the asset to the estimated future cash flows expected to result
from the use of the asset. If the carrying amount of the asset exceeds
estimated expected undiscounted future cash flows, the Company measures the
amount of the impairment by comparing the carrying amount of the asset to
its fair value. The estimation of fair value is generally measured by
discounting expected future cash flows at the rate the Company utilizes to
evaluate potential investments. The Company estimates fair value based on
the best information available making whatever estimates, judgments and
projections are considered necessary. As of December 28, 1996 the Company
has determined that no adjustment under this statement is required.
b. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-
Based Compensation, which is effective for the Company beginning June 30,
1996. SFAS No. 123 requires expanded disclosure of stock-based
compensation arrangements with employees and encourages (but does not
require) compensation expense to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue
to apply Accounting Principles Board Opinion No. 25 (APB No. 25), which
recognizes compensation costs based on the intrinsic value of the equity
instrument awarded. The Company has adopted SFAS No. 123 in the current
fiscal year and as permitted will continue to apply APB No. 25 to its
stock-based compensation awards to employees and will disclose the required
pro-forma effects on net income and earnings per share as required by SFAS
No. 123.
Page 7 of 18<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 six and three
month periods ended December 28, 1996 and December 30, 1995.
<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Six Months Ended Three Months Ended
---------------- ------------------
December 28, December 30, December 28, December 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales 64.4 65.2 63.7 64.5
Selling & adminis-
trative expenses 25.6 26.7 20.6 21.9
Depreciation &
amortization 1.4 1.5 1.0 1.1
Interest expense .4 .7 .2 .5
------- ------- ------- -------
91.8 94.1 85.5 88.0
------- ------- ------- -------
Other income .7 .8 .6 .5
------- ------- ------- -------
Income before income
taxes 8.9 6.7 15.1 12.5
Provision for income
taxes 3.6 2.7 6.2 5.1
-------- -------- ------- -------
Net income 5.3% 4.0% 8.9% 7.4%
======== ======== ======== =======
</TABLE>
Page 8 of 18<PAGE>
Six and Three Months Ended December 28, 1996 and December 30, 1995
- ------------------------------------------------------------------
Net sales increased $97.3 million (10.2%) for the six month period
ended December 28, 1996 compared with the similar period a year ago.
Comparative store sales increased 7.6%. New Burlington Coat Factory
Warehouse stores opened subsequent to December 30, 1995 contributed
$16.5 million to this year's sales. Stores which were in operation
a year ago, but which were closed prior to this year, contributed $6.5
million to last year's sales. The Cohoes stores showed a comparative
stores sales increase of 6.4%, while contributing $22.4 million to
consolidated sales for the period. Sales in the six month period for
the Decelle stores were $20.9 million compared with $18.3 million in
the similar period of a year ago. Two Totally 4 Kids stores were opened
subsequent to last years's second fiscal quarter contributing sales of
$3.0 million to the current six month period. Sales from leased
departments, included in the six month net sales figure, were $19.2
million compared with $19.6 million for the similar period of a year
ago.
For the three month period ended December 28, 1996, net sales
increased 12.3% to $740.0 million compared with the similar period of
a year ago. Comparative store sales increased 10.3%. New Burlington
Coat Factory Warehouse stores opened subsequent to December 30, 1995
contributed $15.2 million to the second quarter's net sales volume.
Cohoes comparative store sales increased $.7 million (5.8%) for the
second quarter of fiscal 1997 compared with the similar period of
fiscal 1996. New Totally 4 Kids stores contributed $2.3 million to this
year's second quarter sales. Sales for the Decelle chain were $12.4
million for the three months ended December 28, 1996 compared with
$10.7 million in the similar period of fiscal 1996. Leased department
sales, included in net sales, were $12.4 million for the second fiscal
quarter this year compared with $12.6 million in last year's similar
period.
