FORM 10-Q
UNITED STATES
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 2, 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 North
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 October 2, 2000
-------------------------- ---------------------------------
Common stock, par value $1 44,333,058
Page 1 of 21
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 - September 2, 2000 3
(unaudited) and June 3, 2000
Condensed Consolidated Statements of Operations 4
(unaudited) - Three Months Ended September 2, 2000 and
August 28, 1999
Condensed Consolidated Statements of Cash Flows 5
(unaudited) - Months Ended September 2, 2000 and
August 28, 1999
Notes to Condensed Consolidated Financial Statements 6 - 10
Item 2. Management's Discussion and Analysis of 11 - 16
Results of Operations and Financial Condition
Item 3. Quantitative and Qualitative Disclosures 16
About Market Risk
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
* * * * * * * * * * * *
Page 2 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
September 2, June 3,
2000 2000
(Unaudited) (Note A)
_____________ ___________
ASSETS
------
Current Assets:
Cash and Cash Equivalents $ 9,294 $ 127,818
Accounts Receivable 17,420 20,119
Merchandise Inventories 624,288 513,018
Deferred Tax Asset 8,947 8,813
Prepaid and Other Current Assets 16,743 23,766
Prepaid Income Tax 7,179 -
__________ __________
Total Current Assets 683,871 693,534
Property and Equipment (Net of Accumulated
Depreciation and Amortization) 324,600 318,316
Long Term Investments 23,895 23,659
Other Assets 14,533 10,538
__________ __________
Total Assets $1,046,899 $1,046,047
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts Payable $ 303,778 $ 274,337
Notes Payable 45,600 -
Income Taxes Payable - 16,472
Other Current Liabilities 101,802 97,461
Current Maturities of Long Term Debt 523 44,865
__________ __________
Total Current Liabilities 451,703 433,135
Long Term Debt 7,560 8,105
Other Liabilities 15,003 15,064
Deferred Tax Liability 3,148 3,302
Stockholders' Equity:
Preferred Stock - -
Common Stock 49,703 49,703
Capital in Excess of Par Value 19,937 19,937
Retained Earnings 561,643 575,994
Accumulated Other Comprehensive
Income (Loss) (210) (359)
Treasury Stock at Cost (61,588) (58,834)
__________ __________
Total Stockholders' Equity 569,485 586,441
__________ __________
Total Liabilities and Stockholders' Equity $1,046,899 $1,046,047
========== ==========
See notes to the condensed consolidated financial statements.
NOTE A: The balance sheet at June 3, 2000 has been derived from the audited
financial statements at that date.
Page 3 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(All amounts in thousands except share data)
<TABLE>
<CAPTION>
Three Months Ended
September 2, August 28,
2000 1999
____________ __________
<S> <C> <C>
REVENUES:
Net Sales $ 415,671 $ 374,789
Other Income 5,535 4,920
__________ __________
421,206 379,709
__________ __________
COSTS AND EXPENSES:
Cost of Sales (Exclusive of Depreciation and Amortization) 272,354 243,417
Selling and Administrative Expenses 158,521 139,862
Depreciation and Amortization 11,199 9,095
Interest Expense 850 1,359
__________ __________
442,924 393,733
__________ __________
Loss Before Income Tax Benefit (21,718) (14,024)
Income Tax Benefit (8,182) (5,346)
__________ __________
Net Loss Before Extraordinary Loss and Cumulative
Effect of Accounting Change (13,536) (8,678)
Extraordinary Loss from Early Extinguishment of Debt,
Net of Tax (815) -
Cumulative Effect of Accounting Change, Net of Tax - (1,356)
__________ __________
Net Loss ($ 14,351) ($ 10,034)
Basic and Diluted Earnings Per Share:
Basic and Diluted Net Loss Per Share Before Extraordinary
Loss and Cumulative Effect of Accounting Change ($ .30) ($ .19)
Extraordinary Loss From Early Extinguishment of Debt,
Net of Tax (.02) -
Cumulative Effect of Accounting Change, Net of Tax - (.03)
__________ __________
Net Loss ($ .32) ($ .22)
========== ==========
Weighted Average Shares Outstanding 44,345,924 46,403,509
========== ==========
Dividends Per Share - -
========== ==========
</TABLE>
See notes to the condensed consolidated financial statements.
