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 the quarterly period ended February 26, 2000
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
Burlington, New Jersey 08016
- ------------------------------ -------------------------------
(Address of principal (Zip Code)
executive 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 March 31, 2000
- -------------------------- ---------------------------------
Common stock, par value $1 44,486,507
Page 1 of 20
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 - February 26, 3
2000 (unaudited) and May 29, 1999
Condensed consolidated statements of operations - Nine 4
and three months ended February 26, 2000 and
February 27, 1999 (unaudited)
Condensed consolidated statements of cash flows - Nine 5
months ended February 26, 2000 and February 27, 1999
(unaudited)
Notes to condensed consolidated financial statements 6 - 9
Item 2. Management's Discussion and Analysis of 10 - 16
Results of Operations and Financial Condition
Item 3. Quantitative and Qualitative Disclosures 17
About Market Risk
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
* * * * * * * * * * * *
Page 2 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
<TABLE>
<CAPTION>
February 26, May 29,
2000 1999
(Unaudited) (Note A)
------------- ------------
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $135,501 $106,952
Accounts Receivable 21,605 14,227
Merchandise Inventories 489,267 501,040
Deferred Tax Asset 10,961 10,231
Prepaid and Other Current Assets 11,593 18,247
Prepaid Income Tax - 973
------- -------
Total Current Assets 668,927 651,670
Property and Equipment (Net of Accumulated
Depreciation and Amortization) 311,826 252,221
Long Term Investments 23,615 24,175
Other Assets 10,478 13,569
------- -------
Total Assets $1,014,846 $941,635
========= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $252,049 $222,766
Income Taxes Payable 15,053 -
Other Current Liabilities 92,820 88,226
Current Maturities of Long Term Debt 44,890 7,919
------- -------
Total Current Liabilities 404,812 318,911
Long Term Debt 8,105 52,970
Other Liabilities 15,704 15,689
Deferred Tax Liability 4,614 5,909
Stockholders' Equity:
Preferred Stock - -
Common Stock 49,703 49,612
Capital in Excess of Par Value 19,467 19,157
Retained Earnings 571,495 515,814
Unearned Compensation - (2)
Accumulated Other Comprehensive
Income (Loss) (383) (29)
Treasury Stock at Cost (58,671) (36,396)
------- -------
Total Stockholders' Equity 581,611 548,156
Total Liabilities and Stockholders' Equity $1,014,846 $941,635
========= =======
See notes to the condensed consolidated financial statements.
NOTE A: The balance sheet at May 29, 1999 has been derived from the audited
financial statements at that date.
</TABLE>
Page 3 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(All amounts in thousands except share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
February 26, February 27, February 26, February 27,
2000 1999 2000 1999
-------------------------- --------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net Sales $ 1,707,980 $ 1,533,006 $ 693,766 $ 586,992
Other Income 12,605 11,284 5,729 3,980
---------- ---------- ---------- ----------
1,720,585 1,544,290 699,495 590,972
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of
Depreciation and Amortization) 1,104,210 994,040 463,263 393,371
Selling and Administrative Expenses 492,226 452,109 172,002 150,716
Depreciation and Amortization 29,650 25,487 10,598 8,856
Interest Expense 3,960 5,146 1,317 1,671
---------- ---------- ---------- ----------
1,630,046 1,476,782 647,180 554,614
---------- ---------- ---------- ----------
Income Before Provision for
Income Taxes 90,539 67,508 52,315 36,358
Provision for Income Taxes 33,917 25,611 19,292 13,187
---------- ---------- ---------- ----------
Net Income $ 56,622 $ 41,897 $ 33,023 $ 23,171
========== ========== ========== ==========
Earnings Per Share:
Basic and Diluted Net
Income Per Share $ 1.23 $ .89 $ .72 $ .50
========== ========== ========== ==========
Weighted Average Shares
Outstanding 46,117,388 47,023,546 45,586,377 46,684,693
========== ========== ========== ==========
Dividends Per Share $ .02 $ .02 $ - $ -
========== ========== ========== ==========
See notes to the condensed consolidated financial statements.