Other income (consisting primarily of rental income from leased
departments, investment income and miscellaneous items) was $7.6
million for both the six months ended December 28, 1996 and the six
months ended December 30, 1995. Investment income increased $1.6
million for the six months ended December 28, 1996 compared with the
similar period of a year ago. Offsetting this increase was a $1.9
million gain on the sale of the Company's Secaucus, New Jersey
facility recorded in last year's comparable six month period. The
Company recorded losses of $1.1 million for the writeoff of leasehold
improvements of stores to be closed during fiscal 1997, compared with
$.6 million of similar writeoffs in last year's six month period. In
Page 9 of 18<PAGE>
addition, the Company had non-recurring miscellaneous income items of
approximately $.6 million during the first six months of fiscal 1997.
For the three months ended December 28, 1996, other income was $4.5
million compared with $3.2 million for the similar period of fiscal
1996. For the three months ended December 28, 1996, interest income
increased $1.3 million compared with the similar period of a year ago.
Cost of sales increased by $55.7 million (9.0%) for the six month
period ended December 28, 1996 compared with the similar period a year
ago and by $46.6 million (11.0%) for the quarter ended December 28,
1996 compared with the similar period a year ago. Cost of sales as
a percentage of net sales decreased from 65.2% to 64.4% for the six
months and decreased from 64.5% to 63.7% for the quarter ended
December 28, 1996 compared with similar periods a year ago. These
decreases in cost of sales, as a percentage of sales for both the six
months and second quarter are due to improvements in the Company's
initial markons. The Company's initial markups have improved due to
better buys from vendors, particularly in outerwear, driven by the
ability to purchase merchandise opportunistically. However, there can
be no assurance that the opportunistic purchases will continue to be
available in the future.
Selling and administrative expenses increased by $14.1 million (5.6%)
for the six month period ended December 28, 1996 compared with the
similar period a year ago. As a percentage of sales, selling and
administrative expenses decreased to 25.6% from 26.7% in the
comparable six month period. For the three months ended December 28,
1996, selling and administrative expenses increased $8.2 million to
$152.1 million (5.7%). As a percentage of sales, selling and
administrative expenses were 20.6% compared with 21.9% for the similar
period of a year ago. For both the six and three month periods ended
December 28, 1996, compared with the similar periods of a year ago,
the dollar increases in selling and administrative expenses are
primarily due to an increase in payroll expenditures. Payroll costs
increased, due to annual pay increases granted subsequent to last
year's second quarter, payroll expenditures for stores opened
subsequent to last year's second quarter and to increased staffing
levels at the stores, home office and distribution center due to the
substantial increase in business during the quarter.
Interest expense decreased $3.0 million for the six months ended
December 28, 1996 compared with the similar period of fiscal 1996.
For the three month period ended December 28, 1996, interest expense
Page 10 of 18<PAGE>
was $1.9 million, a decrease of $1.2 million compared with the three
months ended December 30, 1995. The six and three month decreases in
interest expense are the result of decreases in borrowing levels
associated with the Company's revolving credit and term loan
agreements, refinancing of its industrial revenue bond and the
repayment of $13.4 million of its subordinated bonds.
The provision for income taxes increased to $38.1 million for the six
months ended December 28, 1996 from $26.0 million for the similar
period of fiscal 1996. For the three months ended December 28, 1996
the provision for income taxes increased to $45.5 million from $33.8
million for the comparable period of a year ago. The effective tax
rates were 40.8% for the six and three month periods ended December
28, 1996 compared with 40.9% for the comparable six and three month
periods of fiscal 1996.