Page 4 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 2, August 28,
2000 1999
____________ __________
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss ($14,351) ($10,034)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Extraordinary Loss From Early Extinguishment of
Debt, Net of Tax 815 -
Cumulative Effect of Accounting Change, Net of Tax - 1,356
Depreciation and Amortization 11,199 9,095
Provision for Losses on Accounts Receivable 1,525 1,533
Provision for Deferred Income Taxes (288) (4,685)
Loss on Disposition of Fixed Assets - 100
Non-Cash Rent Expense and Other 496 903
Changes in Operating Assets and Liabilities:
Accounts Receivable 1,174 2,001
Merchandise Inventories (111,270) (71,532)
Prepaids and Other Current Assets 7,996 1,446
Accounts Payable 29,441 26,420
Other Current Liabilities ( 19,792) ( 6,077)
________ ________
Net Cash Used in Operating Activities ( 93,055) ( 49,474)
________ ________
INVESTING ACTIVITIES
Acquisition of Property and Equipment (17,441) (26,975)
Proceeds From Sale of Fixed Assets - 1
Acquisition of Leaseholds (5,025) (1,064)
Receipts Against Long Term Notes Receivable 55 51
Minority Interest and other 30 25
________ ________
Net Cash Used in Investing Activities ( 22,381) ( 27,962)
________ ________
FINANCING ACTIVITIES
Net Borrowings on Lines of Credit 45,600 -
Principal Payments on Long Term Debt (44,887) (7,424)
Prepayment Penalty Associated with Payoff of
Subordinated Notes (1,047) -
Issuance of Common Stock Upon Exercise of Stock Options - 26
Purchase of Treasury Stock ( 2,754) -
________ ________
Net Cash Used in Financing Activities ( 3,088) ( 7,398)
________ ________
Decrease in Cash and Cash Equivalents (118,524) (84,834)
Cash and Cash Equivalents at Beginning of Period 127,818 106,952
________ ________
Cash and Cash Equivalents at End of Period $ 9,294 $ 22,118
======== ========
Interest Paid: $ 3,012 $ 2,785
======== ========
Income Taxes Paid: $ 15,757 $ 572
======== ========
</TABLE>
See notes to the condensed consolidated financial statements.
Page 5 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 2, 2000 AND AUGUST 28, 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 three months ended September
2, 2000 and the corresponding period ended August 28, 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 September 1, 2000.
3. Merchandise inventories as of September 2, 2000 and June 3, 2000 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. 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.
5. The Company records revenue at the time of sale and delivery of
merchandise.
Page 6 of 21
6. As of September 2, 2000, the Company had a deferred tax liability of $3.1
million and a current deferred tax asset of $8.9 million. As of June 3, 2000,
the Company had a deferred tax liability of $3.3 million and a current deferred
tax asset of $8.8 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.
7. Other current liabilities primarily consisted of sales tax payable, accrued
insurance costs, accrued operating expenses, payroll taxes payable and other
miscellaneous items.
8. Long-term debt consists of:
September 2, June 3,
2000 2000
(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
Industrial Revenue Bonds, 5.75%,
due in semi-annual payments of
various amounts from September 1,
2000 to September 1, 2010 $ 8,065 8,525
Promissory Note, due at various dates
through 2000 (interest rate
imputed at 10.6%), 18 45
________ ________
Subtotal 8,083 52,970
Less Current Portion ( 523) (44,865)
________ ________
Long Term Debt $ 7,560 $ 8,105
======== ========
With respect to the Subordinated Notes, in addition to the $7.4 million
principal payment scheduled for June 27, 2000, the Company prepaid the remaining
balance of $37.0 million. The prepayment penalties associated with this
prepayment amounted to approximately $1.0 million. The Company recorded the
prepayment penalties plus the write-off of approximately $0.3 million of
deferred debt charges, related to the debt, as an extraordinary loss.
Page 7 of 21
9. On September 25, 2000, the Board of Directors of the Company declared a
cash dividend in the amount of two cents ($.02) per share. The cash dividend is
payable on November 9, 2000 to stockholders of record on October 13, 2000.
10. The Company presents comprehensive income as a component of stockholders'
equity in accordance with SFAS No. 130, Reporting Comprehensive Income.