</TABLE>
Page 4 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
February 26, February 27,
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 56,622 $ 41,897
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 29,650 25,487
Provision for Losses on Accounts Receivable 6,113 5,661
Provision for Deferred Income Taxes (2,025) (512)
Loss (Gain) on Disposition of Fixed Assets (28) 769
Non-Cash Rent Expense and Other 2,189 583
Changes in Operating Assets and Liabilities:
Accounts Receivable (12,640) (5,543)
Merchandise Inventories 11,773 (25,062)
Prepaids and Other Current Assets 7,627 10,889
Accounts Payable 29,283 29,155
Other Current Liabilities 19,647 (11,014)
-------- --------
Net Cash Provided in Operating Activities 148,211 72,310
-------- --------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (89,418) (39,143)
Proceeds From Sale of Fixed Assets 1,216 172
Acquisition of Leaseholds (873) (5,408)
Receipts Against Long Term Notes Receivable 71 2,987
Minority Interest 49 45
Acquisition of Long Term Investments - (4,200)
-------- --------
Net Cash Used in Investing Activities (88,955) (45,547)
-------- --------
FINANCING ACTIVITIES
Principal Payments on Long Term Debt (7,894) (7,852)
Issuance of Common Stock Upon Exercise
of Stock Options 403 230
Purchase of Treasury Stock (22,275) (13,187)
Payment of Dividends (941) (930)
-------- --------
Net Cash Used in Financing Activities (30,707) (21,739)
-------- --------
Increase in Cash and Cash Equivalents 28,549 5,024
Cash and Cash Equivalents at Beginning of Period 106,952 153,964
-------- --------
Cash and Cash Equivalents at End of Period $ 135,501 $ 158,988
======== ========
Interest Paid: $ 5,615 $ 6,380
======== ========
Income Taxes Paid: $ 20,889 $ 30,970
======== ========
See notes to the condensed consolidated financial statements.
</TABLE>
Page 5 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE AND
THREE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999
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 nine and three months ended February 26,
2000 and the corresponding periods ended February 27, 1999 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 August 27, 1999.
3. Merchandise inventories as of February 26, 2000 and May 29,
1999 are valued at the lower of cost, on a First In First Out
(FIFO) basis, or market, as determined by the retail inventory
method.
4. As of February 26, 2000, the Company had a deferred tax
liability of $4.6 million and a current deferred tax asset of
$11.0 million. As of May 29, 1999, the Company had a deferred
tax liability of $5.9 million and a current deferred tax asset of
$10.2 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. Licensed department sales, included in net sales, amounted
to $33.1 million and $13.3 million, respectively for the nine and
three month periods ended February 26, 2000, compared with $35.0
million and $13.5 million for the similar periods of a year ago.
Page 6 of 20
6. Other current liabilities primarily consisted of sales tax
payable, accrued insurance costs, accrued operating expenses,
payroll taxes payable and other miscellaneous items.
7. Long-term debt consists of:
February 26, May 29,
2000 1999
(unaudited)
(in thousands)
-----------------------
Subordinated Notes, 10.6%, due in
annual principal payments of $7.4
million from June 2000 to June 2005
with interest due semi-annually $44,400 $51,800
Industrial Revenue Bonds, 5.75%,
due in semi-annual payments of
various amounts from September 1,
2000 to September 1, 2010 8,525 8,945
Promissory note, due at various dates
through 2000 (interest rate
imputed at 10.6%), 70 144
-------- --------
Subtotal 52,995 60,889
Less current portion (44,890) (7,919)
-------- --------
Long-Term Debt $ 8,105 $52,970
======= =======
With respect to the Subordinated Notes, in addition to the $7.4
million principal payment scheduled for June 27, 2000, the
Company plans to prepay the remaining balance of $37.0 million on
or after that time, assuming no material change in conditions or
current assumptions. The Company anticipates prepayment
penalties to amount to approximately $1.0 million. As a result
of this expected prepayment, the Company has classified the
entire balance of the Subordinated Notes as a current maturity of
debt on the Company's Condensed Consolidated Balance Sheet as of
February 26, 2000.
8. On September 17, 1999, the Board of Directors of the Company
declared a cash dividend in the amount of two cents ($.02) per
share. The cash dividend was paid on November 2, 1999 to
stockholders of record on October 7, 1999 and amounted to $0.9
million.
9. The Company's net advertising costs consist primarily of
newspaper and television costs. The production costs of net
advertising are charged to expenses as incurred. Net advertising
expenses for the nine and three month periods ended February 26,
Page 7 of 20
2000 were $38.7 million and $10.1 million, respectively. For the
nine and three month periods ended February 27, 1999, net
advertising costs amounted to $38.0 million and $9.2 million,
respectively.