Net income increased $17.6 million to $55.2 million for the six months
ended December 28, 1996 from $37.6 million for the comparative period
of fiscal 1996. Income per share was $1.36 per share for the current
year's six month period compared with $.92 for the similar period of
a year ago. Net income was $66.0 million for the three month period
ended December 28, 1996 compared with $48.8 million for the three
months ended December 30, 1995. Net income per share increased to
$1.64 per share for the three months ended December 28, 1996 compared
with $1.20 for the similar 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
- -------------------------------
The Company opened one Burlington Coat Factory store during the first
quarter of fiscal 1997 and two additional stores in the second fiscal
quarter. The Company also opened one Totally 4 Kids store in Ontario,
California during this year's second quarter. The Company estimates
spending approximately $7.2 million for store openings during this
fiscal year, of which approximately $2.7 million have been expended as
of December 28, 1996. In addition, the Company plans to spend
approximately $12.2 million for the refurbishing and refixturing of
existing stores, of which $8.0 million have been expended as of the
Page 11 of 18
end of this year's second fiscal quarter. During the second quarter, the
Company purchased the land and building associated with one of its
stores for approximately $2.5 million. Expenditures for computer
systems are expected to be approximately $11.0 million during fiscal 1997.
Through the first six months of the current fiscal year, approximately $4.3
million of computer system expenditures have been made.
The Company repurchased 684,400 shares of its stock, costing approximately
$8.0 million in the first half of this current fiscal year. These
purchases are reflected as treasury stock in the equity section of the
balance sheet. As of December 28, 1996, the Company has authorization
to purchase an additional $2.0 million of its stock.
Working capital increased to $329.8 million at December 28, 1996 from
$292.2 million at December 30, 1995.
Net cash provided by operating activities was $245.0 million for the
six months ended December 28, 1996, an increase of $11.3 million
from $233.7 million in net cash provided by operating activities for
the comparable period of fiscal 1996. This change in net cash
provided by operations was the result of the Company's improved
profitability during the first six months of fiscal 1997 compared with
the similar period of fiscal 1996.
The Company's long-term borrowings at December 28, 1996 include $66.6
million of long term subordinated notes issued by the Company to
institutional investors in June 1990 ("the Notes") and an industrial
development bond of $9.7 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 remaining maturity of four
and one half years and are subject to mandatory prepayment in
installments of $8.0 million each without premium on June 27 of each
year. These repayments began with the first prepayment being made
June 27, 1996. The Notes are subordinated to senior debt,
including, among others, bank debt and indebtedness for borrowed
money. During the first quarter of fiscal 1997, the Company
repurchased an additional $5.4 million of the Notes which reduced the
Company's mandatory prepayment to $7.4 million annually. The Company
has no current plan to repurchase or repay any additional amounts
earlier than scheduled, but may consider doing so in the future should
conditions favorable to the Company present themselves.
Page 12 of 18<PAGE>
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 9.01 years, respectively. During the current year's first fiscal
quarter, the Company expended approximately $.3 million for the
repayment of the Refunding Bonds.
The Company has in place a committed line of credit agreement in the
amount of $50.0 million and $150.0 million in uncommitted lines of
credit. The Company had no borrowings under these credit lines during
fiscal 1997's first two quarters. The maximum borrowings outstanding
under these lines were $120.4 million during the first quarter of
fiscal 1996. The average borrowings outstanding under the lines were
$98.1 million during the first quarter of fiscal 1996 at an average
interest rate of 6.2%. During the second quarter of fiscal 1996, the
Company had maximum borrowings under these agreements of $84.3
million. The average borrowing during this period was $65.1 million
with an average borrowing interest rate of 6.2%. As of December 30,
1995, all borrowings under these agreements had been repaid.
The decrease in short term borrowings, during the six month period
ended December 28, 1996, over the similar period of a year ago is the
direct result of continued maintenance of lower inventory levels in
the stores. In addition, liquidity was enhanced by a significant
increase in profitability during fiscal 1996 and the first half of
fiscal 1997. Also, reductions in capital expenditures during fiscal
1996 and the first six months of fiscal 1997 resulted in lower
borrowing requirements.
Page 13 of 18<PAGE>
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.