11. The Company has one reportable segment, operating within the United States.
Sales by major product categories are as follows (in thousands)(unaudited):
Three Months Ended
September 2, 2000 August 28, 1999
_________________ _______________
Apparel $ 301,921 $ 267,993
Home Products 113,750 106,796
________ ________
$ 415,671 $ 374,789
======== ========
Apparel includes all clothing items for men, women and children and apparel
accessories, such as jewelry, perfumes and watches. Home Products includes
linens, home furnishings, gifts, baby furniture and baby furnishings.
12. Licensed department income, included in other income, amounted to $2.1
million for the three month period ended September 2, 2000, compared with $1.9
million for the similar period of a year ago.
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 $0.6 million and $0.2 million relating to these costs during the
three months ended September 2, 2000 and August 28, 1999, respectively.
14. 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 three month period ended
September 2, 2000 were $9.3 million. For the three month period ended August
28, 1999, net advertising costs amounted to $6.4 million.
15. Basic and diluted net loss per share is based on the
Page 8 of 21
weighted average number of shares outstanding during each period. The amounts
used in the calculation of basic and dilutive net loss per share are as follows:
Three Three
Months Months
Ended Ended
September 2, August 28,
2000 1999
(unaudited) (unaudited)
____________ ___________
(all amounts in thousands except per share data)
Net Loss Before Extraordinary Loss
and Cumulative Effect of
Accounting Change ($13,536) ($ 8,678)
======== ========
Weighted Average
Shares Outstanding 44,346 46,404
Effect of Dilutive Stock Options 22 88
-------- --------
Weighted Average
Shares Outstanding
Assuming Dilution 44,368 46,492
======== ========
Basic and Diluted Net Loss Per
Share Before Extraordinary Loss
and Cumulative Effect of
Accounting Change ($.30) ($.19)
======== ========
16. a. Effective for the year ended June 3, 2000, the Company changed its
method of accounting for layaway sales in compliance with Staff Accounting
Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements. Layaway
sales for fiscal 2001 have been recognized upon delivery of merchandise to the
customer. The amount of cash received upon initiation of the layaway is
recorded as a deposit liability within Other Current Liabilities. Layaway sales
in the prior year's comparative fiscal period were recognized when the initial
layaway deposit was received. The accounting change has only a slight impact on
annual sales and earnings. However, due to the seasonal influences of the
business, the accounting change results in a shift of sales and earnings among
the Company's quarterly periods. The cumulative effect of the change for
periods prior to fiscal 2000 is a net decrease in income of $1.4 million or $.03
per share. In addition, upon adoption of SAB No. 101, the Company changed its
classification of leased department revenues and related expenses. Previously,
the Company included these leased department revenues in Net Sales and their
related costs in Cost of Sales. The Company presently records the net of leased
department revenues and related costs to Other Income.
Page 9 of 21
The prior year's Statement of Operations has been reclassified to conform to the
current year's presentation.
b. In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.
This statement, as amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an Amendment of FASB Statement No.
133, 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.
17. Certain reclassifications have been made to the prior years' financial
statements to conform to the classifications used in the current year.
Page 10 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Results of
Operations.
Results of Operations
---------------------
Fiscal 2000 ended June 3, 2000 and consisted of 53 weeks. As a result, the
Company's first quarter of fiscal 2001 began June 4, 2000 and ended September 2,
2000. The first quarter of fiscal 2000 began May 30, 1999 and ended August 28,
1999.
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 2, 2000 and August 28, 1999.
Percentage of Net Sales
-----------------------
Three Months Ended
------------------
September 2, August 28,
2000 1999
___________ __________
Net sales 100.0% 100.0%
Costs and expenses:
Cost of sales 65.5 64.9
Selling & adminis-
trative expenses 38.1 37.3
Depreciation &
amortization 2.7 2.4
Interest expense .2 .4
_____ _____
106.5 105.0
_____ _____
Other income 1.3 1.3
_____ _____
Loss before income
tax benefit (5.2) (3.7)
Income tax benefit 1.9 1.4
_____ _____
Net loss before extraordinary
loss from early extinguishment
of debt and cumulative effect
of accounting change (3.3) (2.3)
Extraordinary loss from early
extinguishment of debt (.2) -
Cumulative effect of
accounting change - (.4)
_____ _____
Net Loss (3.5%) (2.7%)
===== =====
Page 11 of 21
Three Months Ended September 2, 2000 and August 28, 1999
--------------------------------------------------------
Consolidated sales increased $40.9 million (10.9%) for the three month period
ended September 2, 2000 compared with the three month period ended August 28,
1999. Sales for the thirteen comparable calendar weeks ended September 4, 1999
were $378.9 million. Comparative stores sales increased 1.4%. Two new
Burlington Coat Factory stores and one relocated store opened near the end of
the first quarter contributed $0.3 million to this year's net sales. Sales from
stores opened subsequent to August 28, 1999 amounted to $37.2 million for the
three months ended September 2, 2000. Four stores which were in operation a year
ago, but which were closed prior to this year, contributed $2.8 million to last
year's sales.