10. Basic and diluted net income per share is based on the
weighted average number of shares outstanding during each period.
The amounts used in calculation of basic and dilutive net income
per share are as follows:
<TABLE>
<CAPTION>
Nine Nine Three Three
Months Months Months Months
Ended Ended Ended Ended
February 26, February 27, February 26, February 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
(all amounts in thousands except per share data)
<S> <C> <C> <C> <C>
Net Income $56,622 $41,897 $33,023 $23,171
- ------------------------------------------------------------------------------
Weighted Average
Shares Outstanding 46,117 47,024 45,586 46,685
- ------------------------------------------------------------------------------
Effect of Dilutive Stock
Options 42 91 13 75
- ------------------------------------------------------------------------------
Weighted Average
Shares Outstanding
Assuming Dilution 46,159 47,115 45,599 46,760
- ------------------------------------------------------------------------------
Basic and Diluted
Net Income Per Share $1.23 $.89 $.72 $.50
- ------------------------------------------------------------------------------
</TABLE>
11. The Company presents comprehensive income as a component of
stockholders' equity.
12. The Company has one reportable segment, operating within the
United States. Sales by major product categories are as follows
(in thousands)(unaudited):
Nine Months Ended Three Months Ended
February 26, February 27, February 26, February 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Apparel $1,344,174 $1,213,467 $ 562,036 $ 472,432
Non-Apparel 363,806 319,539 131,730 114,560
--------- --------- -------- --------
$1,707,980 $1,533,006 $ 693,766 $ 586,992
========= ========= ======== ========
Apparel includes all clothing items for men, women and children. Non-
apparel includes linens, home furnishings, gifts, baby furniture and
Page 8 of 20
baby furnishings.
13. In March 1998, the AICPA issued Statement of Position ("SOP") 98-
1, Accounting for the Costs of Computer Software Developed for or
Obtained for Internal-Use. The SOP requires the capitalization of
certain costs incurred in connection with developing or obtaining
software for internal use. The Company capitalized $0.7 million and
$0.3 million relating to these costs during the nine and three months
ended February 26, 2000, respectively.
14. The Company classifies its investments in debt securities into
held-to-maturity, available-for-sale or trading categories in
accordance with the provisions of SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Debt securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity. Held-to-
maturity securities are stated at amortized cost. The Company's debt
securities not classified as held-to-maturity are classified as
available-for-sale and are carried at fair market value, with
unrealized gains and losses, net of tax, reported as a separate
component in stockholders' equity.
15. In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. This statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The Company has not yet assessed
what the impact of SFAS No. 133 will be on the Company's future
earnings or financial position.
16. In December, 1999 the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in
Financial Statements. SAB No. 101 provides the staff's view in
applying generally accepted accounting principles to revenue
recognition in financial statements. SAB No. 101 is required to be
applied no later than the first fiscal quarter of the fiscal year
beginning after December 15, 1999. The Company has not yet determined
the impact the adoption of SAB No. 101 will have on the Company's
consolidated financial statements.
17. Certain reclassifications have been made to the prior year's
financial statements to conform to the current year presentation.
Page 9 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Results of
Operations.
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 nine and three month periods ended February 26, 2000 and February
27, 1999.
Percentage of Net Sales
-----------------------
Nine Months Ended Three Months Ended
----------------- ------------------
February 26, February 27, February 26, February 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net sales 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales 64.7 64.8 66.8 67.0
Selling & adminis-
trative expenses 28.8 29.5 24.8 25.7
Depreciation &
amortization 1.7 1.7 1.5 1.5
Interest expense .2 .3 .2 .3
---- ---- ---- ----
95.4 96.3 93.3 94.5
---- ---- ---- ----
Other income .7 .7 .8 .7
---- ---- ---- ----
Income before income
taxes 5.3 4.4 7.5 6.2
---- ---- ---- ----
Provision for income
taxes 2.0 1.7 2.8 2.2
---- ---- ---- ----
Net Income 3.3% 2.7% 4.7% 4.0%
==== ==== ==== ====
Page 10 of 20
Net sales increased $175.0 million (11.4%) for the nine month
period ended February 26, 2000 compared with the similar period
of a year ago. Comparative stores sales increased 2.9% for the
period. Sales from stores operating in the current year, but not
open during the comparative period last year (including eighteen
stores opened during this year and nine stores opened in fiscal
1999's fourth quarter), contributed $139.1 million to this year's
sales. Stores which were in operation a year ago, but which were
closed prior to February 26, 2000, contributed $8.5 million to
last year's net sales. Sales from licensed departments included
in the nine month sales figure amounted to $33.1 million,
compared with $35.0 million for the similar period of a year ago.