On or about September 23, 1994 three separate putative 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. On February 20, 1996, the District Court
dismissed the plaintiff's amended complaint in its entirety. In
March, 1996, the plaintiffs filed an appeal from the District Court's
decision, and in December, 1996, the U.S. Court of Appeals for the
Third Circuit heard oral argument on the appeal. (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 14 of 18<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 sought 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 alleged material misstatements and
omissions by the Company and certain of its officers and directors
that plaintiffs alleged caused the Company's common stock to be
artificially inflated during the proposed Class Period, which was
defined in the Amended Complaint as the period from October 4, 1993
through September 23, 1994. On February 20, 1996, the District Court
granted the Company's motion to dismiss the plaintiffs' Amended
Complaint in its entirety. In March 1996, the plaintiffs filed an
appeal from the District Court's decision in the United States Court
of Appeals for the Third Circuit (the Appeal ). On December 12, 1996,
the Third Circuit entertained oral argument in connection with the
Appeal. Although the Company is unable at this time to assess the
probable outcome of the Appeal or the materiality of the risk of loss
in connection therewith, the Company fully agrees with the District
Court's decision to dismiss the Amended Complaint in its entirety.
Page 15 of 18<PAGE>
Item 4 Submission of Matters to a Vote of Security Holders
The Company's annual meeting of stockholders was held on November 7,
1996. At the meeting, the following actions were taken: 1)
stockholders elected directors to serve until the next annual meeting
of stockholders and until their successors are duly elected and
qualified; and 2) stockholders ratified the appointment of Deloitte
& Touche LLP as independent certified public accountants for the
Company for the fiscal year ending June 28, 1997. The following
tables set forth the results of the votes cast at the meeting for each
matter submitted to stockholders:
Broker
1) Election of Directors Votes For Votes Withheld Non-Votes
--------------------- --------- -------------- ---------
Monroe G. Milstein 36,623,045 109,377 - 0 -
Henrietta Milstein 36,507,120 225,302 - 0 -
Andrew R. Milstein 36,576,370 156,052 - 0 -
Irving Drillings 36,553,745 178,677 - 0 -
Harvey Morgan 36,641,395 91,027 - 0 -
Stephen E. Milstein 36,576,070 156,352 - 0 -
Mark A. Nesci 36,577,120 155,302 - 0 -
2) Ratify appointment of Deloitte & Touche LLP as independent
Certified Public Accountants:
Votes For 36,689,859
Votes Against 23,746
Votes Abstained 18,917
Broker Non-Vote 0
Item 6 Exhibits and Reports on Form 8-K
Page No.
--------
a. Exhibits
27. Financial Data Schedule 18
b. The Company filed no current reports on Form 8-K for
the period ended December 28, 1996.
Page 16 of 18<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
/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: February 7, 1997
Page 17 of 18<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> DEC-28-1996
<CASH> 288,464,000
<SECURITIES> 0
<RECEIVABLES> 24,491,000
<ALLOWANCES> (2,418,000)
<INVENTORY> 414,607,000
<CURRENT-ASSETS> 750,434,000
<PP&E> 350,754,000
<DEPRECIATION> (142,582,000)
<TOTAL-ASSETS> 967,658,000
<CURRENT-LIABILITIES> 420,625,000
<BONDS> 69,716,000
41,187,000
0
<COMMON> 0
<OTHER-SE> 419,902,000
<TOTAL-LIABILITY-AND-EQUITY> 967,658,000
<SALES> 1,047,198,000
<TOTAL-REVENUES> 1,054,791,000
<CGS> 674,734,000
<TOTAL-COSTS> 674,734,000
<OTHER-EXPENSES> 279,181,000
<LOSS-PROVISION> 3,462,000
<INTEREST-EXPENSE> 4,150,000
<INCOME-PRETAX> 93,264,000
<INCOME-TAX> 38,089,000
<INCOME-CONTINUING> 55,175,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,175,000
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
</TABLE>