Other income (consisting of investment income, rental income from leased
departments, and miscellaneous items) was $5.5 million for the three months
ended September 2, 2000 and $4.9 million for the three months ended August 28,
1999. Increases in leased department rental income and miscellaneous items of
$0.7 million were offset in part by lower investment income of $0.1 million.
Lower investment income resulted from decreases in investable funds during the
comparative periods.
Cost of sales increased $28.9 million (11.9%) for the three month period ended
September 2, 2000 compared with the similar period a year ago. For the
comparative three month period, cost of sales, as a percentage of sales,
increased to 65.5% from 64.9%. This percentage increase was primarily the
result of higher markdowns during the three month period compared with the
similar period of a year ago.
Selling and administrative expenses increased by $18.7 million (13.3%) for the
three month period ended September 2, 2000 compared with the similar period a
year ago. The increase in selling and administrative expenses was primarily a
result of the increased number of stores operating during the three month period
compared with the similar period a year ago, increases in comparative store
payroll, increases in home office and warehousing payroll and increased
advertising costs. Comparative store payroll increased 3.1% for the three
months ended September 2, 2000 compared with the similar period a year ago. The
increase in advertising was due mainly to the current year's fiscal quarter
ending after Labor Day whereas advertising for Labor Day was incurred in the
second quarter of the prior year. The one week shift increased advertising
expense of the current fiscal year's first quarter by approximately $1.7
million. As a
Page 12 of 21
percentage of sales, selling and administrative expenses increased to 38.1% for
the three months ended September 2, 2000 from 37.3% in the comparative three
month period of a year ago.
Interest expense decreased $0.5 million for the three months ended September 2,
2000 compared with the similar period of a year ago. The three month decrease in
interest expense is the result of a decrease in long term debt due to the normal
recurring repayment of the Company's industrial development bonds and to the
prepayment of the entire remaining balance of the Company's subordinated notes
in June 2000. Interest amounting to approximately $0.4 million, relating to the
Company's borrowings under its lines of credit, offset in part, the interest
expense decrease realized by the reduction in long term debt.
Income tax benefit increased to $8.2 million for the three months ended
September 2, 2000 from $5.3 million for the similar period of a year ago. The
effective tax rates were 37.7% and 38.1% for the three month periods ended
September 2, 2000 and August 28, 1999, respectively.
Net loss before extraordinary loss from early extinguishment of debt and
cumulative effect of accounting change increased $4.8 million to $13.5 million
for the three months ended September 2, 2000 from $8.7 million for the
comparative period of a year ago. Loss per share before extraordinary loss and
cumulative effect of accounting change was $0.30 per share for the current
fiscal year's first quarter and $0.19 for the comparative three month period of
a year ago.
During the current fiscal quarter, the Company prepaid the remaining balance of
its long term subordinated notes. The prepayment penalty associated with this
payment amounted to approximately $1.0 million. This penalty, along with the
write-off of unamortized deferred debt charges of approximately $0.3 million,
was recorded as an extraordinary loss. Net of income tax effect, the
extraordinary loss amounted to $0.8 million or $0.02 per share.
The Company's business is seasonal, with its highest sales occurring in the
months of September, October, November, December and January 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 September, October, November,
December and January.
Page 13 of 21
Liquidity and Capital Resources
-------------------------------
The Company estimates spending approximately $98.0 million in capital
expenditures during fiscal 2001 including $11.0 million for the purchase of
store land and buildings, $70.0 million for store expenditures, $5.0 million for
the purchase of leaseholds for store locations, $3.0 million for upgrades and
expansion of warehouse facilities, and $9.0 million for computer and other
equipment expenditures. For the first three months of fiscal 2001, capital
expenditures amounted to approximately $22.5 million.