Net sales increased $106.8 million (18.2%) for the three month
period ended February 26, 2000, compared with the similar period
a year ago. Comparative stores sales increased 7.0%. Sales from
stores operating during the current year's third quarter, but not
open in the comparative period a year ago, amounted to $68.0
million. Stores closed prior to this year's third quarter
contributed $3.2 million to last year's sales. Sales from
licensed departments included in the three month net sales figure
were $13.3 million, compared with $13.5 million for the similar
period of a year ago.
The Cohoes stores contributed $29.8 million and $11.2 million to
consolidated net sales for the nine and three months ended
February 26, 2000, respectively, compared with $27.8 million and
$9.7 million for the nine and three months ended February 27,
1999. Cohoes comparative store sales decreased 1.0% for the nine
month period and increased 0.2% for the three month period. One
new Cohoes store opened during the current year's second quarter
contributed $2.3 million to this year's sales.
Net sales in the first nine months of fiscal 2000 for the Decelle
stores were $24.7 million compared with $25.3 million for nine
months ended February 27, 1999. Net sales in the three months
ended February 26, 2000 were $8.3 million compared with $8.1
million during the similar period of a year ago. Decelle
comparative store sales for the nine month period decreased 0.6%.
During the three month period comparative store sales increased
2.1%.
Other income (consisting of investment income, rental income from
leased departments and miscellaneous items) was $12.6 million for
the nine months ended February 26, 2000 and $11.3 million for the
corresponding period of fiscal 1999. For the comparative three
month periods ended February 26, 2000 and February 27, 1999,
Page 11 of 20
other income amounted to $5.7 million and $4.0 million,
respectively. The increase in other income was due primarily to
the receipt of payment for certain non-recurring contractual
obligations during the nine month period ended February 26, 2000
and to an increase in interest income, resulting from higher
interest rates, during the comparative three month periods ended
February 26, 2000 and February 27, 1999.
Cost of sales increased by $110.2 million (11.1%) for the nine
month period ended February 26, 2000 compared with the similar
period of a year ago. For the three months ended February 26,
2000, compared with the three months ended February 27, 1999,
cost of sales increased from $393.4 million to $463.3 million.
The dollar changes in cost of sales primarily reflect the change
in sales for the comparative periods. As a percentage of sales,
cost of sales decreased to 64.7% from 64.8% for the comparative
nine month periods and decreased to 66.8% from 67.0% for the
comparative three month periods. These percentage decreases are
primarily the result of increases in original markups during the
current nine and three month periods compared with the similar
periods of a year ago.
Selling and administrative expenses were $492.2 million and
$172.0 million for the nine and three months ended February 26,
2000, respectively, compared with $452.1 million and $150.7
million for the comparative periods of a year ago. As a
percentage of sales, selling and administrative expenses were
28.8% and 24.8% for the nine and three months ended February 26,
2000, respectively. For the comparative nine and three month
periods of fiscal 1999, selling and administrative expenses were
29.5% and 25.7% of sales, respectively. The dollar increase in
selling and administrative expenses were primarily the result of
the increased number of stores operating during the nine and
three month periods of this fiscal year compared with the similar
periods of a year ago. The decreases in selling, general and
administrative costs as a percentage of sales, for both the nine
and three month comparative periods is primarily the result of a
reduction in payroll as a percentage of sales. In addition, the
increase in same store sales contributed to the reduction of
fixed expenses as a percentage of sales.
Interest expense decreased $1.2 million for the nine months ended
February 26, 2000 compared with the nine months ended February
27, 1999. For the three months ended February 26, 2000, interest
expense was $1.3 million, a decrease of $0.4 million compared
with the three months ended February 27, 1999. The nine and
three month decreases in interest expense are the result of the
Page 12 of 20
Company's scheduled reductions of long term debt.
The provision for income taxes increased to $33.9 million for the
nine months ended February 26, 2000 from $25.6 million for the
similar period of a year ago. For the three months ended
February 26, 2000, the provision for income taxes increased to
$19.3 million from $13.2 million for the comparative quarter of
last fiscal year. The effective tax rate for the nine months
ended February 26, 2000 was 37.5% compared with 37.9% for the
nine months ended February 27, 1999. The effective income tax
rate for the third fiscal quarter of the current year was 36.9%
compared with 36.3% for the similar period of a year ago.
Net income increased $14.7 million to $56.6 million for the nine
months ended February 26, 2000, from $41.9 million for the
comparative period of fiscal 1999. Income per share was $1.23
per share for the current year's nine month period compared with
$0.89 per share for the similar period of a year ago. Net income
was $33.0 million for the three month period ended February 26,
2000 compared with $23.2 million for the three months ended
February 27, 1999. Net income per share increased to $0.72 per
share for the three months ended February 26, 2000 from $0.50 per
share for the similar period of a year ago. The number of
weighted average shares outstanding during the current year's
third quarter compared with the similar period of a year ago, was
smaller as the result of the Company's repurchase of shares of
its common stock during the intervening period.
The Company's business is seasonal, with its highest sales
occurring in the months of September, October, November, December
and January of each year. For the past five fiscal years,
approximately 57% of the Company's net sales have occurred during
the period from September through January. Weather, however,
continues to be an important contributing factor to the sale of
clothing in the fall, winter and spring seasons. Generally, the
Company's sales are higher if the weather is cold during the fall
and warm during the early spring.
Liquidity and Capital Resources
- -------------------------------
The Company had capital expenditures of approximately $90.3
million during the first nine months of fiscal 2000 including
$18.0 million for the purchase of land and buildings, $33.8
million for new store openings, $27.0 million for store
relocations, expansions and refurbishings, $4.2 million for
upgrades and expansion of warehouse facilities, and $7.3 million
for computer and other equipment expenditures. During the
Page 13 of 20
remainder of fiscal 2000, the Company expects to incur capital
expenditures of approximately $12.0 million.
The Company repurchased 1,908,600 shares of its stock costing
approximately $22.3 million during the first nine months of the
current fiscal year. These purchases are reflected as treasury
stock in the equity section of the balance sheet. As of February
26, 2000, the Company had authorization to purchase an additional
$7.4 million of its stock.
Working capital was $264.1 million at February 26, 2000 compared
with $332.8 million at May 29, 1999. This decrease was due
primarily to purchases of property and equipment, purchases of
treasury stock, scheduled payments of long term debt, and the
classification of the Company's subordinated notes as a current
liability.
On September 17, 1999, the Board of Directors of the Company
declared a cash dividend in the amount of two cents ($.02) per
share. The cash dividend was paid on November 2, 1999, to
stockholders of record on October 7, 1999 and amounted to $0.9
million.
The Company's borrowings at February 26, 2000 include $44.4
million of long term subordinated notes issued by the Company to
institutional investors in June 1990 (the "Notes") and an
industrial development bond of $8.5 million issued by the New
Jersey Economic Development Authority (the "Refunding Bonds").
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 approximately three years and are subject to mandatory payment
in installments of $7.4 million each without premium on June 27
of each year. The Notes are subordinated to senior debt,
including, among others, bank debt and indebtedness for borrowed
money. During the current year's first fiscal quarter, the
Company repaid $7.4 million of the Notes. From time to time, the
Company reviews the desirability of prepaying the balance of the
Notes, which as of February 26, 2000 aggregates $44.4 million.
If interest rates remain at current levels, the Company, in
addition to making its scheduled $7.4 million payment, may prepay
the remaining $37.0 million on June 27, 2000 or sometime
thereafter, when the prepayment penalty associated with such
prepayment would fall to approximately $1.0 million. No
assurance, however, can be given that the Company will do so.
Such a decision will depend in part on the availability of cash
and the Company's borrowing requirements, prevailing interest
Page 14 of 20
rates, alternative uses for cash and general economic conditions
along with many other factors. In expectation of prepaying the
Notes on or after June 27, 2000, the Company has reclassified the
remaining balance of the Notes to Current Maturities of Long Term
Debt on the Company's Condensed Consolidated Balance Sheet.
The Refunding Bonds consist of serial and term bonds. The serial
bonds aggregate $2.1 million and mature in series annually on
September 1 through the year 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
5.8% and 6.5 years, respectively.