Working capital was $232.2 million at September 2, 2000 compared with $260.4
million at June 3, 2000. This decrease was due primarily to purchases of
property and equipment and treasury stock.
The Company repurchased 229,100 shares of its stock costing approximately $2.8
million during the first three months of fiscal 2001. These purchases are
reflected as treasury stock in the equity section of the balance sheet. As of
September 2, 2000, the Company had authorization to purchase an additional $4.2
million of its stock.
Net cash used in operating activities was $94.1 million for the three months
ended September 2, 2000. The primary use of cash for operating activities
during the current three month period was for the purchase of additional
inventory. Inventory increases resulted from the stocking of new stores and
from the normal seasonal buildup of inventory throughout the chain.
On September 25, 2000, the Board of Directors of the Company declared a cash
dividend in the amount of two cents ($.02) per share. The cash dividend is
payable on November 9, 2000, to stockholders of record on October 13, 2000.
The Company's long term borrowings at September 2, 2000 consists of an
industrial development bond of $8.1 million issued by the New Jersey Economic
Development Authority (the "Refunding Bonds"). The Refunding Bonds consist of
serial and term bonds. The serial bonds aggregate $1.7 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 4.90% to 5.4% per annum, and the
term bonds bear interest at the rates of 5.60% for
Page 14 of 21
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 5.85% and 6.3 years, respectively.
During the current quarter, the Company repaid the remaining balance of $44.4
million of its long term subordinated notes, which had been issued by the
Company to institutional investors in June 1990. The Notes were scheduled to
mature on June 27, 2005 and were subject to mandatory payment of $7.4 million on
June 27 of each year. The prepayment penalty associated with the early payoff
of the debt was approximately $1.0 million.
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.
Short term borrowings against these lines of credit bear interest at or below
the lending bank's prime rate (9.5% at September 2, 2000).
At September 2, 2000, the Company had borrowings under these lines of credit of
$45.6 million. Maximum borrowings during the quarter amounted to $70.1 million.
The average borrowings under these credit lines during the period of borrowing
was $36.3 million, at an average interest rate of 7.0%. Borrowings under the
Company's lines of credit were necessary during the current year's first quarter
primarily because of the prepayment of the Company's subordinated notes and the
purchase of inventory during the quarter. There were no borrowings under the
Company's lines of credit during the first quarter of fiscal 2000. The Company
had letter of credit commitments outstanding against these lines of credit of
$25.5 million as of the end of the first quarter of fiscal 2001 and $30.8
million at June 3, 2000.
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,
Page 15 of 21
proposed store openings and closings, proposed capital expenditures, projected
financing requirements, proposed developmental projects, projected sales and
earnings, and the Company's ability to maintain selling margins. Among the
factors that could cause actual 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.
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 September 2, 2000, the Company had $45.6
million in borrowings under the lines of credit at an interest rate of 7.0625%.
This approximates the fair value of the borrowings at September 2, 2000. The
table below summarizes the fair value and contract terms of the Company's fixed
rate debt and long-term investments, at September 2, 2000 (in thousands):
Page 16 of 21
Expected Maturity Date of Long-Term Debt (Including Current Portion) and Long
Term Investments at September 2, 2000 (unaudited)
<TABLE>
<CAPTION>
Fiscal Fixed Rate Average Long-Term Average
Year Debt Interest Rate Investments Interest Rate
________ ____________ _____________ ___________ _____________
<S> <C> <C> <C> <C>
2001 18 10.6% - 6.3%
2002 505 5.1% $ 4,200 6.3%
2003 555 5.2% - 6.5%
2004 605 5.4% 20,000 6.5%
Thereafter 6,400 6.0% - -
------ -------
Total $8,083 $24,200
====== =======
Fair Value at
September 2,
2000 $8,420 $23,895
====== =======
</TABLE>
Page 17 of 21
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits Page No.
-------- --------
27 Financial Data Schedule 20
b. The Company filed no reports on Form 8-K during the period
ended September 2, 2000.
Page 18 of 21
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.
Vice President, Corporate Controller & Chief
Accounting Officer
Date: October 16, 2000
Page 19 of 21
EXHIBIT 27
----------
Page 20 of 21