The Company has in place a committed line of credit agreement in
the amount of $50.0 million and an additional $50.0 million in
uncommitted lines of credit. The Company had no borrowings under
these credit lines during the first nine months of fiscal 2000 or
fiscal 1999. The Company had letter of credit commitments
outstanding against these lines of credit of $7.5 million as of
the end of the third quarter of fiscal 2000 and $20.9 million at
May 29, 1999.
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.
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.
Safe Harbor Statement
- ---------------------
Statements made in this report that are forward-looking (within
the meaning of the Private Securities Litigation Reform Act of
1995) are not historical facts and involve a number of risks and
uncertainties. Such statements include but are not limited to,
proposed store openings and closings, proposed capital
expenditures, projected financing requirements, projected sources
and applications of funds, proposed developmental projects,
projected sales and earnings, and the Company's ability to maintain
selling margins. Among the factors that could cause actual
Page 15 of 20
results to differ materially are the following: general economic
conditions; consumer demand; consumer preferences; weather
patterns; competitive factors, including pricing and promotional
activities of major competitors; the availability of desirable
store locations on suitable terms; the availability, selection
and purchasing of attractive merchandise on favorable terms;
import risks; the Company's ability to control costs and
expenses; unforeseen computer related problems; any unforeseen
material loss or casualty; the effect of inflation; and other
factors that may be described in the Company's filings with the
Securities and Exchange Commission. The Company does not
undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear
that any projected results expressed or implied will not be
realized.
Page 16 of 20
Item 3. Quantitative and Qualitative Market Risk Disclosures.
The Company does not utilize financial instruments for trading
purposes and holds no derivative financial instruments which
could expose the Company to significant market risk. The
Company's primary market risk exposure with regard to financial
instruments is to changes in interest rates. Pursuant to the
terms of certain revolving credit arrangements, changes in the
lenders' prime rate, LIBOR or other stated interest rates could
affect the rates at which the Company could borrow funds
thereunder. At February 26, 2000, the Company had no outstanding
borrowings against the credit facilities. The table below
summarizes the fair value and contract terms of the Company's
fixed rate debt and long-term investments, at February 26, 2000
(in thousands):
Expected Maturity Date of Long-Term Debt (Including Current Portion)
and Long Term Investments at February 26, 2000 (unaudited)
<TABLE>
<CAPTION>
Fixed Rate Average Long-Term Average
Debt Interest Rate Investments Interest Rate
-------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
2000 (remaining) $ 25 10.6% - -
2001 44,905 10.5% - -
2002 505 5.1% $ 4,200 5.6%
2003 555 5.2% - -
2004 605 5.4% 20,000 6.5%
Thereafter 6,400 6.0% - -
------- -------
Total $52,995 $24,200
======= =======
Fair Value at
February 26, 2000 $55,972 $23,615
======= =======
</TABLE>
Page 17 of 20
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Page No.
--------
a. Exhibits
27. Financial Data Schedule 20
b. The Company filed no report on Form 8-K
during the period ended February 26, 2000.
Page 18 of 20
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: April 5, 2000
Page 19 of 20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-03-2000
<PERIOD-END> FEB-26-2000
<CASH> 135,501,000
<SECURITIES> 0
<RECEIVABLES> 26,639,000
<ALLOWANCES> (5,034,000)
<INVENTORY> 489,267,000
<CURRENT-ASSETS> 668,927,000
<PP&E> 538,620,000
<DEPRECIATION> (226,794,000)
<TOTAL-ASSETS> 1,014,846,000
<CURRENT-LIABILITIES> 404,812,000
<BONDS> 8,105,000
0
0
<COMMON> 49,703,000
<OTHER-SE> 531,908,000
<TOTAL-LIABILITY-AND-EQUITY> 1,014,846,000
<SALES> 1,707,980,000
<TOTAL-REVENUES> 1,720,585,000
<CGS> 1,104,210,000
<TOTAL-COSTS> 1,104,210,000
<OTHER-EXPENSES> 515,763,000
<LOSS-PROVISION> 6,113,000
<INTEREST-EXPENSE> 3,960,000
<INCOME-PRETAX> 90,539,000
<INCOME-TAX> 33,917,000
<INCOME-CONTINUING> 56,622,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,622,000
<EPS-BASIC> 1.23
<EPS-DILUTED> 1.23
</TABLE>
